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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 7
TO
SCHEDULE 14D-1
TENDER OFFER STATEMENT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
GLEASON CORPORATION
(Name of Subject Company (Issuer))
TORQUE ACQUISITION CO., L.L.C.
(Bidders)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
377339106
(CUSIP Number of Class of Securities)
------------------------------
GLEASON CORPORATION
ATTN: EDWARD J. PELTA, ESQ.
VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
1000 UNIVERSITY AVENUE
P.O. BOX 22970
ROCHESTER, NEW YORK 14692
TELEPHONE: (716) 473-1000
(Name, Address and Telephone Number of Persons Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
BLAINE V. FOGG, ESQ.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
CALCULATION OF FILING FEE:
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TRANSACTION VALUATION** AMOUNT OF FILING FEE
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$193,509,856 $38,702
</TABLE>
** Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 8,413,472 shares of common stock, par value
$1.00 per share (the "Shares"), of Gleason Corporation, a Delaware
corporation (the "Company"), at a price of $23.00 per Share in cash. As of
November 30, 1999, there were 9,589,195 Shares issued and outstanding.
Certain stockholders of the Company, owning in the aggregate (1) 1,458,983
Shares and (2) 472,322 unexercised options to acquire Shares under various
employee stock option plans of the Company as of November 30, 1999, have
agreed not to tender their Shares (which in the aggregate total 1,931,305
Shares, including Shares underlying options) pursuant to the Offer. Based on
the foregoing, the maximum number of Shares available to be tendered
pursuant to the Offer is 8,413,472 Shares, which is equal to the number of
Shares outstanding on a fully diluted basis as of November 30, 1999 less the
aggregate number of Shares and options to acquire Shares owned by the
non-tendering stockholders. The amount of the filing fee calculated in
accordance with Rule 0-11 of the Securities Exchange Act of 1934, as
amended, equals 1/50th of one percent of the value of the transaction.
/ / 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.
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Amount previously paid: $38,702 Filing party: Torque Acquisition Co., L.L.C.
Form or registration no.: Schedule 14D-1 Date filed: December 15, 1999
</TABLE>
(CONTINUED ON FOLLOWING PAGES)
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This Amendment No. 7 to the Tender Offer Statement on Schedule 14D-1 amends
and supplements the Tender Offer Statement on Schedule 14D-1 originally filed on
December 15, 1999 (the "Schedule 14D-1") 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., relating to the joint tender
offer by Acquisition Company and Gleason Corporation, a Delaware corporation
(the "Company"), 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, and the related Letter of
Transmittal. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Schedule 14D-1. Acquisition Company hereby
amends and supplements the Schedule 14D-1 as follows:
ITEM 10. ADDITIONAL INFORMATION.
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
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. The revised bank committment letter is attached hereto as
Exhibit (b)(4) and is incorporated herein by reference.
The new Minimum Condition, together with the Shares owned by the Gleason
Foundation and management, will represent two-thirds of the outstanding Shares,
thereby assuring a favorable vote on the second-step Merger. The reduction in
the Minimum Condition was made in order to facilitate the completion of the
Offer in light of Acquisition Company's willingness to forego the benefits of
recapitalization accounting treatment, which initially had necessitated a higher
Minimum Condition.
The amendment to the Merger Agreement was unanimously approved by the Board
of Directors of the Company (the "Board") following the unanimous recommendation
of an independent Special Committee of the Board. The Board, based on the
unanimous recommendation of the Special Committee, continues to recommend that
the Company's stockholders accept the Offer and tender their Shares. The
amendment to the Merger Agreement is attached hereto as Exhibit (c)(25) and is
incorporated herein by reference.
According to ChaseMellon Shareholder Services, L.L.C., the depositary for
the Offer, as of 12:00 midnight on February 3, 2000, 4,897,987 Shares had been
validly tendered and not withdrawn pursuant to the Offer.
On February 4, 2000, Acquisition Company and the Company commenced
dissemination of a supplement to the Offer to Purchase (the "Supplement") to the
stockholders of the Company. The Supplement is attached hereto as Exhibit
(a)(11) and is incorporated herein by reference.
2
<PAGE>
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
Item 11 is hereby amended and supplemented by the addition of the following
exhibits thereto:
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(a)(11) Supplement, dated February 4, 2000, to the Offer to
Purchase, dated December 15, 1999.
(a)(12) Letter of Transmittal.
(a)(13) Notice of Guaranteed Delivery.
(a)(14) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(15) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(16) Letter to Stockholders of the Company from James S. Gleason,
Chairman of the Board and Chief Executive Officer of the
Company.
(b)(4) Revised Bank Commitment Letter, dated February 3, 2000.
(c)(25) Amendment No. 1 to Agreement and Plan of Merger, dated
February 3, 2000, attached as Exhibit I to the Supplement to
the Offer to Purchase attached hereto as Exhibit (a)(11) and
incorporated herein by reference.
(g)(13) Press Release, dated February 4, 2000.
</TABLE>
3
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: February 4, 2000
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TORQUE ACQUISITION CO., L.L.C.
By: /s/ SANDER M. LEVY
-----------------------------------------
Name: Sander M. Levy
Title: President
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- -------- ------------------------------------------------------------
<S> <C>
(a)(11) Supplement, dated February 4, 2000, to the Offer to
Purchase, dated December 15, 1999.
(a)(12) Letter of Transmittal.
(a)(13) Notice of Guaranteed Delivery.
(a)(14) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(15) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(16) Letter to Stockholders of the Company from James S. Gleason,
Chairman of the Board and Chief Executive Officer of the
Company.
(b)(4) Revised Bank Commitment Letter, dated February 4, 2000.
(c)(25) Amendment No. 1 to Agreement and Plan of Merger, dated
February 3, 2000, attached as Exhibit I to the Supplement to
the Offer to Purchase attached hereto as Exhibit (a)(11) and
incorporated herein by reference.
(g)(13) Press Release, dated February 4, 2000.
</TABLE>
<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>
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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
14
<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
15
<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
16
<PAGE>
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
17
<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
I-1
<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;
I-2
<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
I-3
<PAGE>
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>
I-4
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
GLEASON CORPORATION
AT $23.00 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 15, 1999
AS SUPPLEMENTED BY THE SUPPLEMENT TO THE OFFER TO PURCHASE
DATED FEBRUARY 4, 2000
OF
TORQUE ACQUISITION CO., L.L.C.,
A WHOLLY OWNED SUBSIDIARY OF
VESTAR CAPITAL PARTNERS IV, L.P.,
AND
GLEASON CORPORATION
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS HAVE BEEN EXTENDED UNTIL 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THURSDAY, FEBRUARY 17, 2000, UNLESS FURTHER EXTENDED.
- --------------------------------------------------------------------------------
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or such
stockholder's broker, dealer, commercial bank or other nominee to the Depositary
at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 85 Challenger Rd. 120 Broadway
South Hackensack, NJ 07606 Mail Stop--Reorg 13th Floor
Ridgefield, NJ 07660 New York, NY 10271
</TABLE>
BY FACSIMILE TRANSMISSION:
(201) 296-4293
(for Eligible Institutions only)
FOR CONFIRMATION TELEPHONE: (201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. THE INSTRUCTIONS
CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
- --------------------------------------------------------------------------------
STOCKHOLDERS WHO HAVE PROPERLY TENDERED SHARES 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 EXCEPT FOR COMPLYING WITH THE PROCEDURE
FOR GUARANTEED DELIVERY IF THAT PROCEDURE IS BEING USED.
- --------------------------------------------------------------------------------
This Letter of Transmittal is to be completed by stockholders of Gleason
Corporation either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined in the section captioned "THE OFFER--Procedures for
Tendering Shares" of the Supplement (as defined herein)) is utilized, if
delivery is to be made by book-entry transfer to an account maintained by the
Depositary at the Book-Entry Transfer Facility (as defined in and pursuant to
the procedures set forth in the section captioned "THE OFFER--Procedures for
Tendering Shares" of the Supplement). Stockholders who deliver Shares by
book-entry transfer are referred to herein as "Book-Entry Stockholders" and
other stockholders who deliver Shares are referred to herein as "Certificate
Stockholders."
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in the section captioned "THE OFFER--Procedures for Tendering Shares" of
the Supplement) with respect to, their Shares and all other documents required
hereby to the Depositary prior to the Expiration Date (as defined in the section
captioned "SPECIAL FACTORS--Background of the Transactions" of the Supplement)
must tender their Shares pursuant to the guaranteed delivery procedures set
forth in the section captioned "THE OFFER--Procedures for Tendering Shares" of
the Supplement. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
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 Owner(s) _____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
If delivered by Book-Entry Transfer, check box: / /
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S) AND SHARE(S) TENDERED) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
REPRESENTED BY
SHARE CERTIFICATE SHARE NUMBER OF SHARES
NUMBER(S) (1) CERTIFICATE(S) (1) TENDERED (2)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares represented
by each Share certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
<PAGE>
SIGNATURES MUST BE PROVIDED AT THE END OF THIS LETTER OF TRANSMITTAL.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
Ladies and Gentlemen:
The undersigned hereby tenders to Torque Acquisition Co., L.L.C., a newly
formed Delaware limited liability company and a wholly owned subsidiary of
Vestar Capital Partners IV, L.P. ("Acquisition Company"), and Gleason
Corporation, a Delaware corporation (the "Company" and, together with
Acquisition Company, the "Purchasers"), all of the above-referenced shares of
common stock, par value $1.00 per share (the "Common Stock"), of the Company,
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 (such amount, or any greater amount per Share
paid pursuant to the Offer, being referred to herein as the "Offer Price"),
without interest thereon, with Acquisition Company agreeing to pay for and
purchase (i) the first 4,862,749 Shares tendered pursuant to the Offer and the
Company agreeing to pay for and purchase all Shares in excess of such
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, or (ii) 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 such 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 dated
December 15, 1999, as supplemented by the Supplement to the Offer to Purchase,
dated February 4, 2000 (the "Supplement"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). The
undersigned understands that 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 of
their affiliates, 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 payment pursuant to the Offer.
The Company has distributed one Right for each outstanding Share pursuant to
the Rights Agreement (as defined in the Supplement). The Rights are currently
evidenced by and trade with certificates evidencing the Common Stock. Any tender
of Shares will include a tender of the associated Rights. The Company has taken
such action so as to make the Rights Agreement inapplicable to the Offer, the
Merger, the Merger Agreement (as amended) and the other transactions
contemplated thereby.
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, as amended by Amendment No. 1 to
the Merger Agreement, dated as of February 4, 2000 ("Amendment No. 1").
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Purchasers all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other Shares
or other securities issued or issuable in respect thereof on or after the date
of the Merger Agreement (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 any and all
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
certificates for such Shares (and any and all Distributions), or transfer
ownership of such Shares (and any and all Distributions) on the account books
maintained by the Book-Entry Transfer Facility, together, in any such case, with
all accompanying evidences of transfer and authenticity, to or upon the order of
the Purchasers, (ii) present such Shares (and any and all Distributions) for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
<PAGE>
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Sander M. Levy and Arthur J. Nagle in their respective capacities as
officers of Acquisition Company, and each of them, as the attorneys-in-fact and
proxies of the undersigned, each with full power of substitution and
resubstitution, to vote 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. This
appointment will be effective if, when, and only to the extent that, the
Purchasers accept such Shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the Offer.
Such acceptance for payment shall, without further action, revoke any prior
powers of attorney and proxies granted by the undersigned at any time with
respect to such Shares (and any and all Distributions), and no subsequent powers
of attorney, proxies, consents or revocations may be given by the undersigned
with respect thereto (and, if given, will not be deemed effective). 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.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by the Purchasers, the Purchasers will acquire
good, marketable and unencumbered title thereto and to all Distributions, free
and clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or the
Purchasers to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the account
of the Purchasers all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer of appropriate assurance thereof, the Purchasers shall
be entitled to all rights and privileges as owner of each such Distribution and
may withhold the entire purchase price of the Shares tendered hereby or deduct
from such purchase price, the amount of value of such Distribution as determined
by the Purchasers in their sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in the section of the Supplement captioned "THE
OFFER--Procedures for Tendering Shares" and the instructions hereto will
constitute a binding agreement between the undersigned and the Purchasers upon
the terms and subject to the conditions of the Offer (and if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment). Without limiting the foregoing, if the price to be paid in the Offer
is amended in accordance with the Merger Agreement (as amended), the price to be
paid to the undersigned will be the amended price notwithstanding the fact that
a different price is stated in this Letter of Transmittal. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the Purchasers may not be required to accept for payment any of the Shares
tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all 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 above under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price of all Shares purchased and/or
return any certificates for Shares not tendered or not accepted for payment (and
any accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under "Description of Shares Tendered." In the event
that the boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase price
of all Shares purchased and/or return any certificates evidencing Shares not
tendered or not accepted for payment (and any accompanying documents, as
appropriate) in the name(s) of, and deliver such check and/or return any such
certificates (and any accompanying documents, as appropriate) to, the person(s)
so indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions," please credit any Shares tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
the Purchasers have no obligation, pursuant to the "Special Payment
Instructions," to transfer any Shares from the name of the registered holder
thereof if the Purchasers do not accept for payment any of the Shares so
tendered.
<PAGE>
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES: ____
------------------------------------------------SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
accepted for payment is to be issued in name of someone other than the
undersigned, if certificates for Shares not tendered or not accepted for
payment are to be issued in the name of someone other than the undersigned
or if Shares tendered hereby and delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account
indicated above.
Issue check and/or Share certificate(s) to:
Name: ______________________________________________________________________
(PLEASE PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry transfer and not purchased to the
Book-Entry Transfer Facility account.
____________________________________________________________________________
(ACCOUNT NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment is to be sent to someone other than the undersigned or
to the undersigned at an address other than that shown under "Description of
Shares Tendered."
Mail check and/or Share certificates to:
Name: ______________________________________________________________________
(PLEASE PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
-----------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
____________________________________________________________________________
____________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: ___________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
the Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by 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 and see Instruction 5.)
Name(s) ____________________________________________________________________
(PLEASE PRINT)
Name of Firm _______________________________________________________________
Capacity (full title) ______________________________________________________
(SEE INSTRUCTION 5)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number _____________________________________________
Taxpayer Identification or Social Security Number __________________________
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature _______________________________________________________
Name(s) ____________________________________________________________________
(PLEASE PRINT)
Title ______________________________________________________________________
Name of Firm _______________________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number _____________________________________________
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter 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
(i) this Letter of Transmittal is signed by the registered holder(s) of Shares
(which term, for the 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) 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 this Letter of Transmittal or
(ii) 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 "THE OFFER--Procedures for Tendering Shares" of the
Supplement. Share Certificates evidencing all physically tendered Shares, or
confirmation ("Book-Entry Confirmation") of any book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of Shares delivered by
book-entry as well as a properly completed and duly executed Letter of
Transmittal, must be received by the Depositary, at one of the addresses set
forth herein prior to the Expiration Date (as defined in "SPECIAL
FACTORS--Background of the Transactions" of the Supplement). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Stockholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot comply with the
book-entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedures set forth in "THE OFFER--Procedures for
Tendering Shares" of the Supplement. Pursuant to such procedure, (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 Purchasers, must be received by the Depositary (as provided in
(iii) below) prior to the Expiration Date and (iii) the Share Certificates
evidencing all physically tendered Shares (or Book-Entry Confirmation with
respect to such Shares), as well as a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) with any required signature
guarantees and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three New York Stock Exchange trading days
after the date of execution of such Notice of Guaranteed Delivery, all as
provided in "THE OFFER--Procedures for Tendering Shares" of the Supplement.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE
SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering stockholders, by execution of this Letter of Transmittal (or facsimile
hereof), waive any right to receive any notice of the acceptance of their Shares
for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by the Share
Certificate submitted 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) evidencing the remainder of the Shares that were
evidenced by the old Share Certificate(s) will be sent to the registered holder,
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by the
Share Certificates delivered to the Depositary will be deemed to have been
tendered unless otherwise indicated.
<PAGE>
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 signatures(s) must correspond exactly with the names(s) as
written on the face of the Share Certificate(s) without alternation, enlargement
or any change whatsoever. If any of the Shares tendered hereby are held of
record by two or more persons, all such persons must sign this Letter of
Transmittal.
If any tendered Shares are registered in different names on several Share
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 is signed by the registered holder(s) of the
Shares evidenced by Share Certificates listed and transmitted hereby, no
endorsements of Share Certificates or separate stock powers are required unless
payments is to be made to or Share Certificates evidencing Shares not tendered
or purchased 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) on such
Share Certificates(s). Signatures on such certificates and stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, 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 or names of
the registered holder or holders appear on the Share Certificate(s). Signatures
on such Share Certificate(s) or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificates or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or any person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchasers of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchasers will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of Shares to them or their order pursuant to the Offer.
If, however, payment of the purchase price is to be made to, or if Share
Certificates evidencing Shares not tendered or purchased are to be registered in
the name of, any person other than the registered holder(s), or if Share
Certificates evidencing tendered shares are registered in the name of the 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 other
person) payable on account of the transfer to such person will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES(S) LISTED IN THIS LETTER
OF TRANSMITTAL.
<PAGE>
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent and/or any Share Certificates
are to be returned to someone other than the signer above, or to the signer
above but at an address other than that shown in the box entitled "Description
of Shares Tendered" above, the appropriate boxes on this Letter of Transmittal
should be completed. Stockholders tendering Shares by book-entry transfer may
request that Shares not purchased be credited to such account maintained at any
of the Book-Entry Transfer Facilities as such stockholder may designate under
"Special Delivery Instructions." If no such instructions are given, any such
Share not purchased will be returned by crediting the account at the Book-Entry
Transfer Facility designated above.
8. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to, or additional copies of the Offer to Purchase, the Supplement,
this Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained
from the Information Agent at the telephone number and address set forth below.
Stockholders may also contact their broker, dealer, commercial bank or trust
company.
9. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to
Purchase and the Supplement, and subject to the terms of the Merger Agreement
(as amended), Acquisition Company reserves the right in its sole discretion to
waive in whole or in part at any time or from time to time any of the specified
conditions of the Offer or any defect or irregularity in tender with regard to
any Shares tendered.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"), generally
the stockholder's social security or employer identification number, on
Substitute Form W-9, which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, whether he or she is subject to
backup withholding of federal income tax. 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. Failure to provide the information on Substitute
Form W-9 may subject the tendering stockholder to 31% federal income tax
withholding on the payment of the purchase price. 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, the Depositary will be required to withhold 31% of
all payments made for surrendered shares except that if the Depositary is
provided with a TIN within 60 days, the amount of such withholding will be
refunded to the tendering stockholder.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/ special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
TRANSFER, TOGETHER WITH CERTIFICATES (OR BOOK-ENTRY CONFIRMATION) AND ALL OTHER
REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE
EXPIRATION DATE (AS DEFINED IN THE SUPPLEMENT).
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder surrendering certificates must,
unless an exemption applies, provide the Exchange Agent (as payer) with his
correct TIN on Substitute Form W-9 included in this Letter of Transmittal. If
the stockholder is an individual, his TIN is his 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 stockholder
(or other payee) may be subject to backup withholding of 31%.
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, that person
should complete, sign and submit a Form W-8, Certificate of Foreign Status,
signed under penalties of perjury, attesting to his exempt status. A Form W-8
can be obtained from the Exchange Agent. 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
Exchange Agent. See the "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" previously furnished to you for additional
instructions.
If backup withholding applies, the Exchange Agent 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,
the stockholder is required to notify the Exchange Agent 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 owner of
the Shares. 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 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, the Depositary will
be required to withhold 31% of all payments made for surrendered Shares except
that if the Depositary is provided with a TIN within 60 days, the amount of such
withholding will be refunded to the tendering stockholder.
<PAGE>
<TABLE>
<S> <C> <C>
PAYOR: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY Social Security Number
Department of the Treasury BY SIGNING AND DATING BELOW. OR
Internal Revenue Service
Employer Identification No.
(If awaiting TIN write"Applied
For")
PAYER'S REQUEST FOR PART II--For payees NOT subject to backup withholding, see the
TAXPAYER IDENTIFICATION enclosed Guidelines for Certification of Taxpayer Identification
NUMBER ("TIN") Number on Substitute Form W-9 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 because either (a) I
am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service ("IRS")
that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer
subject to backup withholding.
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 no longer subject to
backup withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines.)
THE INTERNAL REVENUE SERVICE
DOES NOT REQUIRE YOUR CONSENT
TO ANY PROVISION OF THIS
DOCUMENT OTHER THAN THE
CERTIFICATES REQUIRED TO AVOID
BACKUP WITHHOLDING.
SIGNATURE: --------------------------------- Date:
---------------------------
</TABLE>
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 CASH PAYMENTS MADE TO YOU. 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 penalties of perjury that a Taxpayer Identification
Number has not been issued to me, and either (1) 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 (2) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a Taxpayer
Identification Number to the Depositary by the time of payment, 31% of all
reportable payments made to me thereafter will be withheld, but that such
amounts will be refunded to me if I provide a certified Taxpayer
Identification Number to the Depositary within sixty (60) days.
<TABLE>
<S> <C>
------------------------------------- -------------------------
Signature Date
</TABLE>
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, the Supplement, this Letter of Transmittal and other tender offer
materials may be directed to the Information Agent at its address and telephone
number as set forth below:
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>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
GLEASON CORPORATION
TO
TORQUE ACQUISITION CO., L.L.C.,
a wholly owned subsidiary of
Vestar Capital Partners IV, L.P.,
AND
GLEASON CORPORATION
(Not to Be Used for Signature Guarantees)
As set forth in the Supplement (as defined below), this Notice of Guaranteed
Delivery, or a form substantially equivalent hereto, must be used to accept the
Offer (as defined below) if certificates representing shares of Common Stock,
par value $1.00 per share (the "Common Stock"), together with the associated
preferred share purchase rights (the "Rights" and, together with the Common
Stock, the "Shares"), of Gleason Corporation, a Delaware corporation, are not
immediately available, if the procedure for book-entry transfer cannot be
completed prior to the Expiration Date (as defined in the Supplement), or if
time will not permit all required documents to reach the Depositary prior to the
Expiration Date. Such form may be delivered by hand, transmitted by facsimile
transmission or mailed to the Depositary. See the section captioned "THE
OFFER--Procedures for Tendering Shares" of the Supplement.
The Depositary of the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C> <C>
BY MAIL: BY FACSIMILE BY HAND: BY OVERNIGHT COURIER:
TRANSMISSION:
Reorganization Department (201) 296-4293 Reorganization Department Reorganization Department
P.O. Box 3301 (for eligible 120 Broadway 85 Challenger Rd.
South Hackensack, institutions only) 13th Floor Mail Stop--Reorg
NJ 07606 New York, NY 10271 Ridgefield, NJ 07660
</TABLE>
FOR CONFIRMATION TELEPHONE: (201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY 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 Torque Acquisition Co., L.L.C., a newly
formed Delaware limited liability company and a wholly owned subsidiary of
Vestar Capital Partners IV, L.P., and Gleason Corporation, a Delaware
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated December 15, 1999 (the "Offer to Purchase") as supplemented by
the Supplement, dated February 4, 2000 (the "Supplement"), and the related
Letter of Transmittal (which together constitute the "Offer"), receipt of which
is hereby acknowledged, the number of Shares set forth below pursuant to the
guaranteed delivery procedures set forth in the section captioned "THE OFFER--
Procedures for Tendering Shares" of the Supplement.
- --------------------------------------------------------------------------------
Number of Shares:_______________________________________________________________
Share Certificate Numbers (if available):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Check box if Shares will be tendered by book-entry transfer:/ /
Account Number: ________________________________________________________________
Dated:__________________________________________________________________________
<PAGE>
Name(s) of Record Holder(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE TYPE OR PRINT
Address(es):____________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ZIP CODE
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S)
DATED:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution"), hereby
guarantees to deliver to the Depositary either the certificates representing the
Shares tendered hereby in proper form for transfer, or timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company, in each case with delivery of a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (as defined in the Supplement), and
any other documents required by the Letter of Transmittal, within three New York
Stock Exchange trading days (as defined in the Supplement) after the date of
execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
- --------------------------------------------------------------------------------
Name of Firm:___________________________________________________________________
Address:________________________________________________________________________
______________________________________________________________________________
ZIP CODE
Area Code
and Telephone Number: __________________________________________________________
- --------------------------------------------------------------------------------
AUTHORIZED SIGNATURE
Name: __________________________________________________________________________
PLEASE TYPE OR PRINT
- --------------------------------------------------------------------------------
Dated: _________________________________________________________________________
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES SHOULD BE SENT ONLY WITH YOUR LETTER OF
TRANSMITTAL.
<PAGE>
SUPPLEMENT TO OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING 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 HAVE BEEN EXTENDED UNTIL 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THURSDAY, FEBRUARY 17, 2000, UNLESS FURTHER EXTENDED.
February 4, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by Torque Acquisition Co., L.L.C., a newly formed
Delaware limited liability company and a wholly owned subsidiary of Vestar
Capital Partners IV, L.P. ("Acquisition Company"), and Gleason Corporation, a
Delaware corporation (the "Company" and, together with Acquisition Company, the
"Purchasers"), to act as Information Agent in connection with the Purchasers'
offer to purchase all of the outstanding shares of common stock, par value $1.00
per share (the "Common Stock"), of the Company, 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 (such amount, or any greater amount per Share paid pursuant to the
Offer, being referred to herein as the "Offer Price"), without interest thereon,
with Acquisition Company agreeing to pay for and purchase (i) the first
4,862,749 Shares tendered pursuant to the Offer and the Company agreeing to pay
for and purchase all Shares 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, or (ii) 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 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, dated December 15, 1999 (the
"Offer to Purchase"), and the Supplement thereto, dated February 4, 2000 (the
"Supplement"), and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, constitute the "Offer") enclosed
herewith. 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.
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, and (ii) the Company and, if necessary, Merger Subsidiary,
receiving the financing for the Offer as contemplated by a revised bank
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 (as defined in the Supplement)
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.
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
the following documents:
1. The Supplement;
<PAGE>
2. An updated Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. An updated Notice of Guaranteed Delivery to be used to accept the Offer
if certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry transfer
cannot be completed, by the Expiration Date (as defined in the
Supplement);
4. A supplemental printed form of 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; and
5. A letter to stockholders of the Company from James S. Gleason, the
Chairman of the Board and Chief Executive Officer of the Company.
6. A return envelope addressed to ChaseMellon Shareholder Services, L.L.C.
(the "Depositary").
We have previously furnished you with the following documents:
1. Offer to Purchase, dated December 15, 1999;
2. A letter to stockholders of the Company from James S. Gleason, the
Chairman of the Board and Chief Executive Officer of the Company,
together with a Solicitation/Recommendation Statement on Schedule 14D-9
dated December 15, 1999, which has been filed by the Company with the
Securities and Exchange Commission; and
3. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
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 Purchasers will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if the Purchasers give oral or written notice to the
Depositary of the Purchasers' acceptance of such Shares for payment pursuant to
the Offer. Payment for Shares purchased pursuant to the Offer will in all cases
be made only after timely receipt by the Depositary of (i) certificates for such
Shares, or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, pursuant to the procedures
described in the section of the Supplement captioned "THE OFFER--Procedures for
Tendering Shares," (ii) a properly completed and duly executed Letter of
Transmittal (or a properly completed and manually signed facsimile thereof) or
an Agent's Message (as defined in the Supplement) in connection with a
book-entry transfer and (iii) all other documents required by the Letter of
Transmittal.
The Purchasers will not pay any fees or commissions to any broker or dealer
or other person (other than the Information Agent and the Depositary as
described in the Supplement) for soliciting tenders of Shares pursuant to the
Offer. The Purchasers will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling costs
incurred by them in forwarding the enclosed materials to their customers.
The Purchasers will pay or cause to be paid all stock transfer taxes
applicable to their purchase of Shares pursuant to the Offer, subject to
Instruction 6 of the Letter of Transmittal.
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 THURSDAY, FEBRUARY 17, 2000, UNLESS THE OFFER IS FURTHER EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Supplement.
<PAGE>
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery procedures
specified in the section of the Supplement captioned "THE OFFER--Procedures for
Tendering Shares."
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent at its address and telephone number set forth on the back
cover of the Supplement.
Very truly yours,
GEORGESON SHAREHOLDER
COMMUNICATIONS INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU THE AGENT
OF THE PURCHASERS, THE INFORMATION AGENT, THE DEPOSITARY OR ANY AFFILIATE OF ANY
OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR
MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER
THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
SUPPLEMENT TO OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING 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 HAVE BEEN EXTENDED UNTIL 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THURSDAY, FEBRUARY 17, 2000, UNLESS FURTHER EXTENDED.
- --------------------------------------------------------------------------------
February 4, 2000
To Our Clients:
Enclosed for your consideration is the Supplement, dated February 4, 2000
(the "Supplement"), to the Offer to Purchase, dated December 15, 1999, and the
related Letter of Transmittal in connection with the offer by 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"), to purchase all of the
outstanding shares of common stock, par value $1.00 per share (the "Common
Stock"), of the Company, 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 (such amount, or
any greater amount per Share paid pursuant to the Offer, being referred to
herein as the "Offer Price"), without interest thereon, with Acquisition Company
agreeing to pay for and purchase (i) the first 4,862,749 Shares tendered
pursuant to the Offer and the Company agreeing to pay for and purchase all
Shares 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, or
(ii) 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 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 dated December 15, 1999, the Supplement and the enclosed Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"). We are the holder of record of Shares held 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 enclosed 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.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is directed to the following:
1. The Offer Price is $23.00 per Share, net to you 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 (as defined in the Supplement), Amendment No. 1 to
the Merger Agreement, and the transactions contemplated thereby,
including the Offer and the Merger (each, as defined in the
Supplement), has unanimously determined that the Offer and the Merger
are advisable,
<PAGE>
fair to, and in the best interests of, the Company's stockholders
(other than the Acquisition Parties, their affiliates and the
Foundation (each, as defined in the Offer to Purchase)) and
unanimously recommends that stockholders accept the Offer and tender
their Shares pursuant to the Offer.
4. The Offer and withdrawal rights have been extended until 12:00
Midnight, New York City time, on Thursday, February 17, 2000, unless
the Offer is further extended.
5. 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 in the Supplement),
and (ii) the Company and, if necessary, Merger Subsidiary, receiving
the financing for the Offer as contemplated by a revised bank
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 (as defined in the Supplement) 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.
6. Any stock transfer taxes applicable to the sale of Shares to the
Purchasers pursuant to the Offer will be paid by the Purchasers,
except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Except as disclosed in the Offer to Purchase and the Supplement, the
Purchasers are not aware of any state in which the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. In any jurisdiction in which the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchasers by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the opposite side of this letter. An envelope 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 on the opposite side of this letter. Your
instructions should be forwarded to us in sufficient time to permit us to submit
a tender on your behalf prior to the expiration of the Offer.
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.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GLEASON CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Supplement, dated February 4, 2000, to the Offer to Purchase, dated
December 15, 1999 (the "Supplement"), and the related Letter of Transmittal in
connection with the Offer by 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"), to purchase all of the outstanding
shares of common stock, par value $1.00 per share (the "Common Stock"), of the
Company, 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 (such amount, or any greater
amount per Share paid pursuant to the Offer, being referred to herein as the
"Offer Price"), without interest thereon, with Acquisition Company agreeing to
pay for and purchase (i) the first 4,862,749 Shares tendered pursuant to the
Offer and the Company agreeing to pay for and purchase all Shares 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, or (ii) 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 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, the
Supplement and in the related Letter of Transmittal.
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, the Supplement and the related Letter of Transmittal.
<TABLE>
<S> <C>
Number of Shares to be Tendered: Shares*
Dated: ------------------------
-------------------------------------------
-------------------------------------------
Signature(s)
-------------------------------------------
Print Name(s)
-------------------------------------------
-------------------------------------------
Print Address(es)
-------------------------------------------
Area Code and Telephone Number(s)
-------------------------------------------
Tax Identification or Social Security Number(s)
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
GLEASON CORPORATION
1000 University Avenue
P.O. Box 22970
Rochester, New York 14692-2970
(716) 473-1000
February 4, 2000
Dear Stockholders:
Enclosed please find a Supplement to the Offer to Purchase in connection
with the joint tender offer (the "Offer") by Torque Acquisition Co., L.L.C., a
wholly owned subsidiary of Vestar Capital Partners IV, L.P., and Gleason
Corporation, to purchase all of the outstanding shares of Gleason's common stock
for $23.00 per share. The Offer has been extended and will now expire at 12:00
midnight, New York City time, on Thursday, February 17, 2000. IF YOU ALREADY
HAVE TENDERED YOUR SHARES, YOU NEED NOT TAKE ANY FURTHER ACTION.
Pursuant to an amendment to the Merger Agreement, the minimum condition for
the Offer has been reduced to 4,862,749 shares. The original higher minimum
condition was a part of the Offer so that the buyout group could obtain the
benefits of recapitalization accounting. The reduction in the minimum condition
was made in order to facilitate the completion of the Offer in light of the
buying group's willingness to forego the benefits of recapitalization accounting
treatment.
Gleason's Board of Directors, following the unanimous recommendation of an
independent Special Committee, has unanimously determined that the Offer is in
the best interest of Gleason's stockholders and unanimously recommends that
stockholders accept the Offer and tender their shares. If the Offer is
completed, the vote on the second-step merger will be assured. The merger is not
likely to occur until a month or two after the Offer is completed. Therefore, if
you want to receive the $23.00 in cash for your shares promptly, we urge you to
tender your shares now.
If your shares are held by a bank or broker in "street name", you may have
already been sent a form for instructing them to tender your shares. If not, you
should call your bank or broker to inquire as to how to tender your shares.
Registered holders (those who maintain their own stock certificates) may tender
their shares by completing and returning the enclosed BLUE Letter of Transmittal
together with your stock certificate(s). Generally, to complete the Letter of
Transmittal you will need to do the following:
- fill in the certificate number(s), the total number of shares represented
and the number you wish to tender in the box on the front page;
- sign and date the Letter of Transmittal in the "Sign Here" box on the
second page; and
- complete the Form W-9 on the back of the Letter of Transmittal with your
Social Security Number, signature and date.
If you need further assistance with the tendering of your shares, please
contact our information agent, Georgeson Shareholder Communications Inc., at
(800) 223-2064.
Very truly yours,
/s/ James S. Gleason
James S. Gleason
Chairman and Chief Executive Officer
<PAGE>
Exhibit 99.(b)(4)
BANKERS TRUST COMPANY
ONE BANKERS TRUST PLAZA
NEW YORK, NEW YORK 10006
February 3, 2000
Torque Acquisition Co., L.L.C.
c/o Vestar Capital Partners IV, L.P.
245 Park Avenue
New York, New York 10167
Attention: Sander Levy
Gleason Corporation
1000 University Avenue
P.O. Box 22970
Rochester, New York 14692
Attention: John Perrotti
Gleason Germany (Holdings) GmbH
c/o Gleason Corporation
1000 University Avenue
P.O. Box 22970
Rochester, New York 14692
Attention: John Perrotti
Gleason Works (Holdings) Limited
c/o Gleason Corporation
1000 University Avenue
P.O. Box 22970
Rochester, New York 14692
Attention: John Perrotti
COMMITMENT LETTER
re Tender Offer Financing/Refinancing
----------------------------------
Ladies and Gentlemen:
You have advised Bankers Trust Company ("BTCo") that you intend to
consummate a transaction (the "Transaction") in which (i) Gleason Corporation
("Gleason")
<PAGE>
and/or Torque Acquisition Co., L.L.C. ("Newco") would tender (the "Tender
Offer") for a portion of the outstanding common stock of Gleason (after giving
effect to which Newco, Merger Sub, James Gleason, management of Gleason and its
subsidiaries and the Gleason Foundation (the "Foundation") will own at least
66-2/3% of the outstanding common stock of Gleason and will be contractually
obligated to vote in favor of the Merger referred to below), (ii) subsequent to
the consummation of the Tender Offer, Torque Merger Sub, Inc., a wholly-owned
subsidiary of Newco ("Merger Sub") will merge with and into Gleason (the
"Merger") pursuant to which all remaining public shareholders of Gleason will be
cashed out, (iii) substantially all of the indebtedness for borrowed money of
Gleason and its subsidiaries will be refinanced (the "Refinancing") and (iv) a
number of intercompany transactions previously disclosed by you to us will be
effected.
BTCo understands that the amount required to consummate the Transaction
will be approximately $273.4 million including fees and expenses of
approximately $12.5 million incurred in connection with the Transaction. BTCo
also understands that the funding required to effect the Transaction, to pay
related fees and expenses in connection therewith, and to provide for the
ongoing working capital needs of Gleason and its subsidiaries shall be provided
solely from (i) at least $70.4 million from either (a) the issuance by Newco of
equity (the "Equity Financing") to Vestar Capital Partners IV, L.P. ("Vestar")
and other investors reasonably satisfactory to BTCo in exchange for cash and/or
(b) the rollover of existing equity by the Foundation (to the extent, if any, it
elects to do so in its sole discretion), its affiliates and other investors
reasonably satisfactory to BTCo (which equity shall be used to purchase shares
of Gleason pursuant to the Tender Offer and subsequently exchanged for common
equity of Gleason, warrants therefor and preferred equity of Gleason pursuant to
the Merger), it being understood and agreed that of the $70.4 million referred
to in this clause (i), at least $53.3 million shall come from the issuance of
new cash equity pursuant to subclause (a) above, (ii) a rollover of existing
equity in Gleason by James Gleason and management having a value of
approximately $9.5 million, (iii) available cash on hand at Gleason and its
subsidiaries, (iv) the incurrence by The Gleason Works ("GWR"), a wholly-owned
subsidiary of Gleason, and certain specified subsidiaries of GWR, of a senior
secured bank financing described below (the "GWR Senior Bank Financing") and (v)
the incurrence by Merger Sub of a second senior secured bank financing described
below (the "Merger Sub Senior Bank Financing" and together with the GWR Senior
Bank Financing, the "Senior Bank Financing"). The parties hereto acknowledge
that if the number of shares of Gleason tendered pursuant to the Tender Offer
are sufficient to permit recapitalization accounting treatment following the
Merger, then the Merger Sub Senior Bank Financing will terminate unused as of
the consummation of the Tender Offer and all debt financing used to finance the
Transaction shall be incurred under the GWR Senior Bank Financing. After giving
effect to the Transaction, Gleason and its subsidiaries shall have no
indebtedness for borrowed money other than (x) as described below, (y) existing
capital leases in an amount up to $5 million and (z) up to $17 million of local
lines of credit available to foreign subsidiaries of GWR.
BTCo further understands that (i) the GWR Senior Bank Financing shall
be in an aggregate amount of $250 million, and shall be made available in
various term loan and revolving credit tranches as more fully set forth in
Exhibit A-1 to this letter and (ii) the Merger Sub Senior Bank Financing shall
be in an aggregate amount of up to $61,500,000, and shall be
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<PAGE>
made available in a single multiple-drawdown term loan tranche as more fully set
forth in Exhibit A-2 to this letter (Exhibit A-1 and Exhibit A-2, collectively
the "Summary of Terms").
BTCo is pleased to confirm that subject to and upon the terms and
conditions set forth herein and in the Summary of Terms, it is willing to (i)
provide 100% of the Senior Bank Financing on the terms and conditions set forth
herein and in the Summary of Terms, (ii) act as Administrative Agent for the
syndicate of financial institutions (together with BTCo, the "Lenders") party to
the Senior Bank Financing and (iii) act as the sole Lead Arranger and Book
Manager in connection with the Senior Bank Financing.
BTCo reserves the right, prior to or after execution of the definitive
credit documentation for the Senior Bank Financing, to syndicate all or part of
its commitments for the Senior Bank Financing to one or more financial
institutions reasonably satisfactory to you that will become parties to such
definitive credit documentation pursuant to a syndication to be managed by BTCo
in consultation with you. BTCo shall commence syndication efforts promptly after
the execution of this letter, and you agree to actively assist BTCo in achieving
a syndication that is satisfactory to BTCo and you. Such syndication will be
accomplished by a variety of means, including direct contact during the
syndication between principals, senior management and advisors of Newco, Gleason
and the proposed syndicate members. To assist BTCo in its syndication efforts,
you hereby agree both before and after the Closing Date (a) to provide, and use
reasonable efforts to cause your advisors to provide, BTCo and the other
syndicate members upon request with all reasonable information deemed necessary
by us to complete syndication, including but not limited to, information and
evaluations prepared by Newco, Gleason and their respective advisors or on their
behalf relating to the transactions contemplated hereby and (b) to make
available officers of Newco and Gleason from time to time and to attend and make
presentations regarding the business and prospects of Gleason at a meeting or
meetings of Lenders or prospective Lenders.
Prior to the Closing Date, BTCo shall be entitled, after consultation
with you, to change the Applicable Margins (as defined in the Summary of Terms),
terms and structure of the Senior Bank Financing if the syndication has not been
completed and if BTCo reasonably determines that such changes are necessary to
ensure a successful syndication of the Senior Bank Financing, PROVIDED that (i)
the total amount of the Senior Bank Financing remains unchanged, (ii) the
Applicable Margins are not increased by more than 0.50%, (iii) the term loan
portion of the GWR Senior Bank Financing made available in Euros to Gleason
Germany (Holdings) GmbH ("GGH") shall not be less than $90 million and shall be
made by German banks or German branches of other banks, (iv) the term loan
portion of the GWR Senior Bank Financing made available in Pounds Sterling to
Gleason Works (Holdings) Limited ("GWH") shall not be less than $25 million and
(v) the size of the revolving portion of the GWR Senior Bank Financing, the size
of the letter of credit subfacility thereunder and the types of currencies
available to be drawn thereunder shall not be changed. BTCo's commitment
hereunder is subject to the agreements in this paragraph.
To induce BTCo to issue this letter and to complete the work necessary
to consummate the Senior Bank Financing, you (other than Newco) hereby jointly
and severally agree that all reasonable out-of-pocket fees and expenses
(including the reasonable fees and expenses of counsel) of BTCo and its
affiliates (collectively, "BT") arising in connection with
-3-
<PAGE>
this letter (including, without limitation, all such costs and expenses
associated with our due diligence and syndication efforts in connection
herewith) and in connection with the transactions described herein shall be for
your account, whether or not the Transaction is consummated, the Senior Bank
Financing is made available or definitive credit documents are executed. You
further jointly and severally agree to indemnify and hold harmless BT and each
director, officer, employee and affiliate thereof (each, an "indemnified
person") from and against any and all actions, suits, proceedings (including any
investigations or inquiries), claims, losses, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or asserted against or
involve BT or any such indemnified person as a result of or arising out of or in
any way related to or resulting from this letter and, upon demand, to pay and
reimburse BT and each indemnified person for any reasonable out-of-pocket legal
or other expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any inquiry or
investigation) or claim (whether or not BT or any such indemnified person is a
party to any action or proceeding out of which any such expenses arise and
whether such action, suit or proceeding is between you and BT or an indemnified
person or between BT or an indemnified person and a third party or otherwise);
PROVIDED, HOWEVER, that you shall not have to indemnify any indemnified person
against any loss, claim, damage, expense or liability to the extent that same
resulted from the gross negligence or willful misconduct of such indemnified
person. This letter is issued for your benefit only and no other person or
entity may rely thereon. BTCo shall not be responsible or liable for any
consequential damages which may be alleged as a result of this letter or the
financing contemplated hereby.
BTCo reserves the right to employ the services of its affiliates
(including Deutsche Bank Securities Inc. ("DBSI")) in providing services
contemplated by this letter at no additional cost to you, and to allocate, in
whole or in part, to DBSI certain fees payable to BTCo in such manner as BTCo
and DBSI may agree in their sole discretion. You acknowledge that BTCo may share
with any of its affiliates (including DBSI) any information related to the
Transaction or any of the matters contemplated hereby. BTCo agrees to treat, and
cause any such affiliate to treat, all non-public information provided to it by
Newco, Gleason or any of their affiliates or advisors, as confidential
information in accordance with customary banking industry practices. In
furtherance of the foregoing, BTCo agrees that neither it nor any of its
affiliates shall disclose any such non-public information to any person or
entity other than (i) to any potential Lender which receives such information
having been made aware of the confidential nature thereof, (ii) to its
directors, officers, employees, examiners and professional advisers who have a
need to know such information, (iii) upon the request or demand of any
governmental authority having jurisdiction over BTCo or such affiliate, or (iv)
in response to any order of any court or other governmental authority.
The provisions of the two preceding paragraphs shall survive any
termination of this letter, PROVIDED that if and when definitive credit
documentation in respect of the Senior Bank Financing is executed, such
paragraphs shall be superseded and replaced by such definitive credit
documentation.
This letter supersedes and replaces that certain Commitment Letter
previously issued by us to you and dated December 7, 1999.
-4-
<PAGE>
BTCo acknowledges and agrees that no shareholder or member of Newco
shall have any liability for any obligations of Newco under this Commitment
Letter, the Fee Letter or in respect of the Senior Bank Financing. In addition,
BTCo acknowledges that Newco shall be primarily responsible for all negotiations
with BTCo and its affiliates in connection with the documentation of the
transactions contemplated by this letter. Upon the indefeasible repayment in
full of the monetary obligations under the Merger Sub Senior Bank Financing, any
and all obligations of Newco under this Commitment Letter or in respect of the
Senior Bank Financing (including any guaranty given by Newco) shall immediately
terminate and cease to be in full force and effect.
BTCo's willingness to provide the Senior Bank Financing as set forth
above will terminate on March 15, 2000, if definitive credit agreements
evidencing the Senior Bank Financing, satisfactory in form and substance to BTCo
(the "Credit Agreement"), shall not have been entered into prior to such date.
Except as otherwise required by law or unless BTCo has otherwise
consented, you are not authorized to show or circulate this letter to any other
person or entity (other than your legal or financial advisors in connection with
your evaluation hereof, Gleason's board, the special committee thereof and their
respective legal or financial advisors) at any time prior to each of your
acceptance hereof in accordance with the following paragraph. If this letter is
not accepted by you as provided in the immediately succeeding paragraph, you are
to immediately return this letter (and any copies hereof) to the undersigned.
If you are in agreement with the foregoing, please sign and return to
BTCo (including by way of facsimile transmission) the enclosed copy of this
letter and the related fee letter no later than 5:00 p.m., New York time, on
February 4, 2000. This letter may be executed in any number of counterparts, and
by the different parties hereto on separate counterparts, each of which when
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
* * * *
-5-
<PAGE>
THIS LETTER AND THE RELATED FEE LETTER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING
OUT OF OR CONTEMPLATED BY THIS COMMITMENT LETTER AND/OR THE RELATED FEE LETTER
IS HEREBY WAIVED. YOU HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION
WITH ANY DISPUTE RELATED TO THIS COMMITMENT LETTER AND/OR THE RELATED FEE LETTER
OR ANY MATTERS CONTEMPLATED HEREBY OR THEREBY.
* * * *
Very truly yours,
BANKERS TRUST COMPANY
By: /s/ William W. Archer
--------------------------------
Title: Managing Director
Agreed to and Accepted this
3rd day of February, 2000
TORQUE ACQUISITION CO., L.L.C.
By: /s/ Sander M. Levy
----------------------------------
Name: Sander M. Levy
Title: President
GLEASON CORPORATION
By: /s/ John J. Perrotti
----------------------------------
Name: John J. Perrotti
Title: Vice President-Finance and Treasurer
GLEASON GERMANY (HOLDINGS) GMBH
By: /s/ Dr. Walter Eggert
----------------------------------
Name: Dr. Walter Eggert
Title: Managing Director
GLEASON WORKS (HOLDINGS) LIMITED
By: /s/ Edward J. Pelta
----------------------------------
Name: Edward J. Pelta
Title: Director and Secretary
-6-
<PAGE>
EXHIBIT A-1
SUMMARY OF CERTAIN TERMS AND CONDITIONS
I. DESCRIPTION OF FACILITIES COMPRISING THE GWR SENIOR BANK FINANCING
A. TERM LOAN FACILITIES
1. TRANCHE A-1 TERM LOAN FACILITY
Tranche A-1
Term Loan Facility: An amount to be determined (which will be made
available only in U.S. Dollars).1
Borrower: The Gleason Works ("GWR").
Maturity: The final maturity of the Tranche A-1 Term Loan
Facility shall be six years from the date of initial
borrowing under the Senior Bank Financing (the
"Closing Date").
Amortization: The loans made pursuant to the Tranche A-1 Term Loan
Facility (the "Tranche A-1 Term Loans") shall be
subject to scheduled quarterly amortization
requirements to be determined.
- ----------
1 The aggregate amount of Term Loans will be $180 million, to be divided
into six tranches in amounts to be determined, PROVIDED that (i) the
three Tranche A Term Loan Facilities (i.e., A-1, A-2 and A-3) are
expected to total $80 million, (ii) the three Tranche B Term Loan
Facilities (I.E., B-1, B-2 and B-3) are expected to total $100 million,
(iii) at least $90 million in the aggregate will be in the Tranche A-2
Term Loan Facility and the Tranche B-2 Term Loan Facility, and (iv) at
least $25 million will be in the Tranche A-3 Term Loan Facility.
Notwithstanding anything to the contrary in this Summary of Terms, (x)
an amount, equal to the aggregate amount of the Merger Sub Senior Bank
Financing, of the Term Loans to be incurred under the GWR Senior Bank
Financing shall be required to remain undrawn on the Closing Date and
shall thereafter only be available to refinance indebtedness under the
Merger Sub Senior Bank Financing at the time of the Merger and (y) at
the option of the Borrowers, the portion of the Term Loans not needed
to finance the Transaction until the Merger may either be borrowed on
the Closing Date and held until the Merger or delayed and borrowed at
the time of the Merger.
<PAGE>
Exhibit A-1
Page 2
Use of Proceeds: The Tranche A-1 Term Loans shall only be utilized to
directly or indirectly (x) finance the Transaction
and (y) pay fees and expenses of approximately $12.5
million incurred in connection with the Transaction.
Availability: Tranche A-1 Term Loans may only be incurred on the
Closing Date. No amount of Tranche A-1 Term Loans
once repaid may be reborrowed.
2. TRANCHE A-2 TERM LOAN FACILITY
Tranche A-2
Term Loan Facility: An amount to be determined (See Footnote 1) (which
will be made available only in Euros and will be made
only by German banks or German branches of non-German
banks).
Borrower: Gleason Germany (Holdings) GmbH ("GGH"), a direct,
wholly-owned German subsidiary of GWR.
Maturity: The final maturity of the Tranche A-2 Term Loan
Facility shall be six years from the Closing Date.
Amortization: The loans made pursuant to the Tranche A-2 Term Loan
Facility (the "Tranche A-2 Term Loans") shall be
subject to scheduled quarterly amortization
requirements to be determined.
Use of Proceeds: The Tranche A-2 Term Loans shall only be utilized to
directly or indirectly (x) finance the Transaction
and (y) pay fees and expenses of approximately $12.5
million incurred in connection with the Transaction.
Availability: Tranche A-2 Term Loans may only be incurred on the
Closing Date. No amount of Tranche A-2 Term Loans
once repaid may be reborrowed.
3. TRANCHE A-3 TERM LOAN FACILITY
Tranche A-3
Term Loan Facility: An amount to be determined (See Footnote 1) (which
will be made available only in Pounds Sterling).
Borrower: Gleason Works (Holdings) Limited ("GWH"), an
indirect, wholly-owned U.K. subsidiary of GWR, and
after giving effect to the Transaction, a direct,
wholly-owned subsidiary of GGH.
<PAGE>
Exhibit A-1
Page 3
Maturity: The final maturity of the Tranche A-3 Term Loan
Facility shall be six years from the Closing Date.
Amortization: The loans made pursuant to the Tranche A-3 Term Loan
Facility (the "Tranche A-3 Term Loans" and together
with the Tranche A-1 Term Loans and the Tranche A-2
Term Loans, the "Tranche A Term Loans") shall be
subject to scheduled quarterly amortization
requirements to be determined.
Use of Proceeds: The Tranche A-3 Term Loans shall only be utilized to
directly or indirectly (x) finance the Transaction
and (y) pay fees and expenses of approximately $12.5
million incurred in connection with the Transaction.
Availability: Tranche A-3 Term Loans may only be incurred on the
Closing Date. No amount of Tranche A-3 Term Loans
once repaid may be reborrowed.
4. TRANCHE B-1 TERM LOAN FACILITY
Tranche B-1
Term Loan Facility: An amount to be determined (See Footnote 1) (which
will be made available only in U.S. Dollars).
Borrower: GWR.
Maturity: The final maturity of the Tranche B-1 Term Loan
Facility shall be eight years from the Closing Date.
Amortization: Prior to the maturity of the Tranche A Term Loans,
the Loans made pursuant to the Tranche B-1 Term Loan
Facility (the "Tranche B-1 Term Loans") shall be
subject to annual amortization in aggregate annual
amounts equal to 1% of the Tranche B-1 Term Loan
Facility. Thereafter, the Tranche B-1 Term Loans
shall be subject to quarterly amortization
requirements to be determined.
Use of Proceeds: The Tranche B-1 Term Loans shall only be utilized to
directly or indirectly (x) finance the Transaction
and (y) pay fees and expenses of approximately $12.5
million incurred in connection with the Transaction.
Availability: Tranche B-1 Term Loans may only be incurred on the
Closing Date. No amount of Tranche B-1 Term Loans
once repaid may be reborrowed.
5. TRANCHE B-2 TERM LOAN FACILITY
Tranche B-2
<PAGE>
Exhibit A-1
Page 4
Term Loan Facility: An amount to be determined (See Footnote 1) (which
will be made available only in Euros and will be made
only by German banks or German branches of non-German
banks).
Borrower: GGH.
Maturity: The final maturity of the Tranche B-2 Term Loan
Facility shall be eight years from the Closing Date.
Amortization: Prior to the maturity of the Tranche A Term Loans,
the Loans made pursuant to the Tranche B-2 Term Loan
Facility (the "Tranche B-2 Term Loans") shall be
subject to annual amortization in aggregate annual
amounts equal to 1% of the Tranche B-2 Term Loan
Facility. Thereafter, the Tranche B-2 Term Loans
shall be subject to quarterly amortization
requirements to be determined.
Use of Proceeds: The Tranche B-2 Term Loans shall only be utilized to
directly or indirectly (x) finance the Transaction
and (y) pay fees and expenses of approximately $12.5
million incurred in connection with the Transaction.
Availability: Tranche B-2 Term Loans may only be incurred on the
Closing Date. No amount of Tranche B-2 Term Loans
once repaid may be reborrowed.
6. TRANCHE B-3 TERM LOAN FACILITY
Tranche B-3
Term Loan Facility: An amount to be determined (See Footnote 1) (which
will be made available only in U.S. Dollars).
Borrower: GWR.
Maturity: The final maturity of the Tranche B-3 Term Loan
Facility shall be eight years from the Closing Date.
Amortization: Prior to the maturity of the Tranche A Term Loans,
the Loans made pursuant to the Tranche B-3 Term Loan
Facility (the "Tranche B-3 Term Loans", together with
the Tranche B-1 Term Loans and the Tranche B-2 Term
Loans, the "Tranche B Term Loans" and, together with
the Tranche A Term Loans, the "Term Loans")) shall be
subject to annual amortization in aggregate annual
amounts equal to 1% of the Tranche B-3 Term Loan
Facility. Thereafter, the Tranche B-3 Term Loans
shall be subject to quarterly amortization
requirements to be determined.
Use of Proceeds: The Tranche B-3 Term Loans shall only be utilized to
directly or indirectly (x) finance the Transaction
and (y) pay fees and expenses of approximately $12.5
million incurred in connection with the Transaction.
<PAGE>
Exhibit A-1
Page 5
Availability: Tranche B-3 Term Loans may only be incurred on the
Closing Date. No amount of Tranche B-3 Term Loans
once repaid may be reborrowed.
B. REVOLVING CREDIT FACILITIES
1. TRANCHE 1 REVOLVING CREDIT FACILITY
Tranche 1 Revolving
Credit Facility: An amount to be determined 2 (which will be available
only in U.S. Dollars, Euros, Deutsche Marks and
Pounds Sterling).
2. TRANCHE 2 REVOLVING CREDIT FACILITY
Tranche 2 Revolving
Credit Facility: An amount to be determined (See Footnote 2) (which
will be available only in U.S. Dollars, Euros,
Deutsche Marks and Pounds Sterling and will be made
only by German banks or German branches of non-German
banks).
3. TERMS APPLICABLE TO BOTH REVOLVING CREDIT FACILITIES
Borrower: GWR, GGH, GWH and/or Gleason International Marketing
Corporation, a Delaware corporation.
Maturity: The final maturity of loans made under the Tranche 1
Revolving Credit Facility (the "Tranche 1 Revolving
Credit Loans") and under the Tranche 2 Revolving
Credit Facility (the "Tranche 2 Revolving Credit
Loans", and together with the Tranche 1 Revolving
Credit Loans, the "Revolving Credit Loans") shall be
six years from the Closing Date. Loans made pursuant
to the Revolving Credit Facilities shall be repaid in
full on such date.
Use of Proceeds: The proceeds of all Revolving Credit Loans shall be
utilized for the working capital requirements and
other general corporate purposes of Gleason and its
subsidiaries, provided that a portion of the
Revolving Credit Loans (as specified under the
heading "Availability" below) may be used on the
Closing Date to finance the Transaction and pay fees
and expenses in connection therewith.
- ----------
2 The aggregate amount of the Revolving Credit Facilities will be $70
million, to be divided into two tranches in amounts to be determined.
<PAGE>
Exhibit A-1
Page 6
Availability: Revolving Credit Loans may be borrowed, repaid and
reborrowed on and after the Closing Date, provided
that no more than $12.5 million in the aggregate of
Revolving Credit Loans may be incurred on the Closing
Date (provided that the Borrowers may borrow more
than $12.5 million of Revolving Credit Loans if
needed to consummate the Transaction so long as the
excess over $12.5 million is matched by cash
available to Gleason and its subsidiaries at such
time). Of the $70 million total amount available
under the Revolving Credit Facilities, up to $40
million may be utilized in the form of Revolving
Credit Loans, and up to $35 million may be utilized
in the form of letters of credit and/or bank
guaranties, provided that prior to the later of June
30, 2000 and the consummation of the Merger,
availability for incurrence of Revolving Credit Loans
under the Revolving Credit Facilities shall be
limited to $25,000,000 in the aggregate. Each
Revolving Credit Facility shall also contain a
subfacility (in an amount to be agreed upon) to be
provided by BTCo for the incurrence of swingline
loans (denominated in U.S. Dollars only).
II. TERMS APPLICABLE TO THE ENTIRE GWR SENIOR BANK FINANCING
Administrative
Agent: Bankers Trust Company ("BTCo") (the "Agent").
Sole Lead Arranger
and Book Manager: BTCo.
Lenders: BTCo and/or a syndicate of lenders formed by BTCo and
satisfactory to the Borrowers (the "Lenders").
Purpose: To directly or indirectly finance the Transaction, to
pay related fees and expenses and to support the
on-going working capital needs and general corporate
purposes of Gleason and its subsidiaries.
Guaranty: All obligations under the GWR Senior Bank Financing
shall be unconditionally guaranteed by Gleason and
each of its domestic subsidiaries (including GWR,
GGH, GWH and any other foreign subsidiary which is,
or has elected to be, treated as a partnership or
disregarded entity for U.S. tax purposes (each of
which shall be deemed to be a domestic subsidiary for
purposes of this Exhibit A-1)) (the "Guarantors"),
subject to customary exceptions for transactions of
this type.
Security: The obligations of the Borrowers and the Guarantors
shall be secured by a first priority perfected
security interest (subject to permitted liens) in (x)
all limited liability company interests and stock of
each direct and indirect domestic subsidiary of
Gleason (including GWR) and 65% of the stock of
<PAGE>
Exhibit A-1
Page 7
each material foreign subsidiary of Gleason and (y)
all other tangible and intangible assets of Gleason
and each Guarantor, in each case, after giving effect
to the Transaction and (including an exception for
leasehold interests) subject to customary exceptions
for transactions of this type.
Interest Rates: At the option of the respective Borrower, Loans
(other than B-3 Term Loans) may be maintained from
time to time as (x) Base Rate Loans which shall bear
interest at the Applicable Margin in excess of the
Base Rate in effect from time to time or (y) Reserve
Adjusted Eurodollar Loans (or EURIBOR Loans, in the
case of Loans not denominated in U.S. Dollars) which
shall bear interest at the Applicable Margin in
excess of the Eurodollar Rate (adjusted for maximum
reserves) or EURIBOR rate, as the case may be, as
determined by the Agent for the respective interest
period, PROVIDED that until the earlier to occur of
(x) the 60th day following the Closing Date and (y)
that date upon which the Agent has determined (and
notifies GWR) that the primary syndication of the
Senior Bank Financing (and the resultant addition of
institutions as Lenders) has been completed, then
only one week interest periods for Reserve Adjusted
Eurodollar Periods or EURIBOR Loans shall be
available.
B-3 Term Loans shall bear interest at the same rates
as the B-1 Term Loans, provided that if all B-3 Term
Loans are held by a fixed rate Lender, then the B-3
Term Loans shall bear interest at a fixed rate agreed
to by such Lender and GWR.
"Base Rate" shall mean the higher of (x) 1/2 of 1% in
excess of the Federal Funds rate and (y) the rate
that BTCo announces from time to time as its prime
lending rate, as in effect from time to time.
"Applicable Margin" for all Tranche A Term Loans and
Revolving Credit Loans shall be determined as set
forth on Annex A attached hereto. "Applicable Margin"
for Tranche B Term Loans shall be 3.50% in the case
of Reserve Adjusted Eurodollar Loans or EURIBOR Loans
and 2.50% in the case of Base Rate Loans.
Interest periods of 1, 2, 3 or 6 months (and 9 or 12
months if available to each Lender in the respective
Facility) shall be available in the case of Reserve
Adjusted Eurodollar or EURIBOR Loans.
The Senior Bank Financing shall include customary
protective provisions for such matters as defaulting
banks, capital adequacy, increased costs, actual
reserves, funding losses, illegality and withholding
taxes.
<PAGE>
Exhibit A-1
Page 8
Interest in respect of Base Rate Loans and B-3 Term
Loans shall be payable quarterly in arrears on the
last business day of each fiscal quarter. Interest in
respect of Reserve Adjusted Eurodollar and EURIBOR
Loans shall be payable in arrears at the end of the
applicable interest period and every three months in
the case of interest periods in excess of three
months. Interest will also be payable at the time of
repayment of any Loans (on the principal amount
repaid) and at maturity. All interest and commitment
fee and other fee calculations shall be based on a
360-day year and actual days elapsed other than
calculations of interest based on the prime rate
which shall be based on a 365/366-day year.
Overdue principal and interest shall bear interest at
a rate per annum equal to the greater of (i) the rate
which is 2% in excess of the rate otherwise
applicable to Base Rate Loans from time to time and
(ii) the rate which is 2% in excess of the rate then
borne by such borrowings. Such interest shall be
payable on demand.
Agent/Lender Fees: The Agent and the Lenders shall receive such fees as
have been separately agreed upon with the Agent.
Letter of Credit/Bank
Guaranty Fee: The Applicable Margin as in effect from time to time
for Revolving Credit Loans maintained as Reserve
Adjusted Eurodollar or EURIBOR Loans to be shared
proportionately by the Lenders in accordance with
their participation in the respective Letter of
Credit or Bank Guaranty, and a facing fee of 1/4 of
1% (or such lesser amount as shall be agreed to by
the respective issuer) per annum to be paid to the
issuer of the Letter of Credit or Bank Guaranty for
its own account, in each case calculated on the
aggregate stated amount of all Letters of Credit and
Bank Guaranties for the stated duration thereof. In
addition, the issuer of a Letter of Credit or a Bank
Guaranty will be paid its customary administrative
charges in connection with each Letter of Credit or
Bank Guaranty issued by it.
Commitment Fees: The Applicable Commitment Fee Percentage (as
determined as set forth on Annex A attached hereto)
per annum of the unutilized total commitments under
the Revolving Credit Facilities, as in effect from
time to time, commencing on the Closing Date and
continuing to and including the termination of the
Revolving Credit Facilities, payable in arrears
quarterly and upon the termination of the Revolving
Credit Facilities.
Voluntary Prepayments: Voluntary prepayments may be made at any time, with
prior notice but without premium or penalty, subject
to limitations as to minimum prepayment amounts,
PROVIDED that voluntary prepayments of Reserve
Adjusted Eurodollar Loans may only be made on the
last day of an interest period applicable thereto
unless applicable breakage costs are paid by the
<PAGE>
Exhibit A-1
Page 9
Borrower. Voluntary prepayments made by the Borrower
of the Term Loans will be applied proportionately
among tranches of Term Loans (provided that if the
holders of a Tranche of Term Loans waive any such
prepayment, the waived portion will be applied to
prepay the other non-waived Tranches of Term Loans).
All voluntary prepayments of Term Loans will be
applied to reduce future amortization payments in
direct order of their maturity.
Mandatory Repayments: Mandatory repayments of outstanding Term Loans (and
after all Term Loans have been repaid in full,
mandatory reductions to the commitments under the
Revolving Credit Facility) to be required from, in
each case with exceptions to be mutually agreed upon,
(a) 100% of the net proceeds from non-ordinary course
asset sales (subject to reinvestment provisions to be
agreed and an annual basket to be agreed upon), (b)
100% of the net proceeds from issuances of debt
(other than debt permitted under the terms of the GWR
Senior Bank Financing as in effect on the Closing
Date), (c) 50% of the net proceeds from equity
issuances or capital contributions after the Closing
Date (other than any such proceeds received in
connection with the exercise of employee options or
warrants and other than any such proceeds (subject to
a cap to be agreed upon) received from the private
sale or issuance of equity to the extent used to make
permitted capital expenditures, acquisitions or
investments), (d) 100% of the net proceeds of certain
property insurance and condemnation proceeds (subject
to reinvestment provisions to be agreed), and (e) 75%
of annual excess cash flow (the definition of which
will be mutually agreed upon) (to be decreased to 50%
of annual excess cash flow if the Leverage Ratio is
less than 3.25:1.00). In addition, Revolving Credit
Loans shall be required to be prepaid (and Letters of
Credit and Bank Guaranties cash collateralized) if at
any time the aggregate principal amount thereof
exceeds the total Revolving Credit Facility
commitments, with such prepayment (and/or cash
collateralization) to be in an amount equal to such
excess. Mandatory prepayments of the Term Loans will
be applied proportionately among tranches of the Term
Loans (provided that if the holders of a Tranche of
Term Loans waive any such prepayment, the waived
portion will be applied to prepay the other
non-waived Tranches of Term Loans). All mandatory
prepayments and repayments of Term Loans will be
applied to reduce future scheduled amortization
payments on a pro rata basis.
Documentation: The Lenders' commitments will be subject to the
negotiation, execution and delivery of definitive
financing agreements (and related security
documentation, guaranties, etc.) consistent with the
terms of this letter, in each case prepared by
counsel to the Agent. All documentation shall be
governed by New York law.
<PAGE>
Exhibit A-1
Page 10
Conditions Precedent: In addition to conditions precedent typical for these
types of facilities and any other conditions
reasonably appropriate in the context of the proposed
transaction, the following conditions shall apply:
A. TO THE INITIAL LOANS
(i) The structure and all terms of, and the documentation
for, the Transaction shall be reasonably satisfactory
to the Agent. All conditions precedent to the
consummation of the Transaction (other than the
Merger) as set forth in the documentation relating
thereto shall have been satisfied, and not waived in
any material respect except with the consent of the
Agent, to the satisfaction of the Agent. The Tender
Offer and the Refinancing shall have been consummated
in accordance with such documentation and all
applicable laws. Newco, Merger Sub, James Gleason,
management of Gleason and the Foundation
(collectively, the "Designated Holders") shall be
contractually obligated to vote in favor of the
Merger, and, immediately after giving effect to
purchases made pursuant to the Tender Offer, the
Designated Holders shall own at least 66-2/3% of the
outstanding shares of capital stock of Gleason on a
fully diluted basis (determined without counting
options the holders of which have agreed not to
exercise same) (which shares shall be sufficient
under applicable law to effect the Merger without the
vote of any other shareholder of Gleason). All
existing debt for borrowed money of Gleason and its
subsidiaries shall have been repaid in full, all
commitments in respect of such existing debt shall
have been terminated, and all liens securing such
existing debt shall have been released to the
satisfaction of the Agent, other than existing
capital leases not to exceed $5 million and up to $17
million under local local lines of credit available
to foreign subsidiaries of GWR.
(ii) Newco and/or Gleason shall have received gross
proceeds from the Equity Financing and any rollover
and commitments to rollover of at least $70.4
million, at least $53.3 million of which shall
represent new cash equity in Newco.
(iii) All necessary governmental and material third party
approvals in connection with the Tender Offer and the
Refinancing and the other transactions (other than
the Merger) contemplated by the GWR Senior Bank
Financing and otherwise referred to herein shall have
been obtained and remain in effect, and all
applicable waiting periods shall have expired without
any action being taken by any competent authority
which restrains, prevents, or imposes materially
adverse conditions upon, the consummation of the
Transaction or the other transactions contemplated by
the GWR Senior Bank Financing and otherwise referred
to herein.
<PAGE>
Exhibit A-1
Page 11
(iv) Nothing shall have occurred after the date hereof
other than occurrences expressly contemplated as of
the date hereof and disclosed to the Agent (and the
Agent shall have become aware of no facts or
conditions not previously known) which the Agent or
the Required Lenders shall reasonably determine could
reasonably be expected to have a material adverse
effect on the rights or remedies of the Lenders or
the Agent, or on the ability of Gleason and its
subsidiaries to perform their obligations to the
Lenders or which could have a materially adverse
effect on the business, property, assets,
liabilities, condition (financial or otherwise) or
prospects of Gleason and its subsidiaries taken as a
whole, in each case after giving effect to the
Transaction.
(v) No litigation by any entity (private or governmental)
shall be pending or threatened with respect to the
Transaction, the GWR Senior Bank Financing or any
documentation executed in connection therewith or
which the Agent or the Required Lenders shall
reasonably determine could reasonably be expected to
have a materially adverse effect on the business,
property, assets, liabilities, condition (financial
or otherwise) or prospects of Gleason and its
subsidiaries taken as a whole.
(vi) The Lenders shall have received customary legal
opinions from counsel, and covering matters,
reasonably acceptable to the Agent and the Required
Lenders.
(vii) The corporate and capital structure (and all material
agreements related thereto) of Gleason and its
subsidiaries, and all organizational documents of
such entities shall be reasonably satisfactory to the
Agent and the Required Lenders (it being understood
and agreed that the corporate and capital structure
described to the Agent prior to the date hereof are
satisfactory).
(viii) All Loans and other financing to the Borrowers shall
be in full compliance with all applicable
requirements of the margin regulations.
(ix) All reasonable costs, fees, expenses (including,
without limitation, reasonable legal fees and
expenses) and other compensation contemplated hereby
payable to the Lenders or the Agent shall have been
paid to the extent due.
(x) The Lenders shall have received an officer's
certificate with respect to the solvency of Gleason
and its subsidiaries (on a consolidated basis), GWR
and its subsidiaries (on a consolidated basis) and
GWR (on a stand-alone basis)) reasonably acceptable
to the Agent and the Required Lenders.
<PAGE>
Exhibit A-1
Page 12
(xi) Each of the Guaranties shall have been executed and
delivered. The Lenders shall have a perfected first
priority security interest in the assets of Gleason
and its subsidiaries as required above.
(xii) There shall not have occurred and be continuing a
material disruption of or material adverse change in
financial, banking, capital or currency markets, or
in the syndication market for credit facilities
similar in nature to the Senior Bank Financing
contemplated herein, that would have a material
adverse effect on the syndication, in each case as
reasonably determined by BTCo in its sole discretion.
Each of Newco and Gleason and their respective
advisors shall have fully cooperated to the extent
reasonably requested in BTCo's syndication efforts
for the Senior Bank Financing, including without
limitation by promptly providing BTCo with all
information reasonably deemed necessary by it to
successfully complete such syndication.
(xiii) The Agent and, in the case of clause (i) below, the
Lenders shall have received, and the Agent shall be
reasonably satisfied with, (i) an opening pro forma
balance sheet of Gleason and its subsidiaries and GWR
and its subsidiaries, in each case after giving
effect to the Transaction, and (ii) a funds flow
memorandum.
B. CONDITIONS TO ALL LOANS
Absence of material adverse change, absence of
material litigation, absence of default or unmatured
default under the GWR Senior Bank Financing and
continued accuracy of representations and warranties
in all material respects.
Representations
and Warranties: The GWR Senior Bank Financing and related
documentation shall contain representations and
warranties typical for these types of facilities, as
well as any additional ones appropriate in the
context of the proposed transaction as may be
mutually agreed, subject to materiality and other
limitations to be agreed.
Covenants: Those typical for these types of facilities and any
additional covenants appropriate in the context of
the proposed transaction as may be mutually agreed
(with such covenants having such exceptions or
baskets as may be mutually agreed upon). "Special
purpose corporation" covenants shall apply to
Gleason. Although the covenants have not yet been
specifically determined, we anticipate that the
covenants shall in any event include:
<PAGE>
Exhibit A-1
Page 13
(i) Restrictions on other indebtedness, including
capitalized lease obligations (it being understood
that up to $5 million of capitalized lease
obligations shall be permitted and foreign
subsidiaries of GWR shall be permitted to have
indebtedness of up to $17 million under local lines
of credit).
(ii) Restrictions on mergers, acquisitions, joint
ventures, partnerships and acquisitions and
dispositions of assets.
(iii) Restrictions on sale-leaseback transactions.
(iv) Restrictions on dividends, stock repurchases and
material amendments of organizational, corporate and
other documents (it being understood that Gleason
will be permitted to purchase its capital stock from
management and employees upon death, disability,
termination, resignation or retirement up to annual
aggregate limits to be agreed upon plus the proceeds
of key man life insurance.)
(v) Restrictions on transactions with affiliates (other
than intercompany transactions) and formation of
subsidiaries.
(vi) Restrictions on investments.
(vii) Maintenance of existence and properties.
(viii) No liens, with exceptions to be negotiated.
(ix) The following quarterly tested financial covenants:
(a) maximum leverage ratio (to be defined as the
ratio of consolidated total indebtedness (defined to
exclude letters of credit and bank guaranties, unless
drawn upon) to consolidated EBITDA) and (b) minimum
interest coverage ratio (to be defined as the ratio
of consolidated EBITDA to consolidated interest
expense).
(x) Adequate insurance coverage.
(xi) ERISA covenants.
(xii) The obtaining of interest rate protection in amounts
and for periods to be determined.
(xiii) Restrictions on capital expenditures, with a carry
forward to be agreed.
(xiv) Financial reporting.
<PAGE>
Exhibit A-1
Page 14
(xv) Compliance with laws.
(xvi) An affirmative covenant to effect the Merger within
180 days following the Closing Date.
Events of Default: Those typical for these types of facilities and any
additional ones appropriate in the context of the
proposed transaction to be mutually agreed (subject
in each case to mutually agreeable grace periods and
materiality thresholds) including, without
limitation, non-payment, material misrepresentations,
covenant defaults, bankruptcy and a change of control
(the definition of which will be mutually agreed
upon) of Gleason.
Assignments and
Participations: No Borrower may assign its rights or obligations
under the GWR Senior Bank Financing without the prior
written consent of the Lenders. Any Lender may
assign, and may sell participations in, its rights
and obligations under the GWR Senior Bank Financing,
subject (x) in the case of participations, to
customary restrictions on the voting rights of the
participants and (y) in the case of assignments, to
(i) the consent of GWR (except in certain limited
circumstances), which consent shall not be
unreasonably withheld, (ii) a minimum assignment
amount of $5 million and (iii) such other limitations
as may be established by the Administrative Agent.
The Senior Bank Financing shall provide for a
mechanism which will allow for each assignee to
become a direct signatory to the GWR Senior Bank
Financing and will relieve the assigning Lender of
its obligations with respect to the assigned portion
of its commitment.
Required Lenders: Majority.
Governing Law: State of New York.
Counsel to the Agent: White & Case LLP.
<PAGE>
ANNEX A
PRICING GRID
The Applicable Margins for Tranche A Term Loans and Revolving Credit
Loans and Applicable Commitment Fee Percentage in effect at any time shall be
based on the ratio of consolidated total indebtedness to consolidated EBITDA
(the "Leverage Ratio") as of the last day of most recent fiscal quarter for
which financial statements have been delivered to the Lenders (with such
Applicable Margins and Applicable Commitment Fee Percentage to apply from the
date of delivery of such financial statements until the date of delivery of the
financial statements for the next succeeding fiscal quarter, PROVIDED that the
Applicable Margins and Applicable Commitment Fee Percentage shall remain
unchanged (at 3.00% in the case of Reserve Adjusted Eurodollar or EURIBOR Loans,
2.00% in the case of Base Rate Loans and 0.500% in the case of the Applicable
Commitment Fee Percentage) until the delivery of financial statements for
Gleason's June 30, 2000 fiscal quarter and PROVIDED, further that if such
financial statements are not delivered when required, the Leverage Ratio shall
be deemed to be greater than 3.75:1.0 until such financial statements are
delivered):
APPLICABLE MARGINS*
----------------------
APPLICABLE
REVOLVING TRANCHE A COMMITMENT FEE
LEVERAGE RATIO LOANS TERM PERCENTAGE
> 3.75:1.00 3.25% 3.25% 0.500%
> 3.25:1.00 < = 3.75:1.00 3.00% 3.00% 0.500%
> 2.75:1.00 < = 3.25:1.00 2.75% 2.75% 0.500%
> 2.25:1.00 < = 2.75:1.00 2.50% 2.50% 0.500%
< = 2.25:1.00 2.25% 2.25% 0.375%
- --------
* Applicable Margins shown are for Reserve Adjusted Eurodollar and EURIBOR
Loans. Applicable Margins for Base Rate Loans will be 1.00% lower than the
Applicable Margins shown above (but not below 0%).
<PAGE>
EXHIBIT A-2
SUMMARY OF CERTAIN TERMS AND CONDITIONS
MERGER SUB SENIOR BANK FINANCING
Term Loan Facility: $61,500,000 term loan facility (the "Term Loan
Facility").
Borrower: Torque Merger Sub, Inc. (the "Borrower").
Maturity: The final maturity of the Term Loan Facility shall be
the earlier of (x) the date of the consummation of
the Merger and (y) the 180th day following the
initial borrowing under the Merger Sub Senior Bank
Financing (the "Closing Date"). Loans made pursuant
to the Term Loan Facility (the "Loans") shall be
repaid in full on such date.
Use of Proceeds: The proceeds of the Loans incurred on the Closing
Date shall only be utilized (x) to finance the
Transaction and (y) to pay fees and expenses of
approximately $12.5 million incurred in connection
with the Transaction. The proceeds of loans incurred
after the Closing Date shall only be used to pay
commitment fees owing under the Term Loan Facility
and interest on previously outstanding Loans.
Availability: Loans may only be incurred on the Closing Date and on
any date following the Closing Date on which
commitment fees or interest in respect of the Loans
is then due and payable. No amount of Loans once
repaid may be reborrowed.
Administrative
Agent: BTCo (the "Agent").
Sole Lead Arranger
and Book Manager: BTCo.
Lenders: The Lenders.
Guaranty: All obligations under the Merger Sub Senior Bank
Financing shall be unconditionally guaranteed by
Newco (it being understood that (i) no member of
Newco shall have any liability for any obligations of
Newco under this Guaranty and (ii) upon the
indefeasible repayment in full of the monetary
obligations under the Term Loan Facility, any and all
obligations of Newco in respect of the Term Loan
Facility (including those arising under the Guaranty)
shall immediately terminate and cease to be in full
force and effect).
<PAGE>
Exhibit A-2
Page 2
Security: The obligations of Newco shall be secured by a first
priority perfected security interest in all of the
capital stock of Merger Sub.
Interest Rates: At the option of the Borrower, Loans may be
maintained from time to time as (x) Base Rate Loans
which shall bear interest at the Applicable Margin in
excess of the Base Rate in effect from time to time
or (y) Reserve Adjusted Eurodollar Loans which shall
bear interest at the Applicable Margin in excess of
the Eurodollar Rate (adjusted for maximum reserves)
as determined by the Agent for the respective
interest period, PROVIDED that until the
earlier to occur of (x) the 60th day following the
Closing Date and (y) that date upon which the Agent
has determined (and notifies the Borrower) that the
primary syndication of the Merger Sub Senior Bank
Financing (and the resultant addition of institutions
as Lenders) has been completed, then only one week
interest periods for Reserve Adjusted Eurodollar
Periods shall be available.
"Base Rate" shall mean the higher of (x) 1/2 of 1% in
excess of the Federal Funds rate and (y) the rate
that BTCo announces from time to time as its prime
lending rate, as in effect from time to time.
"Applicable Margin" shall be 3.00% in the case of
Reserve Adjusted Eurodollar Loans and 2.00% in the
case of Base Rate Loans.
Interest periods of 1, 2 or 3 months shall be
available in the case of Reserve Adjusted Eurodollar.
The Merger Sub Senior Bank Financing shall include
customary protective provisions for such matters as
defaulting banks, capital adequacy, increased costs,
actual reserves, funding losses, illegality and
withholding taxes.
Interest in respect of Base Rate Loans shall be
payable quarterly in arrears on the last business day
of each fiscal quarter. Interest in respect of
Reserve Adjusted Eurodollar Loans shall be payable in
arrears at the end of the applicable interest period.
Interest will also be payable at the time of
repayment of any Loans (on the principal amount
repaid) and at maturity. All interest and commitment
fee and other fee calculations shall be based on a
360-day year and actual days elapsed other than
calculations of interest based on the prime rate
which shall be based on a 365/366-day year.
<PAGE>
Exhibit A-2
Page 3
Overdue principal and interest shall bear interest at
a rate per annum equal to the greater of (i) the rate
which is 2% in excess of the rate otherwise
applicable to Base Rate Loans from time to time and
(ii) the rate which is 2% in excess of the rate then
borne by such borrowings. Such interest shall be
payable on demand.
Agent/Lender Fees: The Agent and the Lenders shall receive such fees as
have been separately agreed upon with the Agent.
Commitment Fees: 0.50% per annum of the unutilized total commitments
under the Term Loan Facility, as in effect from time
to time, commencing on the Closing Date and
continuing to and including the termination of the
commitments under the Term Loan Facility, payable in
arrears quarterly and upon the termination of the
commitments under the Term Loan Facility.
Voluntary Prepayments: Voluntary prepayments may be made at any time, with
prior notice but without premium or penalty, subject
to limitations as to minimum prepayment amounts,
PROVIDED that voluntary prepayments of Reserve
Adjusted Eurodollar Loans may only be made on the
last day of an interest period applicable thereto
unless applicable breakage costs are paid by the
Borrower.
Documentation: The Lenders' commitments will be subject to the
negotiation, execution and delivery of definitive
financing agreements (and related security
documentation, guaranties, etc.) consistent with the
terms of this letter, in each case prepared by
counsel to the Agent. All documentation shall be
governed by New York law.
Conditions Precedent: In addition to conditions precedent typical for these
types of facilities and any other conditions
reasonably appropriate in the context of the proposed
transaction, the following conditions shall apply:
A. TO THE INITIAL LOANS
(i) All conditions precedent to the initial borrowings
under the GWR Senior Bank Financing shall have been
satisfied, and not waived in any material respect
except with the consent of the Agent, to the
satisfaction of the 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 Agent and the Required
Lenders.
<PAGE>
Exhibit A-2
Page 4
(iii) The corporate and capital structure (and all material
agreements related thereto) of Newco and the
Borrower, and all organizational documents of such
entities shall be reasonably satisfactory to the
Agent and the Required Lenders.
(iv) All Loans and other financing to the Borrower 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 contemplated hereby
payable to the Lenders or the 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 Newco and
the Borrower (on a consolidated basis) and the
Borrower (on a stand-alone basis)) reasonably
acceptable to the Agent and the Required Lenders.
(vii) The Guaranty shall have been executed and delivered.
The Lenders shall have a perfected first priority
security interest in all of the capital stock of the
Borrower as required above.
(viii) Newco shall have assigned its right to purchase
shares of Gleason pursuant to the Tender Offer to the
Borrower.
B. CONDITIONS TO ALL LOANS
Absence of material adverse change, absence of
material litigation, absence of default or unmatured
default under the Merger Sub Senior Bank Financing
and continued accuracy of representations and
warranties in all material respects.
Representations
and Warranties: The Merger Sub Senior Bank Financing and related
documentation shall contain representations and
warranties typical for these types of facilities, as
well as any additional ones appropriate in the
context of the proposed transaction as may be
mutually agreed, subject to materiality and other
limitations to be agreed.
Covenants: Those typical for these types of facilities and any
additional covenants appropriate in the context of
the proposed transaction as may be mutually agreed
(with such covenants having such exceptions or
baskets as may be mutually agreed upon). "Special
purpose corporation" covenants shall apply to (x)
Newco, which shall limit its operations to owning
capital stock
<PAGE>
Exhibit A-2
Page 5
of Gleason (until the business day following the
consummation of the Tender Offer) and of the Borrower
and (y) the Borrower, which shall limit its
operations to incurring the Loans and owning capital
stock of Gleason. Although the covenants have not yet
been specifically determined, we anticipate that the
covenants shall in any event include:
(i) Prohibitions on other indebtedness.
(ii) Restrictions on mergers (other than the Merger),
acquisitions, joint ventures, partnerships and
acquisitions and dispositions of assets (with an
exception permitting the sale of stock of Gleason so
long as (x) such sale is for cash consideration only,
(y) such sale is at fair market value and (z) the
proceeds of such sale are retained by the Borrower),
including sale-leaseback transactions.
(iii) Prohibitions on dividends, stock repurchases and
material amendments of organizational, corporate and
other documents.
(iv) Restrictions on transactions with affiliates (other
than intercompany transactions) and prohibitions on
formation of subsidiaries.
(v) Prohibitions on investments (other than capital stock
of Gleason purchased pursuant to the Tender Offer).
(vi) Maintenance of existence and properties.
(vii) No liens, with exceptions to be negotiated (including
an exception relating to the capital stock of Gleason
acquired pursuant to the Tender Offer).
(viii) Prohibitions on capital expenditures.
(ix) Compliance with laws.
(x) Within 180 days following the consummation of the
Tender Offer, Newco and Merger Sub shall consummate
the Merger.
Events of Default: Those typical for these types of facilities and any
additional ones appropriate in the context of the
proposed transaction to be mutually agreed (subject
in each case to mutually agreeable grace periods and
materiality thresholds) including, without
limitation, non-payment, material misrepresentations,
covenant defaults, bankruptcy and a change of control
(the definition of which will be mutually agreed
upon) of Newco or the Borrower.
Assignments and
Participations: The Borrower may not assign its rights or obligations
under the Merger Sub Senior Bank Financing without
the prior written consent of the Lenders. Any Lender
may assign, and may sell participations in, its
rights
<PAGE>
Exhibit A-2
Page 6
and obligations under the Merger Sub Senior Bank
Financing, subject (x) in the case of participations,
to customary restrictions on the voting rights of the
participants and (y) in the case of assignments, to
(i) the consent of Merger Sub (except in certain
limited circumstances), which consent shall not be
unreasonably withheld, (ii) a minimum assignment
amount of $5 million and (iii) such other limitations
as may be established by the Administrative Agent.
The Merger Sub Senior Bank Financing shall provide
for a mechanism which will allow for each assignee to
become a direct signatory to the Merger Sub Senior
Bank Financing and will relieve the assigning Lender
of its obligations with respect to the assigned
portion of its commitment.
Required Lenders: Majority.
Governing Law: State of New York.
Counsel to the Agent: White & Case LLP.
<PAGE>
Exhibit 99(g)(13)
NEWS FROM For Further Information, Contact:
SANDER M. LEVY
Vestar Capital Partners
(212) 351-1610
GLEASON
JOHN J. PERROTTI
Vice President--Finance & Treasurer
(716) 461-8105
Gleason Corporation
1000 University Avenue
P.O. Box 22970
Rochester, New York USA 14692-2970
FOR IMMEDIATE RELEASE
GLEASON CORPORATION AND TORQUE ACQUISITION CO., L.L.C.
ANNOUNCE REDUCTION OF MINIMUM CONDITION AND EXTENSION OF JOINT TENDER
OFFER FOR GLEASON SHARES
ROCHESTER, NY, FEBRUARY 4, 2000--Torque Acquisition Co., L.L.C.
("Acquisition Company"), a wholly owned subsidiary of Vestar Capital Partners
IV, L.P., and Gleason Corporation (NYSE: GLE) (the "Company", and together with
Acquisition Company, the "Purchasers") announced today that they have amended
their Merger Agreement to reduce the minimum number of shares required to be
tendered in their $23 per share joint tender offer for all outstanding shares of
Gleason Corporation 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 midnight 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 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.
According to ChaseMellon Shareholder Services, L.L.C., the depositary
for the offer, as of midnight on February 3, 2000, 4,897,987 shares had been
validly tendered and not withdrawn pursuant to the offer.
The new minimum number of shares, together with the shares owned by the
Gleason Foundation and management, will represent two-thirds of the outstanding
shares, thereby assuring a favorable vote on the second-step merger. The
reduction in the minimum number of shares required to be tendered was made in
order to facilitate the completion of the offer in light of Acquisition
Company's willingness to forego
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the benefits of recapitalization accounting treatment, which initially had
necessitated a higher minimum condition.
The amendment to the Merger Agreement was unanimously approved by the
Gleason 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 stockholders accept
the offer and tender their shares.
Acquisition Company stated that it does not intend to further extend
the offer if the reduced minimum condition is not satisfied.
The Company and Acquisition Company intend to disseminate to the
Company's shareholders a supplement to the Offer to Purchase commencing later
today. Stockholders who have previously tendered their shares need not take any
further action in order to accept the offer.
Questions and requests for assistance with respect to the offer may be
directed to Georgeson Shareholder Communications Inc., the Information Agent for
the offer, at (212) 440-9800 (banks and brokers call collect) or (800) 223-2064
(all other callers).
The Company's principal business activity is the development,
manufacture and sale of gear production machinery and related equipment. The
gears produced by the Company's machines are used in drive trains of
automobiles, sport utility vehicles, trucks, buses, aircraft and marine,
agricultural and construction machinery. The Company has manufacturing
operations in Rochester, New York; Rockford, Illinois; Plymouth, England; Munich
and Ludwigsburg, Germany; Bangalore, India; and Biel, Switzerland, and has sales
and service offices throughout the United States and Europe and in the
Asia-Pacific region.
MORE INFORMATION ABOUT GLEASON CORPORATION IS AVAILABLE ON THE WORLD WIDE WEB AT
HTTP://WWW.GLEASON.COM
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