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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
(Name of Subject Company)
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
479477101
(CUSIP Number of Class of Securities)
THOMAS M. BEGEL
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
980 N. MICHIGAN AVENUE, SUITE 1000
CHICAGO, ILLINOIS 60611
(312) 280-8844
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of the Person(s) Filing
Statement)
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COPIES TO:
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JOSEPH A. COCO, ESQ. DENNIS S. HERSCH, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP DAVIS POLK & WARDWELL
FOUR TIMES SQUARE 450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10036 NEW YORK, NEW YORK 10017
TELEPHONE: (212) 735-3000 TELEPHONE: (212) 450-4000
TELECOPIER: (212) 735-2000 TELECOPIER: (212) 450-4800
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/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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ITEM 1. SUBJECT COMPANY INFORMATION
The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") relates is Transportation
Technologies Industries, Inc., a Delaware corporation (together with its
subsidiaries, where applicable, the "Company"). The address of the principal
executive offices of the Company is 980 North Michigan Avenue, Suite 1000,
Chicago, Illinois 60611. The telephone number of the principal executive offices
of the Company is (312) 280-8844. The title of the class of equity securities to
which this Schedule 14D-9 relates is common stock, par value $0.01 per share,
including the associated preferred share purchase rights.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
(a) SUBJECT COMPANY INFORMATION. The name, address and telephone number of
the Company, which is the person filing the Schedule 14D-9, are set forth in
Item 1 above.
(b) IDENTITY AND BACKGROUND OF FILING PERSON. This Statement relates to a
joint tender offer by Transportation Acquisition I Corp., a Delaware corporation
("Acquisition"), and the Company disclosed in a tender offer statement on
Schedule TO (the "Schedule TO") dated February 3, 2000, to purchase all
outstanding shares of common stock, including the associated preferred share
purchase rights, of the Company (the "Shares") at a price of $21.50 per Share,
net to the seller in cash, without interest (the "Offer Price"), upon the terms
and subject to the conditions set forth in the Offer to Purchase dated
February 3, 2000 (the "Offer to Purchase"), a copy of which is attached as
Exhibit (a)(1) hereto, and the related Letter of Transmittal, a copy of which is
attached as Exhibit (a)(2) hereto (which, as may be amended from time to time,
together constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
January 28, 2000 (the "Merger Agreement"), between the Company and Acquisition.
The Merger Agreement provides that, among other things, as promptly as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction or waiver, where appropriate, of other conditions set forth in the
Merger Agreement, Acquisition will be merged with and into the Company (the
"Merger"), with the Company continuing as the surviving corporation (the
"Surviving Company"). A copy of the Merger Agreement is attached hereto as
Exhibit (e)(1) and is incorporated by reference herein.
ITEM 3. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
For a description of certain contracts, agreements, arrangements or
understandings and any actual or potential conflicts of interests between the
Company or its affiliates and (1) the Company's executive officers, directors or
affiliates, or (2) Acquisition or its respective executive officers, directors
or affiliates, see "SPECIAL FACTORS--The Merger Agreement; Interests of Certain
Persons in the Transactions" in the Offer to Purchase, which is incorporated by
reference herein, and the Information Statement which is attached in Schedule I
to this Schedule 14D-9 and incorporated by reference herein.
A summary of the material provisions of the Merger Agreement is included in
"SPECIAL FACTORS--The Merger Agreement" in the Offer to Purchase, which is
incorporated by reference herein. The summary of the Merger Agreement contained
in the Offer to Purchase is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached hereto as Exhibit (e)(1) and is
incorporated by reference herein.
In connection with the Merger Agreement, the Company and Acquisition have
entered into commitment letters providing for senior secured financing, senior
subordinated financing and preferred equity financing (the "Financing"). The
Financing will be used to consummate the Offer and the Merger and to pay related
fees and expenses. A summary of the material provisions of the Financing is
included in "SPECIAL FACTORS--Financing of the Transactions" in the Offer to
Purchase, which is incorporated by reference herein.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS. At a meeting held on
January 28, 2000, the Company's Board of Directors, after receiving the
unanimous recommendation of a special committee of the Board of Directors
comprised entirely of independent directors (the "Special Committee"), approved
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, and determined that the transactions contemplated by the
Merger Agreement, including the Offer and the Merger, are advisable, fair to and
in the best interests of the Company's stockholders (other than Acquisition,
members of the management investor group and their affiliates).
The Company's Board of Directors recommends that the stockholders accept the
Offer and tender their Shares pursuant to the Offer.
A letter to the stockholders communicating the Board of Directors'
recommendation and a press release announcing the commencement of the Offer are
filed herewith as Exhibits (a)(3) and (a)(4), respectively, and are incorporated
by reference herein.
(b) REASONS. The information set forth in "SPECIAL FACTORS--Background of
the Transactions; Recommendation of the Board of Directors; Fairness of the
Transactions" in the Offer to Purchase, which is incorporated by reference
herein, sets forth the reasons for the Board of Directors' position. Merrill
Lynch, Pierce, Fenner & Smith Incorporated, financial advisor to the Special
Committee ("Merrill Lynch"), has delivered to the Special Committee its opinion,
dated as of January 28, 2000, to the effect that, as of such date and based upon
and subject to certain assumptions and matters stated therein, the Offer Price
is fair, from a financial point of view, to the stockholders of the Company
(other than Acquisition, the members of the management investor group and their
affiliates). A copy of the Merrill Lynch opinion is attached hereto as
Exhibit (e)(2) and incorporated by reference herein.
(c) INTENT TO TENDER. To the Company's knowledge after reasonable inquiry,
Mr. R. Philip Silver and Mr. Francis A. Stroble, directors of the Company,
currently intend to tender their shares pursuant to the Offer. To the Company's
knowledge after reasonable inquiry, no other executive officer, director,
affiliate or subsidiary of the Company currently intends to tender his shares
pursuant to the Offer.
Pursuant to the Merger Agreement, certain members of the Company's
management (and possibly other employees of the Company) will have the right to
retain an equity interest in the Company following the Offer and the Merger.
Such members of management (and other employees) are collectively referred to
herein as the "Continuing Stockholders." For a further description of the
Continuing Stockholders' retained interests, see "SPECIAL FACTORS--The Merger
Agreement; Interests of Certain Persons in the Transactions; Retained Interest
of Continuing Stockholders" in the Offer to Purchase, which is incorporated by
reference herein.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
Pursuant to the terms of an engagement letter, dated as of January 11, 2000,
the Special Committee engaged Merrill Lynch to act as its financial advisor in
connection with various possible transactions, including transactions
contemplated by the Merger Agreement (a "Business Combination"). As part of its
role as financial advisor, Merrill Lynch delivered a fairness opinion to the
Special Committee. Pursuant to the engagement letter, Merrill Lynch will receive
from the Company an aggregate financial advisory fee, contingent upon the
closing of a Business Combination, equal to $2,000,000 plus 5% of the aggregate
purchase price in excess of $20.00 per share paid in such Business Combination.
The Company has also agreed to reimburse Merrill Lynch for reasonable
out-of-pocket expenses, including, without limitation, the reasonable fees and
disbursements of its legal counsel, and to indemnify Merrill Lynch and related
parties against certain liabilities, including liabilities under the federal
securities laws arising out of Merrill Lynch's engagement.
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The Company and Acquisition have retained MacKenzie Partners, Inc. to act as
the information agent (the "Information Agent") in connection with the Offer.
The Information Agent may contact holders of Shares by mail, telephone,
facsimile, telegraph and personal interviews and may request brokers, dealers
and other nominee stockholders to forward materials to the beneficial owners of
Shares. The Information Agent will receive reasonable and customary compensation
for its services, will be reimbursed for certain reasonable out-of-pocket
expenses and will be indemnified against certain liabilities and expenses in
connection therewith, including certain liabilities under the federal securities
laws.
The Company and Acquisition have engaged CIBC World Markets Corp. and First
Union Securities, Inc. to act as the dealer managers (the "Dealer Managers") in
connection with the Offer. The Company and Acquisition have agreed to reimburse
the Dealer Managers for all reasonable out-of-pocket fees, expenses and costs,
including reasonable fees and expenses of legal counsel, and to indemnify the
Dealer Managers and certain related persons against certain liabilities and
expenses in connection with the Offer, including certain liabilities under the
federal securities laws.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person or class of persons to
make solicitations or recommendations on its behalf with respect to the Offer.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
To the Company's knowledge, no transactions in the Shares, other than
ordinary course purchases under the Company's 401(k) savings plan, have been
effected during the past 60 days by the Company or its executive officers,
directors, affiliates or subsidiaries, or by Acquisition or its executive
officers, directors, affiliates or subsidiaries.
ITEM 7. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS
(a) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by the Company in response to the Offer which relate
to a tender offer or other acquisition of the Company's securities by the
Company, any subsidiary of the Company or any other person.
(b) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by the Company in response to the Offer which relate
to, or would result in, (i) an extraordinary transaction, such as a merger,
reorganization or liquidation, involving the Company or any subsidiary of the
Company, (ii) a purchase, sale or transfer of a material amount of assets by the
Company or any subsidiary of the Company, or (iii) any material change in the
present dividend rate or policy, or indebtedness or capitalization of the
Company.
(c) Except as indicated in Items 3 and 4 above, there are no transactions,
board resolutions, agreements in principle or signed contracts in response to
the Offer that relate to or would result in one or more of the matters referred
to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION
(a) INFORMATION PROVIDED PURSUANT TO RULE 14F-1 UNDER THE EXCHANGE ACT. The
Information Statement attached as Schedule I to this Schedule 14D-9 is being
furnished to the Company's stockholders in connection with the designation by
Acquisition of persons to the Board other than at a meeting of the Company's
stockholders, and such information is incorporated by reference herein.
(b) CERTAIN LITIGATION. At various times between December 14 and 17, 1999,
six purported class action complaints, captioned WILLIAM PHELPS AND LAWTON
WILLISTON V. TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. ET AL., AMY F. BRETAN
V. THOMAS M. BEGEL ET AL., BILL GANEM V. THOMAS M. BEGEL ET AL., RUTH GRENING V.
THOMAS M. BEGEL ET AL., E. CLAIBURNE HOGGE V. THOMAS M. BEGEL ET AL. AND KIRK
BEIRACH V. THOMAS M. BEGEL ET AL., were filed in the Court of Chancery of the
State of Delaware in and for New Castle County against the Company
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and its directors. On or about January 10, 2000, an additional purported class
action complaint, captioned WILLIAM KREOFSKY V. TRANSPORTATION TECHNOLOGIES
INDUSTRIES, INC. ET AL., was filed in the Circuit Court of Cook County of the
State of Illinois against the Company and its directors. The foregoing actions
purport to be brought on behalf of all public stockholders of the Company in
connection with the initial proposal made by Acquisition to acquire the Company
at a price per share of $20. The actions allege, among other things, that the
price per share price offered by Acquisition is unfair and inadequate to the
Company's public stockholders and that the individual defendants have breached
their fiduciary duties. The complaints seek as relief, among other things,
preliminary and permanent injunctive relief enjoining the proposed transaction
and monetary damages in an unspecified amount. The defendants believe that they
have meritorious defenses to these actions and intend to vigorously defend
themselves.
(c) The information contained in all of the Exhibits referred to in Item 9
below is incorporated by reference herein.
ITEM 9. EXHIBITS
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(a)(1) Offer to Purchase dated February 3, 2000 (incorporated
herein by reference to Exhibit (a)(1) to the Schedule TO).
(a)(2) Letter of Transmittal (incorporated herein by reference to
Exhibit (a)(2) to the Schedule TO).
(a)(3) Form of Letter to Stockholders of the Company dated
February 3, 2000.
(a)(4) Press Release of the Company dated February 3, 2000.
(e)(1) Agreement and Plan of Merger, dated as of January 28, 2000,
between Transportation Technologies Industries, Inc. and
Transportation Acquisition I Corp.
(e)(2) Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the Special Committee of the Board of
Directors of the Company, dated January 28, 2000 (included
as Schedule II hereto).
(g) Not applicable.
(i)(1) Complaint filed in action entitled PHELPS AND WILLISTON V.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. ET AL. (Court
of Chancery of New Castle County, Delaware) (incorporated
herein by reference to Exhibit (i)(1) to the Schedule TO).
(i)(2) Complaint filed in action entitled BRETON V. BEGEL ET AL.
(Court of Chancery of New Castle County, Delaware)
(incorporated herein by reference to Exhibit (i)(2) to the
Schedule TO).
(i)(3) Complaint filed in action entitled GRENING V. BEGEL ET AL.
(Court of Chancery of New Castle County, Delaware)
(incorporated herein by reference to Exhibit (i)(3) to the
Schedule TO).
(i)(4) Complaint filed in action entitled GANEM V. BEGEL ET AL.
(Court of Chancery of New Castle County, Delaware)
(incorporated herein by reference to Exhibit (i)(4) to the
Schedule TO).
(i)(5) Complaint filed in action entitled HOGGE V. BEGEL ET AL.
(Court of Chancery of New Castle County, Delaware)
(incorporated herein by reference to Exhibit (i)(5) to the
Schedule TO).
(i)(6) Complaint filed in action entitled BIERACH V. BEGEL ET AL.
(Court of Chancery of New Castle County, Delaware)
(incorporated herein by reference to Exhibit (i)(6) to the
Schedule TO).
(i)(7) Complaint filed in action entitled KREOFSKY V.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. ET AL. (Circuit
Court of Cook County, Illinois) (incorporated herein by
reference to Exhibit (i)(7) to the Schedule TO).
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: February 3, 2000
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TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By: /s/ ANDREW M. WELLER
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Name: Andrew M. Weller
Title: President and Chief Operating
Officer
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EXHIBIT INDEX
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EXHIBIT NO.
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(a)(3) Form of Letter to Stockholders of the Company dated
February 3, 2000.
(a)(4) Press Release of the Company dated February 3, 2000.
(e)(1) Agreement and Plan of Merger, dated as of January 28, 2000,
between Transportation Technologies Industries, Inc. and
Transportation Acquisition I Corp.
(e)(2) Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the Special Committee of the Board of
Directors of the Company, dated January 28, 2000 (included
as Schedule II hereto).
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SCHEDULE I
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
980 N. MICHIGAN AVENUE, SUITE 1000
CHICAGO, ILLINOIS 60611
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
GENERAL
This information statement (the "Information Statement") is being mailed on
or about February 3, 2000 as part of the Solicitation/Recommendation Statement
on Schedule 14D-9 (the "Schedule 14D-9") to holders of record of shares of
common stock, par value $0.01 per share, of Transportation Technologies
Industries, Inc. (the "Company"). You are receiving this Information Statement
in connection with the possible election of persons designated by Transportation
Acquisition I Corp. ("Acquisition") to a majority of the seats on the Board of
Directors of the Company (the "Board" or the "Board of Directors") other than at
a meeting of the stockholders of the Company. Such election would occur pursuant
to the Agreement and Plan of Merger (the "Merger Agreement"), dated as of
January 28, 2000, between Acquisition and the Company. The Merger Agreement is
more fully described under Item 3 of the Schedule 14D-9, of which this
Schedule I is a part. Capitalized terms used and not defined in this Schedule I
have the meanings assigned to them in the Schedule 14D-9.
Pursuant to the Merger Agreement, Acquisition and the Company commenced a
joint cash tender offer (the "Offer") for all outstanding shares of common
stock, including the associated preferred share purchase rights, of the Company
(the "Shares") at a price of $21.50 per Share, net to the seller in cash,
without interest, on February 3, 2000. The Offer currently is scheduled to
expire at 12:00 Midnight, New York City time, on March 3, 2000, at which time,
if the Offer is not extended and all conditions to the Offer have been satisfied
or waived, Acquisition and the Company will be obligated to purchase all Shares
validly tendered pursuant to the Offer and not withdrawn.
If the Merger Agreement is terminated or if Acquisition does not accept
Shares tendered for payment, then Acquisition will not have any right to
designate directors for election to the Board of Directors.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and Rule 14f-1 promulgated
thereunder. You are urged to read this Information Statement carefully. You are
not, however, required to take any action.
THE ACQUISITION DESIGNEES
Effective upon the acceptance for payment pursuant to the Offer of a number
of Shares that satisfies the Minimum Condition (as defined in the Merger
Agreement), Acquisition shall be entitled to designate for election to the Board
such number of persons as will cause a majority of directors of the Company to
consist of persons designated by Acquisition, and the Company shall, upon
written request by Acquisition, promptly, at the Company's election, either
increase the size of the Board or take such other actions as may be necessary so
as to include on, and cause to be elected to the Board, the individual or
individuals designated by Acquisition.
The Company's obligations to appoint Acquisition's designees to the Board of
Directors shall be subject to Section 14(f) of the 1934 Act and Rule 14f-1
promulgated thereunder. The Company shall
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promptly take all actions, as Section 14(f) and Rule 14f-1 require, in order to
fulfill its obligations under the Merger Agreement. Acquisition has supplied to
the Company in writing information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Following the election or appointment of Acquisition's designees pursuant to
the Merger Agreement and prior to the Effective Time, any amendment or
termination of the Merger Agreement, extension of the time for the performance
of any of the obligations or other acts of Acquisition, waiver of any of the
Company's rights under the Merger Agreement, action in connection with the
Merger Agreement required to be taken by the Board of Directors of the Company,
amendment to the Company's Certificate of Incorporation, Bylaws or Rights
Agreement, or actions that would be reasonably likely to adversely affect the
interests of stockholders of the Company (other than Acquisition, the Continuing
Stockholders or their respective affiliates) in any material respect, shall
require the concurrence of a majority of the directors of the Company then in
office who are neither designated by Acquisition nor employees of the Company.
Pursuant to the provisions of the Merger Agreement described in the
Schedule 14D-9, Acquisition may designate from among the persons identified
below the persons to be elected to the Board of Directors (the "Acquisition
Designees"). It is expected that the Acquisition Designees will assume office
promptly upon the acceptance for payment pursuant to the Offer of a number of
Shares that satisfies the Minimum Condition, which the Company expects will be
promptly thereafter, and that they will thereafter constitute at least a
majority of the Board of Directors. Acquisition has informed the Company that
each of the Acquisition Designees has consented to act as a director, if so
designated.
Set forth in the table below are the name and principal occupation or
employment and five year employment history for each of the persons who may be
designated by Acquisition as the Acquisition Designees.
DIRECTOR DESIGNEES OF TRANSPORTATION ACQUISITION I CORP.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
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Thomas M. Begel............... Chairman of the Board and President of Acquisition. Mr.
Begel also serves as Chairman of the Board and Chief
Executive Officer of the Company. He is also Chairman of,
and a partner in, TMB Industries, and a director of Silgan
Holdings, Inc.
Camillo M. Santomero III...... Mr. Santomero serves as a Director of the Company. From
January 1992 to the present, Mr. Santomero has been a
private investor and a Senior Consultant to Chase Capital
Partners (formerly Chemical Venture Partners). From October
1988 to January 1992, he was a General Partner of Chase
Capital Partners.
Andrew M. Weller.............. Vice President, Chief Financial Officer and Treasurer of
Acquisition. Mr. Weller also serves as Director, Vice
President and Chief Operating Officer of the Company. He is
also Executive Vice President of, and a partner in, TMB
Industries, and is a director or officer of certain TMB
companies. From September 1994 to January 2000, he served as
Executive Vice President and Chief Financial Officer of the
Company and from March 1995 to November 1995, he served as
Secretary of the Company. From April 1988 to September 1994,
he was Vice President and Treasurer of Bethlehem Steel
Corporation.
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CERTAIN INFORMATION CONCERNING THE COMPANY
The Shares constitute the only class of voting securities of the Company.
The holders of common stock are entitled to one vote per Share. As of
January 28, 2000, there were 10,322,280 shares of common stock (including
restricted stock) issued and outstanding and 660,168 Shares subject to
outstanding stock options under the Company's stock option plans. Currently, the
Board consists of five members. The Board is divided into three classes and each
director serves a term of three years and until his successor is duly elected
and qualified or until his earlier death, resignation or removal.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years, of each director and executive officer of the Company. Unless
otherwise indicated, each such person is a citizen of the United States and the
business address of each such person is c/o Transportation Technologies
Industries, Inc., 980 N. Michigan Avenue, Suite 1000, Chicago, Illinois 60611.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
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Thomas M. Begel............... Chairman of the Board and Chief Executive Officer. He served
as President from October 1991 to January 2000. He is also
Chairman of, and a partner in, TMB Industries, and a
director of Silgan Holdings, Inc.
Andrew M. Weller.............. Director, President and Chief Operating Officer. He is also
Executive Vice President of, and a partner in, TMB
Industries, and is a director or officer of certain TMB
companies. From September 1994 to January 2000, he served as
Executive Vice President and Chief Financial Officer of the
Company, and from March 1995 to November 1995, he served as
Secretary of the Company. From April 1988 to September 1994,
he was Vice President and Treasurer of Bethlehem Steel
Corporation.
James D. Cirar................ President and Chief Executive Officer of Gunite Corporation
since January 2000. He was Chairman of Johnstown America
Corporation and Freight Car Services, Inc. from September
1998 to June 1999 and Senior Vice President of the Company
from July 1997 to June 1999. From September 1995 to August
1998, he was President and Chief Executive Officer of
Johnstown America Corporation and from March 1998 to August
1998 he was President and Chief Executive Officer of Freight
Car Services, Inc. Prior to September 1995, he was the Plant
Manager of the Truck and Bus Assembly Group of General
Motors Corporation.
Fred D. Culbreath............. Chairman of Imperial Group, L.P. He has held various other
titles with Imperial Group, L.P. since being one of its
primary founders in 1962.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
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Joseph A. Hicks............... Chief Executive Officer of Imperial Group, L.P. He served as
President of Imperial Group, L.P. from January 1995 to
November 1997 and, prior thereto, he was President of Eagle
Associates, a private management firm.
Robert L. Jackson............. President and Chief Executive Officer of Bostrom Seating,
Inc. From August 1996 to January 2000, he was Executive Vice
President of Bostrom Seating, Inc. Prior thereto, he held
various positions with Bethlehem Steel Corporation.
Timothy A. Masek.............. Executive Vice President--Sales and Marketing. He served as
Vice President--Corporate Development from December 1995 to
January 2000 and President of Bostrom Seating, Inc. from
June 1996 to January 2000. Prior thereto, he performed
marketing and corporate functions for the Company.
John D. McClain............... President of Brillion Iron Works, Inc.
Donald C. Mueller............. Vice President and Treasurer. Prior to July 1998, he held
various financial positions with Fisher Scientific
International.
R. Philip Silver.............. Director. In addition, he is currently Co-Chief Executive
Officer of Silgan Holdings, Inc., and has been either
Chairman of the Board or President and a Director of Silgan
Holdings, Inc. since 1988.
Francis A. Stroble............ Director. From 1982 to 1994, he was the Senior Vice
President and Chief Financial Officer of Monsanto Company.
He is also a Director of Mercantile Bancorporation, Inc.
Camillo M. Santomero III...... Director. He has been a private investor and a Senior
Consultant to Chase Capital Partners (formerly Chemical
Venture Partners) since January 1992. In addition, from
October 1988 to January 1992, he was a General Partner of
Chase Capital Partners.
Allen L. Sunderland........... President of Fabco Automotive Corporation since
December 1999. He joined Fabco Automotive Corporation in
1995 as Vice President of Sales and Engineering.
Kenneth M. Tallering.......... Vice President, General Counsel and Secretary. Prior to
November 1995, he was an attorney with the law firm of
Skadden, Arps, Slate, Meagher & Flom LLP.
John C. Wilkinson............. President and Chief Operating Officer of Imperial Group,
L.P. Prior to November 1997, he was General Manager of
Imperial Group, L.P.
Brent Williams................ Controller. He has served in various financial capacities at
TCI and Gunite Corporation for the past five years.
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COMMITTEES OF THE COMPANY BOARD; MEETINGS
The Company has a Compensation Committee, an Audit Committee and an
Executive Committee.
The Compensation Committee, comprised of Messrs. Begel and Santomero,
reviews and makes recommendations to the Board of Directors regarding salaries,
compensation and benefits of executive officers and key employees of the
Company, and grants options to purchase shares of Common Stock.
The Audit Committee, which is comprised of Messrs. Silver and Stroble,
reviews the internal and external financial reporting of the Company, reviews
the scope of the independent audit and considers comments by the auditors
regarding internal controls and accounting procedures, and management's response
to these comments.
The Executive Committee, which is comprised of Messrs. Begel and Weller,
exercises the powers of the Board of Directors during intervals between Board
meetings and acts as an advisory body to the Board by reviewing various matters
prior to their submission to the Board.
During 1999, the Board of Directors met four times. Each director attended
75% or more of the meetings. The Compensation Committee held one meeting in
1999, which was attended by both of the committee members. The Audit Committee
held two meetings in 1999, each of which were attended by both of the committee
members. The Executive Committee held no meetings during 1999. The Board of
Directors does not have a Nominating Committee.
COMPENSATION OF DIRECTORS
The directors of the Company receive a retainer of $20,000 per annum in
addition to an attendance fee of $500 for each committee meeting attended, and
reasonable expenses in connection with each Board or committee meeting attended.
Board members who are also employees of the Company do not receive directors'
fees. In addition, options to purchase 5,000 shares of Common Stock are granted
to each new non-employee director upon such director's initial election and
qualification for the Board. On the date of each annual meeting of shareholders
subsequent to a director's initial election and qualification for the Board,
each continuing non-employee director will be granted additional options to
purchase 3,000 shares of Common Stock.
I-5
<PAGE>
SECURITY OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth information, based on reports filed by such
persons with the Commission, with respect to ownership of the shares of Common
Stock held by the directors and executive officers of the Company, and with
respect to ownership by persons believed by the Company to be the beneficial
owners of more than 5% of its outstanding Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENT OF OUTSTANDING
NAME COMMON STOCK COMMON STOCK
- ---- ------------------- ----------------------
<S> <C> <C>
Dimensional Fund Advisors Inc. (1)...................... 632,200 6.1%
Thomas M. Begel (2)..................................... 404,402 3.9%
James D. Cirar (3)...................................... 135,398 1.3%
Fred D. Culbreath....................................... 106,756 *
Joseph A. Hicks......................................... 49,984 *
Robert L. Jackson (4)................................... 15,105 *
Timothy A. Masek (5).................................... 43,428 *
John D. McClain......................................... 0 --
Donald C. Mueller (6)................................... 7,142 *
Camillo M. Santomero III (7)............................ 173,000 1.7%
R. Philip Silver (8).................................... 20,000 *
Francis A. Stroble (8).................................. 22,000 *
Kenneth M. Tallering (9)................................ 62,096 *
Andrew M. Weller (10)................................... 151,933 1.5%
John C. Wilkinson (11).................................. 30,000 *
Brent Williams (12)..................................... 7,500 *
Directors and Executive Officers as a group (15
persons) (13)......................................... 1,228,744 11.9%
</TABLE>
- ------------------------
* Less than 1%.
(1) The number of shares beneficially held by Dimensional Fund Advisors Inc. is
based upon the Schedule 13G filed by Dimensional Fund Advisors Inc. on
February 12, 1999. The address of Dimensional Fund Advisors Inc. is 12999
Ocean Avenue, Santa Monica, CA 90401.
(2) Includes 50,000 shares of common stock subject to currently exercisable
options, 3,390 shares of common stock held through the Company's 401(k) plan
as of December 31, 1999 and 29,500 shares of restricted common stock.
(3) Includes 100,000 shares of common stock subject to currently exercisable
options and 13,398 shares of common stock held in a self-directed IRA.
(4) Includes 13,333 shares of common stock subject to currently exercisable
options and 1,772 shares of common stock held through the Company's 401(k)
plan as of December 31, 1999.
(5) Includes 18,800 shares of common stock subject to currently exercisable
options, 2,228 shares of common stock held through the Company's 401(k) plan
as of December 31, 1999 and 19,500 shares of restricted common stock.
(6) Includes 6,667 shares of common stock subject to currently exercisable
options and 475 shares of common stock held through the Company's 401(k)
plan as of December 31, 1999.
(7) Mr. Santomero is a private investor and Senior Consultant to Chase Capital
Partners (formerly Chemical Venture Partners), which beneficially owns
shares of common stock, but Mr. Santomero disclaims beneficial ownership of
such shares. Mr. Santomero, however, has an interest in a pool of
securities, including shares of common stock of the Company, acquired by
Chemical Equity Associates
I-6
<PAGE>
at the time he was a General Partner of Chemical Venture Partners (now Chase
Capital Partners). Mr. Santomero holds options to purchase 23,000 shares of
common stock, of which 20,000 are currently exercisable.
(8) Messrs. Silver and Stroble each hold options to purchase 23,000 shares of
common stock, of which 20,000 are currently exercisable.
(9) Includes 37,500 shares of common stock subject to currently exercisable
options, 3,796 shares of common stock held through the Company's 401(k) plan
as of December 31, 1999 and 19,500 shares of restricted common stock.
(10) Includes 105,000 shares of common stock subject to currently exercisable
options, 3,433 shares of common stock held through the Company's 401(k) plan
as of December 31, 1999 and 29,500 shares of restricted common stock.
(11) Includes 30,000 shares of restricted common stock.
(12) Includes 7,500 shares of common stock subject to currently exercisable
options.
(13) Includes 398,800 shares of common stock subject to currently exercisable
options, 15,694 shares of common stock held through the Company's 401(k)
plan as of December 31, 1999 and 128,000 shares of restricted common stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act and regulations of the Commission thereunder
require the Company's officers and directors and persons who own more than ten
percent of the Company's Common Stock, as well as certain affiliates of such
persons, to file initial reports of ownership and changes in ownership with the
Commission. Officers, directors and persons owning more than ten percent of the
Company's Common Stock are additionally required to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it and written representations that no other
reports were required for those persons, the Company believes that all filing
requirements applicable to its officers, directors and owners of more than ten
percent of the Company's Common Stock have been made as required with respect to
fiscal year 1999.
I-7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation for
services in all capacities to the Company for 1999, 1998 and 1997 of (i) the
Chief Executive Officer of the Company and (ii) the Company's four most highly
compensated executive officers other than the Chief Executive Officer who were
serving as executive officers as of December 31, 1999 (the "Named Officers").
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------- ------------------------
FISCAL OTHER ANNUAL RESTRICTED OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) STOCK($)(3) SARS(#)(4) COMPENSATION(5)
- --------------------------- -------- -------- ---------- --------------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas M. Begel......... 1999 $750,000 $1,250,000 $113,112 $473,844 -- $241,964
Chairman of the Board and 1998 350,000 750,000 -- -- -- 221,004
Chief Executive Officer 1997 300,000 350,000 -- -- 25,000 222,066
Thomas W. Cook.......... 1999 $350,000 $ 470,702 -- -- -- $ 8,621
Former Senior Vice 1998 300,000 485,608 -- -- -- 8,647
President and President 1997 275,016 457,900 -- -- 25,000 8,092
and Chief Executive
Officer of Truck
Components Inc.
Donald C. Mueller....... 1999 $160,000 $ 220,000 -- -- 10,000 $ 17,135
Vice President and Chief 1998 70,000 70,000 -- -- 20,000 2,950
Financial Officer
Kenneth M. Tallering.... 1999 $200,000 $ 750,000 -- $313,219 -- $ 16,272
Vice President, General 1998 150,000 200,000 -- -- -- 15,861
Counsel and Secretary 1997 125,000 75,000 -- -- 10,000 11,386
Andrew M. Weller........ 1999 $500,000 $1,000,000 -- $473,844 -- $ 87,257
President, Chief 1998 300,000 500,000 -- -- -- 74,032
Operating Officer and 1997 260,000 350,000 -- -- 25,000 58,211
Director
</TABLE>
- ------------------------
(1) In 1999, includes bonus of $500,000 to Messrs. Begel, Weller and Tallering
and $50,000 to Mr. Mueller following consummation of the sale of the
Company's freight car operations and includes bonus of $20,000 to Mr.
Mueller following relocation of his residence. For Messrs. Begel and Cook
includes a portion of 1998 bonus voluntarily deferred by them under the
Company's Deferred Compensation Plan and for Messrs. Cook and McClain
includes a portion of 1997 bonus voluntarily deferred by them under the
Company's Deferred Compensation Plan. The Deferred Compensation Plan was
terminated in 1999.
(2) For the reimbursement of travel, club dues and other expenses to Mr. Begel.
The value of the perquisites received by Mr. Begel in 1997 and 1998 and by
the other Named Officers in each year was below the threshold requiring
disclosure thereof.
(3) On February 1, 1999, Messrs. Begel and Weller were issued 29,500 shares of
restricted common stock and Mr. Tallering was issued 19,500 shares of
restricted common stock. All such restricted stock vests
I-8
<PAGE>
on the third anniversary of the date of grant, or earlier in certain
circumstances such as a change in control. The value of such restricted
stock for Messrs. Begel, Weller and Tallering was $473,844, $473,844 and
$313,219, respectively, as of February 1, 1999 and $532,844, $532,844 and
$352,219, respectively, as of December 31, 1999.
(4) The options granted to Messrs. Begel, Cook, Tallering and Weller in 1997 are
vested. One-third of the options granted to Mr. Mueller in 1998 are vested.
(5) 1999 includes the following amounts: for Mr. Begel, $235,964 for life
insurance and supplemental pension premium and $6,000 Company contribution
to the Company's 401(k) plan; for Mr. Cook, $621 for life insurance premium
and $8,000 Company profit sharing contribution; for Mr. Mueller, $11,135 for
life insurance and supplemental pension premium and $6,000 Company
contribution to the Company's 401(k) plan; for Mr. Tallering, $10,272 for
life insurance and supplemental pension premium and $6,000 Company
contribution to the Company's 401(k) plan; and for Mr. Weller, $81,257 for
life insurance and supplemental pension premium and $6,000 Company
contribution to the Company's 401(k) plan. 1998 includes the following
amounts: for Mr. Begel, $215,004 for life insurance and supplemental pension
premium and $6,000 Company contribution to the Company's 401(k) plan; for
Mr. Cook, $647 for life insurance premium and $8,000 Company profit sharing
contribution; for Mr. Mueller, $150 for life insurance and $2,800 Company
contribution to the Company's 401(k) Plan; for Mr. Tallering, $9,861 for
life insurance and supplemental pension premium and $6,000 Company
contribution to the Company's 401(k) plan; and for Mr. Weller, $68,032 for
life insurance and supplemental pension premium and $6,000 Company
contribution to the Company's 401(k) plan. 1997 includes the following
amounts: for Mr. Begel, $216,066 for life insurance and supplemental pension
premium and $6,000 Company contribution to the Company's 401(k) plan; for
Mr. Cook, $592 for life insurance premium and $7,500 Company profit sharing
contribution; for Mr. Tallering, $5,386 for life insurance and supplemental
pension premium and $6,000 Company contribution to the Company's 401(k)
plan; and for Mr. Weller, $52,211 for life insurance and supplemental
pension premium and $6,000 Company contribution to the Company's 401(k)
plan. Each executive's right to receive their respective supplemental
pensions upon termination of employment are generally subject to a
three-year cliff vesting requirement (other than in the event of termination
of employment due to a change in control). In the event any such person is
not entitled to receive his supplemental pension, the value of such pension
funds would revert to the Company.
OPTION GRANTS
During the 1999 fiscal year, options were not granted to the Named Officers,
except that Mr. Mueller was granted 10,000 options with an exercise price of
$17.50, which options would have a potential realizable value of $110,057 based
on a 5% appreciation during the option term and $278,905 based on a 10%
appreciation during the option term.
OPTION EXERCISES
The table below sets forth information with respect to the value of options
held by the Named Officers as of December 31, 1999.
I-9
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND OPTION VALUE AS OF DECEMBER 31,
1999
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Begel................ -- -- 50,000 -- $ 362,550 --
Thomas W. Cook................. -- -- 100,000 -- 1,165,625 --
Donald C. Mueller.............. -- -- 6,667 23,333 30,418 $66,457
Kenneth M. Tallering........... -- -- 37,500 -- 382,964 --
Andrew M. Weller............... -- -- 105,000 -- 454,363 --
</TABLE>
PENSION PLANS
The Company, maintains a tax-qualified defined benefit pension plan in which
Messrs. Begel, Mueller, Tallering and Weller are eligible to participate.
Benefits under the plan are based primarily upon the participant's average
monthly earnings and his years of continuous service. Benefits under the plan
are not subject to reduction for social security benefits but are reduced by
certain other amounts received under certain public pension programs, and
certain disability and severance payments. The following table sets forth the
benefits payable under the plan at age 65 on a straight line annuity basis for
participants with the indicated levels of compensation and service.
ESTIMATED ANNUAL RETIREMENT BENEFITS
<TABLE>
<CAPTION>
YEARS OF CONTINUOUS SERVICE
---------------------------------------------------------------
AVERAGE EARNINGS 15 20 25 30 35 40
- ---------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 75,000..................... $15,390 $20,520 $25,650 $30,780 $35,910 $41,816
100,000..................... 21,296 28,395 35,494 42,592 49,691 57,566
125,000..................... 27,202 36,270 45,337 54,405 63,472 73,316
150,000..................... 33,109 44,145 55,181 66,217 77,254 89,066
200,000..................... 35,471 47,295 59,119 70,942 82,766 95,366
250,000..................... 35,471 47,295 59,119 70,942 82,766 95,366
300,000..................... 35,471 47,295 59,119 70,942 82,766 95,366
</TABLE>
The compensation and years of service under the plan for Messrs. Begel,
Mueller, Tallering and Weller are as follows.
<TABLE>
<CAPTION>
HIGHEST FIVE-YEAR
AVERAGE ANNUAL
COMPENSATION YEARS OF SERVICE
----------------- ----------------
<S> <C> <C>
Thomas M. Begel................................. $720,000 6.25
Donald C. Mueller............................... 185,000 1.50
Kenneth M. Tallering............................ 345,000 4.16
Andrew M. Weller................................ 479,400 5.33
</TABLE>
Mr. Cook was eligible to participate in a tax-qualified defined benefit plan
formerly maintained by a subsidiary of Truck Components Inc. ("TCI") (the
"Pension Plan"). The Pension Plan provided a pension benefit at normal
retirement age of 65, based on average monthly pay through December 31, 1991, or
if service is less than five years, the average monthly earnings of the years
worked up to December 31, 1991, and credited service for the years and months
employed by TCI and its subsidiaries up to August 31, 1995. The salary component
for persons hired subsequent to December 31, 1991, was the participant's initial
monthly salary at employment date. At age 65, based on Mr. Cook's covered
compensation and years of service of $150,000 and 4.6 years, respectively, he
would have been entitled to receive an annual pension of
I-10
<PAGE>
$9,080 under the Pension Plan. The Pension Plan was terminated during 1998 and
Mr. Cook rolled his allocated pension proceeds into an individual retirement
account. Mr. Cook also participates in the Gunite Corporation Salaried Employees
Profit Sharing Plan pursuant to which Gunite Corporation, a subsidiary of the
Company, contributes 5% of Mr. Cook's gross earnings up to a maximum
contribution of $8,000.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company is a party to substantially identical employment contracts with
Messrs. Begel, Mueller, Tallering and Weller which became effective on July 1,
1999 and continue for a rolling three-year period (a rolling two-year period for
Mr. Mueller) unless terminated as provided in the agreement. Pursuant to their
respective agreements, each will receive annual base salaries, plus bonuses as
determined by the Board of Directors. Each of these agreements contains
customary employment terms and provides that upon termination of employment by
the Company other than for "Cause" or by the employee for "Good Reason" (each as
defined in the agreements) during the term, the Company will pay a severance
payment to the employee, in addition to other benefits, equal to three times
(two times for Mr. Mueller) the sum of (i) the employee's base salary as of his
date of termination and (ii) the greatest of (w) the employee's guaranteed
bonus, if any, for the year during which the termination occurs, (x) the
employee's target bonus, if any, for the year during which the termination
occurs, (y) the employee's bonus received with respect to the year immediately
preceding the date of termination and (z) the employee's average bonus received
during the three years immediately preceding the date of termination, plus
certain additional amounts.
In connection with the Company's acquisition of TCI in August 1995, the
Company assumed the existing employment agreement between TCI and Mr. Cook. Such
agreement was terminated as of January 11, 2000 upon Mr. Cook's retirement.
Pursuant to the termination, Mr. Cook will receive one year's salary, plus a
bonus equal to Mr. Cook's average bonus for 1998 and 1999.
The Company is a party to employment contracts with certain other officers
and key employees generally with two or three year terms.
COMPENSATION COMMITTEE REPORT
Under the supervision of the Compensation Committee of the Board of
Directors (the "Committee"), the Company has attempted to develop and implement
compensation policies, plans and programs which seek to enhance the
profitability of the Company and to maximize shareholder value by closely
aligning the financial interests of the Company's executive officers with those
of its shareholders. The Committee is currently comprised of Messrs. Begel and
Santomero.
The Company's general compensation philosophy, which is determined by the
Committee, is to offer compensation so as to enable the Company to attract and
retain talented and experienced executive officers who are able to assist the
Company in accomplishing its strategic and performance goals and to allow such
executive officers to participate in the increase in value of the Company upon
attaining such goals. Such compensation consists of salary, performance-based
bonus and stock options/restricted stock. In determining the salary, bonus and
stock option/restricted stock awards for the Company's executive officers, the
Committee takes into account the overall performance of the Company as well as
its subjective determination of the contribution of each executive officer to
that performance. The Committee does not limit its evaluation of Company
performance to any particular performance measure, nor does it apply any
specific formula in relating Company performance to salary, bonus or stock
option/restricted stock award levels.
Four of the five Named Officers are parties to employment agreements with
the Company, which are described herein in the section entitled "Employment and
Severance Agreements." The Committee believes that the compensation offered
pursuant to such agreements is consistent with the Company's compensation
philosophy. In 1999, Mr. Begel's salary was $750,000 and, given the Company's
significant
I-11
<PAGE>
improvement in results of operations and financial condition during 1999,
received a $750,000 bonus for 1999. He also received a bonus of $500,000
following completion of the successful sale of the Company's freight car
operations. Mr. Begel's economic interests are further aligned with the
shareholders of the Company due to his significant ownership interest in the
Company (see "Principal Shareholders and Security Ownership of Management").
The Committee has not developed a formal policy on the rules regarding
deductability of executive compensation because the Company's compensation of
its executive officers is considerably less than the applicable threshholds, but
rather will make such determinations as appropriate.
I-12
<PAGE>
SCHEDULE II
[Merrill Lynch Letterhead]
January 28, 2000
Special Committee of the Board of Directors
Transportation Technologies Industries, Inc.
990 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Members of the Special Committee:
Transportation Technologies Industries, Inc. (the "Company"), and
Transportation Acquisition I Corp. (the "Acquiror"), propose to enter into the
Agreement and Plan of Merger dated as of January 28, 2000 (the "Agreement")
pursuant to which (i) the Acquiror would commence a tender offer and the Company
would commence a tender offer (collectively, the "Tender Offer") for all
outstanding shares of the Company's common stock, par value $0.01 per share (the
"Company Shares") for $21.50 per share, net to the seller in cash (the
"Consideration"), and (ii) Acquiror would be merged with the Company in a merger
(the "Merger"), at which time each Company Share, other than Company Shares held
in treasury, held by the Acquiror or by a Participant (as defined in the
Agreement), would be converted into the right to receive the Consideration. The
Tender Offer and the Merger, taken together, are referred to as the
"Transaction".
You have asked us whether, in our opinion, the Consideration to be received
by the holders of the Company Shares in the Transaction pursuant to the
Agreement is fair from a financial point of view to such holders, other than the
Acquiror or any Participant.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial
information relating to the Company that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets, liabilities and
prospects of the Company furnished to us by the Company;
(3) Conducted discussions with members of senior management of the
Company (which includes Participants) concerning the matters described in
clauses 1 and 2 above;
(4) Reviewed the market prices and valuation multiples for the Company
Shares and compared them with those of certain publicly traded companies
that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and compared them
with those of certain publicly traded companies that we deemed to be
relevant;
(6) Compared the proposed financial terms of the Transaction with the
financial terms of certain other transactions that we deemed to be relevant;
(7) Participated in certain discussions and negotiations between members
of the special committee of the board of directors of the Company (the
"Special Committee") and its legal advisors on the one hand, and the
Acquiror and its financial and legal advisors, on the other hand; and
(8) Reviewed a draft dated January 28, 2000 of the Agreement.
II-1
<PAGE>
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or been furnished with any such evaluation or
appraisal. We have not assumed any obligation to conduct any physical inspection
of the properties or facilities of the Company. With respect to the financial
forecast information furnished to or discussed with us by the Company, we have
assumed that they have been reasonably prepared and reflect the best currently
available estimates and judgment of members of management of the Company (which
includes Participants) as to the expected future financial performance of the
Company. We have also assumed that the final form of the Agreement will be
substantially similar to the draft reviewed by us dated January 28, 2000.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof.
We are acting as financial advisor to the Special Committee in connection
with the Transaction and will receive a fee from the Company for our services,
which is contingent upon the consummation of the Transaction. In addition, the
Company has agreed to indemnify us for certain liabilities arising out of our
engagement. In the ordinary course of our business, we may actively trade the
Company Shares and other securities of the Company for our own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Special Committee. This
opinion relates to the fairness, from a financial point of view, of the
Consideration. This opinion does not constitute an opinion, nor do we assume any
responsibility, with respect to (i) the ability of the Acquiror to obtain
financing, or (ii) the solvency or prudence of the capital structure of the
Company or the Acquiror following the consummation of the Tender Offer or the
Merger. This opinion does not address the merits of the underlying decision by
the Company to engage in the Transaction and does not constitute a
recommendation to any shareholder as to whether such shareholder should tender
any Company Shares pursuant to the Tender Offer, vote in favor of the Merger, or
take any action with respect to the Transaction.
On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Consideration to be received by the holders of the
Company Shares in the Transaction pursuant to the Agreement is fair from a
financial point of view to the holders of such shares, other than the Acquiror
or any Participant.
<TABLE>
<S> <C>
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
/s/ Merrill Lynch, Pierce, Fenner &
Smith
Incorporated
</TABLE>
II-2
<PAGE>
EXHIBIT 99(A)(3)
Transportation Technologies Industries
February 3, 2000
Dear Stockholder:
On behalf of the Board of Directors of Transportation Technologies
Industries, Inc. (the "Company"), I am pleased to inform you that the Company
has entered into an Agreement and Plan of Merger, dated as of January 28, 2000
(the "Merger Agreement"), with Transportation Acquisition I Corp.
("Acquisition"), a company formed by an investor group led by members of senior
management of the Company, including myself and Andrew M. Weller, our President
and Chief Operating Officer. The Merger Agreement provides for the acquisition
of the Company by the management investor group.
Acquisition and the Company today have commenced a joint cash tender offer
(the "Offer") for all outstanding shares of common stock, including the
associated preferred share purchase rights, of the Company (the "Shares") at a
price of $21.50 per Share, net to the seller in cash, without interest.
Following the successful completion of the Offer, upon the terms and subject
to the conditions contained in the Merger Agreement, Acquisition will be merged
with and into the Company (the "Merger"), with the Company as the surviving
corporation. At the effective time of the Merger, each remaining issued and
outstanding Share (other than shares owned by Acquisition and members of the
management investor group) will be converted into the right to receive $21.50 in
cash, subject to dissenters' rights.
YOUR BOARD OF DIRECTORS, AFTER RECEIVING THE UNANIMOUS RECOMMENDATION OF A
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS COMPRISED ENTIRELY OF INDEPENDENT
DIRECTORS (THE "SPECIAL COMMITTEE"), HAS APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, HAS
DETERMINED THAT THE TERMS OF THE MERGER AND THE OFFER ARE ADVISABLE, FAIR TO AND
IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS (OTHER THAN ACQUISITION AND
MEMBERS OF THE MANAGEMENT INVESTOR GROUP), AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
In arriving at their recommendations, the Special Committee and the Board of
Directors gave careful consideration to the factors described in the enclosed
Offer to Purchase, which is incorporated by reference in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9, each of which is being
filed today with the Securities and Exchange Commission. Among the factors
considered was the written opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, the Special Committee's financial advisor, that subject to the
assumptions, factors and limitations set forth in the opinion, the $21.50 per
Share in cash consideration to be paid in the Offer and the Merger is fair to
the holders of common stock (other than Acquisition and the management investor
group) from a financial point of view. Additional information with respect to
the Special Committee's and the Board's recommendations and the background of
the transaction is contained in the enclosed Offer to Purchase.
In addition to the Offer to Purchase and the Schedule 14D-9, enclosed are
various related materials relating to the Offer, including a Letter of
Transmittal to be used for tendering Shares in the Offer if you are the record
holder of Shares. The Offer to Purchase and the related materials set forth the
terms and conditions for the Offer and provide instructions on how to tender
your Shares. If you need assistance with the tendering of your Shares, please
contact the information agent for the Offer, MacKenzie Partners, Inc., at its
address or telephone number appearing on the back cover of the Offer to
Purchase. WE URGE YOU TO READ AND CONSIDER THE ENCLOSED MATERIALS CAREFULLY
BEFORE MAKING YOUR DECISION WITH RESPECT TO TENDERING YOUR SHARES PURSUANT TO
THE OFFER.
Very truly yours,
/s/ Thomas M. Begel
Thomas M. Begel
Chairman and
Chief Executive Officer
<PAGE>
Exhibit (a)(4)
TRANSPORTATION TECHNOLOGIES ANNOUNCES
COMMENCEMENT OF TENDER OFFERS
CHICAGO, ILLINOIS, February 3, 2000 - Transportation Technologies
Industries, Inc. (NASDAQ: TTII) announced today the commencement of a joint
tender offer by the Company and Transportation Acquisition I Corp., a company
formed by an investor group led by members of the Company's senior management,
including Thomas M. Begel, its Chairman and Chief Executive Officer, and Andrew
M. Weller, its President and Chief Operating Officer, to purchase for $21.50 per
share in cash all of the outstanding shares of Transportation Technologies'
common stock. The tender offer is being made pursuant to definitive tender offer
materials that will be distributed to the Company's stockholders and filed with
the Securities and Exchange Commission.
The tender offer is expected to remain open until March 3, 2000, unless
extended, and will be followed by a merger under which those shares not tendered
will be converted into the right to receive the same $21.50 per share in cash.
The closing of the tender offer is conditioned on the funding of the committed
financing, the tender of a sufficient number of shares to give Transportation
Acquisition I Corp. ownership of at least a majority of the fully diluted
outstanding shares of the Company after giving effect to the repurchase of
shares by the Company in the offer, the agreement of the holders of the
Company's outstanding 11-3/4% notes to either sell their notes to the Company or
consent to certain amendments to the indentures for such notes and other
conditions.
Concurrently with the joint tender offer for the Company's common
stock, the Company commenced offers to purchase and consent solicitations
with respect to both its 11-3/4% Senior Subordinated Notes due 2005 and its
11-3/4% Series C Senior Subordinated Notes due 2005. The closing of the note
tender offers are conditioned on the tender of at least a majority in
outstanding principal amount of each series of notes outstanding, the
execution by the trustees of each series of notes outstanding of supplemental
indentures implementing certain amendments to the notes, the consummation of
the tender offer for the shares of the Company's common stock, the funding of
the committed financing and other conditions. These note tender offers and
consent solicitations are being made pursuant to tender offer and consent
solicitation materials that will be distributed to the Company's note holders.
<PAGE>
Transportation Technologies Industries, Inc. is a Delaware corporation
with its principal executive offices located at 980 N. Michigan Avenue, Suite
1000, Chicago, Illinois, 60611. The Company is a leading manufacturer of
components for heavy-duty and medium-duty trucks and buses and the trucks parts
aftermarket. The Company's product lines include Gunite wheel-end components,
Brillion custom iron castings, Imperial body and chassis components, Bostrom
truck and bus seating systems and Fabco steerable drive axles and gearboxes. The
Company has manufacturing operations in Alabama, California, Illinois, Indiana,
Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin.
CERTAIN STATEMENTS MADE IN THIS RELEASE ARE FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND ARE SUBJECT TO A NUMBER OF
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS AND PERFORMANCE TO
DIFFER MATERIALLY FROM ANY EXPECTED FUTURE RESULTS OR PERFOR MANCE, EXPRESSED OR
IMPLIED, BY THE FORWARD-LOOKING STATEMENTS. TRANSPORTATION TECHNOLOGIES ASSUMES
NO RESPONSIBILITY TO UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS CONTAINED
HEREIN.
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION
OF AN OFFER TO SELL SHARES OF THE COMPANY. TRANSPORTATION ACQUISITION I CORP.
AND THE COMPANY HAVE FILED A TENDER OFFER STATEMENT WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION AND THE COMPANY HAS FILED A SOLICITATION/RECOMMENDATION
STATEMENT WITH RESPECT TO THE OFFER. THE TENDER OFFER STATEMENT (INCLUDING AN
OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS)
AND THE SOLICITATION/RECOMMENDATION STATEMENT CONTAIN IMPORTANT INFORMATION
WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER. THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND CERTAIN
OTHER OFFER DOCUMENTS, AS WELL AS THE SOLICITATION/RECOMMENDATION STATEMENT,
WILL BE MADE AVAILABLE TO ALL STOCKHOLDERS OF THE COMPANY, AT NO EXPENSE TO
THEM. THE TENDER OFFER STATEMENT (INCLUDING THE OFFER TO PURCHASE, THE RELATED
LETTER OF TRANSMITTAL AND ALL OTHER OFFER DOCUMENTS FILED WITH THE COMMISSION)
AND THE SOLICITATION/RECOMMENDATION STATEMENT ARE ALSO AVAILABLE AT NO CHARGE AT
THE COMMISSION'S WEBSITE AT WWW.SEC.GOV.
2
<PAGE>
Exhibit (e)(1)
AGREEMENT AND PLAN OF MERGER
between
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
and
TRANSPORTATION ACQUISITION I CORP.
Dated as of January 28, 2000
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE I
THE OFFER
Section 1.01 The Offer................................................... 5
Section 1.02 Company Actions............................................. 7
Section 1.03 Boards of Directors; Committees; Section 14(f).............. 8
Section 1.04 Option to Acquire Additional Shares......................... 8
ARTICLE II
THE MERGER
Section 2.01 The Merger.................................................. 9
Section 2.02 Closing..................................................... 9
Section 2.03 Effective Time.............................................. 9
Section 2.04 Effects of the Merger....................................... 9
Section 2.05 Certificate of Incorporation and By-Laws.................... 9
Section 2.06 Directors................................................... 9
Section 2.07 Officers.................................................... 9
Section 2.08 Stockholders Meeting........................................ 10
Section 2.09 Merger Without Meeting of Stockholders...................... 10
ARTICLE III
CONVERSION OF SECURITIES
Section 3.01 Conversion of Shares........................................ 10
Section 3.02 Company Options............................................. 11
Section 3.03 Dissenting Shares........................................... 11
Section 3.04 Exchange of Shares.......................................... 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01 Organization and Qualification; Subsidiaries................ 13
Section 4.02 Capitalization of the Company............................... 14
Section 4.03 Authorization............................................... 14
Section 4.04 Non-Contravention........................................... 14
Section 4.05 Compliance with Applicable Laws............................. 15
Section 4.06 SEC Reports................................................. 15
Section 4.07 Absence of Certain Changes.................................. 15
Section 4.08 Litigation.................................................. 15
Section 4.09 Company Information......................................... 15
Section 4.10 Brokers and Finders......................................... 16
Section 4.11 Opinion of Financial Advisor................................ 16
</TABLE>
2
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Section 4.12 Takeover Statutes........................................... 16
Section 4.13 Rights Agreement............................................ 16
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
Section 5.01 Organization................................................ 16
Section 5.02 Capitalization.............................................. 16
Section 5.03 Authorization............................................... 16
Section 5.04 Proxy Statement; Schedule 14D-9; Schedule TO................ 17
Section 5.05 Financing................................................... 17
Section 5.06 No Prior Activities. ....................................... 17
Section 5.07 Brokers and Finders......................................... 17
Section 5.08 Governmental Approvals. .................................... 17
Section 5.09 Non-Contravention........................................... 18
Section 5.10 Calculation of EBITDA....................................... 18
ARTICLE VI
COVENANTS
Section 6.01 Conduct of Business of the Company.......................... 18
Section 6.02 No Solicitation............................................. 19
Section 6.03 Access to Information. ..................................... 20
Section 6.04 Reasonable Best Efforts..................................... 20
Section 6.05 Consents. .................................................. 21
Section 6.06 Public Announcements. ...................................... 21
Section 6.07 Indemnification and Insurance............................... 21
Section 6.08 Notification of Certain Matters. ........................... 21
Section 6.09 Matters Relating to the Commitment Letters. ................ 21
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.01 Conditions to Each Party's Obligation to Effect the
Merger. .................................................. 22
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.01 Termination................................................. 22
Section 8.02 Effect of Termination....................................... 23
Section 8.03 Fees and Expenses........................................... 23
Section 8.04 Amendment................................................... 24
Section 8.05 Extension; Waiver........................................... 24
</TABLE>
3
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<TABLE>
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<S> <C> <C>
ARTICLE IX
MISCELLANEOUS
Section 9.01 Nonsurvival of Representations and Warranties............... 25
Section 9.02 Entire Agreement; Assignment................................ 25
Section 9.03 Validity.................................................... 25
Section 9.04 Notices..................................................... 25
Section 9.05 Governing Law............................................... 26
Section 9.06 Descriptive Headings........................................ 26
Section 9.07 Parties in Interest......................................... 26
Section 9.08 Counterparts................................................ 26
Section 9.09 Specific Performance........................................ 26
</TABLE>
4
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January 28,
2000, between TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC., a Delaware
corporation (the "Company"), and TRANSPORTATION ACQUISITION I CORP., a Delaware
corporation ("Acquisition").
WHEREAS, the Boards of Directors of the Company and Acquisition have
determined that it is advisable and in the best interests of their respective
stockholders for Acquisition to acquire the Company upon the terms and subject
to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Acquisition has agreed to
commence a tender offer (the "Purchaser Offer") to purchase for cash shares of
common stock, par value $0.01 per share, of the Company, together with the
associated rights attached thereto (the "Rights") issued pursuant to the Rights
Agreement, dated as of October 4, 1995 (the "Rights Agreement"), between the
Company and BancBoston State Street Investor Services, L.P., as Rights Agent
(collectively, the "Shares"), at a price of $21.50 per Share, net to the seller
in cash (such price, or such higher price per Share as may be paid in the Offer,
being referred to herein as the "Per Share Amount"), upon the terms and subject
to the conditions of this Agreement and the Purchaser Offer;
WHEREAS, the Company has agreed to simultaneously make an offer to acquire
Shares (the "Company Offer," and together with the Purchaser Offer, the "Offer")
for the Per Share Amount, upon the terms and subject to the conditions of this
Agreement and the Company Offer;
WHEREAS, the Purchaser Offer and the Company Offer shall together be an
offer to acquire all of the issued and outstanding Shares;
WHEREAS, the Board of Directors of the Company (the "Board"), acting upon
the unanimous recommendation of a special committee of the Board comprised
entirely of independent directors (the "Special Committee"), and the Board of
Directors of Acquisition have each approved the making of the Offer, and the
Board has determined to recommend that stockholders of the Company tender their
Shares pursuant to the Offer;
WHEREAS, it is further proposed that following the consummation of the
Offer, Acquisition will merge with and into the Company (the "Merger") in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"); and
WHEREAS, the Board of Directors of the Company (the "Board"), acting upon
the unanimous recommendation of the Special Committee, (i) has determined that
the Merger is advisable and in the best interests of the Company and its
stockholders (other than Acquisition, the Participants (as defined below) and
their respective affiliates), (ii) has approved the Merger, the Offer, this
Agreement and the other transactions contemplated hereby and (iii) recommends
that the Company's stockholders approve this Agreement and the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
THE OFFER
Section 1.01 THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.01 and none of the events set forth
in Annex A or Annex B hereto shall have occurred or be existing, as promptly as
practicable, but in no event later than five business days following the public
announcement of the execution of this Agreement, Acquisition and the Company
shall jointly commence the Offer. Upon the terms and subject to the prior
satisfaction or waiver of the conditions of
5
<PAGE>
the Offer, Acquisition and the Company shall accept for payment and pay for
Shares which have been validly tendered and not withdrawn as soon as practicable
after the expiration of the Offer.
(b) The obligations of Acquisition to accept for payment any Shares tendered
shall be subject to the satisfaction of only those conditions set forth in Annex
A hereto and the obligation of the Company to accept for payment any Shares
tendered shall be subject to the satisfaction of only those conditions set forth
in Annex B hereto.
(c) Subject to the requirements of applicable law, Acquisition may waive the
conditions set forth in Annex A in its sole discretion; PROVIDED, HOWEVER, that
without the prior written consent of the Company, Acquisition will not
(i) decrease the Per Share Amount or the number of Shares sought in the
Purchaser Offer, (ii) change the form of consideration to be paid in the
Purchaser Offer, (iii) amend or waive the Minimum Condition (as defined Annex A
hereto) or impose any additional conditions on the Purchaser Offer other than
the conditions set forth in Annex A, (iv) amend any other term of the Purchaser
Offer in any manner adverse to the holders of Shares or (v) extend the
expiration date of the Purchaser Offer beyond April 30, 2000.
(d) Subject to the requirements of applicable law, the Company may waive the
conditions set forth in Annex B in its sole discretion; PROVIDED, HOWEVER, that
without prior written consent of Acquisition, the Company will not (i) decrease
the Per Share Amount or the number of Shares sought in the Company Offer,
(ii) change the form of consideration to be paid in the Company Offer,
(iii) amend or waive the Minimum Condition or impose any additional conditions
on the Company Offer other than the conditions set forth in Annex B, (iv) amend
any other term of the Company Offer in any manner adverse to Acquisition or
(v) extend the expiration date of the Company Offer beyond April 30, 2000.
(e) Notwithstanding the foregoing, but subject in all events to
Section 8.01, Acquisition may, without the consent of the Company, extend the
Purchaser Offer at any time, and from time to time (and at the direction of
Acquisition, the Company shall accordingly extend the Company Offer), (i) if at
the then scheduled expiration date of the Offer any of the conditions to the
obligations of Acquisition and the Company to accept Shares for payment (other
than the Minimum Condition, as to which Acquisition may extend the Purchaser
Offer up to 10 business days) shall not have been satisfied or waived, until
such time as such conditions are satisfied or waived; or (ii) for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or its staff applicable to the Offer.
(f) Notwithstanding the foregoing, Acquisition may, without the consent of
the Company (and at the direction of Acquisition and provided that the
representation set forth in Section 5.05 shall remain true and correct, the
Company shall), increase the Per Share Amount and extend the Offer to the extent
required by applicable law in connection with any such increase.
(g) As soon as practicable following the commencement of the Offer, the
Company shall commence a tender offer and consent solicitation for all of its
outstanding 11.75% Senior Subordinated Notes due 2005 and 11.75% Series C Senior
Subordinated Notes due 2005 (the "Debt Tender Offer"). The Debt Tender Offer
shall be made by means of an offer to purchase and consent solicitation on the
terms set forth in Annex C to this Agreement.
(h) As soon as practicable on the date the Offer is commenced, with respect
to the Offer (i) the parties hereto, together with such other persons as shall
be required to be included as parties to such filing, shall file with the
Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule TO (together with any amendments and supplements thereto and including
the exhibits thereto, the "Schedule TO"). The Schedule TO shall contain or
incorporate by reference an offer to purchase and a form of letter of
transmittal and any other documents related to the Offer (the Schedule TO, the
offer to purchase and such other documents, together with any amendments and
supplements thereto, are collectively referred to herein as the "Offer
Documents"). The Offer Documents shall comply in all
6
<PAGE>
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company or Acquisition with respect to information supplied by the
other party in writing for inclusion in the Offer Documents. Each of the parties
hereto shall take all steps necessary to cause the Offer Documents to be filed
with the SEC and to be disseminated to the Company's stockholders, in each case
as and to the extent required by applicable federal securities laws. Each of the
parties hereto shall promptly correct any information provided by it for use in
the Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and shall take all steps necessary
to cause the Offer Documents, as so corrected, to be filed with the SEC and to
be disseminated to the Company's stockholders, in each case as and to the extent
required by applicable federal securities laws. Each of the parties hereto and
its counsel shall be given a reasonable opportunity to review and comment on the
Offer Documents before they are filed with the SEC. In addition, each of the
parties hereto shall provide to the other party and its counsel in writing any
comments or other communications that such party or its counsel may receive from
time to time from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments or other communications.
Section 1.02 COMPANY ACTIONS. (a) The Company hereby approves of and
consents to the Offer and represents that its Board, at a meeting duly called
and held and acting on the unanimous recommendation of the Special Committee,
has (i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are advisable and in the best interests of
the Company's stockholders (other than Acquisition, the Participants or their
respective Affiliates), (ii) duly approved the adoption of this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, which
approval satisfies in full the requirements of prior approval contained in
Section 203(a)(1) of the DGCL, (iii) resolved to recommend that the stockholders
of the Company accept the Offer, tender their Shares thereunder and approve this
Agreement and the Merger PROVIDED, HOWEVER, that such recommendation may be
withdrawn or modified to the extent that the Special Committee determines in
good faith that such action is required in order to comply with its fiduciary
duties after receiving advice to such effect from its special counsel and
(iv) resolved to amend the Rights Agreement as contemplated herein.
(b) As soon as practicable on the date the Offer is commenced, the Company
shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") containing the recommendation described in
Section 1.02(a)(iii) of this Agreement and to disseminate the Schedule 14D-9 to
the Company's stockholders, together with the Offer Documents, promptly after
the commencement of the Offer. Each of the parties hereto agrees to promptly
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material respect
and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. Acquisition shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 before it is filed with
the SEC. In addition, the Company shall provide Acquisition and its counsel in
writing with any comments or other communications that the Company or its
counsel may receive from time to time from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments or other
communications.
(c) In connection with the Offer, if requested by Acquisition, the Company
shall promptly furnish Acquisition with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
furnish Acquisition with such additional information and such other assistance
as Acquisition or its agents
7
<PAGE>
may reasonably request in communicating the Offer to the record and beneficial
holders of Shares. Subject to the requirements of applicable law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Acquisition and their affiliates
and agents shall hold in confidence the information contained in any of such
labels, listings and files, shall use such information only in connection with
the Offer and the Merger, and, if this Agreement is terminated, shall, upon
request of the Company, deliver or cause to be delivered to the Company all
copies of such information and any extracts or summaries of such information
then in their possession.
Section 1.03 BOARDS OF DIRECTORS; COMMITTEES;
SECTION 14(F). (a) Promptly after the purchase of and payment pursuant to the
Offer of such number of Shares that satisfies the Minimum Condition, Acquisition
shall be entitled to designate for election to the Board such number of persons
as will cause a majority of directors of the Company to consist of persons
designated by Acquisition, and the Company shall, upon written request by
Acquisition, promptly, at the Company's election, either increase the size of
the Board or take such other actions as may be necessary so as to include on,
and cause to be elected to the Board, the individual or individuals designated
by Acquisition.
(b) The Company's obligations to appoint designees to the Board shall be
subject to Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.03 and shall include in
the Schedule 14D-9 mailed to the Company's stockholders promptly after the
commencement of the Offer such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 to
fulfill its obligations under this Section 1.03. Acquisition will supply to the
Company and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of Acquisition's designees
pursuant to this Section 1.03 and prior to the Effective Time (as hereinafter
defined), any amendment or termination of this Agreement, extension of the time
for the performance of any of the obligations or other acts of Acquisition,
waiver of any of the Company's rights hereunder, action in connection with this
Agreement required to be taken by the Board of Directors of the Company,
amendment to the Company's Certificate of Incorporation, Bylaws or Rights
Agreement, or action that would be reasonably likely to adversely affect the
interests of stockholders of the Company (other than Acquisition, the
Participants or their respective affiliates) in any material respect, shall
require the concurrence of a majority of the directors of the Company then in
office who are neither designated by Acquisition nor employees of the Company.
Section 1.04 OPTION TO ACQUIRE ADDITIONAL SHARES. (a) The Company hereby
grants to Acquisition an irrevocable option (the "Option") to purchase up to
that number of newly issued Shares (the "Option Shares") equal to the number of
Shares, that when added to the number Shares owned by Purchaser and its
affiliates immediately following consummation of the Offer, shall constitute 90%
of the Shares then outstanding on a fully diluted basis (giving effect to the
issuance of the Option Shares) for a consideration per Option Share equal to the
Per Share Amount; PROVIDED, HOWEVER, that the number of Option Shares shall not
exceed that number equal to 19.9% of the Shares outstanding on the date of this
Agreement.
(b) The Option may be exercised by Acquisition at any time at or after the
acceptance for payment by Acquisition of Shares pursuant to the Offer in
accordance with the terms of this Agreement. In the event Acquisition wishes to
exercise the Option, Acquisition shall give written notice (the "Notice") of its
exercise of the Option specifying the number of Shares that are or will be owned
by Acquisition and its affiliates immediately following consummation of the
Offer and a place and a time (which may be concurrent with the consummation of
the Offer) for the closing of such purchase. The Company shall, as soon as
possible following receipt of the Notice, deliver written notice to Acquisition
specifying the number of Option Shares.
8
<PAGE>
(c) At the closing of the purchase of the Option Shares, (i) the Company
will deliver to Acquisition a certificate or certificates representing the
number of Option Shares so purchased and (ii) Acquisition will make payment to
the Company of the aggregate price for the Option Shares being purchased, as
stated in the Notice, by check or wire transfer in an amount equal to the
product of (x) the Per Share Amount and (y) the total number of Option Shares
delivered at the closing. The Company shall pay all expenses, and any and all
United States Federal, state and 1ocal taxes and other charges, that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section 1.04.
ARTICLE II
THE MERGER
Section 2.01 THE MERGER. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and the DGCL, Acquisition shall be
merged with and into the Company. Following the Merger, the Company shall
continue as the surviving corporation (the "Surviving Corporation") and the
separate corporate existence of Acquisition shall cease.
Section 2.02 CLOSING. The closing of the Merger (the "Closing") shall take
place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP at 4 Times
Square, New York, New York at 10:00 a.m., local time, on a date to be specified
by the parties hereto, which shall be no later than the second business day
after satisfaction or waiver of all of the conditions set forth in Article VII
hereof (the "Closing Date"), unless another date or place is agreed to in
writing by the parties thereto.
Section 2.03 EFFECTIVE TIME. As soon as practicable after the satisfaction
or waiver of the conditions set forth in Article VII hereof, the parties hereto
shall cause the Merger to become effective by the filing with the Secretary of
State of Delaware of a certificate of merger or other appropriate documents
executed in accordance with the relevant provisions of the DGCL, and shall take
all such other and further actions as may be required by applicable law to make
the Merger effective. The date and time when the Merger shall become effective
is herein referred to as the "Effective Time."
Section 2.04 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the DGCL. 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 Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 2.05 CERTIFICATE OF INCORPORATION AND BY-LAWS. At the Effective
Time, (i) the certificate of incorporation of the Company shall be amended and
restated in its entirety to read in the form of the certificate of incorporation
of Acquisition as in effect immediately prior to the Effective Time and such
amended and restated certificate of incorporation shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
therein or by applicable law and (ii) the by-laws of the Company shall be
amended and restated in their entirety to read in the form of the by-laws of
Acquisition as in effect immediately prior to the Effective Time, and such
amended and restated by-laws shall be the by-laws of the Surviving Corporation
until thereafter amended as provided therein or by applicable law.
Section 2.06 DIRECTORS. The directors of Acquisition immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
and shall hold office in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation from the Effective Time until their
respective successors are duly elected or appointed and qualified.
Section 2.07 OFFICERS. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation from the Effective Time until their
respective successors are duly elected and appointed and qualified.
9
<PAGE>
Section 2.08 STOCKHOLDERS MEETING. If required by applicable law to
consummate the Merger, the Company, acting through its Board, shall, in
accordance with and to the extent permitted by applicable law:
(a) duly call, give notice of, convene and hold a special meeting of its
stockholders (the "Stockholders Meeting") as soon as practicable following
the expiration or termination of the Offer for the purpose of considering
and taking action upon this Agreement;
(b) subject to its fiduciary duties under applicable law as advised by
special counsel to the Special Committee, include in the Proxy Statement (as
defined herein) the recommendation of the Special Committee and the Board
that stockholders of the Company vote in favor of the approval and adoption
of this Agreement and the Merger; and
(c) prepare and file with the SEC a preliminary proxy or information
statement relating to this Agreement and the Merger and use its reasonable
best efforts to obtain and furnish the information required to be included
by it in the Proxy Statement and, after consultation with Acquisition,
respond promptly to any comments made by the SEC with respect to the
preliminary proxy statement or information statement and cause a definitive
proxy or information statement relating to this Agreement and the Merger
(the "Proxy Statement") to be mailed to its stockholders at the earliest
practicable time following the expiration or termination of the Offer.
Acquisition shall provide the Company with the information concerning it and
the transactions contemplated by the Commitment Letters required to be included
in the Proxy Statement and shall promptly correct any information provided by it
to the Company for use in the Proxy Statement if and to the extent that it shall
have become false or misleading in any material respect. At the Stockholders
Meeting, Acquisition will vote, or cause to be voted, all Shares owned by it in
favor of this Agreement and the transactions contemplated hereby.
Section 2.09 MERGER WITHOUT MEETING OF STOCKHOLDERS. In the event that
Acquisition or any of its subsidiaries shall acquire at least 90 percent of the
outstanding Shares pursuant to the Offer or otherwise, each of the parties
hereto shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without the
Stockholders Meeting, in accordance with Section 253 of the DGCL.
ARTICLE III
CONVERSION OF SECURITIES
Section 3.01 CONVERSION OF SHARES. (a) At the Effective Time, each Share
issued and outstanding immediately prior to the Effective Time (other than
(i) Shares held in the Company's treasury, (ii) Shares held, directly or
indirectly, by Acquisition, or by a Participant and (iii) Dissenting Shares (as
defined in Section 3.03(a)) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive, upon the surrender of the certificate formerly representing such Share,
cash in an amount equal to the Per Share Amount. The Per Share Amount shall not
accrue interest.
(b) Each Share held in the treasury of the Company and each Share held by
Acquisition or any wholly owned subsidiary of Acquisition immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be cancelled, retired and cease to exist without any
conversion thereof and no payment shall be made with respect thereto. Each Share
held by a Participant shall be converted into the right to retain one fully paid
and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation (a "Retained Share") or the right to receive the Per Share
Amount, as agreed to between the Participant and Acquisition. For purposes of
this Agreement, a "Participant" shall mean any individual designated as a
Participant by Acquisition prior to the Effective Time. The Company acknowledges
that the consummation of the Merger shall constitute a "Change in Control" for
purposes of the shares of restricted stock of the Company granted to the
Participants and that such Shares shall be treated as Shares for purposes of
this Agreement.
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(c) Each Share to be converted into the right to receive either the Per
Share Amount pursuant to Section 3.01(a) hereof or the Retained Shares pursuant
to Section 3.01(b) hereof, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the Per Share Amount or
the Retained Shares, as the case may be, therefor upon the surrender of such
certificate in accordance with Section 3.04 hereof.
(d) Each share of Acquisition common stock, par value $0.01 per share,
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into a Retained Share. Each share of Acquisition preferred stock, par
value $0.01 per share, issued and outstanding immediately prior to the Effective
Time shall by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to one share of preferred stock, par
value $0.01 per share, of the Surviving Corporation.
Section 3.02 COMPANY OPTIONS. (a) Except as provided in Section 3.02(b)
hereof and unless otherwise agreed to by the holder of an outstanding option to
purchase Shares or other similar interest (collectively, the "Options") granted
under any of the Company's stock option plans or under any other plan or
arrangement (the "Option Plans"), the Company shall take all actions necessary
and appropriate to provide that, upon the Effective Time, each Option, whether
or not then exercisable or vested, shall be cancelled and, in exchange therefor,
each holder of such Option shall receive an amount in cash in respect thereof,
if any, equal to the product of (i) the excess, if any, of the Per Share Amount
over the per Share exercise price thereof and (ii) the number of Shares subject
thereto (such payment to be net of applicable withholding taxes). The Company
shall take all such steps as may be required to cause the transactions
contemplated by this Section 3.02 and any other dispositions of its equity
securities (including derivative securities) in connection with this Agreement
by each individual who is a director or officer of the Company, to be exempt
under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in
accordance with the No-Action Letter dated January 12, 1999, issued by the SEC
to Skadden, Arps, Slate, Meagher & Flom LLP.
(b) Notwithstanding the foregoing, at the Effective Time, to the extent
agreed to by Acquisition and the applicable holder thereof, each outstanding
Option held by a Participant, whether or not then exercisable or vested
(collectively, the "Retained Options"), shall, as of the Effective Time,
continue to represent an option to acquire shares of common stock of the
Surviving Corporation on the terms agreed to by Acquisition and such
Participant.
(c) Prior to the Effective Time, the Company shall amend the terms of its
Option Plans as is necessary to give effect to the provisions of this
Section 3.02.
Section 3.03 DISSENTING SHARES. (a) Notwithstanding anything in this
Agreement to the contrary, each Share which is issued and outstanding
immediately prior to the Effective Time and which is held by a stockholder who
has properly exercised appraisal rights with respect thereto in accordance with
Section 262 of the DGCL (collectively, the "Dissenting Shares") shall not be
converted into or be exchangeable for the right to receive the Per Share Amount,
but such stockholders shall be entitled to receive payment of the appraised
value of such Shares in accordance with the provisions of Section 262 of the
DGCL, except that any Dissenting Shares held by a stockholder who shall
thereafter withdraw such demand for appraisal of such Shares or lose the right
to such payment as provided in Section 262 of the DGCL shall thereupon be deemed
to have been converted into and to have become exchangeable for, at the
Effective Time, the right to receive the Per Share Amount, without any interest
thereon.
(b) The Company shall give Acquisition (i) prompt notice of any written
demands under Section 262 of the DGCL with respect to any Shares, any withdrawal
of any such demand, and any other instruments served pursuant to Section 262 of
the DGCL and received by the Company and (ii) the right to participate in all
negotiations and proceedings with respect to any demands under Section 262 of
the DGCL with respect to any shares of capital stock of the Company. The Company
shall cooperate with Acquisition
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concerning, and shall not, except with the prior written consent of Acquisition,
voluntarily make any payment with respect to, or offer to settle or settle, any
such demands.
Section 3.04 EXCHANGE OF SHARES. (a) Prior to the Effective Time,
Acquisition shall designate a bank or trust company reasonably acceptable to the
Special Committee to act as paying agent (the "Paying Agent") for purposes of
making cash payments contemplated hereby. As soon as practicable following the
Effective Time, Acquisition shall deposit or cause to be deposited with the
Paying Agent the funds necessary to make the payments contemplated by
Section 3.01(a) (the "Payment Fund"). The Payment Fund shall be invested by the
Paying Agent as directed by the Surviving Corporation; provided that such
investment shall be invested in obligations of or guaranteed by the United
States of America, in commercial paper obligations rated A-1 or P-1 or better by
Moody's Investors Service, Inc. or Standard & Poor's Ratings Service,
respectively, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $500 million.
(b) The Payment Fund shall not be used for any other purpose except as
otherwise agreed to by Acquisition and the Company. Promptly following the date
which is twelve months after the Effective Time, the Paying Agent shall return
to the Surviving Corporation all cash, certificates and other instruments in its
possession that constitute any portion of the Payment Fund, and the Paying
Agent's duties shall terminate. Thereafter, each holder of a Certificate shall
be entitled to look to the Surviving Corporation (subject to applicable
abandoned property, escheat and similar laws) only as general creditors thereof
with respect to the Per Share Amount payable upon due surrender of their
Certificates, without interest thereon. Notwithstanding anything to the contrary
in this Section 3.04, none of the Paying Agent, Acquisition or the Surviving
Corporation shall be liable to a holder of a Certificate formerly representing
Shares for any amount properly paid to a public official pursuant to any
applicable property, escheat or similar law.
(c) Promptly (but in any event no later than five business days) after the
Effective Time, the Paying Agent shall mail to each record holder of a
certificate or certificates which immediately prior to the Effective Time
represented Shares, other than holders of certificates formerly representing
Shares which shall become entitled to receive Retained Shares pursuant to
Section 3.01(b) hereof and certificates representing Dissenting Shares (such
certificates, other than those representing Shares to be converted into the
right to receive Retained Shares pursuant to Section 3.01(b) hereof and
Dissenting Shares are collectively referred to herein as the "Certificates"), a
form of letter of transmittal (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates to the Paying Agent) and instructions for use in effecting the
surrendering to the Paying Agent of such Certificates for exchange into the Per
Share Amount. Upon surrender of a Certificate to the Paying Agent together with
a duly executed letter of transmittal and any other required documents, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Per Share Amount payable in respect of each Share represented thereby and such
Certificate shall forthwith be cancelled. If payment is to be made to a person
other than the person in whose name a Certificate so surrendered is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of the Certificate
so surrendered or establish to the satisfaction of the Surviving Corporation
that such tax has been paid or is not applicable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of the Shares which were outstanding
immediately prior to the Effective Time. 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. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged as provided in this Article III.
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(e) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
certificate to be lost, stolen or destroyed, the Paying Agent shall issue in
exchange for such lost, stolen or destroyed certificate the Per Share Amount
deliverable in respect thereof as determined in accordance with this
Article III. When authorizing such payment of the Per Share Amount in exchange
therefor, the person to whom the Per Share Amount is paid shall, if requested by
the Surviving Corporation, give the Surviving Corporation a bond in such
reasonable sum as it may direct or to otherwise indemnify the Surviving
Corporation in a manner reasonably satisfactory to it against any claim that may
be made with respect to the Certificate alleged to have been lost, stolen or
destroyed.
(f) If so specified in the Offer Documents, Acquisition, the Company, the
Surviving Corporation and the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable to a holder of Shares pursuant
to the Offer or Merger such amounts as Acquisition, the Company, the Surviving
Corporation and the Paying Agent are required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code") or any provision of state, local or foreign tax law. To
the extent amounts are so withheld by Acquisition, the Company, the Surviving
Corporation or the Paying Agent, the withheld amounts (i) shall be treated for
all purposes of this Agreement as having been paid to the holder of the Shares
in respect of which the deduction and withholding was made, and (ii) shall be
promptly paid over to the applicable taxing authority.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed in the SEC Reports (as defined) or as set
forth in the disclosure schedule delivered to Acquisition on the date hereof
(the "Disclosure Schedule"), the Company represents and warrants to Acquisition
as follows:
Section 4.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not in the aggregate have a Material Adverse Effect (as
hereinafter defined). The Company and each of its subsidiaries is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities make such qualification necessary, except for failures to be
so qualified or in good standing which would not, individually or in the
aggregate, have a Material Adverse Effect and would not impair the ability of
the Company to perform its obligations hereunder in any material respect. When
used in connection with the Company or any of its subsidiaries, the term
"Material Adverse Effect" means any fact, event, change or effect having, or
which could reasonably be expected to have, a material adverse effect on the
business, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole; PROVIDED, HOWEVER, that facts,
events, changes or effects that are applicable to or arise on account of
(i) any changes in economic, regulatory or political conditions generally,
(ii) this Agreement or the transactions contemplated hereby, (iii) the industry
of the Company generally or (iv) the effect of the public announcement of the
transactions contemplated hereby, shall be excluded from the definition of
"Material Adverse Effect" and from any determination as to whether a Material
Adverse Effect has occurred or may occur. Section 4.01 of the Disclosure
Schedule sets forth the name, jurisdiction of incorporation and percentages of
outstanding capital stock owned, directly or indirectly, by the Company, with
respect to each corporation of which the Company owns, directly or indirectly, a
majority of the outstanding capital stock. Except as disclosed in Section 4.01
of the Disclosure Schedule, all of the outstanding shares of capital stock of
each of the Company's subsidiaries have been validly issued and are fully paid
and nonassessable and are owned,
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directly or indirectly, by the Company, free and clear of any liens, pledges,
security interests, claims, preemptive rights or other encumbrances
(collectively, "Liens").
Section 4.02 CAPITALIZATION OF THE COMPANY. The authorized capital stock
of the Company consists of 201,000,000 Shares of which, as of the date hereof,
10,322,280 Shares are issued and outstanding, and 20,000,000 shares of preferred
stock, par value $0.01 per share, of which, as of the date hereof, no shares are
issued and outstanding. As of the date hereof, 660,168 Shares are subject to
outstanding Options, and no Shares were subject to issuance pursuant to the
Company's 401(k) savings plans. All of the outstanding Shares have been validly
issued, fully paid and nonassessable. Except as set forth above or pursuant to
the exercise of outstanding Options and except for Rights under the Rights
Agreement, there are outstanding (i) no shares of capital stock of the Company,
(ii) no securities of the Company convertible into or exchangeable for shares of
capital stock of the Company and (iii) no options or other rights to acquire
from the Company or any of its subsidiaries, and no other obligation of the
Company or any of its subsidiaries to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable for any capital stock, voting securities or ownership interests
in, the Company. There are no outstanding obligations of the Company or any of
its subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company. Following the Merger, none of the Company or any
of its subsidiaries will have any obligation to issue, transfer or sell any
shares of its capital stock or other securities of the Company or any of its
subsidiaries pursuant to any employee benefit plan or otherwise.
Section 4.03 AUTHORIZATION. The Company has all requisite corporate power
and authority to execute and deliver this Agreement and, subject to any required
vote of the stockholders of the Company as described in Sections 2.08 and 2.09
hereof, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated (other than, with respect to
the Merger, the approval of this Agreement by the holders of a majority of the
then outstanding Shares, if so required). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Acquisition, constitutes a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
Section 4.04 NON-CONTRAVENTION. Except for (a) filings, if required,
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (b) filings required in connection with or in compliance with
the Securities Act (as defined), the Exchange Act and the DGCL, (c) applicable
requirements under corporation or "blue sky" laws of various states,
(d) matters specifically described in this Agreement and (e) the matters
described in Section 4.04 of the Disclosure Schedule, neither the execution,
delivery and performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby shall (i) violate any
provision of the certificate of incorporation or by-laws of the Company or any
of its subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under, or give rise
to any right of termination, cancellation or acceleration of any obligation
under, or result in the creation of any Lien upon any property or asset of the
Company or any of its subsidiaries under, any provision of any material note,
bond, indenture, mortgage, lease, contract, agreement, instrument, license or
other obligation to which the Company or any of its subsidiaries is a party or
by which any of them or their properties or assets may be bound, (iii) violate
any law, rule, regulation, judgment, injunction, order or decree applicable to
the Company or any of its subsidiaries or any of their properties or assets, or
(iv) require any filing or registration with, notification to, or authorization,
consent or approval of, any court, legislative, executive or regulatory
authority or agency (each, a "Governmental Authority"), except in the case of
the foregoing clauses (ii), (iii) or (iv) for such violations, breaches or
defaults which, or filings, registrations, notifications,
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authorizations, consents or approvals the failure of which to obtain would not
have a Material Adverse Effect.
Section 4.05 COMPLIANCE WITH APPLICABLE LAWS. The Company and its
subsidiaries are in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Authority, and neither the
Company nor any of its subsidiaries has received notification of any asserted
present or past failure to so comply, except where such failure to be in
compliance would not have a Material Adverse Effect. No investigation, review,
inquiry or proceeding by any Governmental Authority with respect to the Company
or its subsidiaries is, to the knowledge of the Company, pending or threatened,
except those, the outcome of which would not have a Material Adverse Effect. The
Company and its material subsidiaries hold all permits, licenses, variances,
exemptions, orders, registrations and approvals of all Governmental Authorities
which are necessary for the operation of their respective businesses (the
"Permits"), except where the failure to hold any such Permits would not have a
Material Adverse Effect. The Company and its subsidiaries are in compliance with
the terms of the Permits, except where such failure to be in compliance would
not have a Material Adverse Effect.
Section 4.06 SEC REPORTS. The Company has filed all forms, reports and
documents with the SEC since January 1, 1998 required to be filed by it under
the Securities Act of 1933, as amended (the "Securities Act"), and the Exchange
Act (collectively, the "SEC Reports"). As of their respective filing dates, none
of the SEC Reports or the amendments thereto contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company contained
in the SEC Reports have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise stated in such financial statements) and present
fairly in all material respects the consolidated financial position of the
Company and its subsidiaries as of the respective dates thereof and their
consolidated results of their operations and cash flows for the respective
periods or as of the respective dates set forth therein (subject to normal
year-end adjustments in the case of any unaudited interim financial statements).
Section 4.07 ABSENCE OF CERTAIN CHANGES. Except as set forth in
Section 4.07 of the Disclosure Schedule or as set forth or otherwise reflected
in the SEC Reports or as contemplated by this Agreement, since December 31,
1999, neither the Company nor any of its subsidiaries has (a) taken any of the
actions set forth in Section 6.01, (b) suffered any Material Adverse Effect or
(c) entered into any transaction, or conducted its business or operations, other
than in the ordinary course of business consistent with past practice.
Section 4.08 LITIGATION. There is no action, suit or proceeding pending
or, to the knowledge of the Company, threatened, against the Company or any of
its subsidiaries, by or before any court or Governmental Authority that would
have, or could reasonably be expected to have, a Material Adverse Effect.
Section 4.09 COMPANY INFORMATION. None of the information supplied or to
be supplied by the Company, or any of its officers, directors, employees,
representatives or agents, for inclusion or incorporation by reference in the
Offer Documents, the Schedule 14D-9 or the Proxy Statement, including any
amendments or supplements thereto, shall, at the respective times the Offer
Documents and the Schedule 14D-9 are filed with the SEC or first published, sent
or given to the Company's stockholders, or, in the case of the Proxy Statement,
at the date the Proxy Statement is first mailed to the Company's stockholders or
at the time of the Stockholders Meeting, 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. Each of the Schedule 14D-9 and the Proxy Statement shall
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder. Notwithstanding the foregoing, the
Company does not make any representation or warranty with respect to the
information that has been supplied by Acquisition or its officers, directors,
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employees, representatives or agents for inclusion or incorporation by reference
in any of the foregoing documents.
Section 4.10 BROKERS AND FINDERS. No broker, finder or investment banker
(other than Edward L. Thomas and Robert P. Frisch (or any entity controlled by
them) and Merrill Lynch, Pierce, Fenner & Smith Incorporated, a true and correct
copy of whose engagement agreement has been provided to Acquisition) is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
Section 4.11 OPINION OF FINANCIAL ADVISOR. The Special Committee has
received the opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated,
financial advisor to the Special Committee, to the effect that, as of the date
of such opinion, the Per Share Amount to be received in the Offer and the Merger
is fair to the holders of Shares (other than Acquisition, the Participants or
their affiliates) from a financial point of view.
Section 4.12 TAKEOVER STATUTES. The Board (acting upon the unanimous
recommendation of the Special Committee) has unanimously approved the terms of
this Agreement and the consummation of the Offer, the Merger and the other
transactions contemplated hereby, and such approval constitutes approval of this
Agreement and the transactions contemplated hereby by the Board under
Section 203 of the DGCL and represents all the action necessary to ensure that
such Section 203 does not apply to Acquisition or the Participants in connection
with the Offer, the Merger and the other transactions contemplated hereby.
Section 4.13 RIGHTS AGREEMENT. The Company has taken all actions necessary
to render the Rights issued pursuant to the terms of the Rights Agreement
inapplicable to the Offer, the Merger, this Agreement and the other transactions
contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF ACQUISITION
Acquisition represents and warrants to the Company as follows:
Section 5.01 ORGANIZATION. Acquisition is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power and authority would not impair the ability of Acquisition to perform its
obligations hereunder in any material respect.
Section 5.02 CAPITALIZATION. The authorized capital stock of Acquisition
consists of 1,000 shares of common stock, par value $0.01 per share, and 200,000
shares of preferred stock, par value $0.01 per share, of which, as of the date
hereof, 100 shares of common stock are issued and outstanding. All the issued
and outstanding shares of capital stock of Acquisition are validly issued, fully
paid and nonassessable and free of preemptive rights.
Section 5.03 AUTHORIZATION. Acquisition has all necessary corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Acquisition and by the
stockholders of Acquisition and no other corporate proceedings on the part of
Acquisition are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Acquisition and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid and binding
agreement of Acquisition enforceable against Acquisition in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency and
similar laws affecting creditor's rights and remedies generally.
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Section 5.04 PROXY STATEMENT; SCHEDULE 14D-9; SCHEDULE TO. None of the
information supplied or to be supplied by Acquisition, or any of its officers,
directors, employees, representatives or agents, for inclusion or incorporation
by reference in the Proxy Statement, the Schedule 14D-9 or the Offer Documents,
including any amendments or supplements thereto, will, at the respective times
that the Proxy Statement, the Schedule 14D-9 and the Offer Documents, or any
amendments or supplements thereto, are filed with the SEC or first published,
sent or given to the Company's stockholders or, in the case of the Proxy
Statement or the Schedule TO, at the date first mailed to the Company's
stockholders or at the time of the Stockholders Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Schedule TO shall comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 5.05 FINANCING. Acquisition has received and furnished to the
Company true and complete copies of (i) the senior secured credit facility
commitment letter and fee letter, each dated January 28, 2000, among Canadian
Imperial Bank of Commerce, CIBC World Markets Corp., First Union National Bank,
First Union Securities, Inc., Acquisition and the Company, (ii) the senior
subordinated increasing note bridge facility commitment letter, fee letter and
indemnity letter, each dated January 28, 2000, among CIBC World Markets Corp.,
First Union Investors, Inc., Acquisition and the Company, (iii) the engagement
letter, dated January 28, 2000, among CIBC World Markets Corp., First Union
Securities, Inc., Acquisition and the Company, (iv) the senior preferred stock
commitment letter and indemnity letter, each dated January 28, 2000, among
Caravelle Investment Fund, L.L.C., CIBC WMC Inc., Albion Alliance Mezzanine
Fund, L.P., Albion Alliance Mezzanine Fund II, L.P., Acquisition and the
Company, and (v) the financial advisory engagement letter, dated January 28,
2000, among CIBC World Markets Corp., Acquisition and the Company (collectively,
the "Commitment Letters"), relating to the financing (the "Financing") of the
Offer and the Merger. The Commitment Letters provide, subject to the terms and
conditions set forth therein, for financing in an amount sufficient to purchase
and pay for the Shares tendered in the Offer, pay the Per Share Amount and to
pay all fees and expenses in connection with the Offer, Merger and the
transactions contemplated hereby. Each of the Commitment Letters is in full
force and effect and, since their respective dates, none of the Commitment
Letters has been withdrawn, amended or terminated in any manner adverse to the
Company. Acquisition has taken all actions required to cause the Commitment
Letters to be effective, and each of the Commitment Letters is a valid and
binding commitment of Acquisition. As of the date hereof, Acquisition is not
aware of any fact, circumstances or condition that is reasonably likely to
result in any of the conditions set forth in the Commitment Letters not being
satisfied.
Section 5.06 NO PRIOR ACTIVITIES. Except for the obligations or
liabilities incurred in connection with its incorporation or organization or the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the financing
of the transactions contemplated hereby, Acquisition has not incurred any
obligations or liabilities nor engaged in any business or activities of any type
or kind whatsoever or entered into any agreements or arrangements with any
person or entity.
Section 5.07 BROKERS AND FINDERS. No broker, finder or investment banker
(other than CIBC World Markets Corp. and First Union Investors, Inc., a true and
correct copy of whose engagement agreement has been provided to the Company), is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by and on
behalf of Acquisition.
Section 5.08 GOVERNMENTAL APPROVALS. Other than the HSR Act, the
Securities Act and the Exchange Act, no notices, reports or other filings are
required to be made by Acquisition with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Acquisition or
from, any Governmental Authority in connection with the execution and delivery
of this Agreement by
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Acquisition and the consummation by Acquisition of the transactions contemplated
hereby, the failure to make or obtain any or all of which would prevent,
materially hinder or materially burden the transactions contemplated hereby.
Section 5.09 NON-CONTRAVENTION. Except for the matters set forth in
Section 5.08, neither the execution, delivery and performance of this Agreement
by Acquisition nor the consummation by Acquisition of the transactions
contemplated hereby shall (i) violate any provision of the certificate of
incorporation or by-laws of Acquisition, (ii) result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a default
under, or give rise to any right of termination, cancellation or acceleration of
any obligation under, or result in the creation of any Lien upon any property or
asset of Acquisition under, any provisions of any material note, bond, mortgage,
lease, contract, agreement, instrument, license or other obligation to which
Acquisition or its properties or assets may be bound, (iii) violate any law,
rule, regulation, judgment, injunction, order or decree applicable to
Acquisition or any of its properties or assets or (iv) require any filing or
registration with, notification to, or authorization, consent or approval from,
any Governmental Authority, except in the cases of clauses (ii), (iii) or
(iv) for such violations, breaches or defaults which, or filings, registrations,
notifications, authorizations, consents or approvals the failure or which to
obtain would not impair the ability of Acquisition to perform its obligations
hereunder in any material respect.
Section 5.10 CALCULATION OF EBITDA. Section 5.10 of the Disclosure
Schedule sets forth a true and correct calculation of the Company's consolidated
EBITDA (as defined in the Commitment Letters) for the year ended December 31,
1999 (after giving effect to the sale of the Company's rail car division). As of
December 31, 1999, the condition set forth in the Commitment Letters relating to
the Company's consolidated EBITDA being equal to or exceeding $87.5 million was
satisfied.
ARTICLE VI
COVENANTS
Section 6.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by
this Agreement during the period from the date hereof to the Effective Time, the
Company and its subsidiaries will each conduct their respective operations in
the ordinary course of business consistent with past practice. Without limiting
the generality of the foregoing, except as otherwise expressly provided in this
Agreement or in the Disclosure Schedule, prior to the Effective Time, none of
the Company (acting through the Special Committee) or any of its subsidiaries
will, directly or indirectly, without the prior written consent of Acquisition:
(a) amend its certificate of incorporation, by-laws (or similar
documents) or amend the Rights Agreement or redeem the rights issued
thereunder;
(b) authorize for issuance, issue, sell, deliver 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) any
shares of capital stock of any class or any other securities, other than
pursuant to any employee benefit plan, option plan or agreement as in effect
as of the date hereof, or amend any of the terms of any such securities or
agreements outstanding as of the date hereof;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, or redeem or otherwise acquire any of its securities or any
securities of its subsidiaries;
(d) except in the ordinary course of business, (i) incur or assume any
indebtedness for borrowed money; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except wholly owned
subsidiaries of
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the Company; or (iii) make any loans, advances or capital contributions to,
or investments in, any other person (other than to wholly owned subsidiaries
of the Company);
(e) except in the ordinary course of business, enter into, adopt or
(except as may be required by law) amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreement, trust, plan, fund or other arrangement for the benefit or welfare
of any director, officer or employee, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock options or
performance units);
(f) except in the ordinary course of business and except pursuant to any
agreements or arrangements in effect on the date hereof, acquire, sell,
lease or dispose of any material amount of assets;
(g) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) enter into any contract or agreement other than in
the ordinary course of business; (iii) authorize any expenditures not
contemplated by the Company's business plan provided to Acquisition prior to
the date hereof which individually is in excess of $1,000,000 or in the
aggregate are in excess of $5,000,000; or (iv) enter into or amend any
contract, agreement, commitment or arrangement with respect to any of the
matters set forth in this Section 6.01(i);
(h) except in the ordinary course of business, pay, discharge or satisfy
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its subsidiaries; or
(i) take, or agree to take, any of the foregoing actions or any action
which would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect as of the date when made or
as of a future date.
Section 6.02 NO SOLICITATION. The Company shall not, and shall not
authorize or permit any of its subsidiaries or any of its or subsidiaries'
officers, directors, employees or agents to, directly or indirectly, solicit,
encourage, participate in or initiate discussions or negotiations with, or
provide any information to, any person, entity or group (other than Acquisition
or any of its affiliates or representatives) concerning any merger,
consolidation, tender offer, exchange offer, sale of all or substantially all of
the Company's assets, sale of shares of capital stock or similar business
combination transaction involving the Company or any principal operating or
business unit of the Company or its subsidiaries (an "Acquisition Proposal").
Upon the execution of this Agreement, the Company shall immediately cease any
discussions or negotiations with any person, entity or group (other than
Acquisition or any of its affiliates or representatives) in connection with an
Acquisition Proposal that are continuing as of the date hereof and shall seek to
have returned to the Company any confidential information provided in any such
discussions or negotiations. Notwithstanding the foregoing, if the Company or
the Special Committee receives a bona fide unsolicited, written Acquisition
Proposal after the date hereof from any person or entity at a price per Share
which the Special Committee reasonably concludes, based on the advice of its
financial advisor or special counsel, is in excess of the Per Share Amount, and
if the Special Committee reasonably concludes, based upon the advice of its
financial advisor and outside legal counsel, that the person or entity
delivering such Acquisition Proposal is reasonably capable of consummating such
Acquisition Proposal (based upon, among other things, the availability of
financing and the degree of certainty of obtaining financing, the expectation of
receipt of required antitrust and other regulatory approvals and the identity
and background of such person), then the Company or the Special Committee may,
directly or indirectly, provide access to or furnish or cause to be furnished
information concerning the Company's business, properties or assets to such
person or entity pursuant to an appropriate confidentiality agreement and the
Company or
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the Special Committee may participate in and engage in discussions and
negotiations with such person or entity regarding such Acquisition Proposal if
the Special Committee concludes, based upon the advice of its outside legal
counsel, that it is required to take such actions in order to comply with its
fiduciary duties under applicable law. In the event that, after the Company has
received an unsolicited written Acquisition Proposal (without breaching its
obligations under the foregoing sentence) prior to the consummation of the
Offer, the Special Committee determines, in good faith and based upon the advice
of its financial advisor and legal counsel, that it is required to take such
action in order to comply with its fiduciary duties under applicable law, the
Special Committee may do any or all of the following: (x) withdraw or modify the
Board's approval or recommendation of this Agreement, the Offer or the Merger,
and disclose to the Company's stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or otherwise make disclosure to
them, (y) approve or recommend an Acquisition Proposal and (z) terminate this
Agreement, PROVIDED, HOWEVER, that (A) prior to taking any of the foregoing
actions, the Company shall have paid Acquisition the amounts payable pursuant to
Section 8.03 hereof and (B) prior to taking the action described in clause (z)
above, the Special Committee shall have given Acquisition at least two business
days' notice (which shall be in writing) that the Special Committee intends to
terminate this Agreement and provided Acquisition with a reasonable opportunity
to respond to any such Acquisition Proposal.
Section 6.03 ACCESS TO INFORMATION. (a) Between the date hereof and the
Effective Time and subject to applicable law, the Company will give Acquisition
and its authorized representatives access to all employees, plants, offices,
warehouses and other facilities and to all books and records of the Company and
its subsidiaries, will permit Acquisition to make such inspections as
Acquisition may require and will cause the Company's officers and those of its
subsidiaries to furnish Acquisition with such financial and operating data and
other information with respect to the business and properties of the Company and
any of its subsidiaries as Acquisition may from time to time reasonably request.
(b) Acquisition will hold, and will cause its consultants and advisors to
hold, in confidence, unless compelled to disclose by judicial or administrative
process, after notice to and consultation with the Company or by other
requirements of law after notice to and consultation with the Company, all
documents and information concerning the Company and any of its subsidiaries
furnished to Acquisition in connection with the transactions contemplated hereby
(except to the extent that such information can be shown to have been
(i) previously known by Acquisition or its affiliates on a non-confidential
basis, (ii) in the public domain through no fault of Acquisition, or
(iii) later acquired by Acquisition from other sources which it did not
reasonably believe to be subject to confidentiality obligations) and will not
release or disclose such information to any other person, except that
Acquisition may release or disclose such information to its auditors, attorneys,
financial and other advisors and other consultants and to such persons with whom
contacts are made or discussions are held concerning this Agreement or the
transactions contemplated hereby (it being understood that such persons shall be
informed by Acquisition of the confidential nature of such information and shall
be directed to treat such information confidentially). If the transactions
contemplated hereby are not consummated, such confidentiality shall be
maintained except under the circumstances described under (i), (ii) or (iii) of
this Section 6.03(b).
Section 6.04 REASONABLE BEST EFFORTS. Subject to the terms and conditions
herein provided, each of the parties hereto shall use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, and to assist and cooperate with the other parties hereto in doing, all
things necessary, proper or advisable under applicable laws and regulations to
ensure that the conditions set forth in Article VII hereof are satisfied and to
consummate and make effective, in the most expeditious manner practicable the
transactions contemplated hereby including, without limitation, cooperation in
the preparation and filing of the Offer Documents, the Schedule 14D-9, the
Schedule TO, the Proxy Statement and any amendments thereto and the execution of
any additional instruments necessary to consummate the transactions contemplated
hereby. In case at any time after the Effective Time any further action is
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necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party hereto shall take all such necessary action
as may be reasonably requested by the other party.
Section 6.05 CONSENTS. Each of the parties hereto shall use its reasonable
best efforts to obtain any consents of all third parties and governmental
authorities necessary to the consummation of the transactions contemplated
hereby.
Section 6.06 PUBLIC ANNOUNCEMENTS. Acquisition and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement including, without limitation, the Offer and the Merger, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law or any listing
agreement with or rules applicable to the Nasdaq Stock Market.
Section 6.07 INDEMNIFICATION AND INSURANCE. (a) Acquisition agrees that
all rights to indemnification existing in favor of the present or former
directors, officers, employees, fiduciaries and agents of the Company or any of
its subsidiaries as provided in the Company's Restated Certificate of
Incorporation or By-Laws or pursuant to other agreements, or the certificate of
incorporation, by-laws or similar documents of any of the Company's subsidiaries
as in effect as of the date hereof with respect to matters occurring prior to
the Effective Time shall survive the Merger and shall continue in full force and
effect for a period of not less than six years after the date hereof.
Acquisition shall cause to be maintained in effect for not less than six years
from the Effective Time the current policies of the directors' and officers'
liability insurance maintained by the Company and its subsidiaries; provided
that Acquisition may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous with respect to
matters occurring prior to the Effective Time to the extent available.
(b) In the event that any action, suit, proceeding or investigation relating
hereto or to the transactions contemplated hereby is commenced, whether before
or after the Effective Time, the parties hereto agree to cooperate in good faith
and use their reasonable best efforts to defend vigorously against and respond
thereto.
(c) This Section 6.07, which shall survive any termination of this Agreement
pursuant to Section 8.01 and the consummation of the Merger at the Effective
Time and shall continue without limit, is intended to benefit the Company, the
Surviving Corporation, and any person or entity indemnified hereunder (whether
or not parties to this Agreement).
(d) In the event 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 all or substantially all of its properties and assets
to any person, then, and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 6.07.
Section 6.08 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Acquisition, and Acquisition shall give prompt notice to the
Company, of (i) the occurrence, or nonoccurrence, of any event the occurrence,
or nonoccurrence, of which would be likely to cause any representation or
warranty contained herein to be untrue or inaccurate in any material respect at
or prior to the Effective Time and (ii) any material failure of the Company or
Acquisition, 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 the delivery of any notice pursuant to this
Section 6.08 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 6.09 MATTERS RELATING TO THE COMMITMENT LETTERS. (a) Acquisition
shall be primarily responsible for any negotiations with respect to any
definitive agreements regarding the Financing (the "Definitive Financing
Agreements"); PROVIDED, HOWEVER, that (i) the Company shall have received prior
notice of, and shall be kept reasonably informed of the ongoing status of, any
such negotiations, (ii) the Company shall take all such actions as are
reasonably requested by Acquisition in connection with any such negotiations,
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and (iii) Acquisition shall conduct any such negotiations reasonably and in good
faith. Acquisition shall use its commercially reasonable efforts to close the
Financing on terms consistent with those set forth in the Commitment Letters and
to execute and deliver the Definitive Financing Agreements on or before the
expiration of the Offer. Acquisition shall use its commercially reasonable
efforts to satisfy on or before the expiration of the Offer all requirements of
the Definitive Financing Agreements which are conditions to closing the
transactions constituting the Financing and to drawing the cash proceeds
thereunder.
(b) Following receipt by either the Company or any of its affiliates, on the
one hand, or Acquisition or any of its affiliates, on the other hand, of any
written or oral communications to the effect that any financing source under any
of the Commitment Letters is contemplating not providing the Financing or is
terminating or canceling or modifying in any material respect any of the
Commitment Letters, or that the Financing is unlikely to be obtained, the
Company or Acquisition, as the case may be, shall immediately communicate such
event to the other party and provide such other party with a true and complete
copy of any of such written communication.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party hereto to effect the Merger is
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the Company's stockholders, if required by the Company's
organizational documents and the DGCL;
(b) no statute, rule, regulation, executive order, decree, or injunction
shall have been enacted, entered, promulgated or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Merger; PROVIDED, HOWEVER, that the parties hereto shall use their
reasonable best efforts to have any such order, decree or injunction
vacated;
(c) any waiting period applicable to the Offer or the Merger under the
HSR Act shall have terminated or expired; and
(d) the Company and Acquisition shall have accepted for payment and paid
for all shares validly tendered pursuant to the Offer and not withdrawn;
PROVIDED, HOWEVER, that neither the Company nor Acquisition shall be
entitled to invoke this condition, if it shall have been the cause of the
failure to purchase shares so tendered and not withdrawn in violation of the
of the terms hereof or the Offer.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.01 TERMINATION. This Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after the approval thereof by the Company's stockholders:
(a) By mutual written consent of the Company (acting through the Special
Committee) and Acquisition.
(b) By either the Company (acting through the Special Committee), on the
one hand, or Acquisition, on the other hand:
(i) if Shares shall not have been purchased pursuant to the Offer on
or prior to April 30, 2000; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 8.01(b)(i) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure to purchase
Shares pursuant to the Offer on or prior to such date; or
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(ii) if any Governmental Authority shall have issued an order, decree
or ruling or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and such order, decree or ruling shall have become
final and nonappealable.
(c) By the Company (acting through the Special Committee) prior to the
purchase of Shares pursuant to the Offer, as provided in Section 6.02
hereof; PROVIDED that in order for the termination of this Agreement
pursuant to this Section 8.01(c) to be deemed effective, the Company shall
have complied with all provisions of Section 6.02 hereof, including the
notice provisions therein, and with the applicable requirements of
Section 8.03 hereof.
(d) By the Company (acting through the Special Committee):
(i) in the event that the Offer expires or is terminated in
accordance with its terms without any Shares being purchased thereunder,
provided that the failure of the Company to fulfill any obligation under
this Agreement has not been the cause of, or resulted in, the failure to
purchase Shares pursuant to the Offer; or
(ii) if there shall have been a breach or failure to perform on the
part of Acquisition of any of its representations, warranties, covenants
or agreements contained herein, except where such breach or failure to
perform does not impair the ability of Acquisition to consummate the
Offer or the Merger in any material respect or where such breach or
failure to perform has been cured prior to March 1, 2000 (or such later
date upon which the Offer shall expire).
(e) By Acquisition:
(i) if the Special Committee (A) shall withdraw, modify or change its
recommendation so that it is not in favor of this Agreement, the Offer or
the Merger or shall have resolved to do any of the foregoing, (B) shall
have recommended or resolved to recommend to the Company's stockholders
an Acquisition Proposal, or (C) shall have terminated this Agreement as
provided in Section 6.02 hereof;
(ii) if the Company shall have breached any of its obligations under
Section 6.02 hereof;
(iii) in the event that the Offer expires or is terminated in
accordance with its terms without any Shares being purchased thereunder,
provided that the failure of Acquisition to fulfill any obligation
hereunder has not been the cause of, or resulted in the failure to
purchase Shares pursuant to the Offer; or
(iv) if there shall have been a breach or failure to perform on the
part of the Company of any of its representations, warranties, covenants
or agreements contained herein, except where such breach or failure to
perform does not have a Material Adverse Effect or where such breach or
failure to perform has been cured prior to March 1, 2000 (or such later
date upon which the Offer shall expire).
Section 8.02 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its directors, officers or stockholders, other than the
provisions of this Section 8.02 and Sections 6.03(b), 6.07 and 8.03 and
Article IX. Nothing contained in this Section 8.02 shall relieve any party from
liability for any willful breach of this Agreement.
Section 8.03 FEES AND EXPENSES. (a) Except as otherwise provided in this
Section, all costs and expenses incurred in connection with the Agreement, shall
be paid by the party incurring such cost or expense; PROVIDED, HOWEVER, that all
costs and expenses related to the filing, printing and mailing of the Offer
Documents, the Schedule 14D-9 and the Proxy Statement shall be borne by the
Company.
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(b) Upon a termination of this Agreement by the Company pursuant to
Section 8.01(c) or by Acquisition pursuant to Section 8.01(e)(i),
8.01(e)(ii) or 8.01(e)(iv), the Company shall pay to Acquisition (by wire
transfer of immediately available funds), within two business days following
such termination, documented out-of-pocket fees and expenses up to $11,000,000
actually incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses in
connection with the Commitment Letters and the Financing), it being understood
that such payments shall be in lieu of any and all payments which the Company
may be required to make under the Commitment Letters. In addition, the Company
shall pay to Acquisition (by wire transfer of immediately available funds) the
fees and expenses set forth in the immediately preceding sentence if this
Agreement is terminated (i) by the Company pursuant to Section 8.01(b)(i) or
8.01(d)(i) if the Offer expires or is terminated without any Shares being
purchased thereunder solely as a result of the Minimum Condition failing to be
satisfied by the expiration date of the Offer as it may have been extended or
(ii) by Acquisition pursuant to Section 8.01(b)(i) or 8.01(e)(iii) if the Offer
expires or is terminated without any Shares being purchased thereunder solely as
a result of the Minimum Condition failing to be satisfied by the expiration date
of the Offer as it may have been extended, and within 180 days after such a
termination, the Company enters into a definitive agreement with respect to, and
thereafter consummates, an Acquisition Proposal.
(c) Upon a termination of this Agreement by the Company pursuant to
Section 8.01(b)(i) or 8.01(d)(i) or by Acquisition pursuant to
Section 8.01(b)(i) (in each case other than as a result of a failure to satisfy
the condition set forth in paragraph (b) of Annex A (which shall be governed by
Section 8.03(d)) and other than under the circumstances set forth in Sections
8.03(b) and 8.03(d)), the Company shall pay to Acquisition (by wire transfer of
immediately available funds), within two business days following such
termination, documented out-of-pocket fees and expenses up to $8,000,000
actually incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses in
connection with the Commitment Letters and the Financing), it being understood
that such payments shall be in lieu of any and all payments which the Company
may be required to make under the Commitment Letters.
(d) Upon a termination of this Agreement by the Company pursuant to
Section 8.01(b)(ii), by Acquisition pursuant to Section 8.01(b)(ii) or by
Acquisition as a result of a failure of the condition set forth in
paragraph (b) or (e) of Annex A to have been satisfied, the Company shall pay to
Acquisition (by wire transfer of immediately available funds), within two
business days following such termination, documented out-of-pocket fees and
expenses up to $4,000,000 actually incurred in connection with this Agreement
and the transactions contemplated hereby (including, without limitation, the
fees and expenses in connection with the Commitment Letters and the Financing,
but excluding commitment fees and financial advisory fees under the Commitment
Letters), it being understood that such payments shall be in lieu of any and all
payments which the Company may be required to make under the Commitment Letters.
(e) Notwithstanding anything else in this Section 8.03 to the contrary, the
Company shall not be required to make any payment pursuant to this Section 8.03
if (i) immediately prior to the termination of this Agreement, Acquisition was
in material breach of its obligations under this Agreement or (ii) the
termination is the result of a breach of the terms of the Financing by the
financing sources thereunder. Acquisition hereby covenants and agrees that no
amounts payable purusant to this Section 8.03 shall be paid to any person that
is a director or officer of the Company or Acquisition as of the date hereof.
Section 8.04 AMENDMENT. Subject to Section 1.03(c), this Agreement and the
Plan of Merger may be amended by action taken by the Company and Acquisition at
any time before or after adoption of the Merger by the Company's stockholders
but, after any such approval, no amendment shall be made which decreases the Per
Share Amount or which adversely affects the rights of the Company's stockholders
hereunder without the approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of the parties.
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Section 8.05 EXTENSION; WAIVER. Subject to Section 1.03(c), at any time
prior to the Effective Time, either the Company (acting through the Special
Committee), on the one hand, or Acquisition, on the other hand, may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of any party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.01 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
Section 9.02 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a) constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties or any of them with respect to the subject
matter hereof and (b) shall not be assigned by operation of law or otherwise,
PROVIDED that Acquisition may assign its rights and obligations to purchase
Shares pursuant to the Offer to any subsidiary of Acquisition, but no such
assignment shall relieve Acquisition of its obligations hereunder if such
assignee does not perform such obligations.
Section 9.03 VALIDITY. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
Section 9.04 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram or telex, or by registered or certified mail (postage prepaid, return
receipt requested), to the respective parties as follows:
if to Acquisition:
Transportation Acquisition I Corp.
980 North Michigan Avenue
Chicago, Illinois 60611
Attention: Thomas M. Begel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Joseph A. Coco, Esq.
if to the Company:
Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Chicago, Illinois 60611
Attention: Special Committee
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Dennis Hersch, Esq.
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or to such other address as the person to whom notice is given may have
previously, furnished to the others in writing in the manner set forth above.
Section 9.05 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.06 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.07 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Sections 6.07(d) and 9.02(b),
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 9.08 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 9.09 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
TRANSPORTATION TECHNOLOGIES
INDUSTRIES, INC.
By: /s/ Andrew M. Weller
------------------------------
Name: Andrew M. Weller
Title: President and Chief
Operating Officer
TRANSPORTATION ACQUISITION I CORP.
By: /s/ Kenneth M. Tallering
------------------------------
Name: Kenneth M. Tallering
Title: Vice President
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<PAGE>
ANNEX A
CONDITIONS TO THE PURCHASER OFFER
Notwithstanding any other provision of the Purchaser Offer, but subject to
the provisions of the Agreement to which this Annex A is attached (terms used
herein and not otherwise defined having the meanings ascribed to such terms in
such Agreement), Acquisition shall not be required to accept for payment, or,
subject to any applicable rules and regulations of the SEC, including
Rule 14e-1(c) promulgated under the Exchange Act, pay for, and, subject to any
applicable rules and regulations of the SEC, may delay the acceptance for
payment of, or the payment of, any tendered Shares, if (i) any applicable
waiting period under the HSR Act has not expired or been terminated,
(ii) Acquisition and the Company shall not have obtained the proceeds of
financing on terms satisfactory to Acquisition to enable the purchase of Shares
pursuant to the Offer, to pay the Per Share Amount in the Merger and to pay fees
and expenses of the Offer and the Merger, (iii) there are validly tendered and
not withdrawn prior to the expiration of the Offer a fewer number of Shares than
that number of Shares which, when added to the Shares beneficially owned by
Acquisition on the date Shares are accepted for payment, represents at least a
majority of the Shares outstanding on a fully-diluted basis (after giving effect
to the conversion or exercise of all outstanding options, warrants and other
rights and securities exercisable or convertible into Shares, whether or not
exercised or converted at the time of determination) on the date Shares are
accepted for payment (the "Minimum Condition"), (iv) the Debt Tender shall not
have been consummated or (v) at any time on or after the date of the Agreement,
and at or before the time of acceptance for payment of Shares, any of the
following events shall occur:
(a) any Material Adverse Effect shall have occurred; or
(b) there shall have occurred and be continuing (1) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market
which lasts for three consecutive trading days, (2) a declaration of a
banking moratorium or any general suspension of payments in respect of banks
in the United States that regularly participate in the U.S. market in loans
to large corporations (whether or not mandatory), (3) a commencement of a
war, armed hostilities or other national or international crisis directly or
indirectly involving the United States that has a material adverse effect on
financial markets in the United States, (4) any material limitation (whether
or not mandatory) by any governmental authority on, the extension of credit
by banks or other lending institutions in the United States that regularly
participate in the U.S. market in loans to large corporations, (5) from the
date of the Agreement through the date of termination or expiration of the
Offer a decline of at least 25 percent in either the Dow Jones Average of
Industrial Stocks or the Standard & Poor's 500 index or (6) in the case of
situations described in clause (3) or (4) existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or
(c) any person, entity or group, other than Acquisition or the Company,
any of its affiliates, or any group of which any of them is a member, shall
have (i) acquired beneficial ownership of 20 percent or more of the Shares,
whether through acquisition of stock, the formation of an entity or group,
the grant of an option or a right, or otherwise (other than for bona fide
arbitrage purposes), or (ii) entered into a definitive agreement or an
agreement in principle with the Company with respect to a tender offer or
exchange offer for any Shares or a merger, consolidation or other business
combination with or involving the Company;
(d) the representations and warranties of the Company set forth in the
Agreement which are not qualified by "materiality" or "Material Adverse
Effect" shall not be true and accurate in all material respects, and the
representations and warranties that are qualified by "materiality" or
"Material Adverse Effect" shall not be true and accurate in all respects, in
each case as of the date of consummation of the Offer as though made on or
as of such date (except for those representations and warranties that
address matters only as of a particular date or only with respect to a
specific
27
<PAGE>
period of time which need only be true and accurate as of such date or with
respect to such period), or the Company shall have breached or failed to
perform or comply in any material respect with any obligation, agreement or
covenant required by the Agreement to be performed or complied with by it;
PROVIDED, HOWEVER, that such breach or failure to perform is incapable of
being cured or has not been cured prior to March 1, 2000 (or such later date
upon which the Offer shall expire).
(e) there shall have been any action or position taken, or any statute,
rule, regulation, judgment, order or injunction promulgated, enacted,
entered or enforced by any Governmental Authority, which could reasonably be
expected to (1) make the acceptance for payment of, or the payment for, some
or all of the Shares illegal or otherwise prohibited, or materially restrict
or delay consummation of the Offer, (2) impose limitations on the ability of
Acquisition to acquire or hold or to exercise effectively all rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares purchased by it on all matters properly presented to the
stockholders of the Company, or (3) prohibit or impose any material
limitation on Acquisition's ownership or operation of all or a material
portion of the assets or business of the Company or any of its respective
subsidiaries or affiliates; or
(f) the Company or Acquisition shall have failed to receive any or all
governmental or third party consents and approvals to consummate the Offer
which, if not received, would have a Material Adverse Effect;
(g) the Board of Directors of the Company shall have publicly (including
by amendment of its Schedule 14D-9) withdrawn or modified in any material
respect its recommendation of the Offer or shall have resolved to do so; or
(h) the Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Acquisition, in such case and regardless of
the circumstances (including any action or inaction by Acquisition) giving rise
to any such condition makes it inadvisable to proceed with such acceptance for
payment or payments.
The foregoing conditions are for the sole benefit of Acquisition and may be
asserted by Acquisition regardless of the circumstance giving rise to such
condition and may be waived by Acquisition, in whole or in part at any time and
from time to time, in its sole discretion. The failure by Acquisition at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
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<PAGE>
ANNEX B
CONDITIONS TO THE COMPANY OFFER
Notwithstanding any other provision of the Company Offer, but subject to the
provisions of the Agreement to which this Annex B is attached (terms used herein
and not otherwise defined having the meanings ascribed to such terms in such
Agreement), the Company shall not be required to accept for payment, or, subject
to any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Exchange Act, pay for, and, subject to any applicable
rules and regulations of the SEC, may delay the acceptance for payment of, or
the payment of, any tendered Shares, if (i) any applicable waiting period under
the HSR Act has not expired or been terminated, (ii) Acquisition and the Company
shall not have obtained the proceeds of financing on terms satisfactory to
enable the purchase of Shares pursuant to the Offer and pay fees and expenses of
the Offer and the Merger, (iii) there are validly tendered and not withdrawn
prior to the expiration of the Offer a fewer number of Shares than such number
that satisfies the Minimum Condition, (iv) the Debt Tender shall not have been
consummated or (v) at any time on or afer the date of the Agreement, and at or
before the time of acceptance for payment of Shares, any of the following events
shall occur:
(a) the representations and warranties of Acquisition set forth in the
Agreement which are not qualified by "materiality" or "material" shall not
be true and accurate in all material respects, and the representations and
warranties that are qualified by "materiality" or "material" shall not be
true and accurate in all respects, in each case as of the date of
consummation of the Offer as though made on or as of such date (except for
those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which need
only be true and accurate as of such date or with respect to such period),
or Acquisition shall have breached or failed to perform or comply in any
material respect with any obligation, agreement or covenant required by the
Agreement to be performed or complied with by it, PROVIDED, HOWEVER, that
such breach or failure to perform is incapable of being cured or has not
been cured prior to March 1, 2000 (or such later date upon which the Offer
shall expire);
(b) there shall have been any action or position taken, or any statute,
rule, regulation, judgment, order or injunction promulgated, enacted,
entered, enforced or any other action or position shall have been taken,
proposed or threatened by any Governmental Authority which could reasonably
be expected to make the acceptance for payment of, or the payment for, some
or all of the Shares illegal or otherwise prohibited, or materially restrict
or delay consummation of the Offer;
(c) the Company or Acquisition shall have failed to receive any or all
governmental or third party consents and approvals to consummate the Offer
which, if not received, would have a Material Adverse Effect;
(d) the Agreement shall have terminated in accordance with its terms; or
(e) the Purchaser Offer shall not have been consummated at the same time
as the Company Offer;
which, in the reasonable judgment of the Company, in such case and regardless of
the circumstances (including any action or inaction by he Company) giving rise
to such condition makes it inadvisable to proceed with such acceptance for
payment or payments.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstance giving rise to such
condition and may be waived by the Company, in whole or in part at any time and
from time to time, in its sole discretion. The failure by the Company at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
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<PAGE>
ANNEX C
DEBT TENDER OFFER TERMS AND CONDITIONS
<TABLE>
<S> <C>
Securities Subject to Offers 11.75% Senior Subordinated Notes due 2005
11.75% Series C Senior Subordinated Notes due 2005
Total Consideration for the Offer and The total consideration (the "Total Consideration") for each
the Solicitation $1,000 principal amount of the Notes tendered pursuant to
the Offer will equal the present value on the payment date
of $1,058.75 (the amount payable on August 15, 2000, the
first date on which the Notes are redeemable (the "Earliest
Redemption Date")) and all remaining interest payments
payable up to and including the Earliest Redemption Date on
the second business day before the scheduled expiration
date, plus 50 basis points. The Total Consideration is
comprised of the Tender Offer Consideration and the Consent
Payment.
Tender Offer Consideration: Total Consideration minus the Consent Payment.
Consent Payment: A Consent Payment in cash equal to $25.00 per $1,000
principal amount of Notes for which consents have been
validly delivered.
Conditions to the Offers The Offers shall be conditioned upon:
(i) the execution by the trustee of supplemental indentures
implementing the proposed amendments to the indentures
following receipt of the requisite consents to the proposed
amendments from not less than a majority in aggregate
principal amount of the outstanding Notes of each series,
(ii) there having been validly tendered (and not withdrawn)
prior to the expiration date not less than a majority in
aggregate principal amount of the notes of each series
outstanding,
(iii) the consummation of the Offer (as defined in the
Merger Agreement),
(iv) receipt by the Company of the proceeds of financing in
an amount sufficient to pay for the debt tender offers and
the consent payment on terms acceptable to the Company, and
(v) there shall not have been any action or position taken,
or any statute, rule, regulation, judgment, order or
injunction promulgated, enacted, entered, enforced or any
other action or position taken by any Governmental Authority
which could reasonably be expected (in the sole judgment of
Acquisition) to make the acceptance for payment of, or the
payment for, some or all of the Notes or the consummation of
the consent solicitations, illegal or otherwise prohibited,
or materially restrict or delay consummation of the debt
tender offers and consent solicitations.
(vi) there shall not have occurred or be likely to occur any
event affecting the business or financial affairs of the
Company that, in the sole judgment of Acquisition, would or
might prohibit, prevent, restrict or delay consummation of
the debt tender offers or the consent solicitations in any
material respect;
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
(vii) the trustee under either of the Indentures shall not
have objected in any respect to or taken action that could
reasonably be expected, in the sole judgment of Acquisition,
to adversely affect in any material respect the consummation
of the debt tender offers or consent solicitations or the
Company's ability to effect any of the proposed amendments
to the Indentures or shall have taken any action that
challenges the validity or effectiveness of the procedures
used by the Company in soliciting the Consents (including
the form thereof) or in the making of the debt tender offers
or consent solicitations or the acceptance of, or payment
for, the Notes or the consents; or
(viii) there shall not have occurred and be continuing (1)
any general suspension of trading in, or limitation on
prices for, securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market which
lasts for three consecutive trading days, (2) a declaration
of a banking moratorium or any general suspension of
payments in respect of banks in the United States that
regularly participate in the U.S. market in loans to large
corporations (whether or not mandatory), (3) a commencement
of a war, armed hostilities or other national or
international crisis directly or indirectly involving the
United States that has a material adverse effect on
financial markets in the United States, (4) any material
limitation (whether or not mandatory) by any governmental
authority on, the extension of credit by banks or other
lending institutions in the United States that regularly
participate in the U.S. market in loans to large
corporations, (5) from the date of the Agreement through the
date of termination or expiration of the Offer a decline of
at least 25 percent in either the Dow Jones Average of
Industrial Stocks or the Standard & Poor's 500 index or (6)
in the case of situations described in clause (3) or (4)
existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof.
</TABLE>
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