<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
Simpson Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common stock, par value $1.00 per share ("Common Stock"), of Simpson
Industries, Inc. ("Simpson")
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(2) Aggregate number of securities to which transaction applies:
18,830,817(A)
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
$13.00, the proposed per share cash payment to be made to security
holders of Simpson in connection with the transactions described in the
proxy statement
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$234,772,921(B)
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(5) Total fee paid:
$46,955
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[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
46,946
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(2) Form, Schedule or Registration Statement No.:
PRES14A, File No. 000-06611
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(3) Filing party:
Simpson Industries Inc.
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(4) Date filed:
October 27, 2000
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(A) Based on the sum of (1) 17,870,255, the total number of outstanding shares
of Simpson common stock (including those related to restricted stock awards)
and (2) 960,562, the shares of Simpson common stock issuable pursuant to
options.
(B) Determined by adding (x) the product of (i) the number of shares of common
stock proposed to be acquired in the merger, 17,870,255 and (ii) the merger
consideration of $13.00 cash per share of Simpson common stock, plus (y)
$2,459,605.45 payable to holders of stock options granted by Simpson to
purchase share of Simpson common stock in exchange for the cancellation of
such options.
<PAGE> 2
[SIMPSON INDUSTRIES, INC. LETTERHEAD]
November 15, 2000
Dear Shareholders:
We invite you to attend a special meeting of shareholders of Simpson
Industries, Inc., which will be held on December 15, 2000 at 10:00 a.m. local
time at our principal executive offices located at 47603 Halyard Drive,
Plymouth, Michigan 48170. At the meeting, you will be asked to approve an
Agreement and Plan of Merger dated as of September 29, 2000, among Simpson
Industries, Inc., Simmer Acquisition Company LLC and Simmer Acquisition
Corporation. The Agreement and Plan of Merger provides for Simmer Acquisition
Company's acquisition of Simpson through the merger of Simmer Acquisition
Corporation with and into Simpson. In the merger, you will be entitled to
receive $13.00 in cash for each share of common stock you own at the time of the
merger.
Heartland Industrial Partners, L.P. currently controls Simmer Acquisition
Company and Simmer Acquisition Corporation. Following the merger, Simpson will
be controlled by Simmer Acquisition Company and Heartland, and Simmer
Acquisition Corporation will cease to exist.
The accompanying proxy statement contains detailed information about the
Agreement and Plan of Merger and the merger. A copy of the Agreement and Plan of
Merger specifying the terms of the merger is included as Annex A to the attached
proxy statement.
Your board of directors, after careful consideration, has determined that
the Agreement and Plan of Merger and the merger are advisable and in the best
interests of, and that the merger consideration is fair to, the company's
shareholders. My fellow directors and I have unanimously approved the Agreement
and Plan of Merger and the merger and recommend you vote "FOR" their approval.
The merger cannot be completed unless the Agreement and Plan of Merger and
the merger are approved by the holders of at least a majority of the outstanding
shares of Simpson common stock.
Your vote is very important. Whether or not you plan to attend the special
meeting in person and regardless of the number of shares you own, please
complete, sign, date and return the enclosed proxy promptly in the accompanying
prepaid envelope.
Sincerely,
/s/ Roy E. Parrott
Roy E. Parrott
Chairman of the Board of Directors
and Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED OF THE MERGER, PASSED UPON THE MERITS OR
FAIRNESS OF THE MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This proxy statement dated November 15, 2000 and the accompanying proxy card are
first being mailed to shareholders on or about November 15, 2000.
<PAGE> 3
[SIMPSON INDUSTRIES,INC LOGO]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 15, 2000
To the Shareholders of Simpson Industries, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Simpson
Industries, Inc. has been called by the board of directors of Simpson and will
be held at our principal executive offices.
Place: 47603 Halyard Drive
Plymouth, Michigan 48170-2429
Date: December 15, 2000
Time: 10:00 a.m., local time
The purposes of the special meeting are:
1. To consider and to vote upon a proposal to approve the Agreement
and Plan of Merger, dated as of September 29, 2000, by and among Simpson,
Simmer Acquisition Company LLC and Simmer Acquisition Corporation, and to
approve the merger of Simmer Acquisition Corporation with and into Simpson.
2. To transact such other business as may properly come before the
special meeting.
Heartland Industrial Partners, L.P. currently controls Simmer Acquisition
Company and Simmer Acquisition Corporation. Following the merger, Simmer
Acquisition Corporation will cease to exist and Simpson will be controlled
directly by Simmer Acquisition Company and indirectly by Heartland.
Simpson's board of directors has fixed November 10, 2000 as the record date
for the special meeting. Only shareholders of record at the close of business on
November 10, 2000 may vote at the special meeting.
Your board of directors, after careful consideration, has determined that
the Agreement and Plan of Merger and the merger are advisable and in the best
interests of, and that the merger consideration is fair to, Simpson's
shareholders. Your board of directors has unanimously approved and recommends
that you vote "FOR" the Agreement and Plan of Merger and the merger.
We urge you to read the attached proxy statement. If you are a shareholder
of record you should receive a proxy card with the attached proxy statement.
Whether or not you plan to attend the special meeting, you can be sure your
shares are represented at the special meeting by promptly completing, signing,
dating and returning your proxy card in the enclosed postage prepaid envelope.
Prior to being voted, your proxy may be withdrawn in the manner described in the
attached proxy statement.
By order of the Board of Directors
Frank K. Zinn
Secretary
Plymouth, Michigan
November 15, 2000
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY TERM SHEET.......................................... 1
The Parties............................................... 1
The Merger................................................ 2
Simpson's Recommendations to Shareholders................. 2
Simpson's Reasons for the Merger.......................... 2
Opinion of Simpson's Financial Advisor.................... 2
What Shareholders Will Receive............................ 2
What Holders of Options Will Receive...................... 3
Appraisal or Dissenters' Rights........................... 3
Shareholder Vote Required to Approve the Merger........... 3
Stock Ownership of Management, Directors and Other
Affiliates............................................. 3
Tax Consequences.......................................... 3
Conditions to the Merger.................................. 3
Termination of the Merger Agreement....................... 4
Break-up Fee.............................................. 4
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 5
Who Can Help Answer Your Questions........................ 6
SPECIAL MEETING............................................. 7
Time and Place; Proxy Solicitation........................ 7
Purpose................................................... 7
Who Can Vote; Record Date................................. 7
Vote Required; Voting Procedures.......................... 7
Voting by Proxy........................................... 8
Other Business; Adjournments.............................. 8
THE MERGER.................................................. 8
General................................................... 8
Background of the Merger.................................. 8
Recommendation of Simpson's Board of Directors............ 11
Simpson's Reasons for the Merger.......................... 11
Simmer Acquisition Company's Reasons for the Merger....... 13
Opinion of Simpson's Financial Advisor.................... 13
Amount and Source of Funds and Financing of the Merger.... 18
Material Federal Income Tax Consequences.................. 19
Regulatory Matters........................................ 20
Accounting Treatment of the Merger........................ 20
INTERESTS OF CERTAIN PERSONS IN THE MERGER.................. 20
Stock Options............................................. 20
Severance Agreements...................................... 20
Restricted Stock Awards................................... 21
Other Employee Benefits................................... 21
Indemnification and Insurance............................. 22
THE MERGER AGREEMENT........................................ 22
The Merger................................................ 22
Consideration in the Merger............................... 22
Appraisal and Dissenters' Rights.......................... 22
Options and Restricted Stock Awards....................... 22
Exchange of Shares........................................ 23
The Surviving Corporation................................. 23
Representations and Warranties............................ 23
</TABLE>
-i-
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Covenants of Simpson...................................... 24
Covenants of Simmer Acquisition Company................... 26
Covenants of Simpson and Simmer Acquisition Company....... 27
Principal Conditions to the Completion of the Merger...... 28
Termination; Break-up Fee................................. 28
Amendments; Waivers....................................... 29
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS....... 30
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS.................................................... 31
Five Percent Holders and Executive Officers and Directors
of Simpson............................................. 31
Security Ownership of Certain Beneficial Owners........... 31
Security Ownership of Management.......................... 32
INFORMATION ABOUT SIMMER ACQUISITION COMPANY, SIMMER
ACQUISITION CORPORATION AND HEARTLAND..................... 32
Simmer Acquisition Company LLC............................ 32
Simmer Acquisition Corporation............................ 33
Heartland Industrial Partners, L.P. ...................... 33
Heartland Industrial Associates L.L.C. ................... 33
APPRAISAL OR DISSENTERS' RIGHTS............................. 33
FUTURE SHAREHOLDER PROPOSALS................................ 33
WHERE YOU CAN FIND MORE INFORMATION......................... 33
</TABLE>
LIST OF ANNEXES
Annex A Agreement and Plan of Merger
Annex B Opinion of PaineWebber Incorporated
-ii-
<PAGE> 6
SUMMARY TERM SHEET
This summary contains selected information from this proxy statement. To
understand the merger fully and to obtain a more complete description of the
legal terms of the merger, you should carefully read this entire document,
including the Annexes. See "Where You Can Find More Information" on page 33.
THE PARTIES
SIMPSON INDUSTRIES, INC.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
Telephone: (734) 207-6200
Simpson, a Michigan corporation, develops and produces precision-engineered
automotive components and modular systems for automotive, sport utility, light-
and heavy-duty truck and diesel engines. Simpson's major product lines include
vibration control products, air conditioning compressor components, wheel-end
and suspension components and assemblies, oil pumps, water pumps and other
modular engine assemblies and transmission and driveline components that are
machined from castings and forgings. These products are produced principally for
original equipment manufacturers in North America and Europe.
SIMMER ACQUISITION CORPORATION
c/o Heartland Industrial Group L.L.C.
55 Railroad Avenue
Greenwich, Connecticut 06830
Telephone: (203) 861-2622
Simmer Acquisition Corporation, a Michigan corporation, is controlled by
Simmer Acquisition Company. Simmer Acquisition Corporation is a transitory
merger vehicle that was formed for the sole purpose of facilitating the
acquisition of Simpson. Accordingly, it does not have and is not expected to
have business activities, assets or liabilities, other than those arising under
the Agreement and Plan of Merger.
SIMMER ACQUISITION COMPANY LLC
c/o Heartland Industrial Group L.L.C.
55 Railroad Avenue
Greenwich, Connecticut 06830
Telephone: (203) 861-2622
Simmer Acquisition Company LLC, a Delaware limited liability company, is
controlled by Heartland. Prior to the merger, Heartland may arrange for equity
commitments to be provided to Simmer Acquisition Company by other equity
investors. In such event, Heartland will continue to control Simmer Acquisition
Company, but may reduce its equity commitment to the extent of the investment by
other equity investors. Simmer Acquisition Company was formed to serve as a
parent company of Simmer Acquisition Corporation in order to facilitate the
merger and the financing for the merger. Simmer Acquisition Company does not
have and is not expected to have business activities, assets or liabilities,
other than those arising under or relating to the Agreement and Plan of Merger.
HEARTLAND INDUSTRIAL PARTNERS, L.P.
c/o Heartland Industrial Group L.L.C.
55 Railroad Avenue
Greenwich, Connecticut 06830
Telephone: (203) 861-2622
Heartland Industrial Partners, L.P., is a Delaware limited partnership
established in January 2000. Heartland is a private equity firm formed to focus
on investments in industrial companies. The general partner of Heartland is
Heartland Industrial Associates L.L.C. The management, operation and policy of
Heartland is vested exclusively in Heartland Industrial Associates L.L.C., as
general partner.
1
<PAGE> 7
HEARTLAND INDUSTRIAL ASSOCIATES L.L.C.
c/o Heartland Industrial Group L.L.C.
55 Railroad Avenue
Greenwich, Connecticut 06830
Telephone: (203) 861-2622
Heartland Industrial Associates L.L.C. is a Delaware limited liability
company. Heartland Industrial Associates L.L.C. was formed in December 1999 to
serve as the general partner of Heartland and to focus, through its affiliates,
on investments in industrial companies. The sole member of Heartland Industrial
Associates L.L.C. is David Stockman. Heartland Industrial Associates L.L.C. is
managed by its sole member, and there are no managers of Heartland Industrial
Associates L.L.C.
THE MERGER (SEE PAGE 8)
We have attached the Agreement and Plan of Merger as Annex A to this proxy
statement. We encourage you to read the agreement in its entirety because it is
the legal document that governs the merger.
In the merger, Simmer Acquisition Corporation will be merged with and into
Simpson, with Simpson surviving the merger. Each share of Simpson common stock
outstanding at the time of the merger will be converted into the right to
receive $13.00 in cash from Simmer Acquisition Corporation. After the merger is
completed, Simpson will be a wholly-owned subsidiary of Simmer Acquisition
Company.
SIMPSON'S RECOMMENDATIONS TO SHAREHOLDERS (SEE PAGE 11)
Simpson's board of directors believes that the terms of the Agreement and
Plan of Merger and the merger are advisable and in your best interests and that
the $13.00 per share merger consideration is fair to Simpson shareholders. Your
board of directors recommends that you vote "FOR" the approval of the Agreement
and Plan of Merger and the merger.
SIMPSON'S REASONS FOR THE MERGER (SEE PAGE 11)
In reaching its conclusion to approve and recommend the Agreement and Plan
of Merger and the merger, Simpson's board of directors considered, among other
factors, the following:
- the opportunity for Simpson shareholders to receive a significant premium
over the market price for their Simpson common stock in the merger;
- a review of the timing of, and possible strategic alternatives to, the
merger;
- the fact that the consideration to be received by Simpson shareholders in
the merger will consist entirely of cash; and
- the factors described in detail on pages 11 through 13.
OPINION OF SIMPSON'S FINANCIAL ADVISOR (SEE PAGE 13)
In connection with the merger, Simpson's board of directors received and
considered the opinion of its financial advisor, PaineWebber Incorporated, as to
the fairness, from a financial point of view, of the merger consideration to the
holders of Simpson's common stock. The full text of PaineWebber's written
opinion dated September 28, 2000 is attached to this proxy statement as Annex B.
PAINEWEBBER'S OPINION IS ADDRESSED TO SIMPSON'S BOARD OF DIRECTORS AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER WITH RESPECT TO ANY MATTER
RELATING TO THE PROPOSED MERGER.
We encourage you to read this opinion carefully in its entirety for a
description of the assumptions made, matters considered and limitations on the
review undertaken.
WHAT SHAREHOLDERS WILL RECEIVE (SEE PAGES 22 AND 23)
As a result of the merger, you will be entitled to receive $13.00 in cash
for each share of Simpson common stock you own at the effective time of the
merger.
2
<PAGE> 8
If you have been granted restricted stock awards, immediately prior to the
effective time of the merger those restricted stock awards will be treated as
having vested and all restrictions pertaining to those awards will be treated as
having lapsed. You will be entitled to receive $13.00 in cash for each share of
restricted stock you own at the effective time of the merger.
WHAT HOLDERS OF OPTIONS WILL RECEIVE (SEE PAGES 22 AND 23)
If you have been granted stock options that have an exercise price lower
than $13.00 per share, your options will be canceled at or immediately prior to
the effective time of the merger. Whether or not your options are then vested or
exercisable, promptly after the merger you will receive, for each share of
Simpson common stock subject to such options, the difference between $13.00 and
the exercise price for that share, less any applicable withholding tax.
If you have been granted employee stock options that have an exercise price
higher than or equal to $13.00, those options will be canceled at the effective
time of the merger without consideration.
APPRAISAL OR DISSENTERS' RIGHTS (SEE PAGE 33)
Because you will receive cash for your shares in the event that the merger
is approved by the holders of a majority of Simpson's common stock, you will not
have any right to dissent or demand a judicial appraisal of the fair value of
your shares.
SHAREHOLDER VOTE REQUIRED TO APPROVE THE MERGER (SEE PAGE 7)
Under Michigan law and Simpson's Articles of Incorporation, approval and
adoption of the Agreement and Plan of Merger and the merger require the
favorable vote of the holders of at least a majority of the outstanding shares
of Simpson common stock.
STOCK OWNERSHIP OF MANAGEMENT, DIRECTORS AND OTHER AFFILIATES (SEE PAGES 31 AND
32)
On November 10, 2000, the record date for Simpson's special meeting,
directors and executive officers of Simpson and their associates and affiliates
owned and were entitled to vote 468,491 shares of Simpson common stock, or
approximately 2.6% of Simpson's common stock outstanding on that date.
All of the directors and executive officers who own common stock have
indicated that they intend to vote in favor of the Agreement and Plan of Merger
and the merger.
TAX CONSEQUENCES (SEE PAGE 19)
Generally, the consideration received in the merger will be taxable for
United States federal income tax purposes. You will recognize taxable gain or
loss in the amount of the difference between $13.00 and your adjusted tax basis
for each share of Simpson common stock that you own.
CONDITIONS TO THE MERGER (SEE PAGE 28)
We will complete the merger only if specific conditions are satisfied or in
some cases waived, including the following:
- required approval and adoption of the Agreement and Plan of Merger by the
holders of not less than a majority of the outstanding shares of Simpson
common stock;
- absence of any law or court order prohibiting the merger;
- the completion of all required actions in connection with the merger by
any governmental authority;
- availability of sufficient debt financing; and,
- receipt by each of the board of directors of Simpson, Simmer Acquisition
Company and Simmer Acquisition Corporation of an opinion regarding the
solvency of Simpson after the merger.
3
<PAGE> 9
The party entitled to assert the condition may waive some of its conditions
to the merger, but not the first two listed above.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 28)
Simpson and Simmer Acquisition Company can jointly agree to terminate the
Agreement and Plan of Merger at any time before completing the merger. In
addition, either Simpson or Simmer Acquisition Company can terminate the
Agreement and Plan of Merger if:
- we do not complete the merger by March 31, 2001; however, a party in
breach of its obligations under the Agreement and Plan of Merger cannot
terminate the Agreement and Plan of Merger for this reason;
- a law or final and non-appealable court order prohibits the merger;
however, a party in breach of its obligations under the Agreement and
Plan of Merger resulting in any such prohibition cannot terminate the
Agreement and Plan of Merger for this reason;
- Simpson shareholders do not give the required approval;
- the other party breaches in any material respect any of its
representations or warranties or fails to comply in all material respects
with any of its obligations under the Agreement and Plan of Merger,
causing a failure to satisfy the condition that the representations and
warranties be true in all material respects and the obligations under the
Agreement and Plan of Merger be complied with at March 31, 2001; or
- Simpson's board of directors withdraws or modifies in a manner adverse to
Simmer Acquisition Company its recommendation of the Agreement and Plan
of Merger or the merger to its shareholders; however, Simpson cannot
terminate the Agreement and Plan of Merger until five business days after
notice of such determination by Simpson's board of directors has been
delivered to Simmer Acquisition Company and at the end of such period the
board of directors confirms its determination that failing to withdraw or
modify its recommendation would cause the board of directors to be in
breach of its fiduciary duties to the shareholders.
BREAK-UP FEE (SEE PAGE 29)
Simpson must pay Simmer Acquisition Company a break-up fee of $7.5 million
in cash if:
- a third party publicly announces an acquisition proposal for Simpson; and
- the Agreement and Plan of Merger is terminated by either Simpson or
Simmer Acquisition Company because Simpson's board of directors has
adversely changed its recommendation of the Agreement and Plan of Merger
or the merger or because the necessary shareholder vote for the Agreement
and Plan of Merger or the merger is not obtained; and
- Simpson or any of its subsidiaries enters into another agreement or
consummates another transaction related to an acquisition proposal within
six months of termination of the Agreement and Plan of Merger;
OR,
- a third party publicly announces an acquisition proposal for Simpson; and
- the Agreement and Plan of Merger is terminated by either party because
the transactions have not been consummated by March 31, 2001 or by Simmer
Acquisition Company because Simpson has breached any of its obligations
or representations and cannot cure the breach by March 31, 2001; and
- Simpson or any of its subsidiaries enters into another agreement or
consummates another transaction with that third party related to an
acquisition proposal within six months of termination of the Agreement
and Plan of Merger.
4
<PAGE> 10
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: When and where is the special meeting?
A: The special meeting will take place at 10:00 a.m., local time, on December
15, 2000 at our principal executive offices located at 47603 Halyard
Drive, Plymouth, Michigan 48170.
Q: Who is entitled to vote?
A: Holders of record, including holders of restricted stock awards, of
Simpson common stock as of the close of business on November 10, 2000 are
entitled to one vote per share of Simpson common stock held.
Q: What will I receive in the merger?
A: You will receive, for each share of Simpson common stock you hold at the
time of the merger, $13.00 in cash. Holders of options will be treated as
described in "Summary Term Sheet -- What Holders of Options Will Receive."
See "Summary Term Sheet -- What Shareholders Will Receive" and the
description of the Agreement and Plan of Merger beginning on page 22 for
more information.
Q: Who will own Simpson after the merger?
A: After the merger, Simpson will be a privately held company owned by Simmer
Acquisition Company, which will be controlled by Heartland.
Q: Why is the Simpson board of directors recommending the merger?
A: The Simpson board of directors believes that the merger is in the best
interests of Simpson's shareholders and that the merger consideration is
fair to Simpson's shareholders, based in part on the board of directors'
familiarity with Simpson's business, on the form and amount of the merger
consideration, and on the terms of the Agreement and Plan of Merger. See
"The Merger -- Simpson's Reasons for the Merger" beginning on page 11 for
more information.
Q: Does Simmer Acquisition Corporation have the financial resources to pay
the merger consideration?
A: Simmer Acquisition Company is controlled by Heartland. Simmer Acquisition
Company has obtained an equity commitment letter from Heartland committing
it to provide $184.5 million, and Simmer Acquisition Corporation has
obtained a bank commitment letter from The Chase Manhattan Bank, Chase
Securities Inc. and Credit Suisse First Boston committing them to provide
Simmer Acquisition Corporation an aggregate of $243 million, of which up
to $193 million is available to finance the merger, refinance existing
debt and pay transaction costs. We believe that the funds from these
equity and debt commitments will be sufficient for these purposes. The
funding of these commitments are subject to customary conditions. If the
funds are not available from these sources, Simmer Acquisition Company is
obligated to use commercially reasonable efforts to find other sources of
financing to consummate the merger on terms reasonably acceptable to
Simmer Acquisition Company. However, if the debt or equity financing are
not available, we may not be able to complete the merger.
Q: When do you expect to complete the merger?
A: We are working to complete the merger as soon as possible. We expect to
complete the merger shortly after shareholder approval of the merger.
Q: Will I be entitled to dissenters' or appraisal rights?
A: Because you will receive cash for your shares in the event that the merger
is approved by the holders of a majority of Simpson's common stock, you
will not have any right to dissent or demand a judicial appraisal of the
fair value of your shares.
5
<PAGE> 11
Q: What vote is required for the approval of the merger?
A: The affirmative vote of the holders of at least a majority of the
outstanding shares of Simpson common stock is required to approve the
Agreement and Plan of Merger and the merger.
You may abstain from voting on the proposal to approve the Agreement and
Plan of Merger and the merger; however, if you mark your proxy "ABSTAIN"
with respect to the proposal, you will be in effect voting against the
proposal. In addition, if you fail to send in your proxy, this will have
the same legal effect as a vote against the merger.
Q: If my shares are held in "street name" by my broker, will my broker vote
my shares for me?
A: If you do not provide your broker with instructions on how to vote your
"street name" shares, your broker will not be able to vote them on the
merger. This is called a "broker non-vote" and will have the effect of
voting against the merger. You should therefore instruct your broker how
to vote your shares, following the directions provided by your broker.
Q: What do I need to do now?
A: Just indicate on your proxy card how you want to vote, sign it and mail it
in the enclosed return envelope as soon as possible, so that your shares
may be represented at the special meeting. If you sign and send in your
proxy card and do not indicate how you want to vote, Simpson will count
your proxy card as a vote in favor of the proposal submitted at the
special meeting. You may also attend the special meeting and vote your
shares in person. You can find further details on how to vote by proxy on
page 8.
Q: What do I do if I want to change my vote?
A: Just send in or deliver a later-dated, signed proxy card or a written
notice of revocation dated after the date of the proxy being revoked to
Frank K. Zinn, Simpson's Secretary, before the special meeting. You can
also attend the special meeting in person and vote. You can find further
details on how to revoke your proxy on page 8.
Q: Should I send in my stock certificates now?
A: No. If the merger is completed, we will send shareholders written
instructions for turning in their stock certificates and being paid the
merger consideration.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the merger, or if you would like
additional copies of this document, you should contact:
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
Attention: Frank K. Zinn
Telephone: (734) 207-6200
Telecopier: (734) 207-6500
Innisfree M&A Incorporated
1-888-750-5834 (toll-free)
6
<PAGE> 12
SPECIAL MEETING
TIME AND PLACE; PROXY SOLICITATION
The solicitation of the enclosed proxy is made by the board of directors of
Simpson for use at the special meeting of shareholders of Simpson to be held at
47603 Halyard Drive, Plymouth, Michigan 48170, on December 15, 2000 at 10:00
a.m., and at any adjournment. This proxy statement and the enclosed proxy are
being mailed or given to shareholders on or about November 15, 2000.
The expense of this solicitation will be borne by Simpson. Solicitation
will be by mail, and executive officers and other employees of Simpson may
solicit proxies, without extra compensation, personally and by telephone and
other means of communication. In addition, Simpson has retained Innisfree M&A
Incorporated to assist in the solicitation of proxies for a fee of $8,000, plus
expenses. Simpson will also reimburse brokers and other persons holding Simpson
common stock in their names or in the names of their nominees for their
reasonable expenses in forwarding proxies and proxy materials to beneficial
owners.
PURPOSE
At the special meeting, the shareholders of Simpson will be asked to
consider and vote upon the proposal to approve and adopt the Agreement and Plan
of Merger and the merger as well as any other business as may properly come
before the special meeting.
WHO CAN VOTE; RECORD DATE
Shareholders of record at the close of business on November 10, 2000 will
be entitled to vote at the special meeting. On that date, there were 17,870,255
shares of Simpson common stock, par value $1.00 per share, outstanding and
entitled to vote and 3,421 holders of record. Holders of record will be entitled
to one vote for every share of common stock they hold on the record date.
VOTE REQUIRED; VOTING PROCEDURES
QUORUM. The special meeting will be held if a quorum, consisting of a
majority of the outstanding shares of common stock, is represented in person or
by proxy. Broker non-votes and abstentions will be counted toward the
establishment of a quorum.
VOTE REQUIRED. Approval and adoption of the Agreement and Plan of Merger
and the merger requires the affirmative vote of the holders of at least a
majority of the outstanding shares of Simpson common stock.
BROKER NON-VOTES. If your broker holds shares in its name, the broker can
vote on some "routine" proposals when it has not received your instructions. The
broker cannot vote your shares on non-routine matters, such as the merger
proposal. Therefore, without your instructions, your broker cannot vote your
shares for the approval and adoption of this proposal. This is a "broker
non-vote." A broker non-vote or the withholding of a proxy's authority will have
the same legal effect as a vote against the merger.
EFFECT OF ABSTAINING. You may abstain from voting on the proposal to
approve the Agreement and Plan of Merger and the merger. If you mark your proxy
"ABSTAIN" with respect to this proposal, you will be in effect voting against
the proposal. In addition, if you fail to send in your proxy, this, too, will
have the same legal effect as a vote against the merger.
HOW DIRECTORS AND EXECUTIVE OFFICERS INTEND TO VOTE. Simpson's directors
and executive officers hold in the aggregate approximately 2.6% of the common
stock entitled to vote on the merger. All directors and executive officers of
Simpson who hold stock entitled to vote on the merger have indicated to Simpson
that they intend to vote their shares in favor of the Agreement and Plan of
Merger and the merger.
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<PAGE> 13
VOTING BY PROXY
Holders of record can ensure that their shares are voted at the special
meeting by completing, signing, dating and returning the enclosed proxy card in
the envelope provided. Returning the enclosed proxy card will not affect your
right to attend the special meeting and vote.
If you return a signed proxy card but do not provide voting instructions,
the persons named as proxies on the proxy card will vote "FOR" the approval and
adoption of the Agreement and Plan of Merger and the merger.
Do not send in any stock certificates with your proxy card. Prior to the
effective time of the merger, Simmer Acquisition Company will appoint a bank or
trust company reasonably satisfactory to Simpson as the paying agent in
connection with the merger. The paying agent will mail transmittal forms, with
instructions for the surrender of Simpson common stock certificates, to you as
soon as practicable after the completion of the merger.
REVOKING YOUR PROXY. You may revoke your proxy at any time before it is
voted by:
- delivering a written notice of revocation dated later than the proxy
being revoked to the Secretary of Simpson;
- delivering to the Secretary of Simpson a duly executed proxy indicating a
contrary vote bearing a later date than the proxy being revoked; or
- attending the special meeting and voting in person.
VOTING IN PERSON. If you are a holder of record and you plan to attend the
special meeting and wish to vote in person, Simpson will give you a ballot at
the special meeting. You should realize that attendance at the special meeting,
however, will not in and of itself constitute a revocation of your proxy.
ASSISTANCE. If you need help in changing or revoking a proxy, please
contact Simpson at the address or phone number provided in this document under
the caption "Who Can Help Answer Your Questions."
OTHER BUSINESS; ADJOURNMENTS
The board of directors is not aware of any other matters to be presented at
the special meeting of shareholders. If any other matters should properly come
before the special meeting, the persons named as proxies in the enclosed proxy
card will vote the proxies in accordance with their best judgment.
Adjournments may be made for the purpose of, among other things, soliciting
additional proxies. Any adjournment may be made from time to time by the
Chairman of the meeting or by resolution of Simpson's board of directors.
THE MERGER
GENERAL
At the Simpson shareholders' special meeting, Simpson will ask its
shareholders to vote upon a proposal to approve the Agreement and Plan of Merger
and the merger of Simmer Acquisition Corporation, a wholly-owned subsidiary of
Simmer Acquisition Company LLC, with and into Simpson.
We have attached a copy of the Agreement and Plan of Merger as Annex A to
this document. We urge you to read the Agreement and Plan of Merger in its
entirety because it is the legal document governing the merger.
BACKGROUND OF THE MERGER
As a matter of practice, the board of directors and management regularly
review and evaluate Simpson's business direction and strategies to maximize
shareholder value in light of the realities of the highly
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<PAGE> 14
competitive industry in which it operates. The board and management have
recognized the challenges presented by Simpson's small size in a global market,
the trend towards consolidation and globalization of the industry, the cyclical
nature of the business, and the increasing capital requirements needed to
continue to grow Simpson's business and maintain its competitive position. The
board has also considered that Simpson's strong operating performance has not
been appropriately reflected in its stock price.
In November 1997, following receipt of an unsolicited expression of
interest from a third party, Simpson engaged PaineWebber Incorporated to assist
in a review of strategic alternatives. The board reviewed various alternatives
including a stock repurchase program, the pursuit of strategic acquisitions and
the identification of potential acquirors. After extensive discussion with
management and PaineWebber, the board concluded that remaining independent was
the best course for Simpson at that time. The board then authorized management
to explore a stock repurchase program. At its meeting in April 1998, the board
approved a stock repurchase program for up to 650,000 shares of Simpson common
stock.
In July, 1998, senior management had preliminary discussions with a
potential strategic buyer concerning the possibility of a business combination.
On August 17, 1998, the board reviewed an informal proposal from the potential
buyer to acquire Simpson. PaineWebber presented the board with an analysis of
the transaction and, after full consideration, the board asked management to
pursue further discussions with the potential buyer. On August 28, 1998,
management informed the directors that management had been advised by the
potential buyer that the severe adverse stock market conditions existing at that
time precluded further consideration of the proposal.
Between November 1998 and June 1999 Simpson and PaineWebber had periodic
discussions with this potential strategic buyer and also informally approached
and shared publicly available information with five other potential strategic
acquirors, only one of whom had an interest in pursuing further discussions. The
one additional party expressing some interest in Simpson indicated pricing
levels that were at very modest premiums to the then market price of Simpson's
common stock. During this time period, management revisited the topic of a
business combination with the first potential strategic buyer identified by
management but was unable to reach agreement on value despite the willingness of
the board of directors to reduce the valuation previously discussed with this
potential buyer in August 1998.
At its November 1999 meeting, the board requested that senior management
work with PaineWebber to prepare an updated analysis of strategic alternatives
for presentation at the February 2000 board meeting.
At the board's annual planning meeting in February 2000, management and
PaineWebber reviewed with the board potential strategic and financial
alternatives available to Simpson to maximize shareholder value. Extensive
consideration was given to several strategic alternatives, including maintaining
the status quo and pursuing strategic acquisitions, sales of specific business
segments or product lines, various share repurchase programs, the feasibility
and consequences of a leveraged buyout, as well as the potential sale of
Simpson. Management reviewed the history of expressions of interest in Simpson
from third parties and contacts which they had made over the past 24 months with
a view to a possible sale or business combination. Following the board meeting,
senior management had meetings with three financial sponsor groups to explore
the feasibility of a leveraged buyout of Simpson, although no serious
discussions developed from those meetings.
At a regular meeting on April 17, 2000, the board continued its review of
various strategic and business alternatives to maximize shareholder value,
including the possible sale of Simpson to a strategic or financial buyer.
PaineWebber presented and reviewed with the board a list of potential acquirors,
foreign and domestic, which included strategic as well as financial buyers, and
reiterated its view that a broad, private sale process was the best way to
achieve the highest value for shareholders in the current environment. After a
full review of Simpson's business plans, projections and outlook for the
industry, the board authorized senior management to retain PaineWebber as its
financial advisor, prepare a confidential information memorandum and initiate a
process to obtain non-binding indications of interest to acquire Simpson. The
Company was also advised in this process by Dykema Gossett PLLC, its outside
legal counsel. At the April 17, 2000 meeting, the board also authorized a new
share repurchase program to acquire up to 600,000 shares of common stock.
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<PAGE> 15
During April and May 2000, PaineWebber conducted additional due diligence,
held discussions with management and assisted management in the preparation of a
confidential information memorandum relating to the potential sale of Simpson.
The inquiry process developed by PaineWebber consisted of two rounds. Round 1
was conducted during late May and June 2000 and Round 2 was conducted during
July through September 2000. During this process PaineWebber contacted and
responded to inquiries from 38 potential strategic and financial bidders on
behalf of Simpson. Twenty-four interested parties entered into confidentiality
agreements with Simpson and received the confidential information memorandum as
part of Round 1. The interested parties consisted of 13 strategic buyers and 11
financial buyers.
Round 1 resulted in the submission of six preliminary non-binding
indications of interest (one strategic buyer and five financial buyers). During
the course of Round 1, the board also reviewed a non-binding indication of
interest from the potential strategic buyer with whom Simpson had previous
discussions over the previous 18 months. This indication of interest proposed an
all stock "merger of equals" transaction.
PaineWebber reviewed the results of Round 1 with the board of directors at
a meeting held on June 29, 2000. After a full review and discussion of the
preliminary indications of interest as well as the proposed merger of equals
transaction, the board decided (i) to continue discussions with certain of the
parties who had indicated an interest in acquiring Simpson, and (ii) to defer
further dialogue concerning the proposed merger of equals transaction in light
of the continuing discussions with other strategic and financial purchasers.
Thereafter, Simpson received three additional preliminary non-binding
indications of interest (two strategic buyers and one financial buyer).
During July and August 2000, eight interested parties were granted access
to management presentations from senior management of Simpson as well as
additional Simpson data and information to enable such interested parties to
conduct detailed due diligence concerning Simpson. In addition, each of the
interested parties was given a draft merger agreement prepared by Dykema Gossett
concerning the proposed terms for an acquisition of all of the common stock of
Simpson for cash. On the basis of such presentations and due diligence review,
each of the interested parties was asked to submit a final proposal for the
acquisition of all of the common stock of Simpson for cash. Interested parties
were also asked to include with their proposal a copy of the draft merger
agreement marked to show any language changes necessary in order for the
prospective purchaser to promptly execute the merger agreement.
On September 1, 2000 Simpson issued a press release stating that Simpson
expected earnings for the second half of fiscal year 2000 to be cut by about 10
cents to 12 cents a share as a result of a decline in heavy-duty volumes, the
weak Euro, and increased product launch activities and that consequently
earnings for fiscal year 2000 were projected in the range of $1.03 to $1.05 a
share.
At a special meeting held on September 12, 2000, management reviewed
business unit performance and presented to the board a full year forecast
reflecting a reduction in previously projected earnings. There was full
discussion of conditions in the industry and outlook for the balance of the year
and beyond. Dykema Gossett reviewed and discussed with the board the fiduciary
duties of directors under Michigan law in the context of a possible sale of
Simpson. PaineWebber again reviewed with the board other strategic alternatives
for maximizing shareholder value, including remaining independent. PaineWebber
also reviewed with the board the discussions to date with the prospective
purchasers.
By September 18, 2000, Simpson received three final proposals from
financial buyers for the acquisition of Simpson, two written (including that of
Heartland) and one oral. There were no final proposals submitted by any
strategic buyer.
On September 19, 2000, a special meeting of the board of directors took
place to review the sale process and the final bids that had been submitted.
Dykema Gossett again reviewed and discussed with the board the fiduciary duties
of directors under Michigan law in the context of a possible sale of Simpson.
PaineWebber provided a detailed review and analysis of the final bids received
from the prospective purchasers, including the related bank financing
commitments which accompanied the proposals. PaineWebber also reviewed with the
board current information concerning the industry in which Simpson operates and
the economic prospects for the near future. After full discussion and extensive
questioning of management and Simpson's advisors, the
10
<PAGE> 16
board determined the proposal submitted by Heartland to be superior to the other
proposals received. The board then authorized management to proceed to negotiate
a definitive merger agreement with Heartland.
On September 21, 2000, Dykema Gossett submitted to legal counsel for
Heartland a revised draft merger agreement based upon the comments provided by
Heartland with its final proposal. Over the next seven days, negotiations took
place between the respective legal counsel to and senior management of Simpson
and Heartland to finalize the terms of the merger agreement.
On September 28, 2000, a special meeting of the board of directors was held
to review the status of negotiations with Heartland. Representatives of Dykema
Gossett and PaineWebber were also present. Current drafts of the Agreement and
Plan of Merger, proposed board resolutions and other board materials had been
provided to the directors prior to the meeting. Dykema Gossett reviewed in
detail the terms of the Agreement and Plan of Merger, including the conditions
to the obligation of each party to consummate the merger, provisions for the
termination of the Agreement and Plan of Merger and the break-up fee and expense
reimbursement payable by Simpson in certain circumstances. Dykema Gossett
discussed specific provisions in the Agreement and Plan of Merger which would
allow the board to negotiate with third parties who might submit unsolicited
written acquisition proposals under certain circumstances and to terminate the
Agreement and Plan of Merger in such circumstances.
PaineWebber reviewed with the directors its analysis of the $13.00 per
share cash consideration provided for in the Agreement and Plan of Merger and
rendered its oral opinion, which opinion was subsequently confirmed by delivery
of a written opinion dated September 28, 2000, to the effect that, as of the
date of the opinion and based on and subject to the matters described in the
opinion, the $13.00 per share cash consideration to be received in the merger by
the Simpson shareholders was fair to the Simpson shareholders from a financial
point of view. After extensive discussion and questioning of Simpson's
management and advisors by the directors, members of Simpson's management who
were not directors and representatives from PaineWebber were excused. Based upon
the various factors considered by the directors, as described below under "The
Merger -- Simpson's Reasons for the Merger" and "The Merger -- Recommendation of
Simpson's Board of Directors," the board then unanimously determined that the
Agreement and Plan of Merger and the transactions contemplated by the Agreement
and Plan of Merger, including the merger, are advisable, fair to, and in the
best interests, of the shareholders; approved the Agreement and Plan of Merger
and the transactions contemplated by the Agreement and Plan of Merger, including
the merger; and recommended that the shareholders approve the Agreement and Plan
of Merger and the transactions contemplated by the Agreement and Plan of Merger,
including the merger.
The Agreement and Plan of Merger was executed by the parties early on the
morning of September 29, 2000 at which time Simpson issued a press release
announcing the execution of the Agreement and Plan of Merger.
RECOMMENDATION OF SIMPSON'S BOARD OF DIRECTORS
The board of directors of Simpson has:
- determined that the Agreement and Plan of Merger and the merger are
advisable and in the best interests of Simpson's shareholders;
- determined that the merger consideration is fair to Simpson's
shareholders;
- approved the Agreement and Plan of Merger and authorized the merger; and
- recommended that shareholders vote "FOR" approval and adoption of the
Agreement and Plan of Merger and the authorization of the merger.
SIMPSON'S REASONS FOR THE MERGER
The board of directors believes that the merger is advisable and in the
best interests of Simpson's shareholders and that the consideration in the
merger is fair to Simpson's shareholders. Simpson's board of directors has
approved and voted to enter into, and to recommend that Simpson shareholders
vote to approve
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<PAGE> 17
and adopt, the Agreement and Plan of Merger and the merger. In the course of
reaching its decision to approve the Agreement and Plan of Merger, Simpson's
board of directors consulted with Simpson's management, as well as its outside
legal counsel and financial advisor, and considered a number of factors,
including the following factors in favor of the merger:
- the board of directors' familiarity with Simpson's business, operations,
properties, assets, financial condition, operating results and prospects,
including Simpson's recent and current financial performance and the
implications thereof with respect to the potential market performance of
Simpson common stock on a stand-alone basis;
- the financial presentation of PaineWebber Incorporated on September 28,
2000, and the opinion of PaineWebber that, as of that date, the merger
consideration was fair to the holders of Simpson common stock from a
financial point of view. We have described PaineWebber's opinion in
detail under the heading "The Merger -- Opinion of Simpson's Financial
Advisor;"
- the fact that the consideration to be received by Simpson shareholders in
the merger will consist entirely of cash;
- the process conducted with the assistance of PaineWebber to solicit
proposals from 38 potential strategic and financial bidders and the
board's conclusion that such process was likely to have elicited
proposals from substantially all entities who could reasonably be
expected to have an interest in acquiring Simpson and the ability to
finance such a transaction;
- the relationship between the merger consideration and the historical
market prices and trading activity of Simpson common stock, and the
opportunity for Simpson shareholders to receive a significant premium
over the market price for their Simpson common stock in the merger;
- the financial and other terms and conditions of the merger and the
Agreement and Plan of Merger, including, without limitation, the terms of
the Agreement and Plan of Merger which should not unduly discourage third
parties from making bona fide proposals subsequent to the signing of the
Agreement and Plan of Merger and, if any of these proposals were made,
Simpson's board of directors, in the exercise of its fiduciary duties in
accordance with the Agreement and Plan of Merger, could authorize Simpson
to provide information to, engage in negotiations with, and, subject to
provision of notice of such proposal to Simmer Acquisition Company prior
to termination of the Agreement and Plan of Merger and payment of a
break-up fee, enter into a transaction with, another party (as described
under "The Merger Agreement -- Covenants of Simpson"). The board of
directors concluded that the $7.5 million break-up fee should not deter a
third party from making an offer that was more favorable to Simpson
shareholders;
- the Agreement and Plan of Merger requires the affirmative vote of the
holders of at least a majority of the outstanding shares of Simpson
common stock; and
- the terms of the debt and equity commitment letters provided or obtained
by Heartland in connection with the transactions contemplated by the
Agreement and Plan of Merger, the terms of which had been reviewed by
Simpson and its representatives.
The board of directors also considered the following factor that was not
supportive of entering into the merger:
- that, while the merger is likely to be completed, conditions to funding
by the parties to the equity and debt commitments described in this proxy
statement may not be satisfied or waived and Simmer Acquisition Company
may not have sufficient funds to consummate the merger, even if approved
by Simpson's shareholders (See "The Merger Agreement -- Principal
Conditions to Completion of the Merger").
In view of the number and wide variety of factors considered in connection
with its evaluation of the merger, and the complexity of these matters, the
board of directors did not find it practicable to, nor did it
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<PAGE> 18
attempt to, quantify, rank or otherwise assign relative weights to the specific
factors it considered. In addition, the board of directors did not undertake to
assign any particular weight to any factor, but conducted an overall analysis of
the factors described above. In considering the factors described above,
individual members of the board of directors may have given different weight to
different factors. Simpson's board of directors considered all these factors
together and, on the whole, considered the weight of the factors to be favorable
to, and to support, its determination.
SIMMER ACQUISITION COMPANY'S REASONS FOR THE MERGER
As a result of the merger, Simmer Acquisition Company, an entity controlled
by Heartland, will acquire all of the common stock of Simpson and will control
Simpson. Heartland is engaging in the merger as part of its strategy to assemble
companies that can be full service providers of engineered metal products for
automotive and industrial customers. Heartland intends to buy, build and grow
Simpson and other industrial companies in sectors that are attractive for
consolidation and long-term growth. Heartland believes that the merger
represents an opportunity for holders of Simpson common stock to receive a cash
premium for their shares over the market price at which the shares were traded
prior to the announcement of the merger.
Recently, an affiliate of Heartland separately agreed to enter into a
recapitalization agreement with MascoTech, Inc. which will cause MascoTech to be
controlled by Heartland if the transactions in the recapitalization agreement
are consummated. Neither Simpson nor MascoTech is a party to the other's
agreement with Heartland's affiliates or has any right to participate in the
other's merger or recapitalization, as the case may be. Upon completion of the
MascoTech recapitalization, Heartland plans to consider a range of strategic
relationships between Simpson and MascoTech, including a business combination.
Heartland may effect such combination by transferring its interests in Simmer
Acquisition Company to MascoTech or one of its subsidiaries following the
recapitalization.
OPINION OF SIMPSON'S FINANCIAL ADVISOR
THE FULL TEXT OF THE OPINION OF PAINEWEBBER, DATED SEPTEMBER 28, 2000,
WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED
AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX B TO THIS PROXY
STATEMENT. SIMPSON SHAREHOLDERS ARE URGED TO READ SUCH OPINION CAREFULLY AND IN
ITS ENTIRETY. THE SUMMARY OF THE PAINEWEBBER OPINION SET FORTH BELOW IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In connection with the Simpson board of director's consideration of the
Agreement and Plan of Merger, PaineWebber delivered its written opinion, dated
September 28, 2000, to the effect that, as of such date, and based upon its
review and assumptions and subject to the limitations summarized below, the
merger consideration to be received by the shareholders of Simpson pursuant to
the merger is fair to the shareholders of Simpson from a financial point of
view. The opinion was prepared at the request and for the information of the
Simpson board of directors and does not constitute a recommendation to any
holder of Simpson common stock as to how any such shareholder should vote with
respect to the merger.
In arriving at its opinion, PaineWebber, among other things:
- Considered the outcome of the sale process for Simpson;
- Reviewed the draft of the Agreement and Plan of Merger dated September
26, 2000;
- Reviewed, among other public information, Simpson's Annual Reports,
Reports on Form 10-K and related financial information for the five
fiscal years ended December 31, 1999; and Simpson's Quarterly Reports on
Form 10-Q and the related unaudited financial information for the six
months ended June 30, 1999 and June 30, 2000;
- Reviewed certain information, including financial forecasts internally
prepared by management of Simpson, relating to the business, earnings,
cash flow, assets and prospects of Simpson, furnished to PaineWebber by
Simpson;
- Conducted discussions with members of senior management of Simpson
concerning its businesses and prospects;
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<PAGE> 19
- Reviewed the historical market prices and trading activity for the shares
of Simpson common stock and compared them with that of certain publicly
traded companies which PaineWebber deemed to be relevant;
- Compared the financial position and results of operations of Simpson with
those of certain publicly traded companies which PaineWebber deemed to be
relevant;
- Compared the proposed financial terms of the merger contemplated by the
Agreement and Plan of Merger with the financial terms of certain other
mergers and acquisitions which PaineWebber deemed to be relevant;
- Reviewed a commitment letter by a lender for $243 million in senior
secured credit facilities for Simmer Acquisition Company dated September
18, 2000; and
- Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as
PaineWebber deemed necessary, including PaineWebber's assessment of
general economic, market and monetary conditions.
In preparing its opinion, PaineWebber relied on the accuracy and
completeness of all information that was publicly available, supplied or
otherwise communicated to PaineWebber by Simpson, and PaineWebber did not assume
any responsibility to independently verify such information. With respect to the
financial forecasts internally prepared by management of Simpson, PaineWebber
assumed, with Simpson's consent, that they were reasonably prepared on bases
reflecting the best currently available estimates and good faith judgments of
the management of Simpson as to the future performance of Simpson. PaineWebber
also relied upon assurances of Simpson's management that they were unaware of
any facts that would make the information or financial forecasts provided to
PaineWebber incomplete or misleading. PaineWebber did not undertake an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of Simpson, nor was PaineWebber furnished with any such evaluations
or appraisals. PaineWebber also assumed, with Simpson's consent, that any
material liabilities or assets (contingent or otherwise, known or unknown) of
Simpson were set forth in the consolidated financial statements of Simpson.
The PaineWebber opinion was based upon economic, monetary and market
conditions existing on the date of the opinion. Furthermore, PaineWebber
expressed no opinion as to the price or trading ranges at which the Simpson
common stock will trade after the date of the opinion.
The PaineWebber opinion does not address the relative merits of the merger
and any other transactions or business strategies that may have been discussed
by the Simpson board of directors as alternatives to the merger, or the decision
of the Simpson board of directors to proceed with the merger. Simpson did not
place any limitations upon PaineWebber with respect to the procedures followed
or factors considered in rendering the opinion.
The following is a summary of the significant financial analyses performed
by PaineWebber in connection with providing its written opinion dated September
28, 2000 to the Simpson board of directors:
HISTORICAL STOCK PERFORMANCE. PaineWebber reviewed trading prices for the
shares of Simpson common stock. This share price performance review indicated
that for the latest twelve months ended September 26, 2000, the low and high
closing prices for shares of Simpson's common stock were $7.09 and $12.13,
respectively. PaineWebber also reviewed the Simpson common stock price on
September 26, 2000 and averages over periods prior to September 26, 2000 as set
forth in the following table:
<TABLE>
<CAPTION>
TRADING PERIOD CLOSING PRICE
- -------------- -------------
<S> <C>
September 26, 2000.......................................... $10.00
</TABLE>
<TABLE>
<CAPTION>
TRADING PERIOD AVERAGE PRICE
- -------------- -------------
<S> <C>
Latest 30 days.............................................. $9.78
Latest 90 days.............................................. $8.95
Latest Twelve Months........................................ $9.95
</TABLE>
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<PAGE> 20
SELECTED COMPARABLE PUBLIC COMPANY ANALYSIS. Using publicly available
information, PaineWebber compared selected historical and projected financial,
operating and stock market performance data of Simpson to the corresponding data
of certain publicly traded companies that PaineWebber deemed to be relevant to
Simpson.
The Simpson comparable companies consisted of:
<TABLE>
<S> <C>
American Axle & Manufacturing Holdings, Inc. Dura Automotive Systems, Inc.
ArvinMeritor, Inc. Federal-Mogul Corporation
BorgWarner Inc. Hayes Lemmerz International, Inc.
Dana Corporation Intermet Corporation
Delco Remy International, Inc. Tower Automotive, Inc.
</TABLE>
PaineWebber reviewed, among other information, the comparable companies'
multiples of total enterprise value ("TEV"), which consists of the market value
of equity plus total debt and minority interests minus cash, cash equivalents
and marketable securities to:
- Latest Twelve Months ("LTM") Revenue;
- LTM EBITDA;
- LTM Free Cash Flow ("FCF"), which equals LTM EBITDA minus LTM Capital
Expenditures; and
- LTM EBIT.
PaineWebber also reviewed, among other information, the comparable
companies' multiples of equity market value ("EMV") to:
- LTM Net Income; and
- Projected Earnings Per Share ("EPS") based on First Call Research
consensus earnings estimates for the calendar year ending December 31,
2000.
The Simpson comparable public company analysis resulted in the following
ranges of values as of September 26, 2000:
<TABLE>
<CAPTION>
ANALYSIS MARKET RANGE RELEVANT RANGE
- -------- -------------- --------------
<S> <C> <C>
TEV/LTM Revenue........................................ 0.23x to 0.87x 0.45x to 0.65x
TEV/LTM EBITDA......................................... 2.2x to 5.1x 4.0x to 5.0x
TEV/LTM FCF............................................ 3.7x to 16.5x 6.5x to 7.5x
TEV/LTM EBIT........................................... 3.2x to 7.9x 6.0x to 7.0x
EMV/LTM Net Income..................................... 1.5x to 5.8x 4.5x to 5.5x
2000E EPS -- First Call................................ 2.3x to 7.0x 4.5x to 6.0x
</TABLE>
The valuation range indicated by this analysis implied a value of $7.00 to
$10.00 per share, based on Simpson's September 26, 2000 closing stock price of
$10.00.
PREMIUMS PAID ANALYSIS. PaineWebber reviewed purchase price per share
premiums paid in publicly-disclosed cash mergers and acquisitions in
non-financial industries announced and completed (excluding withdrawn
transactions) since September 24, 1999 with market values between $100.0 million
and
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<PAGE> 21
$500.0 million. This analysis indicated mean and median premiums to the target's
closing stock prices on dates prior to the announcement as set forth in the
following table:
<TABLE>
<CAPTION>
MEAN/MEDIAN PREMIUM PAID
IN SELECT NON-FINANCIAL
PERIOD PRIOR TO ANNOUNCEMENT MERGERS AND ACQUISITIONS
- ---------------------------- ------------------------
<S> <C>
One day................................................... 34.7% / 26.6%
One week.................................................. 40.4% / 31.2%
One month................................................. 44.1% / 37.1%
</TABLE>
Using this information and applying the Simpson common stock price one day,
one week and one month prior to September 26, 2000 indicated implied stock
prices of $12.75 to $13.75 per share for the select non-financial mergers and
acquisitions.
SELECTED COMPARABLE TRANSACTION ANALYSIS. PaineWebber reviewed publicly
available financial information for selected mergers and acquisitions involving
automotive supply companies. The selected public automotive supply companies
PaineWebber analyzed included:
<TABLE>
<CAPTION>
ACQUIRER TARGET
- -------- ------
<S> <C>
Heartland Industrial Partners, L.P. MascoTech, Inc.
Harvard Industries, Inc. Breed Technologies, Inc.
BC Partners Ltd. Mark IV Industries, Inc.
Meritor Automotive, Inc. Arvin Industries, Inc.
Cooper Tire & Rubber Company The Standard Products Company
Tower Automotive, Inc. Active Tool & Manufacturing, Inc.
TI Group Automotive Systems Walbro Corporation
Arvin Industries, Inc. Mark IV Industries, Inc. (Purolator)
Eaton Corporation Aeroquip-Vickers, Inc.
Dura Automotive Systems, Inc. Adwest Western Automotive, Inc.
Dura Automotive Systems, Inc. Excel Industries, Inc.
The General Chemical Group Inc. Defiance, Inc.
</TABLE>
PaineWebber reviewed the consideration paid based on stock prices on the
day prior to the announcement of the comparable transactions and calculated
multiples of TEV and EMV. The comparable transactions analysis resulted in the
following ranges of values:
<TABLE>
<CAPTION>
ANALYSIS MARKET RANGE RELEVANT RANGE
- -------- -------------- --------------
<S> <C> <C>
TEV/LTM Revenue........................................ 0.37x to 1.19x 0.65x to 0.85x
TEV/LTM EBITDA......................................... 4.7x to 7.5x 5.0x to 7.0x
TEV/LTM FCF............................................ 6.8x to 16.0x 10.0x to 12.0x
TEV/LTM EBIT........................................... 7.7x to 12.2x 9.0x to 11.0x
EMV/LTM Net Income..................................... 7.2x to 36.5x 10.0x to 12.0x
</TABLE>
The valuation range indicated by this analysis implied a value of $12.00 to
$17.00 per share.
Because the reasons for and the circumstances surrounding each of the
transactions analyzed were specific to each transaction and because of the
inherent differences between the businesses, operations and prospects of Simpson
compared to the businesses, operations and prospects of the companies that were
parties to the selected public automotive supply mergers and acquisitions
analyzed, PaineWebber believed it was inappropriate to, and therefore did not,
rely solely on the quantitative results of the analysis, and accordingly also
made qualitative judgments concerning differences between the characteristics of
these transactions. These qualitative judgments did not lead to specific
conclusions regarding the fairness of the merger consideration, but rather were
part of PaineWebber's evaluation of the relevance of this analysis under the
particular circumstances of the acquisition.
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<PAGE> 22
DISCOUNTED CASH FLOW ANALYSIS. PaineWebber analyzed Simpson based on an
unleveraged discounted cash flow analysis of the financial forecasts internally
prepared by management of Simpson. Such projected financial performance was
based upon a five-year forecast for Simpson provided by Simpson management. The
discounted cash flow analysis determined the discounted present value of the
unleveraged after-tax cash flows generated over the five-year period and then
added a terminal value based upon ranges of Revenue, EBITDA, Free Cash Flow, and
EBIT multiples from 0.45x to 0.65x, 4.0x to 5.0x, 6.5x to 7.5x, and 6.0x to
7.0x, respectively. The unleveraged after-tax cash flows and terminal value were
discounted using a range of discount rates that PaineWebber deemed appropriate.
The valuation range indicated by the Simpson analysis implied a value of $11.50
to $17.50 per share.
LEVERAGED BUYOUT ANALYSIS. PaineWebber performed a leveraged buyout
analysis of Simpson as a means of establishing the value of Simpson assuming the
sale of Simpson to a typical financial buyer. A leveraged buyout ("LBO")
involves the acquisition or recapitalization of a company financed primarily by
incurring indebtedness that is serviced by the post-LBO operating cash flow of
the company. For purposes of the leveraged buyout analysis PaineWebber assumed,
among other things: (i) a purchase price per share range from $10.50 to $13.50;
(ii) purchase accounting; (iii) a closing date of December 31, 2000; and (iv)
the hypothetical investors exit in four years (2004) at an EBITDA multiple of
5.5x. The valuation range indicated by this analysis implied a value of $10.50
to $12.50 per share.
The summary of the PaineWebber opinion set forth above does not purport to
be a complete description of the data or analyses presented by PaineWebber. The
preparation of a fairness opinion involves various determinations as to the most
appropriate and relevant quantitative methods of financial analyses and the
application of those methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to partial analysis or summary
description. Accordingly, PaineWebber believes that its analysis must be
considered as a whole and that considering any portion of such analysis and of
the factors considered, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying the opinion. In
its analyses, PaineWebber made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the control of Simpson. Any estimates contained in these
analyses are not necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less favorable than as set
forth therein. Accordingly, such estimates are inherently subject to substantial
uncertainty and neither Simpson nor PaineWebber assume responsibility for the
accuracy of such analyses and estimates. In addition, analyses relating to the
value of businesses do not purport to be appraisals or to reflect the prices at
which businesses may actually be sold.
Simpson selected PaineWebber to be its financial advisor in connection with
the merger because PaineWebber is a prominent investment banking and financial
advisory firm with experience in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of securities, private placements and
valuations for corporate purposes.
ENGAGEMENT LETTER. Pursuant to an engagement letter between Simpson and
PaineWebber dated May 8, 2000, PaineWebber earned a fee of $500,000 for
rendering the opinion dated September 28, 2000, independent of the result of the
opinion. In addition, PaineWebber will receive a fee, payable upon completion of
the merger, of approximately $2,350,000, against which the opinion fee will be
credited, and will be reimbursed for certain of its related expenses.
PaineWebber will not be entitled to any additional fees or compensation in the
event the acquisition is not approved or otherwise consummated. Simpson also
agreed, under a separate agreement, to indemnify PaineWebber, its affiliates and
each of its directors, officers, agents and employees and each person, if any,
controlling PaineWebber or any of its affiliates against certain liabilities,
including liabilities under federal securities laws.
Prior to this engagement, PaineWebber has provided investment banking and
other financial services to Simpson, and has received fees for rendering those
services. In addition, an officer of PaineWebber sits on the board of directors
of Simpson.
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In the ordinary course of business, PaineWebber may actively trade the
securities of Simpson for its own account and for the accounts of its customers
and, accordingly, may at any time hold long or short positions in such
securities.
AMOUNT AND SOURCE OF FUNDS AND FINANCING OF THE MERGER
Simpson and Simmer Acquisition Company estimate that the total amount of
funds required to purchase all of the outstanding common stock of Simpson is
approximately $238.2 million and that the total amount of funds required to pay
for the common stock, refinance outstanding debt and to pay all related fees and
expenses is approximately $380.8 million. The completion of the merger is
conditioned on Simmer Acquisition Corporation obtaining sufficient debt
financing from The Chase Manhattan Bank, Chase Securities Inc. and Credit Suisse
First Boston to finance (together with the equity contributions) the merger.
Simmer Acquisition Company has committed to use commercially reasonable efforts
to obtain financing sufficient to pay for the outstanding common stock of
Simpson, to repay or refinance outstanding debt and to pay all related fees and
expenses. However, if such financing cannot be arranged from The Chase Manhattan
Bank, Chase Securities and CSFB and alternative sources of financing are not
available, the merger will not be consummated.
EQUITY COMMITMENT. On September 29, 2000, Simmer Acquisition Company
received an executed commitment letter from Heartland Industrial Partners, L.P.
for an equity investment of up to $184.5 million. Heartland's commitment is
subject only to the satisfaction of the conditions to Simmer Acquisition
Company's and Simmer Acquisition Corporation's obligations under the Agreement
and Plan of Merger. The commitment letter also provides for indemnification by
Simmer Acquisition Company of Heartland for any losses related to the Agreement
and Plan of Merger or the commitment letter suffered by Heartland.
Prior to the merger, Heartland may arrange for equity commitments to be
provided to Simmer Acquisition Company by other equity investors. In such event,
Heartland will continue to control Simmer Acquisition Company, but may reduce
its equity commitment to the extent of the investment by other equity investors.
CREDIT FINANCING. On September 28, 2000, Simmer Acquisition Corporation
received an executed commitment letter from The Chase Manhattan Bank, Chase
Securities and CSFB under which The Chase Manhattan Bank, Chase Securities and
CSFB agreed to provide credit facilities consisting of a $75,000,000 tranche A
term loan facility, a $118,000,000 tranche B term loan facility, and a
$50,000,000 senior secured revolving credit facility. An amount to be agreed
upon of the revolving facility will be available in the form of letters of
credit. The net proceeds of the term loan facilities (together with proceeds of
the equity contribution and other cash held by Simmer Acquisition Company) will
be used to finance the merger, including repayment of some of Simpson's and its
subsidiaries' existing debt and paying related fees and expenses. The proceeds
of loans under the revolving facility will be used by Simpson for general
corporate purposes after the merger. Letters of credit will be used by Simpson
for general corporate purposes after the merger.
- Loans under the tranche A facility will bear interest at a rate of, at
Simmer Acquisition Corporation's option, adjusted LIBOR plus 3% or the
alternate base rate plus 2%. The alternate base rate is the highest of
The Chase Manhattan Bank's prime rate, the Federal Funds Effective Rate
plus 1/2 of 1% and the Base CD rate plus 1%. Loans under the tranche B
facility will bear interest at a rate of, at Simmer Acquisition
Corporation's option, adjusted LIBOR plus 3.75% or the alternate base
rate plus 2.75%. Loans under the revolving facility will bear interest at
a rate of, at Simmer Acquisition Corporation's option, adjusted LIBOR
plus 3% or the alternate base rate plus 2%.
- The tranche A facility and the revolving facility will each mature five
years and six months after the closing of the merger. The tranche B
facility will mature seven years after the closing of the merger.
- Loans under these facilities will be secured by all of the assets of
Simpson, Simmer Acquisition Company and, with certain limited exceptions,
Simpson's subsidiaries.
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<PAGE> 24
Each of The Chase Manhattan Bank, Chase Securities and CSFB commitments is
subject to customary conditions, including the negotiation, execution and
delivery of definitive documentation with respect to each commitment. Simmer
Acquisition Company does not have any plans or arrangements to refinance or
repay the facilities to be entered into in connection with the merger, other
than to make payments to the lenders at maturity and otherwise, in accordance
with the facilities' terms. In the event Heartland determines to transfer its
interests in Simmer Acquisition Company to MascoTech, it expects to have
arranged for the necessary debt financing to complete the merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material U.S. federal income tax
consequences of the merger. This discussion is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the regulations
promulgated under the Code, Internal Revenue Service rulings, and judicial and
administrative rulings in effect as of the date of this document, all of which
are subject to change, possibly with retroactive effect. This discussion assumes
that shareholders have held their Simpson common stock as "capital assets"
(generally, property held for investment) under the Internal Revenue Code. This
discussion does not address all aspects of federal income taxation that may be
relevant to a shareholder in light of the shareholder's particular circumstances
or to those shareholders subject to special rules, such as shareholders who are
not citizens or residents of the United States, financial institutions or
broker-dealers, tax-exempt organizations, insurance companies, dealers in
securities, foreign corporations, shareholders who acquired their common stock
through the exercise of options or similar derivative securities or otherwise as
compensation or shareholders who hold their common stock as part of a straddle
or conversion transaction. This discussion does not address the U.S. federal
income tax consequences to holders of restricted stock awards or options on
Simpson's common stock.
The disposition of Simpson common stock pursuant to the merger will be a
taxable transaction for U.S. federal income tax purposes. For U.S. federal
income tax purposes, a shareholder of Simpson common stock will recognize
capital gain or loss in an amount equal to the difference between (i) the amount
realized in the merger and (ii) such shareholder's adjusted tax basis in the
shares of common stock surrendered in the merger. A shareholder's adjusted tax
basis in the shares of common stock generally will equal the beneficial owner's
purchase price for such shares of common stock. Gain or loss must be determined
separately for each block of common stock (i.e., common stock acquired at the
same cost in a single transaction) surrendered in the merger.
Net capital gain recognized by non-corporate taxpayers from the sale of
property held more than one year will generally be taxed at a rate not to exceed
20% for U.S. federal income tax purposes. Net capital gain from property held
for one year or less will be subject to tax at ordinary income tax rates. In
addition, capital gains recognized by a corporate taxpayer will be subject to
tax at the ordinary income tax rates applicable to corporations. In general,
capital losses are deductible only against capital gains and are not available
to offset ordinary income. However, individual taxpayers are allowed to offset a
limited amount of capital losses against ordinary income.
Payments in connection with the merger may be subject to "backup
withholding" at a rate of 31%, unless a shareholder of common stock:
- comes within certain exempt categories (generally including corporations,
financial institutions and certain foreign individuals) under backup
withholding rules, or
- provides the payer of such payments with the shareholder's correct
taxpayer identification number on Form W-9 and certifies under penalty of
perjury that such number is correct and that such shareholder is not
subject to backup withholding.
Backup withholding is not an additional tax but merely an advance payment;
any amounts so withheld may be credited against the U.S. federal income tax
liability of the shareholder subject to the withholding and may be refunded to
the extent it results in an overpayment of tax. Each shareholder of common stock
should consult its own tax advisor as to its qualification for exemption from
backup withholding and the procedure for obtaining this exemption.
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<PAGE> 25
We intend this discussion to provide only a summary of the material federal
income tax consequences of the merger to the shareholders. In addition, we do
not address tax consequences that may vary with or are contingent upon
individual circumstances, including any non-income tax or any foreign, state or
local tax consequences of the merger. Accordingly, we strongly urge you to
consult your tax advisor to determine your particular U.S. federal, state, local
or foreign income or other tax consequences resulting from the merger, with
respect to your individual circumstances.
REGULATORY MATTERS
MERGER AGREEMENT. We have filed the required notification under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and on October 31, 2000
the required waiting period under the Hart-Scott-Rodino Act was terminated. The
Antitrust Division of the United States Department of Justice, the Federal Trade
Commission or any state or foreign governmental authority could take action with
respect to the merger under the antitrust laws as it deems necessary in the
public interest. This action could include seeking to enjoin the merger or
seeking Heartland's divestiture of Simpson or Simpson's divestiture of all or
some portion of its business. Private parties may also seek to take legal action
under the antitrust laws under certain circumstances.
Based on information available to us, we believe that the merger will
comply with all significant federal, state and foreign antitrust laws. We cannot
assure you, however, that there will not be a challenge to the merger on
antitrust grounds or that, if this challenge were made, we would prevail.
OTHER LAWS. Simpson conducts operations in a number of other jurisdictions
where regulatory filings, notifications or approvals with applicable commissions
and other authorities may be required or advisable in connection with completion
of the merger. Simpson currently is in the process of reviewing whether other
filings or approvals may be required or desirable in these other jurisdictions.
We recognize that some of these filings may not be completed before the closing,
and that some of these approvals, which are not required to be obtained prior to
the closing, may also not be obtained before the closing.
ACCOUNTING TREATMENT OF THE MERGER
The merger will be accounted for by Simmer Acquisition Company as a
"purchase" in accordance with generally accepted accounting principles.
Consequently, the aggregate consideration paid by Simmer Acquisition Company in
connection with the merger will be allocated to Simpson's assets and liabilities
based upon their fair values, with any excess being treated as goodwill.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of Simpson's board of directors with
respect to the Agreement and Plan of Merger and the merger, Simpson shareholders
should be aware that certain directors and members of management of Simpson have
interests in the merger that are different from, or in addition to, their
interests as Simpson shareholders generally. Simpson's board of directors was
aware of these interests and considered them, among other matters, in approving
the merger.
STOCK OPTIONS
Pursuant to the Agreement and Plan of Merger, each outstanding stock
option, whether vested or not, will be canceled and holders of options with an
exercise price per share that is less than the merger consideration received by
the shareholders will after the merger receive for each share of Simpson common
stock subject to such options an amount equal to the merger consideration less
the applicable exercise price and any applicable withholding tax for each such
share. Any option, whether vested or not, with an exercise price that is equal
to or more than the merger consideration will be canceled.
SEVERANCE AGREEMENTS
Consummation of the transactions contemplated by the Agreement and Plan of
Merger may result in severance payments becoming payable to one or more of the
following officers of Simpson pursuant to letter agreements between Simpson and
such officer(s): Roy E. Parrott, George G. Gilbert, James A. Hug, James B.
Painter, Vinod M. Khilnani, George A. Thomas, Charles A. Pestow, Richard R.
Lefebvre, James T.
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Strahley, and Jeoffrey A. Burris. The individual letter agreement with Mr.
Parrott provides that, if Simpson terminates Mr. Parrott's employment during the
three years following a change in control of Simpson, other than due to death or
disability or for cause, or if Mr. Parrott terminates his employment for good
reason, Simpson must pay Mr. Parrott a lump sum equal to 36 months of his base
monthly compensation as of the date of termination, plus 36 months' worth of
short term incentive bonus payments, calculated using the average of such bonus
payments made to him during the two years prior to the termination. Mr. Parrott
would also be entitled to receive full benefits under each employee welfare
benefit plan for which he was eligible at the time of termination for up to 36
months, vesting credit of up to 36 months under Simpson's Supplemental Executive
Retirement Plan, and would be fully vested in all outstanding stock options
granted to him under any of Simpson's stock option plans prior to the change in
control. Simpson is also obliged to "gross up" the payments to Mr. Parrott to
the extent any of the payments are subject to excise tax as a result of being
deemed "excessive parachute payments." The merger will constitute a change in
control under the terms of this agreement.
The individual letter agreements with Messrs. Gilbert, Hug, Painter,
Pestow, Lefebvre, Strahley and Burris all provide that, if Simpson terminates
such individual's employment during the two years following a change in control
of Simpson other than due to death or disability or for cause, or if during that
time such individual terminates his employment for good reason, Simpson must pay
him his full base salary through the date of termination, plus any amounts due
under Simpson's bonus plans. For 24 months after a change in control, each such
individual would also be entitled to receive from Simpson his full salary plus
1/12 the average short-term incentive compensation accrued during the two years
prior to termination. Simpson must also continue his participation in certain
option programs, employee welfare benefits, allow him to immediately exercise
any options he may hold to purchase Simpson's stock, and allow him full credit
under Simpson's retirement plans for service through 24 months after a change in
control. These amounts may be reduced to the extent that they would constitute
an "excess parachute payment" under Section 280G of the Internal Revenue Code.
The merger will constitute a change in control under the terms of these
agreements.
The individual letter agreements with Messrs. Khilnani and Thomas provide
that, if Simpson terminates such individual's employment during the two years
following a change in control of Simpson other than due to death or disability
or for cause, or if during that time such individual terminates his employment
for good reason, Simpson must pay him a lump sum equal to 30 months of his base
monthly compensation in effect at the date of termination plus 30 months' worth
of short term incentive bonus payments calculated using the average of such
payments made to him during the two years prior to the date of termination. Each
individual would also be entitled to receive full benefits under each employee
welfare benefit plan for which he was eligible at the time of termination for up
to 30 months, vesting credit of up to 30 months under Simpson's Supplemental
Executive Retirement Plan, and would be fully vested in all outstanding stock
options granted to him prior to the change in control. These amounts may be
reduced to 2.99 times the "base amount" as defined in Internal Revenue Code
Section 280G. The merger will constitute a change in control under the terms of
these agreements.
RESTRICTED STOCK AWARDS
All existing restricted stock awards will be treated as having vested and
all restrictions pertaining to such awards will be treated as having lapsed
immediately prior to the effective time of the merger.
OTHER EMPLOYEE BENEFITS
Simmer Acquisition Company has agreed that for a period beginning at the
effective time of the merger and ending on December 31, 2002, Simpson as the
surviving corporation of the merger will continue to provide to its employees
and its subsidiaries' employees compensation and employee benefits substantially
equivalent to those in place at the time the Agreement and Plan of Merger was
signed. Simpson and its subsidiaries will not, however, be required to offer
compensation and benefit plans or arrangements with employer stock as a
component.
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See "Merger Agreement -- Covenants of Simmer Acquisition
Company -- Employee Benefits After the Merger" for a description of the benefits
provided by the agreement for employees of Simpson generally.
INDEMNIFICATION AND INSURANCE
Under the Agreement and Plan of Merger, Simmer Acquisition Company has
agreed to cause Simpson, as the surviving corporation, and its successors and
assigns to:
- for a period of six years after the merger, indemnify and hold harmless
present and former directors and officers of Simpson and its subsidiaries
for all acts or omissions occurring at or prior to the merger to the
fullest extent permitted by law or provided under Simpson's articles of
incorporation and bylaws as of the date of the Agreement and Plan of
Merger; and
- provide, for a period of six years after the merger, an insurance and
indemnification policy that grants Simpson's officers and directors
coverage for acts and omissions occurring prior to the merger on terms no
less favorable than Simpson's policy in effect as of the date of the
Agreement and Plan of Merger. In no event, however, will Simpson be
required to pay annual premium payments for this coverage in excess of
225% of the annual premiums paid by Simpson as of the date of the
Agreement and Plan of Merger and provided, further, that if the annual
premiums for this coverage exceed that amount, Simpson will provide a
policy providing the best available coverage obtainable for premiums not
exceeding that amount.
If Simpson were to merge or otherwise to dispose of all or substantially
all of its assets, the surviving corporation or transferee must assume this
obligation.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Agreement and Plan
of Merger. The following description may not contain all the information about
the agreement that is important to you. We encourage you to read the Agreement
and Plan of Merger itself, which is attached as Annex A and incorporated by
reference.
THE MERGER
The Agreement and Plan of Merger provides that as promptly as practicable
after all of the conditions to the merger have been satisfied or waived, Simmer
Acquisition Corporation will be merged with and into Simpson, after which its
separate existence will cease and Simpson will be the surviving corporation. The
merger will become effective at the time the applicable certificate of merger is
filed with the Department of Consumer and Industry Services of the State of
Michigan, or at a later time as specified in that certificate of merger.
CONSIDERATION IN THE MERGER
COMMON STOCK. At the effective time of the merger, each share of issued and
outstanding Simpson common stock held by shareholders will be converted into the
right to receive $13.00 in cash.
APPRAISAL AND DISSENTERS' RIGHTS
Because Simpson's shareholders will receive cash for their shares in the
event that the merger is approved by the holders of a majority of Simpson's
common stock, no Simpson shareholder will be entitled to appraisal or
dissenters' rights in connection with the merger.
OPTIONS AND RESTRICTED STOCK AWARDS
Certain options are issued and outstanding under Simpson's 1984 Stock
Option and Incentive Plan, its 1993 Executive Long-Term Stock Incentive Plan and
its 1993 Non-Employee Director Stock Option Plan. At
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or immediately prior to the effective time of the merger, each such outstanding
stock option, whether or not vested, will be canceled. Simpson will then, as
soon as possible after the effective time of the merger, pay to the holders of
such options an amount in cash equal to the excess, if any, of the merger
consideration over the exercise price of the option, multiplied in each case by
the number of shares the option holder could have purchased (assuming full
vesting of all options) had the holder fully exercised the option immediately
prior to the effective time of the merger. Options with an exercise price below
the merger consideration will be cancelled with no consideration.
Immediately prior to the effective time of the merger, all restricted stock
awards granted under any of the option plans listed above will be treated as
having vested and all restrictions on the awards will be treated as having
lapsed.
EXCHANGE OF SHARES
Prior to the effective time of the merger, Simmer Acquisition Company will
appoint a paying agent for the payment of the merger consideration. Prior to the
effective time of the merger, Simmer Acquisition Company will provide the paying
agent funds in an amount sufficient to pay the merger consideration to the
shareholders of Simpson.
As soon as possible after the effective time of the merger, the paying
agent will mail to each holder of record of Simpson common stock as of the
effective date a letter of transmittal and instructions. For a period of six
months after the effective time of the merger, holders of Simpson common stock
certificates may surrender their certificates and a duly executed letter of
transmittal to the paying agent. Thereafter, until two years after the effective
date of the merger, holders may surrender their certificates and a duly executed
letter of transmittal to Simpson. In either case, upon surrender, the holders
will receive the merger consideration multiplied by the number of shares
represented by each certificate surrendered. After the effective time of the
merger, and until surrendered, each certificate for Simpson stock will only
represent the right to receive the merger consideration and holders of such
certificates shall cease to have any rights with respect to the shares
represented by such certificates.
Shareholders must surrender their certificates for common stock of Simpson
prior to two years after the effective time of the merger in order to receive
the merger consideration.
The merger consideration paid in the merger will be paid in full to the
holders of shares without interest, and will be subject to reduction only for
any applicable United States federal or other withholding or stock transfer
taxes payable by such holder.
THE SURVIVING CORPORATION
Immediately after the effective time of the merger:
- the articles of incorporation of Simmer Acquisition Corporation in effect
at the effective time of the merger will become the articles of
incorporation of Simpson, provided that the articles of incorporation of
Simmer Acquisition Corporation will be amended to reflect Simpson's name;
- the bylaws of Simmer Acquisition Corporation in effect at the effective
time of the merger will become the bylaws of Simpson; and,
- the directors of Simmer Acquisition Corporation and the officers of
Simpson at the effective time of the merger will become the directors and
officers, respectively, of Simpson at the effective time of the merger.
REPRESENTATIONS AND WARRANTIES
Simpson and Simmer Acquisition Company make a number of reciprocal
representations and warranties as to, among other things, due incorporation and
good standing, corporate authority to enter into the contemplated transactions,
information related to each of them supplied for use in this document, absence
of conflicts, required consents, filings with governmental entities and finders'
fees.
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Representations and warranties made solely by Simpson relate to the
following items: capitalization, nature and ownership of subsidiaries and equity
investments, delivery of and disclosure in required SEC filings, the form and
substance of this proxy statement, absence of certain changes, absence of
undisclosed material liabilities, compliance with laws and court orders, absence
of litigation, filing and accuracy of tax returns, tax audits, tax effects of
certain employment agreements, employee benefit plans, environmental matters,
inapplicability of state anti-takeover statutes, rendering Simpson's rights
agreement inapplicable to the merger and receipt of an opinion from a financial
advisor.
Representations and warranties made solely by Simmer Acquisition Company
relate to receipt of commitment letters and other financing matters.
Many of these representations and warranties will not be breached unless
the breach of the representation or warranty has a material adverse effect on
Simpson. For purposes of the Agreement and Plan of Merger, a material adverse
effect can be one of two things. The first is a material adverse effect on the
assets, liabilities (contingent or otherwise) condition (financial or
otherwise), business or results of operations of Simpson and its subsidiaries,
taken as a whole, other than any material adverse effects resulting or arising
from:
- the Agreement and Plan of Merger or the transactions contemplated by the
Agreement and Plan of Merger or announcement of the execution of the
Agreement and Plan of Merger or those transactions;
- changes in circumstances or conditions affecting the industry in which
Simpson and its subsidiaries operate or affecting industrial
manufacturing companies in general;
- changes in general economic, regulatory or political conditions or in
financial markets in the U.S. or Europe; or
- changes in generally accepted accounting principles.
A material adverse effect can also be an effect which is materially adverse
to the ability of Simpson or Simmer Acquisition Company to consummate the merger
or the other transactions contemplated by the Agreement and Plan of Merger,
other than effects arising out of the matters covered in the last three bullet
points listed above.
The representations and warranties in the Agreement and Plan of Merger do
not survive the merger.
COVENANTS OF SIMPSON
INTERIM OPERATIONS. Simpson has agreed, and has agreed to cause each of its
subsidiaries, to conduct its operations according to its ordinary and usual
course of business, consistent with past practice, and use all commercially
reasonable efforts to preserve intact current business organizations, to keep
available the services of current officers and employees, to preserve
relationships with customers, suppliers, licensors, licensees, advertisers,
distributors and others having business dealings with Simpson or a subsidiary
and to preserve goodwill.
Subject to certain exceptions, Simpson has agreed not to, and to cause each
of its subsidiaries not to, without the consent of Simmer Acquisition Company:
- amend its corporate charter/organizational documents, or alter its
corporate structure or its capitalization or the ownership of any
material subsidiary;
- merge or consolidate with another person or acquire a material amount of
the stock or assets of another person;
- sell, lease, license or otherwise dispose of any subsidiary or any
material amount of assets, securities or property;
- make capital expenditures that would exceed 110% of the amounts set forth
in the most recent version of the business plan provided to Simmer
Acquisition Company;
- enter into any new material line of business;
24
<PAGE> 30
- amend, modify, terminate or waive any material rights under any material
contracts with others;
- issue or encumber capital stock of Simpson or any subsidiary of Simpson;
- declare, set aside, make or pay any dividend or distribution, except that
Simpson may pay quarterly cash dividends in and after the first quarter
of 2001 not in excess of $.10 per share per quarter having customary
record and payment dates and a wholly owned subsidiary may make a
distribution to Simpson or another wholly-owned subsidiary of Simpson;
- split, combine or reclassify any capital stock;
- purchase, repurchase, redeem or otherwise acquire any of Simpson's
securities;
- incur any additional indebtedness for borrowed money except for
borrowings in the ordinary course of business consistent with past
practice as may be available under current facilities and in any case no
more than $30 million in the aggregate;
- issue or sell any debt securities;
- make any loans to, capital contributions to, or investments in any other
person;
- assume, guaranty or endorse the obligations of another person;
- increase the compensation or severance pay of an existing officer or
director or enter into a new employment or severance agreement with an
existing director or officer or new officer;
- adopt any new employee benefit plan or change any existing employee
benefit plan;
- make any tax election or change methods of accounting;
- pay, discharge or satisfy any claim, liability or obligation in excess of
$1 million, or $3 million in the aggregate;
- settle or compromise material litigation;
- take any action which would make any representation or warranty
inaccurate in any material respect or omit to take any action necessary
to prevent any representation or warranty from being materially
inaccurate; or
- take any action with respect to the rights agreement.
SHAREHOLDER MEETING; PROXY MATERIAL. Simpson has agreed to take all
commercially reasonable actions and do all things necessary or advisable under
the Agreement and Plan of Merger and applicable laws to hold a shareholders'
special meeting, to make the appropriate filings with the SEC, to mail the proxy
statements to the shareholders, to obtain the necessary shareholder approvals,
and to comply with all applicable legal requirements.
SIMPSON BOARD OF DIRECTORS' COVENANT TO RECOMMEND. The board of directors
has agreed to recommend the approval and adoption of the Agreement and Plan of
Merger and the merger to Simpson's shareholders. However, subject to the
provisions of the Agreement and Plan of Merger described under the caption "No
Solicitation" below, the board of directors can withdraw, or modify in a manner
adverse to Simmer Acquisition Company, its recommendation if it determines in
good faith after consultation with its outside legal counsel that failing to
take such action would cause Simpson's board of directors to be in breach of its
fiduciary duties to Simpson's shareholders under applicable law.
ACCESS TO INFORMATION. Simpson has agreed that it and its subsidiaries will
give Simmer Acquisition Company reasonable access to the books and records and
other information concerning the business of Simpson and its subsidiaries.
25
<PAGE> 31
NO SOLICITATION. Simpson has agreed not to take the following actions
(other than in connection with the merger):
- seek, initiate, solicit or encourage any individual or entity to make an
acquisition proposal;
- enter into or participate in negotiations or discussions concerning an
acquisition proposal with any other person or group;
- furnish or disclose any non-public information or give access to any of
the properties, employees, business, assets, books or records of Simpson
or its subsidiaries, in connection with any acquisition proposal; or
- approve or recommend or agree to approve or recommend any acquisition
proposal.
In response to an unsolicited acquisition proposal, the board of directors
may furnish information and participate in discussions if the board of directors
in good faith determines after consultation with its outside legal counsel that
failing to take such action would cause the board of directors to be in breach
of its fiduciary duties to Simpson's shareholders under applicable law. Prior to
furnishing such information or participating in such discussions, Simpson and
the party making such an offer must enter into a confidentiality agreement on
customary terms. Simpson must also notify Simmer Acquisition Company of the
receipt of, terms of, changes to, or modifications of, and the identity of the
person making, such an acquisition proposal. The board of directors may also
withdraw, or modify in a manner adverse to Simmer Acquisition Company, its
recommendation of the merger if it determines in good faith after consultation
with its outside legal counsel that failing to take such action would cause
Simpson's board of directors to be in breach of its fiduciary duties to
Simpson's shareholders under applicable law.
The Agreement and Plan of Merger defines "acquisition proposal" as an offer
or proposal for any acquisition or purchase of 30% or more of the consolidated
assets of Simpson and its subsidiaries or an equity interest in Simpson
representing in excess of 30% of the voting power of its securities, or any
merger or other business combination, sale of substantially all of its assets or
similar transaction involving Simpson or any of its material subsidiaries.
Please see "The Merger Agreement -- Termination; Break-up Fee" for
information on break-up fees.
STATE TAKEOVER LAWS. Simpson will, upon the request of Simmer Acquisition
Company, take all reasonable steps to assist in any challenge by Simmer
Acquisition Company to the validity or applicability of any state takeover law
to the merger. Because of the structure of the proposed merger transaction, no
takeover provision under Michigan law is applicable.
REPORTS. Simpson has agreed to provide Simmer Acquisition Company with
internal financial information.
COVENANTS OF SIMMER ACQUISITION COMPANY
ACTION. Simmer Acquisition Company has agreed to take all action necessary
to cause Simmer Acquisition Corporation to perform its obligations and to
consummate the merger on the terms and conditions in the Agreement and Plan of
Merger.
DIRECTOR AND OFFICER LIABILITY. Simmer Acquisition Company has agreed that
the surviving corporation will, to the extent provided in the Agreement and Plan
of Merger:
- indemnify and hold harmless the present and former officers and directors
of Simpson and each of its subsidiaries for a period of six years after
the merger for acts or omissions occurring at or prior to the effective
time of the merger; and
- provide officers' and directors' liability insurance coverage for a
period of six years after the effective time for acts or omissions
occurring prior to the merger, subject to limitations on premium
payments.
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<PAGE> 32
These matters are discussed in more detail above under the heading
"Interests of Certain Persons in the Merger -- Indemnification and Insurance."
EMPLOYEE BENEFITS AFTER THE MERGER. For a period beginning at the effective
time of the merger and ending on December 31, 2002, Simmer Acquisition Company
will cause Simpson and its subsidiaries to provide to its employees who were
employed immediately before the effective time of the merger substantially
equivalent compensation and benefits. However, Simmer Acquisition Company will
not be required to offer compensation or benefit plans where employer stock is a
component. Simmer Acquisition Company will also cause Simpson to perform its
duties under all benefit plans, although Simmer Acquisition Company may modify
the plans to the extent modification is allowed by the terms of the plans
themselves.
These matters are also discussed above under the heading "Interests of
Certain Persons in the Merger -- Severance Agreements" and "Interests of Certain
Persons in the Merger -- Other Employee Benefits."
FINANCING ARRANGEMENTS. Simmer Acquisition Corporation has agreed to use
commercially reasonable efforts to obtain financing sufficient to pay amounts
required by the Agreement and Plan of Merger, whether by taking advantage of
existing commitments or otherwise.
COVENANTS OF SIMPSON AND SIMMER ACQUISITION COMPANY
COMMERCIALLY REASONABLE EFFORTS. Simpson and Simmer Acquisition Company
have agreed, subject to the fiduciary duties of Simpson's board of directors, to
use commercially reasonable efforts to consummate the merger, including making
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, if
necessary.
CERTAIN FILINGS. Simpson and Simmer Acquisition Company have agreed to
cooperate with one another in connection with the preparation of Simpson's proxy
statement, in making any other filings, furnishing information required in
connection with the merger or with Simpson's proxy statement and in seeking to
obtain any required actions, consents, approvals or waivers in a timely manner.
PUBLIC ANNOUNCEMENTS. Simmer Acquisition Company and Simpson have agreed to
consult with each other before issuing any press release or making any public
statement with respect to the Agreement and Plan of Merger or the merger.
NOTICES OF CERTAIN EVENTS. Simmer Acquisition Company and Simpson have
agreed to promptly notify the other of:
- any communication by any person claiming that its consent is required in
connection with the transaction;
- any notice from any governmental or regulatory agency in connection with
the transaction;
- any litigation commenced or threatened against Simpson or its
subsidiaries;
- the occurrence or non-occurrence of any fact or event which would
reasonably be likely to cause any representation or warranty to be untrue
in any material respect at any time up to and including the effective
time of the merger or to cause any covenant, condition or agreement not
to be complied with or satisfied; or
- any failure of either party to comply with or satisfy any covenant,
condition or agreement.
CONFIDENTIALITY. Prior to the effectiveness of the merger and after any
termination of the Agreement and Plan of Merger, each party has agreed to hold
in confidence all confidential documents and information concerning the other
party.
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<PAGE> 33
PRINCIPAL CONDITIONS TO THE COMPLETION OF THE MERGER
MUTUAL CLOSING CONDITIONS. Each party's obligation to complete the merger
is subject to the satisfaction of the following conditions:
- approval by not less than a majority of the outstanding shares of Simpson
common stock of the Agreement and Plan of Merger;
- expiration of the waiting period under the Hart-Scott-Rodino Act and any
other waiting periods under other applicable antitrust laws;
- absence of legal prohibitions to the completion of the merger;
- receipt of a solvency opinion addressed to the board of directors of
Simpson, Simmer Acquisition Company and Simmer Acquisition Corporation as
to the solvency of Simpson after giving effect to the transactions
contemplated by the Agreement and Plan of Merger;
- filings for all necessary licenses, permits, qualifications, consents,
waivers, approvals, authorizations or orders must have been obtained
and/or made by Simpson, except where the failure to do so would not be
reasonably expected to have a material adverse effect; and
- all actions by, or filings with, governmental bodies that are required to
permit the consummation of the merger have been made.
ADDITIONAL CLOSING CONDITIONS FOR SIMMER ACQUISITION COMPANY AND SIMMER
ACQUISITION CORPORATION'S BENEFIT. The obligations of Simmer Acquisition Company
and Simmer Acquisition Corporation to complete the merger are subject to the
satisfaction of the following additional conditions, among others:
- Simpson's performance in all material respects of all of its obligations
under the Agreement and Plan of Merger;
- the representations and warranties of Simpson must be true in all
material respects as of the relevant times and Simpson shall have
provided a certificate to this effect to Simmer Acquisition Company;
- the absence of any legal prohibition restraining or preventing the merger
or restraining the effective operation of the business of Simpson and its
subsidiaries after the effective date of the merger;
- completion of debt financing necessary to complete the merger;
ADDITIONAL CLOSING CONDITIONS FOR SIMPSON'S BENEFIT. Simpson's obligation
to complete the merger is subject to the satisfaction of the following
additional conditions:
- Simmer Acquisition Company's and Simmer Acquisition Corporation's
performance in all material respects of all of their obligations under
the Agreement and Plan of Merger;
- Simmer Acquisition Company's representations and warranties must be true
in all material respects as of the relevant times and Simmer Acquisition
Company shall have provided a certificate to this effect to Simpson; and
- the absence of any legal prohibition restraining or preventing the merger
or restraining the effective operation of the business of Simpson and its
subsidiaries after the effective date of the merger.
The party entitled to assert the condition may waive some of its conditions
to the merger, but no party may waive any of the first three conditions listed
under "Principal Conditions to the Completion of the Merger -- Mutual Closing
Conditions."
TERMINATION; BREAK-UP FEE
TERMINATION. The Agreement and Plan of Merger may be terminated and the
merger may be abandoned at any time prior to the effective time of the merger:
- by mutual written consent of Simpson and Simmer Acquisition Company;
- by either party, if: (i) the merger has not been completed before March
31, 2001, but the Agreement and Plan of Merger may not be terminated for
this reason by a party whose breach of any provision of the Agreement and
Plan of Merger resulted in the failure of the merger to be completed by
March 31,
28
<PAGE> 34
2001; (ii) the completion of the merger is legally prohibited by final and
non-appealable order, judgment, injunction or decree, or by law, but the right
to terminate under this provision is not available to a party whose breach
results in the application of the legal prohibition; (iii) Simpson
shareholders fail to give the required approval to the Agreement and Plan
of Merger and the merger; or (iv) the board of directors fails to make or
withdraws or adversely modifies its approval or recommendation of the
merger; however, Simpson cannot terminate the Agreement and Plan of Merger
until after five business days after notice of such determination by
Simpson's board of directors is given to Simmer Acquisition Company;
- by Simmer Acquisition Company, if Simpson breaches or fails to perform
any representation, warranty, covenant or agreement in any material
respect and cannot cure it by March 31, 2001; and
- by Simpson, if Simmer Acquisition Company or Simmer Acquisition
Corporation breaches or fails to perform any representation, warranty,
covenant or agreement in any material respect and cannot cure it by March
31, 2001.
EXPENSE REIMBURSEMENT. If the Agreement and Plan of Merger is terminated
according to the terms listed above under conditions where Simmer Acquisition
Company has satisfied all of the closing conditions for Simpson's benefit and
Simpson has not satisfied all of the conditions for Simmer Acquisition Company's
benefit then, if Simpson has not already paid the break-up fee described below,
Simpson must pay Simmer Acquisition Company's and Simmer Acquisition
Corporation's fees and expenses incurred in connection with the Agreement and
Plan of Merger, up to a total of $1 million.
BREAK-UP FEE. Simpson must pay Simmer Acquisition Company a break-up fee
(referred to in the Agreement and Plan of Merger as the "topping fee") of $7.5
million, minus any previously reimbursed expenses of Simmer Acquisition Company,
in each of the following circumstances:
- (1) a third party publicly announces an acquisition proposal for Simpson,
and (2) the Agreement and Plan of Merger is terminated because Simpson's
board of directors has adversely changed its recommendation of the
Agreement and Plan of Merger or the related merger or because the
necessary shareholder vote for the Agreement and Plan of Merger and the
merger are not obtained, and (3) Simpson or any of its subsidiaries
enters into another agreement or consummates another transaction related
to an acquisition proposal within six months of termination of the
Agreement and Plan of Merger; or
- (1) a third party publicly announces an acquisition proposal for Simpson,
and (2) the Agreement and Plan of Merger is terminated by either party
because the transactions have not been consummated by March 31, 2001, or
by Simmer Acquisition Company because Simpson has breached any of its
obligations or representations and cannot cure the breach by March 31,
2001, and (3) Simpson or any of its subsidiaries enters into another
agreement or consummates another transaction with that third party
related to an acquisition proposal within six months of termination of
the Agreement and Plan of Merger.
AMENDMENTS; WAIVERS.
Any provision of the Agreement and Plan of Merger may be amended or waived
prior to the effective time of the merger if the amendment or waiver is in
writing and is signed, in the case of an amendment, by each party to the
Agreement and Plan of Merger, or in the case of a waiver, by each party against
whom the waiver is to be effective, subject to applicable law. After the
adoption of the Agreement and Plan of Merger by the shareholders of Simpson,
however, no amendment may be made to the Agreement and Plan of Merger to reduce
the amount or change the kind of consideration to be received by the
shareholders without their further approval.
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<PAGE> 35
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
We are including the following discussion to inform you generally of some
of the risks and uncertainties that can affect Simpson and to take advantage of
the "safe harbor" protection for forward-looking statements afforded under
federal securities laws.
From time to time, Simpson's management or persons acting on Simpson's
behalf make forward-looking statements to inform existing and potential security
holders about Simpson. These statements may include projections and estimates
concerning the timing and success of specific projects and Simpson's future
income or capital spending. Forward-looking statements are generally accompanied
by words such as "estimate," "project," "predict," "believe," "expect,"
"anticipate," "plan," "goal" or other words that convey the uncertainty of
future events or outcomes. In addition, sometimes we will specifically describe
a statement as being a forward-looking statement. These statements by their
nature are subject to risks, uncertainties and assumptions and will be
influenced by various factors, including, but not limited to:
- Simpson's ability to consummate the merger;
- receipt of the required regulatory approvals related to the merger;
- competition;
- government regulation; and
- general economic and business conditions.
Should any of the assumptions underlying a forward-looking statement prove
incorrect, actual results could vary materially.
Except for the historical information contained in this proxy statement,
the matters discussed in this proxy statement are forward-looking statements
that are subject to risks, uncertainties and assumptions. Actual results could
differ materially based on numerous factors.
30
<PAGE> 36
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
FIVE PERCENT HOLDERS AND EXECUTIVE OFFICERS AND DIRECTORS OF SIMPSON
Set forth below is information concerning beneficial ownership of Simpson
common stock as of October 31, 2000 by (i) all persons known by Simpson to be
the beneficial owners of five percent or more of Simpson common stock, (ii) each
director of Simpson, (iii) each executive officer of Simpson and (iv) all
directors and executive officers of Simpson as a group. Except as indicated
below, each person exercises sole voting and investment power with respect to
the shares listed.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning those persons
who are known by management of Simpson to be beneficial owners of more than 5%
of Simpson's outstanding shares of common stock (as provided to Simpson by such
persons or the record holders of such shares.)
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
- ------------------- ----------------------- ----------
<S> <C> <C>
State Street Research & Management Co. ..................... 1,708,500 shrs.(1) 9.56%
One Financial Center
Boston, Massachusetts 02111-2690
Dimensional Fund Advisors, Inc. ............................ 1,313,225 shrs.(2) 7.35%
c/o DFA Investment Dimensions Group Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
DePrince, Race & Zollo, Inc. ............................... 1,268,650 shrs.(3) 7.10%
201 South Orange Avenue, Suite 850
Orlando, Florida 32801
President and Fellows of Harvard College.................... 1,147,800 shrs.(4) 6.42%
c/o Harvard Management Company, Inc.
600 Atlantic Avenue, Boston, Massachusetts 02210
</TABLE>
- -------------------------
(1) Voting power -- 1,708,500 shares (9.56%); as reported on a Form 13F-HR dated
August 11, 2000, filed by State Street Research & Management.
(2) Sole voting power -- 1,313,225 shares (7.35%); sole investment
power -- 1,313,225 shares (7.35%); as reported on a Form 13F-HR dated August
29, 2000, filed by Dimensional Fund Advisors Inc.
(3) Sole voting power -- 1,268,650 (7.1%); sole investment power -- 1,268,650
(7.1%); as reported on a Form 13F-HR dated August 15, 2000, filed by
DePrince, Race & Zollo, Inc.
(4) Sole voting power -- 1,147,800 shares (6.42%); sole investment
power -- 1,147,800 shares (6.42%); as reported on a Form 13F-HR/A dated
August 8, 2000, filed by President and Fellows of Harvard College.
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<PAGE> 37
SECURITY OWNERSHIP OF MANAGEMENT
The following table provides information about the beneficial ownership of
Simpson's Common Stock by the directors and executive officers of Simpson.
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 2000
-----------------------------------
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP(1) OF CLASS
- ---- ----------------------- --------
<S> <C> <C>
R.E. Parrott................................................ 210,930 1.17%
W.J. Kirchberger............................................ 93,432 0.52%
J.A. Hug.................................................... 86,058 0.48%
F.L. Weaver................................................. 98,135(2) 0.54%
F.K. Zinn................................................... 62,061(3) 0.34%
V.M. Khilnani............................................... 40,976 0.22%
R.W. Navarre................................................ 34,562 0.19%
G.R. Kempton................................................ 33,813(4) 0.19%
G.A. Thomas................................................. 33,178(5) 0.18%
J.B. Painter................................................ 23,102 0.13%
R.L. Roudebush.............................................. 22,000 0.12%
S.F. Haka................................................... 10,020 0.05%
M.E. Batten................................................. 10,000 0.05%
------- ----
Directors and Executive Officers as a Group................. 758,267 4.18%
</TABLE>
- -------------------------
(1) Includes shares beneficially held for certain executive officers and
directors under the Simpson Industries, Inc. Savings Plan and also includes
289,776 shares of Common Stock certain executive officers and directors may
acquire within the next 60 days pursuant to the exercise of stock options
under Simpson's long-term incentive plans.
(2) Includes 71,917 shares owned by Prudence B. Weaver, Mr. Weaver's wife, for
her own benefit.
(3) Includes 50,061 shares owned jointly by Mr. Zinn and Ruth A. Zinn, his wife.
(4) Includes 20,463 shares owned jointly by Mr. Kempton and Joyce H. Kempton,
his wife.
(5) Includes 9,898 shares owned jointly by Mr. Thomas and Carolyn C. Thomas, his
wife.
INFORMATION ABOUT SIMMER ACQUISITION COMPANY,
SIMMER ACQUISITION CORPORATION AND HEARTLAND
SIMMER ACQUISITION COMPANY LLC
Simmer Acquisition Company is a Delaware limited liability company,
organized at the direction of Heartland Industrial Partners, L.P., its sole
member, for the purpose of facilitating the merger and the financing of the
merger. Simmer Acquisition Company does not have and is not expected to have
business activities, assets or liabilities, other than those arising under or
relating to the Agreement and Plan of Merger. Prior to the effective time of the
merger, Heartland may arrange for equity commitments to be provided to Simmer
Acquisition Company by other equity investors. In such event, Heartland will
continue to control Simmer Acquisition Company, but may reduce its equity
commitment to the extent of the investment by other equity investors. Simmer
Acquisition Company was formed to serve as a parent company of Simmer
Acquisition Corporation in order to facilitate the merger and the financing for
the merger. Its business address is c/o Heartland Industrial Group, L.L.C., 55
Railroad Avenue, Greenwich, Connecticut 06830 and its telephone number is (203)
861-2622.
We have not provided any financial or additional information for Simmer
Acquisition Company since it is a transitory merger vehicle formed in connection
with the proposed merger and has no independent operations, assets or
liabilities, other than in connection with the Agreement and Plan of Merger.
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<PAGE> 38
SIMMER ACQUISITION CORPORATION
Simmer Acquisition Corporation is a Michigan corporation organized at the
direction of Simmer Acquisition Company, its sole shareholder. Simmer
Acquisition Corporation is a transitory merger vehicle which was formed solely
to facilitate the merger and will cease to exist at the time of the merger.
Accordingly, it does not have and is not expected to have business activities,
assets or liabilities, other than those arising under the Agreement and Plan of
Merger. Its business address is c/o Heartland Industrial Group, L.L.C., 55
Railroad Avenue, Greenwich, Connecticut 06830 and its telephone number is (203)
861-2622.
HEARTLAND INDUSTRIAL PARTNERS, L.P.
Heartland is a Delaware limited partnership established in January 2000.
The general partner of Heartland is Heartland Industrial Associates L.L.C. The
management, operation and policy of Heartland is vested exclusively in Heartland
Industrial Associates L.L.C., as general partner. Heartland is a private equity
firm formed to focus on investments in industrial companies. Its business
address is c/o Heartland Industrial Group, L.L.C., 55 Railroad Avenue,
Greenwich, Connecticut 06830 and its telephone number is (203) 861-2622.
HEARTLAND INDUSTRIAL ASSOCIATES L.L.C.
Heartland Industrial Associates L.L.C. is a Delaware limited liability
company. Heartland Industrial Associates L.L.C. was formed in December 1999 to
serve as the general partner of Heartland and to focus, through its affiliates,
on investments in industrial companies. The sole member of Heartland Industrial
Associates L.L.C. is David Stockman. Heartland Industrial Associates L.L.C. is
managed by its sole member and there are no managers of Heartland Industrial
Associates L.L.C. Its business address is c/o Heartland Industrial Group,
L.L.C., 55 Railroad Avenue, Greenwich, Connecticut 06830 and its telephone
number is (203) 861-2622.
APPRAISAL OR DISSENTERS' RIGHTS
Under Michigan law, because you will receive cash for your shares in the
event that the merger is approved by the holders of a majority of Simpson's
common stock, you will not have any right to dissent or demand a judicial
appraisal of the fair value of your shares.
FUTURE SHAREHOLDER PROPOSALS
Simpson will only hold an annual meeting in the year 2001 if the merger has
not already been completed. If such annual meeting is held, shareholder
proposals to be presented at the 2001 annual meeting must be received by Simpson
not later than November 17, 2000 if they are to be included in Simpson's proxy
statement for the 2001 annual meeting. Such proposals should be addressed to the
secretary at Simpson's executive offices. Shareholder proposals or director
nominations to be presented at the 2001 annual meeting or any special meeting
which are not to be included in the proxy statement for that meeting must be
received by Simpson not less than 60 nor more than 90 days prior to the date of
the meeting in accordance with the procedures set forth in Simpson's bylaws.
WHERE YOU CAN FIND MORE INFORMATION
Simpson files annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements or
other information that Simpson files at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms.
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an
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<PAGE> 39
Internet world wide web site that contains reports, proxy statements and other
information about issuers, including Simpson, who file electronically with the
SEC. The address of that site is http://www.sec.gov.
Heartland has supplied all information contained in this proxy statement
relating to Simmer Acquisition Company, Simmer Acquisition Corporation,
Heartland or Heartland Industrial Associates L.L.C., and Simpson has supplied
all information relating to Simpson.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT,
INCLUDING THE ANNEXES, TO VOTE ON THE AGREEMENT AND PLAN OF MERGER AND THE
MERGER. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT FROM WHAT IS CONTAINED IN THIS DOCUMENT. THIS PROXY STATEMENT IS DATED
NOVEMBER 15, 2000. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN IT IS ACCURATE
AS OF ANY DATE OTHER THAN THAT DATE, AND ITS MAILING TO SHAREHOLDERS SHALL NOT
CREATE ANY IMPLICATION TO THE CONTRARY.
34
<PAGE> 40
ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF
SEPTEMBER 29, 2000
AMONG
SIMPSON INDUSTRIES, INC.
SIMMER ACQUISITION COMPANY LLC
AND
SIMMER ACQUISITION CORPORATION
<PAGE> 41
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS............................................... A-1
SECTION 1.01. Definitions.............................. A-1
ARTICLE 2
THE MERGER................................................ A-4
SECTION 2.01. The Merger............................... A-4
SECTION 2.02. The Effective Time....................... A-4
SECTION 2.03. Effect of the Merger..................... A-4
SECTION 2.04. Effect on Capital Stock.................. A-4
SECTION 2.05. Payment for Shares....................... A-5
SECTION 2.06. Stock Options; Restricted Stock.......... A-6
SECTION 2.07. Stock Transfer Books..................... A-6
SECTION 2.08. No Further Ownership Rights in the
Shares................................................ A-6
SECTION 2.09. Lost, Stolen or Destroyed Certificates... A-6
SECTION 2.10. Further Action........................... A-7
ARTICLE 3
THE SURVIVING CORPORATION................................. A-7
SECTION 3.01. Articles of Incorporation................ A-7
SECTION 3.02. Bylaws................................... A-7
SECTION 3.03. Directors and Officers................... A-7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. A-7
SECTION 4.01. Corporate Existence and Power............ A-7
SECTION 4.02. Corporate Authorization.................. A-7
SECTION 4.03. Governmental Authorization............... A-8
SECTION 4.04. Non-contravention........................ A-8
SECTION 4.05. Capitalization........................... A-8
SECTION 4.06. Subsidiaries............................. A-9
SECTION 4.07. SEC Filings.............................. A-9
SECTION 4.08. Financial Statements..................... A-10
SECTION 4.09. Disclosure Documents..................... A-10
SECTION 4.10. Absence of Certain Changes............... A-10
SECTION 4.11. No Undisclosed Material Liabilities...... A-11
SECTION 4.12. Compliance with Laws and Court Orders.... A-11
SECTION 4.13. Litigation............................... A-11
SECTION 4.14. Finders' Fees............................ A-11
SECTION 4.15. Taxes.................................... A-12
SECTION 4.16. Employee Benefit Plans................... A-12
SECTION 4.17. Environmental Matters.................... A-14
SECTION 4.18. Antitakeover Statutes and Rights
Agreement............................................. A-14
SECTION 4.19. Opinion of Financial Advisor............. A-15
SECTION 4.20. Disclaimer of Other Representations and
Warranties............................................ A-15
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT.................. A-15
SECTION 5.01. Corporate Existence and Power............ A-15
SECTION 5.02. Authorization............................ A-15
SECTION 5.03. Governmental Authorization............... A-15
SECTION 5.04. Non-contravention........................ A-15
SECTION 5.05. Disclosure Documents..................... A-16
SECTION 5.06. Finders' Fees............................ A-16
SECTION 5.07. Financing................................ A-16
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 6
COVENANTS OF THE COMPANY.................................. A-17
SECTION 6.01. Conduct of the Company................... A-17
SECTION 6.02. Shareholder Meeting; Proxy Material...... A-19
SECTION 6.03. Access to Information.................... A-19
SECTION 6.04. No Solicitation.......................... A-19
SECTION 6.05. State Takeover Laws...................... A-20
SECTION 6.06. Reports.................................. A-20
ARTICLE 7
COVENANTS OF PARENT....................................... A-20
SECTION 7.01. Obligations of Merger Sub................ A-20
SECTION 7.02. Voting of Shares......................... A-20
SECTION 7.03. Director and Officer Liability........... A-20
SECTION 7.04. Employee Benefits after the Merger....... A-21
SECTION 7.05. Financing Arrangements................... A-22
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY....................... A-22
SECTION 8.01. Commercially Reasonable Efforts.......... A-22
SECTION 8.02. Certain Filings.......................... A-23
SECTION 8.03. Public Announcements..................... A-23
SECTION 8.04. Confidentiality.......................... A-23
SECTION 8.05. Notices of Certain Events................ A-23
ARTICLE 9
CONDITIONS TO THE MERGER.................................. A-24
SECTION 9.01. Conditions to Obligations of Each
Party................................................. A-24
SECTION 9.02. Conditions to Obligations of Parent and
Merger Sub............................................ A-24
SECTION 9.03. Conditions to Obligations of the
Company............................................... A-25
ARTICLE 10
TERMINATION............................................... A-25
SECTION 10.01. Termination............................. A-25
SECTION 10.02. Effect of Termination................... A-26
ARTICLE 11
MISCELLANEOUS............................................. A-26
SECTION 11.01. Notices................................. A-26
SECTION 11.02. Survival of Representations and
Warranties............................................ A-27
SECTION 11.03. Amendments; No Waivers.................. A-27
SECTION 11.04. Expenses; Topping Fee................... A-27
SECTION 11.05. Successors and Assigns.................. A-28
SECTION 11.06. Governing Law........................... A-28
SECTION 11.07. Jurisdiction............................ A-28
SECTION 11.08. Waiver of Jury Trial.................... A-28
SECTION 11.09. Counterparts; Effectiveness; Benefit.... A-28
SECTION 11.10. Entire Agreement........................ A-28
SECTION 11.11. Captions................................ A-28
SECTION 11.12. Severability............................ A-28
SECTION 11.13. Specific Performance.................... A-29
</TABLE>
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<PAGE> 43
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") dated as of September 29,
2000 among Simpson Industries, Inc, a Michigan corporation (the "COMPANY"),
Simmer Acquisition Company LLC, a Delaware limited liability company ("PARENT"),
and Simmer Acquisition Corporation, a Michigan corporation and a wholly owned
subsidiary of Parent ("MERGER SUB").
BACKGROUND
WHEREAS, the Boards of Directors of Merger Sub and the Company have each
determined that it is advisable and in the best interests of their respective
shareholders for the Company and Merger Sub to enter into a business combination
upon the terms and subject to the conditions set forth herein;
WHEREAS, the managers and members of Parent have determined that it is
advisable and in the best interests of its members for the Company and Merger
Sub to enter into a business combination upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
Merger Sub and the Company have each approved the merger of Merger Sub with and
into the Company in accordance with the applicable provisions of the Michigan
Business Corporation Act and upon the terms and subject to the conditions set
forth herein, and the Board of Directors of the Company has resolved and agreed
to recommend that holders of outstanding Shares (as defined herein), approve the
Merger;
WHEREAS, in furtherance of such combination, the members and managers of
Parent have approved the merger of Merger Sub with and into the Company in
accordance with the applicable provisions of the Michigan Business Corporation
Act and upon the terms and conditions set forth herein;
WHEREAS, pursuant to the Merger (as defined in Section 2.01), each
outstanding share of the Company's common stock, $1.00 par value, shall be
converted into the right to receive the Merger Consideration (as defined in
Section 2.04(a)), upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the representations
and warranties and mutual covenants herein contained, Parent, Merger Sub and the
Company hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.
(a) The following terms, as used herein, have the following meanings:
"ACQUISITION PROPOSAL" means any offer or proposal for, or any indication
of interest in, (i) any acquisition or purchase of 30% or more of the
consolidated assets of the Company and its Subsidiaries, (ii) any acquisition or
purchase of an equity interest in the Company representing in excess of 30% of
the power to vote for the election of a majority of the directors of the
Company, or any tender offer or exchange offer for equity securities of the
Company as a result of which the offeror would hold such an equity interest in
the Company or (iii) any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company, or any of its Subsidiaries whose assets,
individually or in the aggregate, constitute more than 30% of the consolidated
assets of the Company, in each case other than the transactions contemplated by
this Agreement.
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City or Detroit are authorized or required by
law to close.
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"BENEFICIALLY OWNED" means, with respect to any Shares held by any Person,
that such Person is the beneficial owner of such Shares as defined in Rule 13d-3
promulgated under the 1934 Act.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY 10-K" means the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1999.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction or governmental
restriction or requirement or any agreement with any governmental authority, in
each case as currently in effect, relating to the environment or to pollutants,
contaminants, wastes or chemicals or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substances, wastes or materials.
"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating to, the business of the Company or any Subsidiary as currently
conducted.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"KNOWLEDGE" of the Company or the "Company's knowledge" or "known by the
Company" means the actual knowledge of the senior officers of the Company listed
on Schedule A attached hereto.
"INTELLECTUAL PROPERTY" means patents, copyrights, trademarks (registered
or unregistered), service marks, brand names, trade dress, trade names, computer
software programs and applications (including imbedded software), the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing; and trade secrets
and rights in any jurisdiction to limit the use of disclosure thereof by any
person.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, either (A) a
material adverse effect on the assets, liabilities (contingent or otherwise),
condition (financial or otherwise), business or results of operations of such
Person and its Subsidiaries, taken as a whole or (B) an effect which is
materially adverse to the ability of such Person and its Subsidiaries to
consummate the transactions contemplated by this Agreement; provided that with
respect to subclause (A) of this definition, any such effect resulting or
arising from (i) this Agreement or the transactions contemplated hereby or the
execution or announcement hereof, (ii) changes in circumstances or conditions
affecting the industry in which the Company and its Subsidiaries operate or
affecting industrial manufacturing companies in general, (iii) changes in
general economic, regulatory or political conditions or in financial markets in
the United States or Europe or (iv) changes in generally accepted accounting
principles shall not be considered a Material Adverse Effect, and with respect
to subclause (B) of this definition any such effect resulting from subclause
(ii), (iii) or (iv) above, shall not be considered a Material Adverse Effect.
"MATERIAL SUBSIDIARY" means, with respect to the Company, all of the
Subsidiaries of the Company other than Stahl International, Inc., Simpson
Industries, LTDA, Simpson Sabind Industries Limited, and RJ Simpson India
Private Limited.
"MBCA" means the Michigan Business Corporation Act.
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"OPTION PLANS" means the Company's 1984 Stock Option and Incentive Plan,
1993 Executive Long-Term Stock Incentive Plan and 1993 Non-Employee Director
Stock Option Plan.
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<PAGE> 45
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"RIGHTS" means the common stock purchase rights attached to the Shares and
issued pursuant to the Rights Agreement.
"RIGHTS AGREEMENT" means the Rights Agreement between the Company and
Harris Trust and Savings Bank, dated as of February 28, 1997.
"SEC" means the Securities and Exchange Commission.
"SHARES" means the shares of common stock, $1.00 par value, of the Company.
"SPONSOR" means Heartland Industrial Partners, L.P., a Delaware limited
partnership.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other body performing similar functions
are at any time directly or indirectly owned by such Person.
"THIRD PARTY" means any Person as defined in Section 13(d) of the 1934 Act,
other than Sponsor or Merger Sub or any of Sponsor's Affiliates.
"TOPPING FEE" means a fee of $7.5 million, less any amount of expense
reimbursement paid by the Company pursuant to Section 11.04(b), payable by wire
transfer in same day funds to a bank account designated by Parent.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Antitrust Law............................................... 8.01
Bank........................................................ 5.07
Benefit Plans............................................... 4.16
Certificate of Merger....................................... 2.02
Certificates................................................ 2.05
Commitment Letter........................................... 5.07
Company Proxy Statement..................................... 4.09
Company Representatives..................................... 6.04
Company SEC Documents....................................... 4.07
Company Securities.......................................... 4.05
Company Subsidiary Securities............................... 4.06
Company Shareholder Meeting................................. 6.02
Confidentiality Agreement................................... 6.03
DOJ......................................................... 8.01
Effective Time.............................................. 2.02
Equity Commitment Letters................................... 5.07
Equity Investors............................................ 5.07
ERISA....................................................... 4.16
ERISA Affiliate............................................. 4.16
Financing Agreements........................................ 7.05
Foreign Plan................................................ 4.16
FTC......................................................... 8.01
GAAP........................................................ 4.08
Indemnified Person.......................................... 7.04
Merger...................................................... 2.01
</TABLE>
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<PAGE> 46
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Merger Consideration........................................ 2.04
Multi-Employer Plan......................................... 4.16
Paying Agent................................................ 2.05
Required Amount............................................. 5.07
Surviving Corporation....................................... 2.01
Tax Return.................................................. 4.15
Taxes....................................................... 4.15
Taxing Authority............................................ 4.15
Termination Date............................................ 10.01
Transmittal Documents....................................... 2.05
</TABLE>
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger. At the Effective Time, and subject to and upon
the terms and conditions of this Agreement, Merger Sub shall be merged (the
"MERGER") with and into the Company in accordance with the MBCA, whereupon the
separate corporate existence of Merger Sub shall cease, and the Company shall
continue as the surviving corporation (THE "SURVIVING CORPORATION").
SECTION 2.02. The Effective Time. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 10.01, as promptly as practicable (and in any event within
three business days) after satisfaction or waiver of the conditions set forth in
Article 9, the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger as contemplated by the MBCA (the "CERTIFICATE OF
MERGER"), together with any required related certificates, with the Department
of Consumer and Industry Services of the State of Michigan, in such form as
required by, and executed in accordance with the relevant provisions of, the
MBCA. The Merger shall become effective at such time (the "EFFECTIVE TIME") as
the Certificate of Merger is duly filed with the Department of Consumer and
Industry Services of the State of Michigan or at such later time as may be
specified in the Certificate of Merger. Prior to such filing a closing shall be
held at the offices of Dykema Gossett PLLC, 39577 North Woodward Avenue, Suite
300, Bloomfield Hills, Michigan, unless another date, time or place is agreed to
in writing by the parties hereto for the purpose of confirming the satisfaction
or waiver, as the case may be, of the conditions set forth in Article 9.
SECTION 2.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of the MBCA. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.04. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) each Share issued and outstanding immediately prior to the Effective
Time (excluding any Shares to be canceled pursuant to Section 2.04(b)), shall be
converted into the right to receive $13.00, in cash (the "MERGER
CONSIDERATION"); each such Share shall no longer be outstanding, shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate formerly representing any such Shares shall, to the extent such
certificate formerly represented such Shares, cease to have any rights with
respect thereto, except the right to receive the Merger Consideration, upon
surrender of such certificate in accordance with Section 2.05;
(b) each Share owned by Parent or any of Parent's Subsidiaries immediately
prior to the Effective Time shall be canceled, and no payment shall be made with
respect thereto; and
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<PAGE> 47
(c) each share of common stock, without par value, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of common
stock, without par value, of the Surviving Corporation.
SECTION 2.05. Payment for Shares.
(a) Prior to the Effective Time, Parent shall designate a bank or trust
company, reasonably acceptable to the Company, to act as paying agent in
connection with the Merger (the "PAYING AGENT") pursuant to a paying agent
agreement providing for the matters set forth in this Section 2.05 and otherwise
reasonably satisfactory to the Company. At the Effective Time, Parent shall
deposit, or cause to be deposited, in trust with the Paying Agent for the
benefit of holders of Shares the aggregate consideration to which such holders
shall be entitled at the Effective Time pursuant to Section 2.04. Such funds
shall be invested as directed by the Surviving Corporation pending payment
thereof by the Paying Agent to holders of the Shares. Earnings from such
investments shall be the sole and exclusive property of the Surviving
Corporation and no part thereof shall accrue to the benefit of the holders of
the Shares.
(b) As soon as reasonably practicable after the Effective Time, the Paying
Agent shall mail to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented outstanding Shares (the "CERTIFICATES"), whose Shares were
converted pursuant to Section 2.04 into the right to receive the Merger
Consideration (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Paying Agent and shall be
in such form and have such other provisions not inconsistent with this Agreement
as the Surviving Corporation shall specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration (together, the "TRANSMITTAL DOCUMENTS"). Upon surrender of
a Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each Share formerly represented
by such Certificate, without any interest thereon, and less any applicable
withholding taxes, and the Certificate so surrendered shall forthwith be
canceled. Until surrendered in accordance with the provisions of and as
contemplated by this Section 2.05 each Certificate (other than Certificates
representing Shares subject to Section 2.04(b)) shall be deemed at any time
after the Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 2.05. Upon the surrender
of Certificates in accordance with the terms and instructions contained in the
Transmittal Documents, Parent shall cause the Paying Agent to pay the holder of
such Certificates in exchange therefor cash in an amount equal to the Merger
Consideration multiplied by the number of Shares represented by such Certificate
(other than Certificates representing Shares subject to Section 2.04(b)).
(c) If payment of the Merger Consideration is to be made to a Person other
than the Person in whose name the surrendered Certificate is registered, it
shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall otherwise be in proper form for transfer, that the
signatures on the Certificate or any related stock power shall be properly
guaranteed and that the Person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a Person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable.
(d) From and after the Effective Time, the holders of Certificates
evidencing ownership of Shares outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except as
otherwise provided herein or by applicable law.
(e) Promptly following the date which is six (6) months after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any cash (including any earnings and interest received with
respect thereto), Certificates and other documents in its possession relating to
the Merger, which had been made available to the Paying Agent and which have not
been disbursed to holders of Certificates, and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat or similar laws) only as general creditors thereof with respect to the
Merger
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<PAGE> 48
Consideration payable upon due surrender of their Certificates, without any
interest thereon and the Paying Agent's duties shall terminate.
(f) Parent or the Paying Agent shall be entitled to deduct and withhold
from the Merger Consideration otherwise payable pursuant to this Agreement to
any holder of the Shares such amounts as Parent or the Paying Agent is required
to deduct and withhold with respect to the making of such payment under the
Code, or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was made
by Parent or the Paying Agent.
(g) Notwithstanding anything to the contrary in this Section 2.05, none of
the Paying Agent, Parent or the Surviving Corporation shall be liable to any
holder of a Certificate formerly representing Shares for any amount properly
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If Certificates are not surrendered prior to two (2)
years after the Effective Time, unclaimed funds payable with respect to such
Certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
SECTION 2.06. Stock Options; Restricted Stock. (a) At or immediately prior
to the Effective Time, each outstanding stock option to purchase Shares granted
under any of the Option Plans, shall be canceled, and each holder of any such
option, whether or not then vested or exercisable, shall be paid by the
Surviving Corporation promptly after the Effective Time for each such option, in
consideration therefor an amount in cash determined by multiplying (i) the
excess, if any, of $13.00 per Share over the applicable exercise price of such
option by (ii) the number of Shares such holder could have purchased (assuming
full vesting of all options) had such holder exercised such option in full
immediately prior to the Effective Time. The Company shall use all reasonable
efforts to effectuate the foregoing, including without limitation, amending the
Option Plans and obtaining any necessary consents from the holders of such
options.
(b) Immediately prior to the Effective Time, all restricted stock awards
granted under any Option Plan shall be treated as having vested and all
restrictions pertaining to such awards shall be treated as having lapsed.
SECTION 2.07. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall not be any further
registration of transfers of any shares of capital stock thereafter on the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, they shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set forth, in
this Article 2. No interest shall accrue or be paid on any cash payable upon the
surrender of a Certificate or Certificates which immediately before the
Effective Time represented outstanding Shares.
SECTION 2.08. No Further Ownership Rights in the Shares. The Merger
Consideration delivered upon the surrender for exchange of Shares in accordance
with the terms hereof shall be deemed to have been issued in full satisfaction
of all rights pertaining to such Shares, and there shall be no further
registration of transfers on the records of the Surviving Corporation of Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Shares are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article 2.
SECTION 2.09. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Paying Agent or the
Surviving Corporation, as applicable, shall deliver in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof, the Merger Consideration as provided in this Article;
provided, however, that the Surviving Corporation may, in its discretion and as
a condition precedent to the payment thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against the
Surviving Corporation or the Paying Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
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<PAGE> 49
SECTION 2.10. Further Action. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company and Merger Sub, the officers and directors of the Company and Merger
Sub immediately prior to the Effective Time are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary action.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Articles of Incorporation. The Articles of Incorporation of
Merger Sub in effect at the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until amended in accordance with
applicable law; provided that, at the Effective Time, Article I of such Articles
of Incorporation shall be amended to read that the name of the corporation is
the same as the name of the Company.
SECTION 3.02. Bylaws. The bylaws of Merger Sub in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Sub at the Effective Time shall be
the directors of the Surviving Corporation and (ii) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that, except as set forth in
the section or subsection of the disclosure schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "DISCLOSURE SCHEDULE")
corresponding to the relevant section or subsection of this Article 4:
SECTION 4.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Michigan and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to own or lease and
operate its assets and to carry on its business as now conducted, except for
those licenses, authorizations, permits, consents and approvals the absence of
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company. The Company has heretofore delivered to Parent true and complete copies
of the Articles of Incorporation and bylaws of the Company as currently in
effect.
SECTION 4.02. Corporate Authorization.
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby are
within the Company's corporate powers and, except for the affirmative vote of
the holders of a majority of the outstanding Shares in connection with the
consummation of the Merger, have been duly authorized by all necessary corporate
action on the part of the Company. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any of the
Company's capital stock necessary or required under applicable law or the
Company's Articles of Incorporation and bylaws in connection with the
consummation of the Merger. This Agreement constitutes a valid and binding
obligation of the Company.
(b) At a meeting duly called and held, the Board of Directors has (i)
determined that this Agreement and the Merger are fair to and in the best
interests of the shareholders of the Company (other than Parent and
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<PAGE> 50
its Affiliates), (ii) approved and adopted this Agreement and the Merger and
(iii) resolved (subject to Section 6.04) to recommend approval and adoption of
the Merger and this Agreement by the shareholders of the Company.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any foreign, federal, state or local court, administrative
agency, commission, governmental body, agency, official or authority, other than
(i) the filing of the Certificate of Merger with the Michigan Department of
Consumer and Industry Services Corporation, Securities and Land Development
Bureau, and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (ii) compliance with any
applicable requirements of the HSR Act and of laws, rules and regulations
analogous to the HSR Act existing in foreign jurisdictions, (iii) compliance
with any applicable requirements of the 1934 Act and any other applicable
securities laws, whether state or foreign, and (iv) any actions or filings the
absence of which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company. As provided by Section
762(2)(b) of the MBCA, no shareholder is entitled to dissent from the Merger.
Neither the Articles of Incorporation or Bylaws or any applicable law provide
the shareholders with, nor has the board provided, pursuant to resolution or
otherwise, the shareholders with, a right to dissent from the Merger in
accordance with the provisions of Section 762 of the MBCA.
SECTION 4.04. Non-contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene, conflict with, or result
in any violation or breach of any provision of the Articles of Incorporation or
Bylaws of the Company, (ii) assuming compliance with the matters referred to in
Section 4.03, contravene, conflict with or result in a violation or breach of
any provision of any applicable law, statute, ordinance, rule, regulation,
judgment, injunction, order or decree, (iii) require any consent or other action
by any Person under, constitute a default under, or cause or permit the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which the Company or any of its
Subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of the Company and
its Subsidiaries or (iv) result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries except for such contraventions,
conflicts and violations referred to in clause (ii) and for such failures to
obtain any such consent or other action, default, termination, cancellation,
acceleration, change, loss or Lien referred to in clauses (iii) and (iv) that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
SECTION 4.05. Capitalization.
(a) The authorized capital stock of the Company consists of 55,000,000
Shares. As of the close of business on September 27, 2000, there were
outstanding 17,874,374 Shares (including all shares of restricted stock
outstanding under the Option Plans) and employee stock options to purchase an
aggregate of 1,009,430 Shares (of which options to purchase an aggregate of
410,388 Shares were exercisable). All shares of capital stock of the Company
outstanding as of the date hereof have been duly authorized and validly issued
and are fully paid and nonassessable. All Shares issuable upon exercise of
outstanding stock options have been duly authorized and, when issued, will have
been validly issued and will be fully paid and nonassessable.
(b) Except as set forth in this Section 4.05 and for changes since
September 27, 2000 resulting from the award or grant of options or Shares
awarded under the Option Plans, each in the ordinary course of business, or the
exercise of stock options outstanding on such date, there are no outstanding (i)
shares of capital stock or voting securities of the Company, (ii) securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company or (iii) options or other rights to acquire
from the Company or other obligation of the Company to issue, any capital stock,
voting securities or securities convertible into, exercisable for, or
exchangeable for capital stock or voting securities of the Company or (iv) stock
appreciation, phantom stock or similar rights with respect to the Company (the
items in clauses (i), (ii), (iii) and (iv) being referred to collectively as the
"COMPANY SECURITIES"). There are no outstanding
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obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Securities.
(c) A list of the holders of options, the number of options held by each
such holder, the exercise prices and the date of grant of each such option are
set forth in Section 4.05(c) of the Disclosure Schedule. A list of the holders
of Restricted Stock, the number of Shares of Restricted Stock held by each such
holder and the date of grant is set forth in Section 4.05(c) of the Disclosure
Schedule.
SECTION 4.06. Subsidiaries.
(a) Each Subsidiary of the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to own and lease its
assets and carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Each such Material Subsidiary is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Material Subsidiary of the Company (other than
director qualifying shares) is owned by the Company, directly or indirectly,
free and clear of any Lien and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other voting securities or ownership interests). All of
the outstanding shares of capital stock of each Subsidiary of the Company have
been validly issued and are fully paid and non-assessable. There are no
outstanding (i) securities of the Company or any of its Subsidiaries convertible
into, exercisable for, or exchangeable for shares of capital stock or other
voting securities or ownership interests in any Material Subsidiary of the
Company, (ii) options or other rights to acquire from the Company or any of its
Subsidiaries, or other obligation of the Company or any of its Subsidiaries to
issue, any capital stock or other voting securities or ownership interests in,
or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Material Subsidiary of
the Company or (iii) stock appreciation, phantom stock or similar rights with
respect to any Subsidiary of the Company (the items in clauses (i), (ii) or
(iii) being referred to collectively as the "COMPANY SUBSIDIARY SECURITIES").
There are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any of the Company Subsidiary
Securities.
(c) Schedule 4.06(c) lists any equity interest owned by the Company or any
Subsidiary of the Company in any other corporation, partnership, joint venture
or other business association or entity owned directly or indirectly by the
Company and having a fair market value or book value in excess of $100,000.
SECTION 4.07. SEC Filings.
(a) The Company has made available to Parent (i) the Company's annual
reports on Form 10-K for its fiscal years ended December 31, 1997, 1998 and
1999, (ii) its quarterly reports on Form 10-Q for its fiscal quarters ended
March 31, 2000 and June 30, 2000, (iii) its proxy statements relating to
meetings of the shareholders of the Company held since December 31, 1999, and
(iv) all of its other reports, statements, schedules and registration statements
filed by the Company with the SEC since December 31, 1999 (the documents
referred to in this Section 4.07(a), collectively, the "COMPANY SEC DOCUMENTS").
(b) As of its filing date, each Company SEC Document complied as to form in
all material respects with the applicable requirements of the 1934 Act or the
1933 Act, as applicable.
(c) As of its filing date, each Company SEC Document did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
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SECTION 4.08. Financial Statements. The audited consolidated financial
statements of the Company included in the annual reports on Form 10-K referred
to in clause (i) of Section 4.07(a) and the unaudited consolidated interim
financial statements of the Company included in the quarterly reports on Form
10-Q referred to in clause (ii) of Section 4.07(a) fairly present, in conformity
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended (subject to normal year-end adjustments and the
absence of notes in the case of any unaudited interim financial statements).
SECTION 4.09. Disclosure Documents.
(a) The proxy statement of the Company to be filed with the SEC in
connection with the Merger (the "COMPANY PROXY STATEMENT"), and any amendments
or supplements thereto, will, when filed, comply as to form in all material
respects with the applicable requirements of the 1934 Act. At the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to shareholders of the Company and at the time such shareholders vote on
adoption of this Agreement, the Company Proxy Statement, as supplemented or
amended, if applicable, will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section 4.09
will not apply to statements or omissions included in the Company Proxy
Statement based upon information furnished to the Company in writing by or on
behalf of Parent or Merger Sub specifically for use therein.
SECTION 4.10. Absence of Certain Changes. Since December 31, 1999, the
business of the Company and its Subsidiaries has been conducted in the ordinary
course consistent with past practices and there has not been:
(a) any event, occurrence or development that has had or would reasonably
be expected to have a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company (other
than quarterly cash dividends on the Shares not in excess of $.10 per Share per
quarter and having customary record and payment dates), or any repurchase,
redemption or other acquisition by the Company or any of its Subsidiaries of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, the Company or any of its Subsidiaries (other than ordinary course
open market purchases made in connection with the Company's stock incentive
plans or stock repurchase program);
(c) any amendment of any material term of any outstanding security of the
Company or, to the knowledge of the Company, any of its Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of any indebtedness for borrowed money in excess of $1 million,
individually or in the aggregate, other than (i) under the Company's existing
credit facilities (as in effect on the date hereof), or (ii) between the Company
and its Subsidiaries or between two or more of the Company's Subsidiaries;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any asset that is material to the Company and its
Subsidiaries, taken as a whole, other than in the ordinary course of business
consistent with past practices;
(f) any making of any loan, advance or capital contribution to or
investment in excess of $500,000, individually or in the aggregate, in any
Person that is not an employee or director of the Company or any of its
Subsidiaries other than loans, advances or capital contributions to or
investments in its wholly-owned Subsidiaries, or by its wholly-owned
Subsidiaries to or in the Company or other wholly-owned Subsidiaries of the
Company;
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(g) any change in any method of accounting, method of tax accounting or
accounting principles or practice by the Company or any of its Subsidiaries,
except for any such change required by reason of a concurrent change in GAAP,
Regulation S-X under the 1934 Act or other applicable law or regulation;
(h) any damage, destruction or other casualty loss (whether or not covered
by insurance) or any condemnation affecting the business or assets of the
Company or any of its Subsidiaries that has had or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company; or
(i) any (i) adoption or grant of any severance or termination pay to or
other benefit for (or amendment to any existing arrangement with) any director
or executive officer of the Company, (ii) increase in benefits payable to any
executive officer or director of the Company under any existing, severance or
termination pay policies or employment agreements, (iii) entering into any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director or executive officer of the
Company, or (iv) increase in compensation, bonus or other benefits payable to
any director or executive officer of the Company or (v) any amendment to any
Benefit Plan or Option Plan, except, in the case of (i), (ii) (iv) or (v), for
such adoption, grant, increase, or amendment with respect to benefits payable to
any director or executive officer of the Company in the ordinary course of
business consistent with past practice.
SECTION 4.11. No Undisclosed Material Liabilities. There are no liabilities
or obligations of the Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
other than:
(a) liabilities or obligations disclosed or provided for in the unaudited
consolidated balance sheet of the Company and its Subsidiaries at June 30, 2000,
and the footnotes to the audited consolidated financial statements included in
the annual report on Form 10-K for the year ended December 31, 1999 included in
the Company SEC Documents filed prior to the date hereof;
(b) liabilities or obligations incurred in the ordinary course of business
consistent with past practice since June 30, 2000 that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company;
(c) liabilities or obligations under this Agreement; and
(d) liabilities or obligations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 4.12. Compliance with Laws and Court Orders:
(a) The Company and each of its Subsidiaries are and since January 1, 1999
have been in compliance with all applicable laws, statutes, ordinances, rules,
regulations, judgments, injunctions, orders or decrees, except for failures to
comply or violations that have not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(b) There are no claims pending or, to the knowledge of the Company,
threatened that the Company or any of its Subsidiaries is infringing on or
otherwise violating the rights of any Person with regard to any material
Intellectual Property that would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
SECTION 4.13. Litigation. There is no action, suit, investigation or
proceeding pending, or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries or any of their respective assets before any
court or arbitrator or before or by any Governmental body, agency or official,
domestic or foreign, that would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
SECTION 4.14. Finders' Fees. Except for PaineWebber Incorporated, a copy of
whose engagement agreement has been provided to Parent, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of the Company or any of its Subsidiaries who might
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be entitled to any fee or commission from the Company or any of its Subsidiaries
in connection with the transactions contemplated by this Agreement.
SECTION 4.15. Taxes. Except as set forth on Schedule 4.15:
(a) the Company and each of its Subsidiaries has timely filed (or has had
timely filed on its behalf), taking into account any extension of time within
which to file, all material Tax Returns required to be filed by it;
(b) the Company and each of its Subsidiaries has paid (or has had paid on
its behalf), or, where payment is not yet due, has established (or has had
established on its behalf) in accordance with GAAP an adequate accrual for the
payment of, all Taxes, except with respect to matters contested in good faith
for which adequate reserves have been established or for such amounts that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company;
(c) there are no material Liens or encumbrances for Taxes on any of the
assets of the Company or any of its Subsidiaries;
(d) no federal, state, local or foreign audits or administrative
proceedings are pending or, to the Company's knowledge, threatened, with regard
to any Taxes or any Tax Return of the Company or its Subsidiaries which, could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company; and
(e) Except for the Option Plans, Supplemental Executive Retirement Plan and
change in control agreements included among the Benefit Plans, no amount that
could be received (whether in cash or property or the vesting of property) as a
result of any of the transactions herein contemplated by any employee, officer
or director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan could be characterized as an excess
"parachute payment" (as such term is defined in Section 280G(b)(1) of the Code).
"TAXES" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital,
net worth, payroll, profits, withholding, franchise, transfer and recording
taxes, fees and charges, and any other taxes, assessment or similar charges
imposed by the IRS or any taxing authority (whether domestic or foreign
including any state, county, local or foreign government or any subdivision or
taxing agency thereof (including a United States possession)) (a "TAXING
AUTHORITY"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments. "TAX RETURN" shall mean any report, return, document, declaration
or other information or filing required to be supplied to any taxing authority
or jurisdiction (foreign or domestic) with respect to Taxes, including
information returns, any documents with respect to or accompanying payments of
estimated Taxes, or with respect to or accompanying requests for the extension
of time in which to file any such report, return, document, declaration or other
information.
SECTION 4.16. Employee Benefit Plans.
(a) Schedule 4.16 contains a correct and complete list identifying each
material "employee benefit plan", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), each material employment,
severance or similar contract, plan, arrangement or policy and each other
material plan or arrangement providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance coverage
(including, any self-insured arrangements), health or medical benefits,
disability benefits, workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance benefits) which is
maintained, administered or contributed to by the Company or any ERISA Affiliate
and covers any employee, former employee or director
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of the Company or any of its Subsidiaries, or with respect to which the Company
or any of its Subsidiaries has any liability. Copies of such plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof have been furnished, or will be made available upon
request, to Parent. Such plans are referred to collectively herein as the
"BENEFIT PLANS". For purposes of this Section 4.16, "ERISA AFFILIATE" of any
Person means any other Person which, together with such Person, would be treated
as a single employer under Section 414 of the Code, and "MULTIEMPLOYER PLAN"
means a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA
with respect to which the Company or any ERISA Affiliate has an obligation to
contribute or has or could have withdrawal liability under ERISA.
(b) Except as set forth on Schedule 4.16 or as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company:
(i) each Benefit Plan has at all times been maintained and
administered in all respects in accordance with its terms and with the
requirements of all applicable law, including ERISA and the Code. Each
Benefit Plan intended to qualify under Section 401(a) of the Code has been
determined by the IRS to be qualified under Section 401(a) of the Code, and
the Company knows of no fact or circumstance giving rise to a material
likelihood that the plan would not be treated as so qualified by the IRS;
(ii) all required contributions to any Benefit Plans and Multiemployer
Plans that are "defined benefit pension plans" required to be made by the
Company or any Subsidiary in accordance with Section 302 of ERISA or
Section 412 of the Code have been timely made; there has been no
application for or waiver of the minimum funding standards imposed by
Section 412 of the Code with respect to any Benefit Plan; and no Benefit
Plan has incurred any "accumulated funding deficiency" within the meaning
of section 302 of ERISA or section 412 of the Code;
(iii) no "reportable event" (within the meaning of section 4043 of
ERISA) has occurred with respect to any Benefit Plan or any employee
benefit plan (as defined in Section 3(3) of ERISA) maintained by an ERISA
Affiliate since the effective date of said section 4043;
(iv) with respect to each Multiemployer Plan, (A) no withdrawal
liability (within the meaning of Section 4201(b) of ERISA) has been
incurred by the Company or any ERISA Affiliate, and the Company has no
reason to believe that any such withdrawal liability will be incurred, (B)
no notice has been received indicating that such Multiemployer Plan is in
"reorganization" (within the meaning of Section 4241 of ERISA), (C) no
notice has been received that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of an excise tax, or
that such Multiemployer Plan is or may become "insolvent" (within the
meaning of Section 4245 of ERISA), (D) to the knowledge of the Company, no
proceedings have been instituted by the PBGC against such Multiemployer
Plan, (E) neither the Company nor any Subsidiary thereof has sold assets in
a transaction intended to satisfy the requirements of Section 4204 ERISA,
and (F) if the Company or any ERISA Affiliate were to have a complete
withdrawal under Section 4203 of ERISA as of the Effective Time, no
withdrawal liability would exist on the part of the Company or any ERISA
Affiliate;
(v) no benefit under any Benefit Plan, including without limitation,
any severance or parachute payment plan or agreement, will be established
or become accelerated, vested or payable by reason of any of the
transactions contemplated by this Agreement;
(vi) neither the Company nor any ERISA Affiliate has incurred any
liability for any tax imposed under Sections 4971 through 4980E of the Code
or civil liability under Section 502(i) or (l) of ERISA;
(vii) no Tax has been incurred under Section 511 of the Code with
respect to any Benefit Plan (or trust or other funding vehicle pursuant
thereto);
(viii) there is no commitment or agreement that would prevent the
termination or modification as to employees or former employees of the
Company of any Benefit Plan under which obligations to provide
post-retirement benefits arise; and
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(ix) no action (excluding claims for benefits incurred in the ordinary
course of Plan activities) has been brought or, to the knowledge of the
Company or any Subsidiary thereof, threatened against or with respect to
any Benefit Plan.
(c) Except as would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect, (i) all contributions required to be
made by the Company or any Subsidiary with respect to a Foreign Plan have been
timely made, (ii) each Foreign Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws and has been maintained, where required, in good standing with the
applicable governmental authority, and (iii) neither the Company nor any
Subsidiary has incurred any obligation in connection with the termination or
withdrawal from any Foreign Plan. To the knowledge of the Company, each of the
Foreign Plans that is a defined benefit plan has plan assets with aggregate fair
market value that is greater than such plan's liabilities, as determined in
accordance with applicable law using reasonable actuarial assumptions. For
purposes hereof, the term "FOREIGN PLAN" shall mean any plan, program, policy,
arrangement or agreement maintained or contributed to by, or entered into with,
the Company or any Subsidiary with respect to employees (or former employees)
employed outside the United States.
SECTION 4.17. Environmental Matters. (a) Except as disclosed in Section
4.17 of the Disclosure Schedule or as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of the Company, is
threatened by any governmental entity or other Person, nor is the Company
subject to any judgment, decree, or agreement relating to or arising out of
any Environmental Law;
(ii) the Company is in compliance with and has no liability under all
Environmental Laws and all Environmental Permits; and
(iii) to the knowledge of the Company, no property or facility
currently or formerly owned, leased or operated by the Company or any of
the Subsidiaries, or at which hazardous substances of the Company or any of
the Subsidiaries have been stored, treated or disposed of is listed or
proposed on the National Priorities List or the Comprehensive Environmental
Response, Compensation and Liability Information System, both promulgated
under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, or on any comparable state or foreign list
established under any Environmental Law.
(b) The Company has made available to Parent all material records and
files, including, but not limited to, all material assessments, reports,
studies, audits, analyses, tests and data known by the Company to be in the
possession or control of the Company or any of its Subsidiaries relating to the
existence of hazardous substances at facilities or properties currently owned,
operated, leased or used by the Company or any Subsidiaries or in any way
concerning compliance by the Company and any of its Subsidiaries with, or
liability of any of them, under any Environmental Law.
SECTION 4.18. Antitakeover Statutes and Rights Agreement.
(a) The Company has taken all action necessary to exempt the Merger and
this Agreement and the transactions contemplated hereby from the provisions of
Section 775 through 784 of the MBCA. Neither the restrictions in such sections
nor any other anti-takeover or similar statute or regulation applies to the
transactions contemplated by this Agreement. The Company has taken all action
necessary to opt out of Sections 790 through 799 of the MBCA in order to render
the provisions of such statutes restricting voting rights of "control shares"
inapplicable to Shares acquired by Parent, Merger Sub or their affiliates
pursuant to the Merger.
(b) The Company has taken all action necessary to render the Rights issued
pursuant to the Rights Agreement inapplicable to the Merger, this Agreement and
the transactions contemplated hereby. The Rights
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Agreement has been amended such that it will expire and all Rights will be
canceled immediately prior to the Effective Time and the Rights Agreement will
have no force or effect at or after the Effective Time.
SECTION 4.19. Opinion of Financial Advisor. The Board of Directors has
received the opinion of the financial advisor to the Company to the effect that,
as of the date of this Agreement, the Merger Consideration is fair to the
shareholders of the Company from a financial point of view.
SECTION 4.20. Disclaimer of Other Representations and Warranties. The
Company does not make, and has not made, any representations or warranties in
connection with the Merger other than those expressly set forth herein. It is
understood that any data, any financial information or any memoranda or offering
materials or presentations (including but not limited to the Confidential
Memorandum dated May 2000) are not and shall not be deemed to be or to include
representations or warranties of the Company. Except as expressly set forth
herein, no Person has been authorized by the Company to make any representation
or warranty relating to the Company or any Subsidiary thereof or their
respective businesses, or otherwise in connection with the Merger and, if made,
such representations or warranties may not be relied upon as having been
authorized by the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
SECTION 5.01. Corporate Existence and Power. Each of Parent and Merger Sub
is a limited liability company or corporation, as the case may be, duly formed
or incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all limited liability company or corporate
powers and all governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted, except for those
licenses, authorizations, permits, consents and approvals the absence of which
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent. Merger Sub is directly owned by Parent and
indirectly owned by Sponsor and any other equity investors in Parent and Merger
Sub was incorporated solely for the purpose of engaging in the transactions
contemplated by this Agreement. Since the date of its incorporation, Merger Sub
has not engaged in any activities other than in connection with or as
contemplated by this Agreement. Merger Sub has no Subsidiaries.
SECTION 5.02. Authorization. The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby are within the limited
liability company or corporate powers of Parent and Merger Sub and have been
duly authorized by all necessary limited liability company or corporate action.
This Agreement constitutes a valid and binding agreement of each of Parent and
Merger Sub.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby require no action
by or in respect of, or filing, with, any foreign, federal, state or local
court, administrative agency, commission, governmental body, agency, official or
authority, other than (i) the filing of the Certificate of Merger with the
Michigan Department of Consumer and Industry Services Corporation, Securities
and Land Development Bureau, and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business, (ii)
compliance with any applicable requirements of the HSR Act and of laws, rules
and regulations analogous to the HSR Act existing in foreign jurisdictions,
(iii) compliance with any applicable requirements of the 1934 Act and any other
applicable securities laws, whether state or foreign, and (iv) any actions or
filings the absence of which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
SECTION 5.04. Non-contravention. The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby do not and will not (i)
contravene, conflict with, or result in any violation or breach of any provision
of the
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certificate of incorporation or bylaws or other organizational document of
Parent or Merger Sub, (ii) assuming compliance with the matters referred to in
Section 5.03, contravene, conflict with, or result in any violation or breach of
any provision of any law, rule, regulation, judgment, injunction, order or
decree, (iii) require any consent or other action by any Person under,
constitute a default under, or cause or permit the termination, cancellation,
acceleration or other change of any right or obligation or the loss of any
benefit to which Parent or Merger Sub is entitled under any provision of any
agreement or other instrument binding upon Parent or Merger Sub, or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of Parent or Merger
Sub or (iv) result in the creation or imposition of any Lien on any asset of
Parent or Merger Sub, except for such contraventions, conflicts and violations
referred to in clause (ii) and for such failures to obtain any such consent or
other action, defaults, terminations, cancellations, accelerations, changes,
losses or Liens referred to in clauses (iii) and (iv) that would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on Parent or materially to impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
SECTION 5.05. Disclosure Documents. None of the information provided by
Parent for inclusion in the Company Proxy Statement or any amendment or
supplement thereto, at the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to shareholders of the Company and at the
time the shareholders vote on adoption of this Agreement will contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
SECTION 5.06. Finders' Fees. Except for Chase Securities Inc. and Credit
Suisse First Boston, whose fees will be paid by the Surviving Corporation, there
is no investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of Parent or any of its Affiliates
who might be entitled to any fee or commission from the Company or any of its
Affiliates upon consummation of the transactions contemplated by this Agreement.
SECTION 5.07. Financing. (a) Parent has received and furnished a copy to
the Company of a commitment letter (including the Summary of Terms and
Conditions annexed thereto, the "COMMITMENT LETTER") with The Chase Manhattan
Bank and Credit Suisse First Boston (together, the "BANK") dated as of September
28, 2000. The funds which the Bank has agreed, subject to the terms and
conditions of the Commitment Letter, to provide will be sufficient, when taken
together with other funds available to Parent, to enable it to provide to the
Paying Agent the aggregate Merger Consideration and any other amounts owing as a
result of the transactions contemplated by this Agreement, and to pay all
related fees and expenses pursuant to the Merger (collectively, the "Required
Amount").
(b) As of the date hereof, (i) the Commitment Letter has not been withdrawn
and is in full force and effect and (ii) Merger Sub has no reason to believe
that any of the conditions set forth in the Commitment Letter will not be
satisfied.
(c) Merger Sub has received and furnished a copy to the Company of the
equity commitment letters (the "Equity Commitment Letters") addressed to Parent
from Sponsor and each of the other equity investors in Parent (the "Equity
Investors"), each dated as of September 28, 2000 pursuant to which the Equity
Investors have committed to make available to Parent certain funds, subject to
the terms and conditions contained therein, for the purpose of consummating the
transactions contemplated by this Agreement. As of the date hereof, (i) no
Equity Commitment Letter has been withdrawn and each Equity Commitment Letter is
in full force and effect and (ii) Merger Sub has no reason to believe that any
of the conditions set forth in any Equity Commitment Letter will not be
satisfied. Sponsor may arrange for other equity commitment letters addressed to
Parent to be executed on substantially the same terms and conditions as the
equity commitment letters executed on the date hereof, in lieu of the existing
equity commitment letters (including in order to cause Sponsor to reduce its
equity commitment), so long as the aggregate equity commitments to Parent are
not less than the equity commitments on the date hereof and Sponsor maintains a
controlling interest in Parent.
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(d) Upon consummation of the transactions contemplated by this Agreement,
the Surviving Corporation (i) will not become insolvent, (ii) will not be left
with unreasonably small capital, and (iii) will not have incurred debts beyond
its ability to pay such debts as they mature.
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees that, except as set forth in the Disclosure Schedule:
SECTION 6.01. Conduct of the Company. Except as contemplated by this
Agreement, from the date hereof until the Effective Time, the Company shall and
shall cause its Subsidiaries to conduct their business in the ordinary course of
business and consistent with past practice and shall use all commercially
reasonable efforts to preserve intact their current business organizations and
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them and to keep available the services of
their present officers and employees and to preserve goodwill. Without limiting
the generality of the foregoing and except as (x) otherwise expressly provided
in this Agreement or (y) required by law, from the date hereof until the
Effective Time, without the consent of Parent (which consent shall not be
unreasonably withheld):
(a) the Company will not and will not permit its Subsidiaries to adopt or
propose any change to its Articles of Incorporation or Bylaws or analogous
organizational documents or alter through merger, liquidation, reorganization or
in any other fashion the corporate structure or ownership of the Company or any
of its Material Subsidiaries;
(b) the Company will not, and will not permit any of its Subsidiaries to,
merge or consolidate with any other Person or acquire a material amount of stock
or assets of any other Person other than (i) purchases of materials or products
in the ordinary course consistent with past practice and (ii) pursuant to
purchase orders in the ordinary course consistent with past practice;
(c) the Company will not, and will not permit any of its Subsidiaries to,
sell, lease, license or otherwise dispose of any Subsidiary or material amount
of assets, securities or property of the Company and its Subsidiaries, taken as
a whole, except pursuant to existing contracts, commitments or arrangements or
otherwise in the ordinary course consistent with past practice; and
(d) the Company will not and will not permit any of its Subsidiaries to (i)
expend funds for capital expenditures that in the aggregate would cause total
capital expenditures for the period from January 1, 2000 to the Effective Time
to exceed 110% of the amounts set forth in the most recent version of the
business plan previously provided to Merger Sub in the Confidential Memorandum
dated May 2000, (ii) enter into any new material line of business, or (iii)
amend, modify or terminate any material contracts or waive, release or assign
any rights or claims thereunder except in the ordinary course of business and
consistent with past practice.
(e) except for issuances of Shares upon exercise of presently outstanding
options, the Company will not and will not permit any of its Subsidiaries to
authorize for issuance, issue, deliver, sell or agree or commit to issue, sell
or deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), pledge or
otherwise encumber any shares of its capital stock or the capital stock of any
of its Subsidiaries, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities or any other securities or equity
equivalents (including, without limitation, stock appreciation rights);
(f) the Company will not and will not permit any of its Subsidiaries to (i)
declare, set aside, make or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of any of its
capital stock, except that (x) the Company may pay quarterly cash dividends on
the Shares in and after the first quarter of 2001 not in excess of $.10 per
share per quarter and having customary record and payment dates and (y) a
wholly-owned Subsidiary of the Company may declare and pay a dividend, or make
advances, to the Company or another wholly-owned Subsidiary of the Company, (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect
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of, in lieu of or in substitution for shares of its capital stock, or (iii)
except as required by the terms of any security as in effect on the date hereof
amend the terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire any of the Company's securities, including Shares,
or any option, warrant or right, directly or indirectly, to acquire any such
securities;
(g) the Company will not and will not permit its Subsidiaries to (i) incur
any additional indebtedness for borrowed money, except for borrowings and
reborrowings in the ordinary course of business consistent with past practice
not to exceed $30 million in the aggregate at any one time outstanding under the
Company's existing credit facilities (as in effect on the date hereof) and
intercompany indebtedness, (ii) issue or sell any debt securities (except
intercompany debt securities) or warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, (iii) make any loans,
advances (other than to employees of and consultants to the Company for travel
and other reasonable and customary expenses incurred in the ordinary course of
business consistent with past practice) or capital contributions to, or
investment in, any other Person, other than to the Company or any direct or
indirect Subsidiary of the Company or otherwise in the ordinary course
consistent with past practice or (iv) assume, guarantee (other than guarantees
of obligations of the Company's Subsidiaries entered into in the ordinary course
of business consistent with past practice) or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person (other than
obligations of Subsidiaries and the endorsements of negotiable instruments for
collection in the ordinary course of business consistent with past practice);
(h) the Company will not and will not permit any of its Subsidiaries to (i)
increase the compensation or severance payable or to become payable to any
existing director and officer, except for any previously scheduled increases in
compensation to existing officers in the ordinary course consistent with past
practice, (ii) enter into any employment or severance agreement with any
existing director or officer or any new officer, except as provided in Section
6.01(h) of the Disclosure Schedule and except for an employment agreement with a
new officer, entered into after consultation with Parent, providing for annual
base compensation not to exceed $300,000, either individually, in the case of
one such agreement, or in the aggregate for all such agreements.
(i) the Company will not and will not permit its Subsidiaries to adopt or
amend (except as previously adopted or amended by the Company or a Subsidiary or
as may be required by law) any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other employee
benefit plan, agreement, trust, fund or other arrangement for the benefit or
welfare of any employee, director or former director or employee, other than
increases for individuals (other than existing officers and directors, except as
provided in Section 6.01(h) above) in the ordinary course of business consistent
with past practice.
(j) the Company will not and will not permit any of its Subsidiaries to
take any action to or make any tax election or to change any method of
accounting, method of tax accounting or accounting principles or practice by the
Company or any of its Subsidiaries, except for any such change required by
reason of a concurrent change in GAAP, Regulation S-X under the 1934 Act or
other applicable law or regulation.
(k) the Company will not and will not permit any of its Subsidiaries to
pay, discharge or satisfy any claim, liability or obligation in excess of
$1,000,000 in any individual case or $3.0 million in the aggregate, other than
the payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in the financial statements contained
in the Company SEC Documents filed prior to the date of this Agreement or
incurred in the ordinary course of business.
(l) the Company will not and will not permit any of its Subsidiaries to
settle or compromise (i) any shareholder derivative suits arising out of the
transactions contemplated by this Agreement or (ii) any other material
litigation (whether or not commenced prior to the date of this Agreement) or
settle, pay or compromise any claims not required to be paid;
(m) the Company will not and will not permit any of its Subsidiaries to (i)
take any action that would make any representation and warranty of the Company
hereunder inaccurate in any material respect at, or as of any time prior to, the
Effective Time or (ii) omit to take any action necessary to prevent any such
representation or warranty from being materially inaccurate in any respect at
any such time;
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(n) the Company will not waive or amend any provision of the Rights
Agreement or otherwise take any action with respect to the Rights Agreement; or
(o) the Company will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
SECTION 6.02. Shareholder Meeting; Proxy Material. The Company shall cause
a meeting of its shareholders (the "COMPANY SHAREHOLDER MEETING") to be duly
called and held as soon as reasonably practicable for the purpose of voting on
the approval and adoption of this Agreement and the Merger. Subject to Section
6.04(b), the Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the Merger by the Company's shareholders. In
connection with such meeting, the Company will (i) promptly prepare and file
with the SEC, will use all commercially reasonable efforts to have cleared by
the SEC and will thereafter mail to its shareholders as promptly as practicable
the Company Proxy Statement and all other proxy materials for such meeting, (ii)
use all commercially reasonable efforts to obtain the necessary approvals by its
shareholders of this Agreement and the transactions contemplated hereby, unless
otherwise required by the applicable fiduciary duties of the Company's
directors, as determined by them in good faith and (iii) otherwise comply with
all legal requirements applicable to such meeting.
SECTION 6.03. Access to Information. From the date hereof until the
Effective Time and subject to applicable law and the Confidentiality Agreement
dated as of August 2, 2000 between the Company and Sponsor (the "CONFIDENTIALITY
AGREEMENT"), the Company shall, and shall cause its Subsidiaries to (i) give
Parent, its counsel, financial advisors, auditors and other authorized
representatives and representatives of financing sources identified by Parent
reasonable access to the offices, properties, books and records of the Company
and the Subsidiaries, (ii) furnish to Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as such Persons may reasonably request and (iii) cause the
employees, counsel, financial advisors, auditors and other authorized
representatives of the Company and its Subsidiaries to cooperate with Parent in
its investigation of the Company and its Subsidiaries. Any investigation
pursuant to this Section shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of the Company and its
Subsidiaries. No information or knowledge obtained by Parent in any
investigation pursuant to this Section shall affect or be deemed to modify any
representation or warranty made by the Company hereunder.
SECTION 6.04. No Solicitation.
(a) Neither the Company nor any of its Subsidiaries shall, nor shall the
Company or any of its Subsidiaries authorize or permit any of its or their
officers, directors, employees, investment bankers, attorneys, accountants,
consultants or other representatives, agents or advisors (collectively, "Company
Representatives") to, directly or indirectly, (i) seek, solicit, initiate or
take any action to encourage any Person to make an Acquisition Proposal (ii)
enter into or participate in any discussions or negotiations concerning an
Acquisition Proposal with any other Person or group, (iii) furnish or disclose
any non-public information relating to the Company or any of its Subsidiaries or
afford access to the employees, business, properties, assets, books or records
of the Company or any of its Subsidiaries to any other Person or group in
connection with an Acquisition Proposal or (iv) approve or recommend or agree to
approve or recommend any Acquisition Proposal.
(b) Notwithstanding the foregoing, the Board of Directors, directly or
indirectly through Company Representatives, may (i) subject to the other
provisions of this Section 6.04, engage in negotiations or discussions with any
Third Party that has made an Acquisition Proposal not solicited in violation of
this Section 6.04, (ii) furnish to such Third Party any information relating to
the Company or any of its Subsidiaries, (iii) following receipt of such
Acquisition Proposal, take and disclose to its shareholders a position
contemplated by Rule 14e-2(a) under the 1934 Act or otherwise comply with its
disclosure obligations, (iv) fail to make, withdraw, or modify in a manner
adverse to Parent its recommendation to its shareholders referred to in Section
6.02 hereof or fail to call the Company Shareholder Meeting in accordance with
Section 6.02 hereof and/or (v) take any non-appealable, final action ordered to
be taken by the Company by any court of competent jurisdiction, but (x) in each
case referred to in the foregoing clauses (i) through (iv) only if the Board of
Directors determines in good faith (after consultation with outside legal
counsel to
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the Company), that failing to take such action would cause the Company's board
of directors to be in breach of its fiduciary duties to the Company's
shareholders under applicable law and (y) in each case referred to in the
foregoing clauses (i) and (ii) only if prior to participating in such
negotiations or discussions or furnishing such information, the Company and the
party making such Acquisition Proposal agree to a confidentiality agreement on
customary terms.
(c) The Company shall notify Parent in writing promptly (but in no event
later than the end of the next business day after receipt thereof) of the
receipt of, or any change to or modification of, any Acquisition Proposal
(including a copy thereof if in writing), the terms and conditions of such
Acquisition Proposal and the identity of the Person making it.
(d) The Company shall, and shall cause its Subsidiaries and Company
Representatives to, cease immediately and cause to be terminated any and all
existing activities, discussions or negotiations, if any, with any Third Party
conducted prior to the date hereof with respect to any Acquisition Proposal and
shall use its commercially reasonable efforts to cause any such Party (or its
agents or advisors) in possession of confidential information about the Company
that was furnished by or on behalf of the Company to return or destroy all such
information.
SECTION 6.05. State Takeover Laws. The Company shall, upon the request of
Parent, take all reasonable steps to render inapplicable and to assist in any
challenge to the validity or applicability to the transactions contemplated by
this Agreement, including the Merger, of any state takeover laws.
SECTION 6.06. Reports. From the date of this Agreement, the Company shall
provide Parent with monthly financial statements in the existing reporting
format (balance sheet, cash flow statement, income statement and, if available,
notes thereto), broken out by operating unit, no later than the tenth Business
Day following the end of each calendar month following the date of this
Agreement; provided that for calendar months that are also the end of a calendar
quarter, the Company may provide such financial information to Parent on the
earlier of (a) the second business day following the date on which such
financial information becomes available to the Company, and (b) the same date
such information is publicly released in accordance with the past practice of
the Company.
ARTICLE 7
COVENANTS OF PARENT
Parent agrees that:
SECTION 7.01. Obligations of Merger Sub. Parent will take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 7.02. Voting of Shares. Parent agrees to vote or cause to be voted
all Shares Beneficially Owned by it, if any, in favor of adoption of this
Agreement at the Company Shareholder Meeting.
SECTION 7.03. Director and Officer Liability. Parent shall cause the
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the
following:
(a) For six years after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless each present and former officer and director of the
Company and of any Subsidiary of the Company (each an "INDEMNIFIED PERSON") in
respect of acts or omissions occurring at or prior to the Effective Time to the
fullest extent permitted by the MBCA or provided under the Company's Articles of
Incorporation and Bylaws in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law.
(b) The Surviving Corporation shall pay all expenses, including reasonable
fees and expenses of counsel, that an Indemnified Person may incur in enforcing
the indemnity and other obligations provided for in this Section 7.03. The
Indemnified Person shall be entitled to control the defense of any action, suit,
investigation or proceeding with counsel of its own choosing reasonably
acceptable to the Surviving Corporation and the
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Surviving Corporation shall cooperate in the defense thereof, provided that the
Surviving Corporation shall not be liable for the fees of more than one counsel
for all Indemnified Persons, other than local counsel, unless a conflict of
interest shall be caused thereby, and provided further that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld).
(c) For six years after the Effective Time, the Surviving Corporation shall
provide officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such Indemnified
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof; provided that the
Surviving Corporation shall not be obligated to make annual premium payments for
such insurance to the extent such annual premiums exceed 225% of the annual
premiums paid as of the date hereof by the Company for such insurance and
provided, further, that if the premiums with respect to such insurance exceed
225% of the annual premiums paid as of the date hereof by the Company for such
insurance, the Surviving Corporation shall be obligated to obtain such insurance
with the maximum coverage as can be obtained at an annual premium equal to 225%
of the annual premiums paid by the Company as of the date hereof.
(d) The obligations of the Surviving Corporation under this Section 7.03
shall be joint and several obligations of Parent and the Surviving Corporation.
(e) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 7.03.
(f) The rights of each Indemnified Person under this Section 7.03 shall be
in addition to any rights such Person may have under the Articles of
Incorporation or Bylaws of the Company or any of its Subsidiaries, or under the
MBCA or any other applicable laws. These rights shall survive consummation of
the Merger and are intended to benefit, and shall be enforceable by, each
Indemnified Person.
SECTION 7.04. Employee Benefits after the Merger.
(a) For a period commencing at the Effective Time and ending on December
31, 2002, Parent shall cause the Surviving Corporation to provide those of its
and its Subsidiaries' employees who were employed by the Company or its
Subsidiaries immediately prior to the completion of the Effective Time with
compensation and employee benefits substantially equivalent in the aggregate, to
the compensation and benefits provided by the Company and its Subsidiaries to
such employees immediately prior to the date hereof; provided, however, that the
Surviving Corporation and its Subsidiaries shall not be required to offer
compensation and benefit plans or arrangements with employer stock as a
component.
(b) Subject to Section 7.04(a), from and after the Effective Time, Parent
will, and will cause the Surviving Corporation to, honor, without modification,
perform all acts and pay all amounts required or due under or with respect to
each Benefit Plan and each agreement which relates to any current or former
employee of the Company and its Subsidiaries or the terms of any such employee's
employment or termination of employment, including, without limitation, all
employment, retention, change of control, employment protection, severance,
termination, consulting, deferred compensation, executive pension and
retirement, welfare and fringe benefit agreements, plans and programs, except
for any modification to any such Benefit Plan or agreement to the extent
permitted in accordance with Section 7.04(a). Nothing contained in this Section
7.04(b) shall restrict Parent or the Surviving Corporation from seeking to amend
or otherwise modify any Benefit Plan to the extent such modification is
permitted by the terms of such Plan and is consistent with Section 7.04(a).
(c) Notwithstanding the foregoing, nothing in this Section 7.04 shall
preclude Parent from seeking to (i) modify any employment agreement with the
consent of the affected employee or employees or (ii) modify
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any Benefit Plan to the extent such modification is permitted by the terms of
such Benefit Plan and is consistent with Section 7.04(a).
(d) Notwithstanding Section 7.04(a), employment of any of the employees by
the Surviving Corporation or its Subsidiaries will be "at will" and may be
terminated by the Surviving Corporation or its Subsidiaries at any time for any
reason (subject to any legally binding agreement other than this Agreement, or
any applicable laws or collective bargaining agreement, or any other arrangement
or commitment). No provision of this Section 7.04 shall confer any third party
beneficiary rights or benefits to any employee of the Surviving Corporation or
its Subsidiaries under this Agreement.
SECTION 7.05. Financing Arrangements. (a) Merger Sub shall use its
commercially reasonable efforts to obtain financing in an amount at least equal
to the Required Amount, including by executing definitive agreements for the
facilities referred to in the Commitment Letter on or prior to the Effective
Time. The Commitment Letter and the definitive agreements for the facilities
referred to therein (along with any other document pursuant to which Parent or
Merger Sub intends to obtain financing of all or a portion of the Required
Amount) are referred to herein collectively as the "Financing Agreements." The
Company will be afforded a reasonable opportunity to review and comment on the
representations and warranties contained in the Financing Agreements and no such
representation or warranty, insofar as it relates to facts and circumstances
relating to the Company and its Subsidiaries, shall be included therein that the
Company shall have advised Merger Sub is incorrect or inaccurate. Merger Sub
shall use commercially reasonable efforts to ensure that the representations and
warranties contained in the Financing Agreements shall be consistent with the
Commitment Letter.
(b) Without limiting the generality of the foregoing, in the event that at
any time funds are not or have not been made available under the Financing
Agreements so as to enable Merger Sub to proceed with the Merger in a timely
manner, Merger Sub shall (i) use its commercially reasonable efforts to obtain
alternative funding in an amount at least equal to the Required Amount on terms
and conditions comparable to those provided in such Financing Agreements or
otherwise on terms reasonably acceptable to Merger Sub and (ii) shall continue
to use its commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement; provided, however, nothing contained herein
shall require Merger Sub to obtain equity financing in excess of the amount of
equity financing contemplated in the Commitment Letter.
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 8.01. Commercially Reasonable Efforts.
(a) Subject to the terms and conditions of this Agreement and subject to
the fiduciary duties under applicable law of the directors of the Company (as
determined by such directors in good faith), Company and Parent will use
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement, including but not limited to making all filings with the SEC
necessary to consummate such transactions and to assist Parent and cooperate in
all respects with Parent and the Bank and the other lenders in order for Parent
to establish its contemplated debt financing arrangements under the Commitment
Letter. In furtherance and not in limitation of the foregoing, each of Parent
and Company agrees to make, if required, an appropriate filing of a Notification
and Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby as promptly as practicable and in any event within ten
business days of the date hereof and to supply as promptly as practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act and to take all other actions necessary to cause the expiration
or termination of the applicable waiting periods under the HSR Act as soon as
practicable.
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(b) In connection with the efforts referenced in Section 8.01(a) to obtain
all requisite approvals and authorizations for the transactions contemplated by
this Agreement under the HSR Act or any other Antitrust Law, each of Parent and
Company shall use all commercially reasonable efforts to (i) cooperate in all
respects with each other in connection with any filing or submission and in
connection with any investigation or other inquiry, including any proceeding
initiated by a private party, (ii) keep the other party informed in all material
respects of any material communication received by such party from, or given by
such party to, the Federal Trade Commission (the "FTC"), the Antitrust Division
of the Department of Justice (the "DOJ") or any other governmental authority and
of any material communication received or given in connection with any
proceeding by a private party, in each case regarding any of the transactions
contemplated hereby and (iii) permit the other party to review any material
communication given by it to, and consult with each other in advance of any
meeting or conference with, the FTC, the DOJ or any such other governmental
authority or, in connection with any proceeding by a private party, with any
other Person. For purposes of this Agreement, "ANTITRUST LAW" means the Sherman
Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state and foreign statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines and
other laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
SECTION 8.02. Certain Filings. The Company and Parent shall cooperate with
one another (i) in connection with the preparation of the Company Proxy
Statement, (ii) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official, or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (iii) in taking such actions or
making any such filings, furnishing information required in connection therewith
or with the Company Proxy Statement and seeking, timely to obtain any such
actions, consents, approvals or waivers.
SECTION 8.03. Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press releases or make any
such public statement prior to such consultation.
SECTION 8.04. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, Parent and the Company will hold, and will cause
its officers, directors, managers, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, all confidential documents and
information concerning the other party furnished to it or its Affiliates in
connection with the transactions contemplated by this Agreement in accordance
with the terms of the Confidentiality Agreement.
SECTION 8.05. Notices of Certain Events. Each of the Company and Merger Sub
shall promptly notify the other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced or,
to its knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its Subsidiaries that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 4.12 or 4.13 or that relate to the consummation of the transactions
contemplated by this Agreement.
(d) the occurrence or non-occurrence of any fact or event which would be
reasonably likely:
(i) to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Effective Time; or
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(ii) to cause any covenant, condition or agreement under this
Agreement not to be complied with or satisfied; and
(e) any failure of the Company or Merger Sub, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that no such notification shall
affect the representations or warranties of any party or the conditions to the
obligations of any party hereunder.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to Obligations of Each Party. The obligations of
the Company and Merger Sub to consummate the Merger are subject to the
satisfaction of the following conditions:
(a) This Agreement shall have been approved and adopted by the holders of
not less than a majority of the Shares entitled to vote for directors in
accordance with the MBCA;
(b) any applicable waiting period under the HSR Act or comparable period
under the Antitrust Laws of other applicable jurisdictions relating to the
Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(d) receipt of a solvency opinion addressed to each of the Board of
Directors of the Company, Parent, and Merger Sub, as to the solvency of the
Surviving Corporation after giving effect to the transactions contemplated by
this Agreement;
(e) all licenses, permits, qualifications, consents, waivers, approvals,
authorizations or orders set forth on the Disclosure Schedule shall have been
obtained and made by the Company, except where the failure to receive such
licenses, permits, qualifications, consents, waivers, approvals, authorizations
or orders, individually or in the aggregate with all other such failures, would
not be reasonably expected to have a Material Adverse Effect (either before or
after giving effect to the transactions contemplated by this Agreement); and
(f) all actions by or in respect of, or filings with, any governmental
body, agency or authority required to permit the consummation of the Merger,
shall have been taken, made or obtained.
SECTION 9.02. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of the Company contained
in this Agreement and in any certificate or other writing delivered by the
Company pursuant hereto that are qualified by materiality or Material Adverse
Effect shall be true, and all other such representations and warranties of the
Company shall be true in all material respects, in each case at and as of the
Effective Time as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such earlier date), and (iii)
Parent shall have received a certificate signed by a duly authorized officer of
the Company to the foregoing effect;
(b) no court, arbitrator or governmental body, agency or authority,
domestic or foreign, shall have issued any order, and there shall not be any
statute, rule or regulation, restraining or prohibiting the consummation of the
Merger or the effective operation of the business of the Company and its
Subsidiaries after the Effective Time; and
(c) the financing contemplated by the Commitment Letter to be provided by
the Bank shall have been completed on substantially the terms and conditions
identified in such Commitment Letter or on such other terms and conditions or
involving such other financing sources, as are acceptable to Parent and the
Company and are not materially more onerous; provided, however, that this
condition shall be deemed satisfied if the failure of this condition is due to a
willful breach by Parent or Merger Sub of any covenant or willful failure to
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perform any agreement or a willful breach by Parent or Merger Sub of any
representation or warranty contained in the Financing Agreements with the Bank.
SECTION 9.03. Conditions to Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the satisfaction of the
following further conditions:
(a) (i) Parent and Merger Sub shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the Effective Time, (ii) the representations and warranties of Parent contained
in this Agreement and in any certificate or other writing delivered by Parent
pursuant hereto that are qualified by materiality or Material Adverse Effect
shall be true, and all other such representations or warranties of Parent shall
be true in all material respects, in each case at and as of the Effective Time
as if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such earlier date), and (iii) the Company
shall have received a certificate signed by a duly authorized officer of Parent
to the foregoing effect; and
(b) no court, arbitrator or governmental body, agency or authority,
domestic or foreign, shall have issued any order, and there shall not be any
statute, rule or regulation, restraining or prohibiting the consummation of the
Merger or the effective operation of the business of the Company and its
Subsidiaries after the Effective Time.
ARTICLE 10
TERMINATION
SECTION 10.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the shareholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Merger has not been consummated on or before March 31, 2001
(the "TERMINATION DATE"); provided that the right to terminate this
Agreement pursuant to this Section 10.01(b)(i) shall not be available to
any party whose breach of any provision of this Agreement results in the
failure of the Merger to be consummated by such time; or
(ii) there shall be any law or regulation that makes consummation of
the Merger illegal or otherwise prohibited or any judgment, injunction,
order or decree of any court or governmental body having competent
jurisdiction enjoining the Company or Parent from consummating the Merger
is entered and such judgment, injunction, order or decree shall have become
final and nonappealable; provided that the right to terminate this
Agreement pursuant to this Section 10.01(b)(ii) shall not be available to
any party whose breach of any provision of this Agreement results in the
application of any such law or regulation to the Merger or the imposition
of any such judgment, injunction, order or decree; or (iii) this Agreement
and the Merger shall not have been approved and adopted in accordance with
the MBCA by the shareholders of the Company at the Company Shareholder
Meeting (or any adjournment thereof); or
(iv) as permitted by Section 6.04 hereof, the Board of Directors of
the Company shall have failed to make or withdrawn or modified in a manner
adverse to Parent its approval or recommendation of this Agreement or the
Merger; provided that the Company may not terminate this Agreement pursuant
to this Section 10.01(b) (iv) unless and until (i) five Business Days have
elapsed following delivery to Parent of a written notice of such
determination by the Board of Directors of the Company and (ii) at the end
of such five Business Day period the Board of Directors of the Company
confirms its determination (after consultation with outside legal counsel)
that failing to withdraw, not make or modify in a manner adverse to Parent
its recommendation of this Agreement or the Merger would cause the
Company's Board of Directors to be in breach of its fiduciary duties to the
Company's shareholders under applicable law.
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(c) by Parent if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement shall have occurred that would cause the condition set forth in
Section 9.02(a) hereof not to be satisfied, and such condition is incapable of
being satisfied by the Termination Date; or
(d) by the Company if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Parent or Merger Sub set forth in
this Agreement shall have occurred that would cause the conditions set forth in
Section 9.03(a) hereof not to be satisfied, and such condition is incapable of
being satisfied by the Termination Date.
The party desiring to terminate this Agreement pursuant to this Section
10.01 (other than pursuant to Section 10.01(a)) shall give prompt notice of such
termination to the other party.
SECTION 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
with no liability on the part of any party (or any shareholder, director,
officer, manager, member, employee, agent, consultant or representative of such
party) to the other party hereto; provided that, if such termination shall
result from the willful (i) failure of either party to fulfill a condition to
the performance of the obligations of the other party or (ii) failure of either
party to perform a covenant hereof, such party shall be fully liable for any and
all liabilities and damages incurred or suffered by the other party as a result
of such failure. The provisions of Sections 8.04, 11.04, 11.06, 11.07 and 11.08
shall survive any termination hereof pursuant to Section 10.01.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to the Company, to:
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 48170
Facsimile: 734-207-6570
Attention: Roy E. Parrott
with a copy to:
Dykema Gossett PLLC
Suite 300 -- 39577 Woodward Avenue
Bloomfield Hills, Michigan 48304
Facsimile: (248) 203-0763
Attention: D. Richard McDonald
if to Parent or Merger Sub, to:
Simmer Acquisition Company LLC
320 Park Avenue, 33rd Floor
New York, New York 10022
Facsimile: (212) 981-3535
Attention: David A. Stockman
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with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile: (212) 269-5420
Attention: W. Leslie Duffy
Jonathan A. Schaffzin
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 11.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
set forth in Sections 2.04, 2.06, 7.03, 7.04, 8.04, 10.02, 11.04, 11.06, 11.07
and 11.08.
SECTION 11.03. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to the
Effective Time if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement or, in the
case of a waiver, by each party against whom the waiver is to be effective,
provided that, after the adoption of this Agreement by the shareholders of the
Company and without their further approval, no such amendment or waiver shall
reduce the amount or change the kind of consideration to be received in exchange
for the Shares.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04. Expenses; Topping Fee.
(a) Except as otherwise provided in this Section, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
(b) If (x) this Agreement is terminated by the Company or Parent, (y) the
conditions set forth in Section 9.02(a)(i) would not be satisfied at the date of
termination and the condition set forth in Section 9.03(a)(i) would be satisfied
at the date of termination, and (z) the Company has not previously paid to
Parent the Topping Fee in accordance with Section 11.04(c), the Company shall
promptly reimburse Parent for all reasonable and documented out-of-pocket
expenses and fees (including, without limitation, expenses payable to all banks,
investment banking firms and other financial institutions and all reasonable
fees and expenses of such banks'; firms' and institutions' legal counsel) and
all reasonable fees and expenses of counsel, accountants, financial printers,
experts and consultants to Parent and Merger Sub and their Affiliates incurred
in connection with the matters contemplated by this Agreement, and the financing
thereof; provided, however, that the reimbursement for costs and expenses
provided in this Section 11.04(b) shall not exceed $1,000,000.
(c) (i) If (x) any Third Party shall have made, proposed, communicated or
disclosed an Acquisition Proposal in a manner which is or otherwise becomes
public prior to the termination of this Agreement, (y) this Agreement is
terminated by either the Company or Parent pursuant to Section 10.01(b) (iii) or
Section 10.01(b)(iv) and (z) within six months of such termination the Company
or any of its Subsidiaries shall have entered into a definitive agreement with
respect to an Acquisition Proposal or consummated an Acquisition Proposal, the
Company shall promptly pay Parent the Topping Fee immediately prior to the
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earlier of (a) the execution of a definitive agreement with respect to such
Acquisition Proposal or (b) the consummation of the Acquisition Proposal.
(ii) If (x) any Third Party shall have made, proposed, communicated or
disclosed an Acquisition Proposal in a manner which is or otherwise becomes
public prior to the termination of this Agreement, (y) this Agreement is
terminated pursuant to Section 10.01(b)(i) or Section 10.01(c) and (z) within
six months of such termination, the Company or any of its Subsidiaries shall
have entered into a definitive agreement with respect to an Acquisition Proposal
with such Third Party or consummated an Acquisition Proposal with such Third
Party, the Company shall promptly pay Merger Subsidiary the Topping Fee
immediately prior to the earlier of (a) the execution of a definitive agreement
with respect to such Acquisition Proposal or (b) the consummation of such
Acquisition Proposal.
SECTION 11.05. Successors and Assigns. The provisions of this Agreement
shall be binding, upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto. Notwithstanding the foregoing,
Parent or Merger Sub may, without the prior consent of the Company, transfer or
assign, in whole or from time to time in part, to one or more Affiliates of
Parent or Merger Sub, the right to enter into the transactions contemplated by
this Agreement, but any such transfer or assignment will not relieve Parent or
Merger Sub of its obligations hereunder.
SECTION 11.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Michigan.
SECTION 11.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal court located in the State of Michigan or any Michigan state court,
and each of the parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 11.01 shall be deemed effective service of
process on such party.
SECTION 11.08. Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this agreement or the transactions contemplated
hereby.
SECTION 11.09. Counterparts; Effectiveness; Benefit. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 7.03, no provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations or liabilities hereunder
upon any Person other than the parties hereto and their respective successors
and assigns.
SECTION 11.10. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
SECTION 11.11. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
SECTION 11.12. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in
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no way be affected, impaired or invalidated. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
SECTION 11.13. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Michigan or any Michigan state court,
in addition to any other remedy to which they are entitled at law or in equity.
* * * * * * * * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SIMPSON INDUSTRIES, INC.
By: /s/ ROY E. PARROTT
------------------------------------
Name: Roy E. Parrott
Title: Chairman and Chief
Executive Officer
SIMMER ACQUISITION COMPANY LLC
By: /s/ W. GERALD MCCONNELL
------------------------------------
Name: W. Gerald McConnell
Title:
SIMMER ACQUISITION CORPORATION
By: /s/ DANIEL P. TREDWELL
------------------------------------
Name: Daniel P. Tredwell
Title:
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<PAGE> 73
ANNEX B
CONFIDENTIAL
September 28, 2000
The Board of Directors
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 48170
Members of the Board of Directors:
You have informed us that Simpson Industries, Inc., a Michigan corporation
("Simpson" or the "Company"), proposes to enter into an Agreement and Plan of
Merger (the "Agreement") with Simmer Acquisition Company LLC, a Delaware limited
liability company ("Parent") and JLH Acquisition Corporation, a Michigan
corporation and a wholly owned subsidiary of Parent ("Merger Sub"). Pursuant to
the Agreement, (i) Merger Sub shall merge with and into the Company (the
"Merger") and (ii) each outstanding share of Simpson common stock, par value
$1.00 per share (collectively, the "Shares"), shall be canceled and retired and
shall cease to exist, and shall be converted into the right to receive $13.00 in
cash (the "Merger Consideration"), subject to the terms and conditions as set
forth in the Agreement.
You have asked us whether or not, in our opinion, the proposed Merger
Consideration to be received by the shareholders of the Company pursuant to the
Merger is fair to the shareholders of the Company from a financial point of
view.
In arriving at the opinion set forth below, we have, among other things:
1) Reviewed the draft of the Agreement dated September 26, 2000;
2) Reviewed, among other public information, the Company's Annual Reports,
Reports on Form 10-K and related financial information for the five
fiscal years ended December 31, 1999; and the Company's Reports on Form
10-Q and the related unaudited financial information for the six months
ended June 30, 1999 and June 30, 2000;
3) Reviewed certain information, including financial forecasts, relating to
the business, earnings, cash flow, assets and prospects of the Company,
furnished to us by the Company;
4) Conducted discussions with members of senior management of the Company
concerning its businesses and prospects;
5) Reviewed the historical market prices and trading activity for the
Shares and compared them with that of certain publicly traded companies
which we deemed to be relevant;
6) Compared the financial position and results of operations of the Company
with those of certain publicly traded companies which we deemed to be
relevant;
7) Compared the proposed financial terms of the Merger contemplated by the
Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
8) Reviewed a commitment letter by a lender for $243 million in senior
secured credit facilities for Parent dated September 18, 2000; and
9) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness
of all information publicly available, supplied or otherwise communicated to us
by the Company, and we have not assumed any responsibility to independently
verify such information. With respect to the financial forecasts examined by us,
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<PAGE> 74
we have assumed that they were reasonably prepared on bases reflecting the best
currently available estimates and good faith judgments of the management of the
Company as to the future performance of the Company. We have also relied upon
assurances of the management of the Company that they are unaware of any facts
that would make the information or financial forecasts provided to us incomplete
or misleading. We have not made any independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of the Company nor have we been
furnished with any such evaluations or appraisals. We have also assumed, with
your consent, that any material liabilities or assets (contingent or otherwise,
known or unknown) of the Company are as set forth in the consolidated financial
statements of the Company. Our opinion is based on economic, financial and other
conditions as they exist on the date hereof.
Our opinion is directed to the Board of Directors of the Company. This
opinion does not constitute a recommendation to any shareholder of the Company
as to how any such shareholder should vote on the Merger. This opinion does not
address the relative merits of the Merger and any other transactions or business
strategies discussed by the Board of Directors of the Company as alternatives to
the Merger or the decision of the Board of Directors of the Company to proceed
with the Merger.
In the ordinary course of business, PaineWebber Incorporated may trade in
the securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold long or short positions in such
securities.
PaineWebber Incorporated is currently acting as financial advisor to the
Company in connection with the Merger and will be receiving a fee in connection
with the rendering of this opinion and upon the consummation of the Merger. In
the past, PaineWebber Incorporated and its affiliates have provided investment
banking and other financial services to the Company and have received fees for
rendering these services. In addition, an officer of PaineWebber Incorporated
sits on the Board of Directors of the Company.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed Merger Consideration to be received by the shareholders of the
Company pursuant to the Merger is fair to the shareholders of the Company from a
financial point of view.
This opinion has been prepared for the information of the Board of
Directors of the Company in connection with the proposed Merger and shall not be
reproduced, summarized, described or referred to, provided to any person or
otherwise made public or used for any other purpose without the prior written
consent of PaineWebber Incorporated, provided, however, that this letter may be
reproduced in full in the Proxy Statement related to the Merger.
Very truly yours,
PaineWebber Incorporated
/s/ PAINEWEBBER INCORPORATED
--------------------------------------
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[Form of Proxy]
PROXY SIMPSON INDUSTRIES, INC. PROXY
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 15, 2000
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, hereby revoking any Proxy heretofore given, appoints
Roy E. Parrott and Vinod M. Khilnani and each of them attorneys and proxies for
the undersigned, each with full power of substitution, to vote the shares of
Simpson Industries, Inc. common stock, par value $1.00 per share, registered in
the name of the undersigned to the same extent the undersigned would be entitled
to vote if then personally present at the special meeting of shareholders of
Simpson Industries, Inc. to be held at 47603 Halyard Drive, Plymouth, Michigan
48170, on December 15, 2000, at 10:00 a.m. and at any adjournment thereof.
The undersigned hereby acknowledges receipt of the accompanying notice
of special meeting of shareholders and proxy statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE MERGER
PROPOSAL. This Proxy when executed will be voted in the manner directed herein.
If no direction is made, this Proxy will be voted FOR the proposal to approve
the Agreement and Plan of Merger. Discretionary authority is hereby conferred as
to all other matters that may come before the special meeting.
(CONTINUED AND TO BE DATED AND SIGNED ON THE REVERSE SIDE.)
<PAGE> 76
SIMPSON INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. To approve the Agreement and Plan of Merger dated as of September
29, 2000, by and among Simpson Industries, Inc., Simmer Acquisition Company LLC
and Simmer Acquisition Corporation, and to approve the merger of Simmer
Acquisition Corporation with and into Simpson Industries, Inc., as described in
the Notice of Special Meeting and Proxy Statement dated November 15, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE CHECK THIS BOX IF YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON. [ ]
Please sign exactly as name appears at left. Executors, administrators,
trustees, attorneys-in-fact et al. should so indicate when signing. If the
signature is for a corporation, please sign the full corporate name by an
authorized officer. If the signature is for a partnership, please sign the full
partnership name by an authorized person. If you are acting as attorney-in-
fact, please so indicate. If shares are registered in more than one name, all
holders must sign.
Dated: , 2000 ------------------------------------
------------------------ ------------------------------------
------------------------------------
Capacity (Title or Authority, e.g.,
President, Partner, Executor, Trustee,
Attorney-in-Fact)
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
YOUR VOTE IS IMPORTANT
PLEASE VOTE, DATE AND SIGN AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
