<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1996
REGISTRATION NO. 333-5015
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
TOWER AUTOMOTIVE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 41-1746238
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 342-2310
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL OFFICES)
ANTHONY A. BARONE
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
TOWER AUTOMOTIVE, INC.
6303 28TH STREET S.E.
GRAND RAPIDS, MICHIGAN 49546
TELEPHONE: (616) 954-7600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
CARTER W. EMERSON, ESQ. DEWEY B. CRAWFORD, ESQ.
KIRKLAND & ELLIS GARDNER, CARTON & DOUGLAS
200 EAST RANDOLPH DRIVE 321 NORTH CLARK STREET
CHICAGO, ILLINOIS 60601 CHICAGO, ILLINOIS 60610-4795
(312) 861-2052 (312) 245-8422
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH +
+THESECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR +
+MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION +
+STATEMENTBECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO +
+SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF +
+THESE SECURITIES INANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 20, 1996
4,270,000 SHARES
LOGO
COMMON STOCK
-----------
Of the 4,270,000 shares of Common Stock being offered, 2,000,000 shares are
being sold by Tower Automotive, Inc. (the "Company") and 2,270,000 shares are
being sold by the Selling Stockholders. See "Principal and Selling
Stockholders." The Company will not receive any of the proceeds from the sale
of shares offered by the Selling Stockholders.
The Company's Common Stock is traded on the Nasdaq Stock Market under the
symbol "TWER." On June 14, 1996, the last reported sale price of the Common
Stock on the Nasdaq Stock Market was $24.75 per share. See "Market Price of and
Dividends on Common Stock."
SEE "RISK FACTORS," BEGINNING ON PAGE 8 OF THIS PROSPECTUS, FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF
COMMON STOCK OFFERED HEREBY.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THESECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIESCOMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION ORANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACYOR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TOTHE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
Underwriting
Discounts and Proceeds to
Price to Commissions Proceeds to Selling
Public (1) Company (2) Stockholders
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........................ $ $ $ $
- ---------------------------------------------------------------------------------------------
Total............................ $ $ $ $
- ---------------------------------------------------------------------------------------------
Total Assuming Full Exercise of
Over-Allotment Option (3)....... $ $ $ $
- ---------------------------------------------------------------------------------------------
</TABLE>
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(1) See "Underwriting."
(2) Before deducting expenses estimated at $550,000, which are payable by the
Company.
(3) Assuming exercise in full of the 30-day option granted by the Company and
certain Selling Stockholders to the Underwriters to purchase up to 640,500
additional shares, on the same terms, solely to cover over-allotments. See
"Underwriting."
-----------
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters, and
subject to their right to reject orders in whole or in part. It is expected
that delivery of the Common Stock will be made in New York City on or about
, 1996.
-----------
PAINEWEBBER INCORPORATED
ROBERT W. BAIRD & CO.
INCORPORATED
PIPER JAFFRAY INC.
-----------
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
[Car and Minivan Illustrating parts produced by Tower Automotive]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ STOCK MARKET, IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
DURING THE OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING IN
THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK OF THE COMPANY PURSUANT TO EXEMPTIONS
FROM RULES 10b-6, 10b-7 AND 10b-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and related notes appearing elsewhere or
incorporated by reference in this Prospectus. Unless otherwise indicated, all
information in this summary and elsewhere in this Prospectus assumes that the
Underwriters' over-allotment option has not been exercised. Unless the context
indicates otherwise, as used in this Prospectus the term "Company" refers to
Tower Automotive, Inc., its consolidated subsidiaries and their respective
predecessors. The Company acquired Trylon Corporation ("Trylon") on January 16,
1996 and MascoTech Stamping Technologies, Inc. ("MSTI") on May 31, 1996.
Revenue data presented herein for 1995 on a pro forma basis give effect to the
acquisitions of Trylon and MSTI as if such acquisitions occurred on January 1,
1995. See "Unaudited Pro Forma Financial Statements."
THE COMPANY
GENERAL
The Company is a leading designer and producer of high-quality, engineered
metal stampings and assemblies used by major North American original equipment
manufacturers ("OEMs"), including Ford, Honda, Chrysler, General Motors, Mazda,
Toyota and Nissan. The Company's products range from engineered mechanical
parts, such as hood and deck lid hinges and brake components, to large
structural stampings and assemblies, such as body pillars, chassis, suspension
and floor pan components and major housing assemblies. The majority of the
Company's revenues are derived from complex, high value-added products,
primarily assemblies which generally consist of multiple parts which the
Company stamps and combines with various welded or fastened components. The
Company's revenues have grown rapidly through a focused strategy of internal
growth and a highly disciplined acquisition program. Since 1993, revenues have
increased from $86.3 million to $222.8 million in 1995, a compound annual
growth rate of approximately 61%.
On May 31, 1996, the Company acquired MSTI, a leading supplier of complex,
high value-added stampings used in chassis and suspension systems for North
American OEMs. The acquisition of MSTI expands the Company's product offerings
to include chassis and suspension components, increases the Company's product
content on several of the most popular light truck models and enhances new
business opportunities with OEMs. On a pro forma basis, the Company had
revenues of approximately $424 million in 1995, which the Company believes
makes it the third largest independent supplier of automotive stampings and
assemblies to North American OEMs.
The Company manufactures products for a wide variety of car and light truck
models, including nine of the ten best-selling vehicles in the United States in
1995. Two of the Company's highest content per car models, the Ford Taurus and
the Honda Accord, have been the best-selling cars in the United States for the
past eleven years. In addition, two of the Company's highest content per light
truck models, the Ford Explorer and F-Series Pick-up, were the best-selling
sport utility vehicle and pick-up truck in North America in 1995. As a result
of its long history of high-efficiency/high-quality manufacturing and extensive
service capabilities as well as strategic acquisitions, the Company has gained
access to most OEMs and has become a long-term preferred supplier to Ford, the
Company's largest customer, as well as its other major customers. In addition
to receiving numerous quality awards, the Company has consistently received one
of Ford's highest commercial ratings for suppliers in its stamping segment.
STRATEGY
The Company operates in the large and highly fragmented stamping segment of
the automotive supply industry, which has recently begun to undergo significant
consolidation. To lower costs and improve quality, OEMs are reducing their
supplier base by awarding sole-source contracts to full-service stamping
suppliers who
3
<PAGE>
are able to supply larger segments of a vehicle. OEMs' criteria for supplier
selection include not only cost, quality and responsiveness, but also full-
service design, engineering and program management capabilities. In addition,
suppliers increasingly will be required by OEMs to deliver their products and
services on a global basis. As a full-service supplier with strong OEM
relationships, the Company expects to benefit from the continued consolidation
within the automotive stamping segment.
The Company's strategy is designed to capitalize on the opportunities created
by the consolidation of stamping suppliers through continued internal growth
and pursuit of strategic acquisitions that complement its existing business.
The Company believes its strong customer relationships with OEMs enable it to
more quickly identify business opportunities and react to customer needs during
all stages of vehicle design.
The key elements of the Company's strategy are:
Technical Design, Engineering and Program Management Capabilities. The
Company strives to maintain a technological advantage through investment in
research and product development, advanced engineering and program management.
The Company works with OEMs throughout the product development process from
concept vehicle and prototype development through the design and implementation
of manufacturing processes, in some cases by placing Company employees at
customer facilities.
Efficient Manufacturing/Continuous Improvement Programs. In response to OEMs'
increasingly stringent demands, the Company has implemented manufacturing
practices designed to maximize quality and timeliness of delivery and eliminate
waste and inefficiency. The Company has continued to upgrade its manufacturing
technology and product design capability through substantial investment in
design and manufacturing equipment and highly trained engineering personnel.
Strategic Acquisitions. The Company believes that consolidation in the
stamping segment will continue to provide attractive opportunities to acquire
high-quality companies that complement its existing business. The Company seeks
to make acquisitions that (i) provide additional product, manufacturing and
technical capabilities, (ii) increase the number of models for which the
Company supplies products and the content supplied for existing models, (iii)
add new customers and (iv) broaden the Company's geographic coverage. Since
1993, the Company has acquired four businesses. The Company intends to seek
future acquisitions or develop strategic alliances that will strengthen the
Company's ability to supply its products on a global basis.
Broad Product Capabilities. The Company believes that its ability to offer a
broad range of products will provide the Company with a competitive advantage
as OEMs continue to consolidate their stamping suppliers. The Company's North
American content per vehicle has increased from $6.23 in 1993 to $14.92 in
1995, and $28.37 on a pro forma basis after giving effect to the acquisitions
of Trylon and MSTI. The acquisition of MSTI further broadens the Company's
product offerings into chassis and suspension components. The Company seeks to
increase volume by offering a broader range of its products to customers for
each vehicle model and by developing new products for customers.
Management and Workforce Incentives. The Company's management team has
extensive experience in supplying OEMs and has a significant stake in the
Company's success. After the Offering, the Company's management team will
continue to own approximately 16% of the Common Stock on a fully diluted basis.
To increase employee productivity, the Company utilizes incentive programs for
all salaried and hourly employees and provides incentives for employees who
take advantage of its continuous improvement programs and who provide cost
saving ideas. The Company's decentralized management style encourages employee
participation in refining and improving production processes.
RECENT ACQUISITIONS
On May 31, 1996, the Company purchased MSTI from MascoTech, Inc.
("MascoTech") for approximately $79 million, plus certain contingent payments
(the "MSTI Acquisition"). MSTI had net revenues of $152.9 million in 1995. The
MSTI Acquisition has expanded the Company's product capabilities into chassis
and
4
<PAGE>
suspension components, thereby permitting further penetration on its existing
vehicle platforms. In addition, MSTI currently supplies assemblies and
components for key light truck models including the Ford F-Series and Explorer
and Chrysler Grand Cherokee and Mini-van and for high-volume passenger cars
including the Ford Taurus/Sable and Escort and Chrysler Cirrus/Stratus. Many of
the components manufactured by MSTI also require substantial value-added
processing including assembly, painting and welding. The Company believes that
its ability to supply a larger portion of the vehicle as a result of the MSTI
Acquisition will afford it with significant opportunities to increase sales to
OEMs. In a separate transaction, the Company agreed to assume production of
certain parts previously manufactured at a non-acquired MascoTech facility and
will make payments to MascoTech equal to 5% of the revenues to be derived by
the Company during the first twelve months of production from each assumed
purchase order resourced to the Company. The Company will also acquire selected
inventory, tooling and production equipment used for such production at an
estimated cost of approximately $6 million. The purchased assets will be
transferred to the Company's existing facilities over the remainder of 1996.
In addition, the Company has completed three other strategic acquisitions:
. In January 1996, the Company acquired Trylon, formerly a wholly owned
subsidiary of MascoTech, for approximately $25 million in cash, including
transaction costs (the "Trylon Acquisition"). The Trylon Acquisition
broadened the Company's product offerings to include small, precision
metal stampings and assemblies, which were previously outsourced to third
parties.
. In June 1994, the Company acquired Kalamazoo Stamping and Die Company
("Kalamazoo"), a supplier of structural stampings and assemblies.
. In May 1994, the Company acquired Edgewood Tool and Manufacturing Company
and its affiliate Ann Arbor Assembly Corporation (collectively,
"Edgewood"), a leading supplier of hood and deck lid hinges as well as
structural stampings and assemblies.
The Company was formed to acquire R.J. Tower Corporation (the "Predecessor"),
the acquisition of which was completed in April 1993 (the "R.J. Tower
Acquisition"). The Company completed an initial public offering of its Common
Stock in August 1994 (the "IPO"). The Company's principal executive offices are
located at 4508 IDS Center, Minneapolis, Minnesota 55402 and its telephone
number is (612) 342-2310.
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered by the Company. 2,000,000 shares
Common Stock Offered by Selling 2,270,000 shares
Stockholders....................... ----------------
Total............................. 4,270,000 shares
Common Stock to be Outstanding after
the Offering....................... 13,931,381 shares (1)
Use of Proceeds..................... The net proceeds to be received by the
Company from the Offering will be used to
repay all indebtedness under the Company's
credit agreement and for general corporate
purposes that may include repayment of
other indebtedness, potential future
acquisitions or capital expenditures. The
Company will not receive any proceeds from
the sale of the shares by the Selling
Stockholders. See "Use of Proceeds."
Nasdaq Stock Market Symbol.......... TWER
</TABLE>
- --------
(1) As of May 31, 1996. Does not include (i) 1,083,504 shares of Common Stock
reserved for issuance under the Company's stock option plans and employee
stock discount purchase plan, of which options to purchase 277,875 shares
were outstanding, (ii) 102,984 shares issuable upon the exercise of stock
options issued in connection with the acquisition of Edgewood, (iii)
520,235 shares issuable upon conversion of convertible subordinated notes
issued in connection with the acquisition of Edgewood (the "Convertible
Notes"), and (iv) 200,000 shares issuable upon the exercise of outstanding
warrants issued to MascoTech in connection with the MSTI Acquisition (the
"MSTI Warrants").
5
<PAGE>
SUMMARY FINANCIAL AND OTHER DATA
(IN THOUSANDS, EXCEPT PER SHARE AND PER VEHICLE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------- ---------------------------
COMBINED PRO FORMA PRO FORMA
1993 (1) 1994 1995 1995 (2) 1995 1996 1996 (2)
-------- --------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $ 86,334 $ 165,526 $ 222,801 $ 423,607 $ 58,423 $ 68,921 $ 111,282
Gross profit (3)....... 13,967 22,540 37,413 59,837 9,696 10,515 16,538
Operating income....... 9,392 14,302 21,920 34,278 5,810 6,626 10,402
Net income............. 5,009 7,361 12,071 17,073 3,296 3,188 5,143
Net income applicable
to common
stockholders (4)..... 5,009 7,476 12,247 17,249 3,340 3,232 5,187
Net income per common
and common equivalent
share................. $ 0.74 $ 0.86 $ 1.05 $ 1.19 $ 0.29 $ 0.28 $ 0.36
======== ========= ========= ========= ======== ======== =========
Weighted average common
and common equivalent
shares outstanding
(5)................... 6,812 8,720 11,697 14,482 11,677 11,733 14,518
OTHER DATA:
Capital expenditures,
net................... $ 5,156 $ 28,524 $ 26,148 $ 38,063 $ 6,774 $ 2,339 $ 2,610
EBITDA (6)............. 12,143 18,440 28,469 48,191 7,383 9,208 14,089
North American content
per vehicle (7)....... $ 6.23 $ 10.83 $ 14.92 $ 28.37 $ 14.24 $ 18.59 $ 30.01
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------
DECEMBER 31, PRO FORMA AS
1995 ACTUAL PRO FORMA (8) ADJUSTED (9)
------------ -------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............. $ 32,245 $ 26,501 $ 40,012 $ 54,209
Total assets................. 209,476 251,710 377,815 392,012
Total debt (10).............. 71,079 91,200 149,200 116,790
Stockholders' investment..... 85,585 88,987 110,121 156,728
</TABLE>
- --------
(1) On April 15, 1993, the Company acquired the Predecessor. Operating data of
the Predecessor for the period January 1, 1993 to April 14, 1993 have been
combined for presentation purposes with the operating data of the Company
for the eight and one-half month period ended December 31, 1993, without
giving effect to purchase accounting or the impact of the financing of the
R.J. Tower Acquisition.
(2) The unaudited pro forma statement of operations data for the year ended
December 31, 1995 reflect (i) the Trylon Acquisition (including related
financing transactions), (ii) the MSTI Acquisition (including related
financing transactions) and (iii) the Offering and the application of the
net proceeds to the Company (at an assumed public offering price of $24.38
per share) as described in "Use of Proceeds," as if such transactions had
occurred at the beginning of the period. The unaudited pro forma statement
of operations data for the three months ended March 31, 1996 reflect (i)
the MSTI Acquisition (including related financing transactions) and (ii)
the Offering and the application of the net proceeds to the Company (at an
assumed public offering price of $24.38 per share) as described in "Use of
Proceeds," as if such transactions had occurred at the beginning of the
period. The Company acquired Trylon on January 16, 1996. Results of
operations of Trylon for the period January 1, 1996 through the acquisition
date are not material and therefore have not been included in the Company's
results of operations for the three-month period ended March 31, 1996. The
unaudited pro forma financial data set forth herein do not purport to
represent what the results of operations or financial position of the
Company would have been if such transactions had occurred as of the dates
indicated or attempt to project the results of operations or financial
position of the Company for any future period or date. See "Use of
Proceeds," "Capitalization" and "Unaudited Pro Forma Financial Statements."
(3) Beginning in the three-month period ended March 31, 1996, the Company
began classifying certain manufacturing engineering expenses as cost of
sales. Previously, these expenses were classified as general and
administrative expenses. Accordingly, these expenses for the periods prior
to the three months ended March 31, 1996 have been reclassified to conform
to the new presentation. These reclassifications had no effect on
previously reported operating or net income.
(4) Net income applicable to common stockholders reflects the elimination of
interest expense on $5.0 million of Convertible Notes (net of related
income tax benefit).
(5) Assumes conversion of the $5.0 million in aggregate principal amount of
the Convertible Notes issued in connection with the acquisition of
Edgewood. The shares issuable upon conversion of such Convertible Notes
are included in the calculation of earnings per share because the
conversion price is less than the initial public offering price.
(See footnotes on following page)
6
<PAGE>
(6) "EBITDA" is operating income plus depreciation and amortization. EBITDA
does not represent and should not be considered as an alternative to net
income or cash flow from operations as determined by generally accepted
accounting principles.
(7) "North American content per vehicle" is the Company's revenues divided by
total North American vehicle production, which is comprised of car and
light truck production in the United States, Canada and Mexico, as
estimated by the Company from industry sources.
(8) The unaudited pro forma balance sheet data reflect the MSTI Acquisition
(including related financing transactions) as if such transaction had
occurred on March 31, 1996.
(9) The unaudited pro forma as adjusted balance sheet data reflect (i) the
MSTI Acquisition (including related financing transactions) and (ii) the
Offering and the application of the net proceeds to the Company (at an
assumed public offering price of $24.38 per share) as described in "Use of
Proceeds," as if such transactions had occurred on March 31, 1996.
(10) Total debt includes an aggregate of $43.8 million of indebtedness from the
issuance of industrial development revenue bonds ("IRBs") to finance the
construction of the Company's Bardstown facility and the purchase of
related equipment. The $14.6 million of uncommitted proceeds from these
IRBs is reflected as "restricted cash" on the Company's balance sheet at
March 31, 1996.
7
<PAGE>
RISK FACTORS
This Prospectus, including the documents incorporated by reference herein,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended ("Securities Act"). Also, documents
subsequently filed by the Company with the Securities and Exchange Commission
and incorporated herein by reference will contain forward-looking statements.
Actual results could differ materially from those projected in the forward-
looking statements as a result of the risk factors set forth below and the
matters set forth or incorporated in the Prospectus generally. The Company
cautions the reader, however, that this list of factors may not be exhaustive,
particularly with respect to future filings. In analyzing an investment in the
Common Stock offered hereby, prospective investors should carefully consider,
along with the other matters referred to herein, the risk factors described
below.
RELIANCE ON MAJOR CUSTOMERS AND SELECTED MODELS
Ford, Honda and Chrysler accounted for approximately 68%, 15% and 10%,
respectively, of the Company's revenues during 1995 and approximately 68%, 8%
and 10%, respectively, on a pro forma basis. Although the Company has
contracts with many of its customers, such contracts provide for supplying the
customers' requirements for a particular model, rather than for manufacturing
a specific quantity of products. The loss of any one of its major customers or
a significant decrease in demand for certain key models or a group of related
models sold by any of its major customers could have a material adverse effect
on the Company. There is substantial and continuing pressure from OEMs to
reduce costs, including the cost of products purchased from outside suppliers
such as the Company. Management believes that the Company's manufacturing and
engineering expertise and its ability to control costs will allow the Company
to remain competitive. Certain of the Company's products are purchased under
long-term agreements that require the Company to provide annual cost
reductions to such purchasers (directly through price reductions or indirectly
through suggestions regarding manufacturing efficiencies or other cost
savings) by certain percentages each year. Although the Company has been able
to achieve a portion of such reductions through production cost savings that
benefit customers, there can be no assurance that the Company will be able to
continue to generate such cost savings in the future. If the Company were
unable to generate sufficient production cost savings in the future to offset
such price reductions, the Company's gross margin could be adversely affected.
See "Business--Customers and Marketing."
Substantially all of the hourly employees of North American OEMs are
represented by the United Automobile, Aerospace and Agricultural Implement
Workers of America ("UAW") under similar collective bargaining agreements. The
collective bargaining agreements applicable to Ford and Chrysler are both
scheduled to expire in September 1996. The failure of Ford or Chrysler to
reach agreement with the UAW relating to the terms of a new collective
bargaining agreement resulting in either a work stoppage or strike at any of
their respective production facilities could have a material adverse effect on
the Company.
INDUSTRY CYCLICALITY AND SEASONALITY
The automobile market is highly cyclical and is dependent on consumer
spending. Economic factors adversely affecting automotive production and
consumer spending could adversely impact the Company. In addition, the
Company's business is somewhat seasonal. The Company typically experiences
decreased revenue and operating income during the third quarter of each year
due to the impact of OEM plant shutdowns in July for vacations and model
changeovers. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Seasonality."
IMPORTANCE OF BUSINESS RELATED TO NEW AND REDESIGNED MODEL INTRODUCTIONS
The Company principally competes for new business both at the beginning of
the development of new models and upon the redesign of existing models by its
major customers. New model development generally begins two to five years
prior to the marketing of such models to the public. The Company has been
successful in obtaining significant new business on new models and in
supplying additional parts for existing models as they are redesigned by its
customers. Although the Company has been awarded replacement business on all
of
8
<PAGE>
its major platforms through 1998, there can be no assurance that the Company
will continue to obtain such new business. The failure of the Company to
obtain new business on new models or to retain or increase business on
redesigned existing models could adversely affect the Company. See "Business--
Competition."
ACQUISITION STRATEGY
Acquiring businesses that complement the Company's existing business has
been and continues to be an important element of the Company's strategy for
achieving profitable growth. There can be no assurance that suitable
acquisition candidates will be identified and acquired in the future, that
financing for any such acquisitions will be available on satisfactory terms,
that the Company will be able to accomplish its strategic objectives as a
result of any such acquisition or that any business or assets acquired by the
Company will be integrated successfully into the Company's operations.
Although the Company is continually evaluating possible acquisitions, it is
not presently involved in active negotiations with any company. See
"Business--Strategy."
The MSTI Acquisition is the Company's largest acquisition to date. Although
the Company has been successful in integrating prior acquisitions, no
assurance can be given that the Company will not experience difficulties in
integrating the operations of MSTI with those of the Company. In addition, the
need to focus management's attention on integration of the operations of MSTI
may constrain the Company's ability to pursue other acquisitions during the
period of such integration.
COMPETITION
The automotive components supply industry is highly competitive. Some of the
Company's competitors, including certain divisions of its OEM customers, are
larger and have substantially greater financial and other resources than the
Company. Although management believes that the Company is well positioned to
continue to supply its products to OEMs, there can be no assurance that the
Company will be able to compete successfully. See "Business--Competition."
INFLUENCE OF EXISTING STOCKHOLDERS; ANTI-TAKEOVER PROVISIONS
Certain of the Company's significant stockholders have entered into
agreements to vote their shares of Common Stock in the same manner that Onex
U.S. Investments, Inc. (together with its affiliates, "Onex"), the Company's
largest stockholder, votes its shares. After giving effect to the sale of
Common Stock offered hereby, Onex will have voting control of 31.8% of the
total number of outstanding shares of Common Stock (27.7% if the Underwriters'
over-allotment is exercised in full). Consequently, Onex will continue to have
significant influence over the policies of the Company and any matters
submitted to a stockholder vote following the Offering. See "Principal and
Selling Stockholders."
Certain provisions of the Company's Restated Certificate of Incorporation,
which permit the Board of Directors to issue up to 5,000,000 shares of
preferred stock without further stockholder approval, as well as certain
provisions of the Delaware General Corporation Law, could have the effect of
delaying, deterring or preventing a change in control of the Company.
POSSIBLE VOLATILITY OF STOCK PRICE
The public offering price per share of the Common Stock has been determined
by negotiations among the Company and representatives of the Underwriters
based in part on the trading price of the Common Stock on the Nasdaq Stock
Market and may not be indicative of the price at which the Common Stock will
trade after completion of the Offering. In addition, the stock markets have
from time to time experienced extreme price and volume volatility. These
fluctuations may be unrelated to the operating performance of particular
companies whose shares are traded. Market fluctuations may adversely affect
the market price of the Common Stock. The market price of the Common Stock
could be subject to significant fluctuations in response to the Company's
operating results and other factors, and there can be no assurance that the
market price of the Common Stock will not decline below the price at which the
shares of the Common Stock are sold in this Offering.
9
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the 2,000,000
shares of Common Stock offered by the Company hereby (at an assumed public
offering price of $24.38 per share and after deducting the underwriting
discounts and commissions and estimated offering expenses payable by the
Company) are estimated to be $46.0 million ($48.3 million if the Underwriters'
over-allotment option is exercised in full). The Company will use a portion of
the net proceeds to repay all of its borrowings under the Company's secured
credit agreement (the "Credit Agreement"). The remaining proceeds will be used
for other general corporate purposes that may include repayment of other
indebtedness, potential acquisitions or capital expenditures. As of May 31,
1996, the Company had $25.3 million of indebtedness outstanding under the
revolving credit facility of the Credit Agreement. The revolving credit
facility expires in January 2001. Borrowings under the revolving credit
facility bear interest at variable rates. The interest rate under the revolving
credit facility was 7.6% at May 31, 1996. A portion of the borrowings under the
revolving credit facility were used by the Company in May 1996 to repay a term
loan incurred in connection with the Trylon Acquisition.
Although the Company is continually evaluating possible acquisitions, it is
not presently involved in active negotiations with any company. Pending
application of the remaining net proceeds, the Company intends to invest such
proceeds in short-term, interest-bearing investment grade securities or in
short-term bank deposits.
Following the Offering, the Company expects to enter into a new unsecured
credit facility providing for borrowings up to $75.0 million (the "New Credit
Agreement"). See "Management's Discussion and Analysis of Results of Operations
and Financial Condition--Liquidity and Capital Resources."
The Company will not receive any of the proceeds from the sale of Common
Stock by the Selling Stockholders. See "Principal and Selling Stockholders."
10
<PAGE>
MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK
The Common Stock is traded on the Nasdaq Stock Market under the symbol
"TWER." The following table sets forth, for the periods indicated, the high and
low closing sale prices for the Common Stock on the Nasdaq Stock Market. The
Company's Common Stock commenced trading on August 12, 1994. Prior thereto,
there was no public market for the Company's Common Stock.
<TABLE>
<CAPTION>
1994 HIGH LOW
---- ------ ------
<S> <C> <C>
Third Quarter (commencing August 12, 1994)................. $13.75 $11.50
Fourth Quarter............................................. 11.75 7.38
<CAPTION>
1995
----
<S> <C> <C>
First Quarter.............................................. $10.63 $ 7.50
Second Quarter............................................. 10.50 8.25
Third Quarter.............................................. 14.50 10.38
Fourth Quarter............................................. 17.50 13.25
<CAPTION>
1996
----
<S> <C> <C>
First Quarter.............................................. $16.13 $14.63
Second Quarter (through May 30, 1996)...................... 24.88 16.00
</TABLE>
The last reported sale price of the Common Stock on the Nasdaq Stock Market
as of a recent date is set forth on the cover page of this Prospectus.
As of May 30, 1996, there were approximately 115 holders of record of the
outstanding Common Stock. The Company believes it has a significantly larger
number of beneficial holders of its Common Stock.
The Company has not declared or paid any cash dividends on its Common Stock
in the past, currently intends to retain its earnings to support its growth
strategy and does not anticipate paying dividends in the foreseeable future.
Any future payment of dividends is within the discretion of the Company's Board
of Directors and will depend upon, among other factors, the capital
requirements, operating results and financial condition of the Company from
time to time. In addition, the Company's ability to pay cash dividends is
limited by the terms of the Credit Agreement. As of March 31, 1996, under the
most restrictive terms of the Credit Agreement, the Company would not have been
permitted to pay any dividends. The Company expects to be similarly restricted
by the terms of the New Credit Agreement. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Liquidity and
Capital Resources."
11
<PAGE>
CAPITALIZATION
The following table sets forth (i) the actual consolidated capitalization of
the Company at March 31, 1996; (ii) the pro forma capitalization of the
Company giving effect to the MSTI Acquisition (including related financing
transactions); and (iii) the pro forma as adjusted capitalization of the
Company giving effect to the MSTI Acquisition (including related financing
transactions) and the sale by the Company of 2,000,000 shares of Common Stock
in the Offering and the application of the net proceeds therefrom as if such
transactions had occurred on such date. See "Use of Proceeds" and "Unaudited
Pro Forma Financial Statements." This table should be read in conjunction with
the consolidated financial statements of the Company and notes thereto
incorporated by reference into this Prospectus.
<TABLE>
<CAPTION>
AT MARCH 31, 1996
--------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Long-term debt:
Term loan.................................... $ 25,000 $ -- $ --
Revolving credit facility (1)................ 13,803 31,803 --
Senior secured notes (1)..................... -- 65,000 65,000
Industrial development revenue bonds (2)..... 47,365 47,365 47,365
Convertible Notes (3)........................ 5,000 5,000 4,393
Other........................................ 32 32 32
Less: current maturities..................... (5,730) (730) (730)
-------- -------- --------
Total long-term debt....................... 85,470 148,470 116,060
-------- -------- --------
Stockholders' investment:
Preferred stock, par value $1.00; 5,000,000
shares authorized; no shares issued or
outstanding................................. -- -- --
Common Stock, par value $.01; 30,000,000
shares authorized; 10,839,867 shares on an
actual basis; 11,624,867 shares on a pro
forma basis; and 13,724,867 shares on a pro
forma as adjusted basis (4)................. 108 116 137
Additional paid-in capital................... 63,547 82,673 129,259
MSTI Warrants (5)............................ -- 2,000 2,000
Retained earnings............................ 25,701 25,701 25,701
Common stock subscriptions receivable........ (369) (369) (369)
-------- -------- --------
Total stockholders' investment............. 88,987 110,121 156,728
-------- -------- --------
Total capitalization....................... $174,457 $258,591 $272,788
======== ======== ========
</TABLE>
- --------
(1) On May 31, 1996, the Company used borrowings under the revolving credit
facility, together with a portion of the net proceeds from the sale of
$65.0 million in aggregate principal amount of senior secured notes (the
"Senior Notes") to repay a $25.0 million term loan incurred in connection
with the Trylon Acquisition. The remaining proceeds from sale of the
Senior Notes were used to finance the cash portion of the purchase price
of MSTI. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Liquidity and Capital Resources."
(2) Long-term debt includes an aggregate of $43.8 million of indebtedness from
the issuance of IRBs to finance the construction of the Company's
Bardstown facility and the purchase of related equipment. The $14.6
million of uncommitted proceeds from these IRBs is reflected as
"restricted cash" on the Company's balance sheet at March 31, 1996.
(3) Reflects the conversion of $0.6 million of Convertible Notes by a Selling
Stockholder.
(4) Does not include (i) 2,875 shares of Common Stock issued since March 31,
1996 upon the exercise of stock options, (ii) 203,639 shares of Common
Stock issued since March 31, 1996 upon the conversion of certain of the
Convertible Notes, (iii) 1,083,504 shares of Common Stock reserved for
issuance under the Company's stock option plans and employee stock
discount purchase plan, of which options to purchase 277,875 shares were
outstanding as of May 31, 1996, (iv) 102,984 shares issuable upon the
exercise of stock options issued in connection with the acquisition of
Edgewood, (v) 520,235 shares issuable upon conversion of the Convertible
Notes or (vi) 200,000 shares issuable upon the exercise of the MSTI
Warrants.
(5) The MSTI Warrants were valued using the Black-Scholes option pricing
model.
12
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following Unaudited Pro Forma Statement of Operations for the year ended
December 31, 1995 gives effect to (i) the Trylon Acquisition (including
related financing transactions), (ii) the MSTI Acquisition (including related
financing transactions) and (iii) the Offering and the application of the net
proceeds therefrom to the Company (at an assumed public offering price of
$24.38 per share) as described in "Use of Proceeds," as if such transactions
had occurred on January 1, 1995. The following Unaudited Pro Forma Statement
of Operations for the three months ended March 31, 1996 gives effect to (i)
the MSTI Acquisition (including related financing transactions) and (ii) the
Offering and the application of the net proceeds therefrom to the Company (at
an assumed public offering price of $24.38 per share) as described in "Use of
Proceeds," as if such transactions had occurred on January 1, 1996. The
Company acquired Trylon on January 16, 1996. Results of operations of Trylon
for the period from January 1, 1996 through the acquisition date are not
material and therefore have not been included in the Company's results of
operations for the three-month period ended March 31, 1996.
The information set forth under the heading Pro Forma included in the
Unaudited Pro Forma Balance Sheet as of March 31, 1996 reflects the MSTI
Acquisition (including related financing transactions) as if such transaction
occurred on such date. The information set forth under the heading Pro Forma
As Adjusted included in the Unaudited Pro Forma Balance Sheet as of March 31,
1996 reflects (i) the MSTI Acquisition (including related financing
transactions) and (ii) the Offering and the application of the net proceeds
therefrom to the Company (at an assumed public offering price of $24.38 per
share) as described under "Use of Proceeds," as if such transactions had
occurred on such date. The historical financial statements of the Company as
of March 31, 1996 already reflect the Trylon Acquisition.
In connection with the MSTI Acquisition, the Company has committed to make
additional earn-out payments if certain operating targets are achieved by the
MSTI facilities in the first three years following the MSTI Acquisition. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition--Liquidity and Capital Resources." The Unaudited Pro Forma Financial
Statements do not include any amounts related to such payments as a result of
their contingent nature. In addition, the Unaudited Pro Forma Financial
Statements do not include any revenues that may be derived from purchase
orders to be assumed by the Company from a non-acquired MascoTech facility.
The unaudited pro forma financial data presented herein are based on the
assumptions and adjustments described in the accompanying notes. The Unaudited
Pro Forma Statements of Operations do not purport to represent what the
Company's results of operations actually would have been if the events
described above had occurred as of the dates indicated or what such results
will be for any future periods. The Unaudited Pro Forma Financial Statements
are based upon assumptions and adjustments that the Company believes are
reasonable. The Unaudited Pro Forma Financial Statements and the accompanying
notes should be read in conjunction with the historical financial statements
of the Company, Trylon and MSTI, including the notes thereto, included
elsewhere herein or incorporated by reference in this Prospectus.
13
<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THE PRO FORMA OFFERING PRO FORMA
COMPANY (1) TRYLON (2) MSTI ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
----------- --------- -------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $222,801 $47,911 $152,895 $423,607 $423,607
Cost of sales.......... 185,388 41,315 136,592 100 (3) 363,770 363,770
375 (4)
-------- ------- -------- ------- -------- ------- --------
Gross profit........... 37,413 6,596 16,303 (475) 59,837 59,837
Selling, general and
administrative
expenses.............. 14,308 700 8,054 23,062 23,062
Amortization expense... 1,185 372 1,638 (32)(5) 2,497 2,497
(666)(6)
-------- ------- -------- ------- -------- ------- --------
Operating income....... 21,920 5,524 6,611 223 34,278 34,278
Interest expense, net.. 1,799 -- -- 2,000 (7) 8,207 (2,385)(8) 5,822
4,408 (9)
-------- ------- -------- ------- -------- ------- --------
Income before
provision for income
taxes................. 20,121 5,524 6,611 (6,185) 26,071 2,385 28,456
Provision for income
taxes................. 8,050 2,296 3,330 (3,247)(10) 10,429 954 (11) 11,383
-------- ------- -------- ------- -------- ------- --------
Net income........... $ 12,071 $ 3,228 $ 3,281 $(2,938) $ 15,642 $ 1,431 $ 17,073
======== ======= ======== ======= ======== ======= ========
Net income applicable
to common
stockholders........ $ 12,247 $ 3,228 $ 3,281 $(2,938) $ 15,818 $ 1,431 $ 17,249
======== ======= ======== ======= ======== ======= ========
Net income per common
and common
equivalent share.... $ 1.05 $ 1.27 $ 1.19
Weighted average
common and common
equivalent shares
outstanding......... 11,697 785 (12) 12,482 2,000 (13) 14,482
</TABLE>
See accompanying notes to unaudited pro forma statements of operations.
14
<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THE PRO FORMA OFFERING PRO FORMA
COMPANY MSTI ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------- ------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $68,921 $42,361 $111,282 $111,282
Cost of sales.......... (400)(14)
58,406 36,638 100 (4) 94,744 94,744
------- ------- ----- -------- ----- --------
Gross profit........... 10,515 5,723 300 16,538 16,538
Selling, general and
administrative
expenses.............. 3,514 1,998 5,512 5,512
Amortization expense... 375 410 (161)(6) 624 624
------- ------- ----- -------- ----- --------
Operating income....... 6,626 3,315 461 10,402 10,402
Interest expense, net.. 1,308 -- 1,119 (9) 2,427 (596)(8) 1,831
------- ------- ----- -------- ----- --------
Income before
provision for income
taxes................. 5,318 3,315 (658) 7,975 596 8,571
Provision for income
taxes................. 2,130 1,490 (430)(10) 3,190 238 (11) 3,428
------- ------- ----- -------- ----- --------
Net income........... $ 3,188 $ 1,825 $(228) $ 4,785 $ 358 $ 5,143
======= ======= ===== ======== ===== ========
Net income applicable
to common
stockholders........ $ 3,232 $ 1,825 $(228) $ 4,829 $ 358 $ 5,187
======= ======= ===== ======== ===== ========
Net income per common
and common
equivalent share.... $ 0.28 $ 0.39 $ 0.36
Weighted average
common and common
equivalent shares
outstanding......... 11,733 785 (12) 12,518 2,000 (13) 14,518
</TABLE>
See accompanying notes to unaudited pro forma statements of operations.
15
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(1) Represents the results of operations of the Company for the year ended
December 31, 1995. Beginning in 1996, the Company began classifying
certain engineering expenses that were previously classified as selling,
general and administrative expenses as cost of sales. These engineering
expenses incurred in 1995 have been reclassified to cost of sales to be
consistent with the 1996 presentation. This reclassification had no effect
on previously reported operating income or net income.
(2) Represents the results of operations of Trylon for the year ended December
31, 1995. The Company acquired Trylon on January 16, 1996. Results of
operations of Trylon for the period from January 1, 1996 through the
acquisition date are not material and therefore have not been included in
the Unaudited Pro Forma Consolidated Statement of Operations for the three
months ended March 31, 1996.
(3) Represents the change in depreciation expense resulting from adjustments
to the depreciable lives of property, plant and equipment of Trylon to
their estimated useful lives at the time of their acquisition and from
adjustments to value such property, plant and equipment at fair value as
of the date of acquisition.
(4) Represents the net periodic postretirement benefit cost associated with
the postretirement benefit obligation assumed in connection with the MSTI
Acquisition.
(5) Represents amortization of goodwill arising from the acquisition of
Trylon, net of amortization of goodwill previously recorded by Trylon
which has been eliminated. Goodwill will be amortized on a straight-line
basis over a forty year period.
(6) Represents amortization of goodwill arising from the acquisition of MSTI,
net of amortization of goodwill previously recorded by MSTI which has been
eliminated. Goodwill will be amortized on a straight-line basis over a
forty year period.
(7) Represents incremental interest expense arising from indebtedness incurred
in connection with the Trylon Acquisition. Interest expense was calculated
using the weighted average interest rate on the borrowings incurred to
fund the acquisition.
(8) Represents the reduction in interest expense resulting from the use of the
proceeds from the Offering to repay existing indebtedness, calculated
using the Company's weighted average interest rate on the debt assumed to
be retired for the period presented.
(9) Represents incremental interest expense arising from indebtedness incurred
in connection with the MSTI Acquisition. Interest expense was calculated
using the weighted average interest rate on the borrowings incurred to
fund the acquisition.
(10) To adjust the provision for income taxes on a pro forma basis to reflect
the Company's incremental tax rate of 40%.
(11) To record the income tax effect of the Offering adjustments at the
Company's incremental income tax rate of approximately 40%.
(12) Represents the shares of Common Stock issued to MascoTech in connection
with the MSTI Acquisition.
(13) Represents the shares of Common Stock to be issued by the Company in the
Offering.
(14) Represents the change in depreciation expense resulting from adjustments
to the depreciable lives of property, plant and equipment of MSTI to
their estimated useful lives at the time of their acquisition and from
adjustments to value such property, plant and equipment at fair value as
of the date of acquisition.
16
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
------------------
THE PRO FORMA OFFERING PRO FORMA
ASSETS COMPANY MSTI ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------ -------- -------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents.......... $ 1,057 $ 196 $ (196)(1) $ 1,057 $ 14,197 (8) $ 15,254
Accounts receivable... 53,075 26,476 79,551 79,551
Inventories........... 14,777 6,041 20,818 20,818
Other current assets.. 6,826 5,460 12,286 12,286
-------- -------- -------- -------- -------- --------
Total current
assets............. 75,735 38,173 (196) 113,712 14,197 127,909
Property, plant and
equipment, net......... 103,234 48,647 (1,000)(2) 150,881 150,881
Restricted cash......... 14,593 -- 14,593 14,593
Goodwill and other
intangible assets, net. 58,148 47,383 (6,902)(3) 98,629 98,629
-------- -------- -------- -------- -------- --------
$251,710 $134,203 $ (8,098) $377,815 $ 14,197 $392,012
======== ======== ======== ======== ======== ========
<CAPTION>
LIABILITIES AND
STOCKHOLDERS' INVESTMENT
- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Current liabilities:
Current maturities of
long-term debt....... $ 5,730 -- $ (5,000)(4) $ 730 $ 730
Accounts payable...... 28,029 22,019 50,048 50,048
Accrued liabilities... 15,475 7,447 22,922 22,922
-------- -------- -------- -------- -------- --------
Total current
liabilities........ 49,234 29,466 (5,000) 73,700 73,700
Long-term debt, net of
current maturities..... 85,470 -- 63,000 (4) 148,470 (31,803)(8) 116,060
(607)(9)
Other noncurrent
liabilities............ 28,019 7,005 10,500 (5) 45,524 45,524
-------- -------- -------- -------- -------- --------
Stockholders'
investment:
Preferred stock....... -- -- -- --
Common Stock.......... 108 -- 8 (6) 116 20 (8) 137
1 (9)
MSTI Warrants......... -- -- 2,000 (6) 2,000 -- 2,000
Additional paid-in
capital.............. 63,547 -- 19,126 (6) 82,673 45,980 (8) 129,259
606 (9)
Retained earnings..... 25,701 -- 25,701 25,701
Net assets acquired... -- 97,732 (97,732)(7) -- --
Subscriptions
receivable........... (369) -- (369) (369)
-------- -------- -------- -------- -------- --------
Total stockholders'
investment......... 88,987 97,732 (76,598) 110,121 46,607 156,728
-------- -------- -------- -------- -------- --------
$251,710 $134,203 $ (8,098) $377,815 $ 14,197 $392,012
======== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma balance sheet.
17
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(IN THOUSANDS)
(1) To eliminate MSTI cash balances which were not included in the MSTI
Acquisition.
(2) To state property, plant and equipment acquired in the MSTI Acquisition at
estimated fair value and eliminate historical accumulated depreciation.
(3) To adjust goodwill to the amount recognized in connection with the MSTI
Acquisition. The goodwill will be amortized on a straight-line basis over
forty years.
(4) To reflect the financing transactions related to the MSTI Acquisition as
follows:
<TABLE>
<S> <C>
Sources:
Proceeds from Senior Notes..................................... $65,000
Borrowings under the revolving credit facility................. 18,000
-------
$83,000
=======
Uses:
Cash paid to MascoTech in connection with the MSTI Acquisition. $55,000
Repayment of term loan......................................... 25,000
Transaction costs.............................................. 3,000
-------
$83,000
=======
</TABLE>
(5) To record management's preliminary estimate of reserves to be established
in connection with the MSTI Acquisition including $1,300 of losses to be
incurred on the sale of products which have costs in excess of selling
prices, $5,800 of costs to be incurred to rationalize certain facilities
of MSTI, $300 of employee severance and related costs and $3,100 for the
estimated accumulated benefit obligation associated with assumed
postretirement medical and life insurance benefits of certain MascoTech
employees. These reserves have been established based on preliminary
estimates. Management does not believe the actual amounts to be incurred
will be materially different than the estimated amounts.
(6) To reflect the $19,134 value of the Common Stock and $2,000 value of the
MSTI Warrants issued to MascoTech in connection with the MSTI Acquisition.
The MSTI Warrants were valued using the Black-Scholes option pricing
model.
(7) To eliminate the historical stockholder's investment of MSTI.
(8) To reflect the application of the proceeds of the Offering to reduce
outstanding indebtedness and provide for general corporate purposes. See
"Use of Proceeds."
(9) To reflect the conversion of $607 principal amount of Convertible Notes
into 100,000 shares of Common Stock to be sold in the Offering by a
Selling Stockholder. See "Principal and Selling Stockholders."
18
<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND PER VEHICLE AMOUNTS)
The consolidated financial data for the years ended December 31, 1991 and
1992 and the three and one-half month period ended April 14, 1993 are derived
from the audited consolidated financial statements of the Predecessor. The
consolidated financial data for the eight and one-half month period ended
December 31, 1993 and the years ended December 31, 1994 and 1995 have been
derived from the audited consolidated financial statements of the Company,
which are incorporated by reference into this Prospectus. The financial data
for the combined year ended December 31, 1993 have been derived from the
financial statements of the Predecessor and the Company and are unaudited. The
consolidated financial data of the Company for the three months ended March
31, 1995 and 1996 have been derived from the Company's unaudited financial
statements; however, in the Company's opinion, they reflect all adjustments,
consisting only of normal recurring items, necessary for a fair presentation
of the financial position and results of operations of such periods. The
results for the three months ended March 31, 1996 are not necessarily
indicative of the results to be expected for the full year. The selected
financial data below should be read in conjunction with the consolidated
financial statements and the notes thereto of the Predecessor and the Company
incorporated by reference into this Prospectus and "Management's Discussion
and Analysis of Results of Operations and Financial Condition."
<TABLE>
<CAPTION>
PREDECESSOR (1) THE COMPANY
-------------------------------- ------------------------------------------------------------
THREE AND EIGHT AND THREE MONTHS
YEAR ENDED ONE-HALF ONE-HALF ENDED
DECEMBER 31, MONTH PERIOD MONTH PERIOD YEAR ENDED DECEMBER 31, MARCH 31,
------------------ ENDED ENDED ----------------------------- -----------------
APRIL 14, DECEMBER 31, COMBINED
1991 1992 1993 1993 1993 (2) 1994 1995 1995 1996
-------- -------- ------------ ------------ -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 68,025 $ 80,830 $ 25,037 $ 61,297 $ 86,334 $ 165,526 $ 222,801 $ 58,423 $ 68,921
Cost of sales (3)....... 58,599 70,431 20,426 51,941 72,367 142,986 185,388 48,727 58,406
-------- -------- -------- -------- -------- --------- --------- -------- --------
Gross profit (3)....... 9,426 10,399 4,611 9,356 13,967 22,540 37,413 9,696 10,515
Selling, general and
administrative expenses
(3) 3,399 4,440 1,223 3,155 4,378 7,435 14,308 3,586 3,514
Amortization expense.... -- -- -- 197 197 803 1,185 300 375
-------- -------- -------- -------- -------- --------- --------- -------- --------
Operating income....... 6,027 5,959 3,388 6,004 9,392 14,302 21,920 5,810 6,626
Interest expense, net... 959 539 93 636 729 1,899 1,799 309 1,308
Other income, net....... (441) (229) (25) -- (25) -- -- -- --
-------- -------- -------- -------- -------- --------- --------- -------- --------
Income before provision
for income taxes...... 5,509 5,649 3,320 5,368 8,688 12,403 20,121 5,501 5,318
Provision for income
taxes.................. 2,201 2,395 1,392 2,287 3,679 5,042 8,050 2,205 2,130
-------- -------- -------- -------- -------- --------- --------- -------- --------
Net income............. $ 3,308 $ 3,254 $ 1,928 $ 3,081 $ 5,009 $ 7,361 $ 12,071 $ 3,296 $ 3,188
======== ======== ======== ======== ======== ========= ========= ======== ========
Net income applicable
to common stockholders
(4) $ 3,308 $ 3,254 $ 1,928 $ 3,081 $ 5,009 $ 7,476 $ 12,247 $ 3,340 $ 3,232
======== ======== ======== ======== ======== ========= ========= ======== ========
Net income per common
and common equivalent
share................. $ .45 $ .74 $ .86 $ 1.05 $ .29 $ .28
Weighted average common
and common equivalent
shares outstanding
(5)................... 6,812 6,812 8,720 11,697 11,677 11,733
OTHER DATA:
Capital expenditures.... $ 3,066 $ 5,156 $ 28,524 $ 26,148 $ 6,774 $ 2,339
EBITDA (6).............. 7,851 12,143 18,440 28,469 7,383 9,208
North American content
per vehicle (7)........ NA $ 6.23 $ 10.83 $ 14.92 $ 14.24 $ 18.59
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.............................................................. $ 32,245 $ 26,501
Total assets................................................................. 209,476 251,710
Total debt (8)............................................................... 71,079 91,200
Stockholders' investment..................................................... 85,585 88,987
</TABLE>
(See footnotes on following page)
19
<PAGE>
- --------
(1) On April 15, 1993, the Company acquired the Predecessor. Accordingly,
certain information provided for the years ended December 31, 1991 and
1992, and the three and one-half month period ended April 14, 1993 is not
comparable to the Statement of Operations Data of the Company due to the
effects of certain purchase accounting adjustments and the financing of
the R.J. Tower Acquisition. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition."
(2) Operating data for the Predecessor for the period January 1, 1993 to April
14, 1993 have been combined for presentation purposes with the operating
data of the Company for the eight and one-half month period ended December
31, 1993, without giving effect to purchase accounting or the impact of
the financing of the R.J. Tower Acquisition.
(3) Beginning in the three-month period ended March 31, 1996, the Company
began classifying certain manufacturing engineering expenses as cost of
sales. Previously, these expenses were classified as general and
administrative expenses. Accordingly, these expenses for the periods prior
to the three months ended March 31, 1996 have been reclassified to conform
to the new presentation. These reclassifications had no effect on
previously reported operating or net income.
(4) Net income applicable to common stockholders reflects the elimination of
interest expense on $5.0 million of Convertible Notes (net of related
income tax benefit).
(5) Assumes conversion of the $5.0 million in aggregate principal amount of
the Convertible Notes issued in connection with the acquisition of
Edgewood. The shares issuable upon conversion of the Convertible Notes are
included in the calculation of earnings per share for all periods
presented because the conversion price is less than the initial public
offering price of the Company's Common Stock.
(6) "EBITDA" is operating income plus amortization and depreciation. EBITDA
does not represent and should not be considered an alternative to net
income or cash flow from operations as determined by generally accepted
accounting principles.
(7) "North American content per vehicle" is the Company's revenues divided by
total North American vehicle production, which is comprised of car and
light truck production in the United States, Canada and Mexico, as
estimated by the Company from industry sources.
(8) Total debt includes an aggregate of $43.8 million of indebtedness from the
issuance of IRBs to finance the construction of the Company's Bardstown
facility and the purchase of related equipment. The $14.6 million of
uncommitted proceeds from these IRBs is reflected as "restricted cash" on
the Company's balance sheet at March 31, 1996.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
The Company was organized to effect the R.J. Tower Acquisition, which was
financed with a combination of common equity and secured indebtedness. Since
the R.J. Tower Acquisition, the Company has continued to pursue strategic
acquisitions. On May 4, 1994 the Company completed the acquisition of
Edgewood, on June 29, 1994, the Company completed the acquisition of
Kalamazoo, on January 16, 1996, the Company completed the Trylon Acquisition,
and on May 31, 1996, the Company completed the MSTI Acquisition.
The following table sets forth the percentage relationship of certain items
to revenues for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- -----------------------
PRO FORMA PRO FORMA
1993 (1) 1994 1995 1995 (2) 1995 1996 1996 (2)
-------- ----- ----- --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 83.8 86.4 83.2 85.9 83.4 84.7 85.1
----- ----- ----- ----- ----- ----- -----
Gross profit............ 16.2 13.6 16.8 14.1 16.6 15.3 14.9
Selling, general and
administrative
expenses............... 5.1 4.5 6.5 5.4 6.1 5.1 5.0
Amortization expense.... .2 .5 .5 .6 .6 .6 .6
----- ----- ----- ----- ----- ----- -----
Operating income........ 10.9 8.6 9.8 8.1 9.9 9.6 9.3
Interest and other
expense................ .8 1.1 .8 1.4 .5 1.9 1.6
----- ----- ----- ----- ----- ----- -----
Income before provision
for income taxes....... 10.1 7.5 9.0 6.7 9.4 7.7 7.7
Provision for income
taxes.................. 4.3 3.1 3.6 2.7 3.8 3.1 3.1
----- ----- ----- ----- ----- ----- -----
Net income.............. 5.8% 4.4% 5.4% 4.0% 5.6% 4.6% 4.6%
===== ===== ===== ===== ===== ===== =====
</TABLE>
- --------
(1) Operating data for the Predecessor for the period January 1, 1993 to April
14, 1993 have been combined for presentation purposes with the operating
data of the Company for the eight and one-half month period ended December
31, 1993, without giving effect to purchase accounting or the impact of
the financing of the R.J. Tower Acquisition.
(2)See "Unaudited Pro Forma Financial Statements."
The Company believes that MSTI's historical gross margin has been slightly
lower than that of the Company, primarily because MSTI's products have
historically contained a greater proportion of components purchased from
outside suppliers. As a result, the Company expects some downward pressure on
its overall gross margin in periods following the MSTI Acquisition. MSTI's
results of operations for the first three quarters of 1995 were adversely
impacted by significant costs incurred by MSTI related to the launch of new
product programs during such periods. Following the MSTI Acquisition, the
Company anticipates cost savings from the consolidation of MSTI's technical,
engineering and sales functions with those of the Company.
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1996 TO THE THREE MONTHS ENDED
MARCH 31, 1995
Revenues
Revenues for the three months ended March 31, 1996 increased by $10.5
million, or 18%, to $68.9 million compared to $58.4 million for the three
months ended March 31, 1995. Revenues for the 1996 period increased over the
1995 period due to new business awarded to the Company and the Trylon
Acquisition in January 1996, despite significant production decreases in key
models served by the Company, including the Ford Escort, Villager,
Taurus/Sable, Econoline and the Chrysler LH line.
Cost of Sales
Cost of sales as a percentage of revenues for the three months ended March
31, 1996 was 84.7% compared to 83.4% for the three months ended March 31,
1995. The decrease in gross margins was the result of lower margins on the
Trylon business and fixed costs at the Company's Bardstown facility while the
plant is ramping up and operating at less than full capacity, partially offset
by operating efficiencies and enhanced productivity.
21
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased slightly to $3.5
million for the three months ended March 31, 1996 from $3.6 million for the
three months ended March 31, 1995. The decrease was due primarily to lower
engineering costs in the first quarter of 1996. As a percentage of revenues,
selling, general and administrative expenses were 5.1% for the three months
ended March 31, 1996 compared to 6.1% for the three months ended March 31,
1995.
Interest Expense
Interest expense for the three months ended March 31, 1996 was $1.3 million
compared to $309,000 for the three months ended March 31, 1995. The increase
was due principally to increased borrowings under the Credit Agreement to fund
the Trylon Acquisition.
Income Taxes
The effective income tax rate was 40.1% for the three months ended March 31,
1996 and 1995. The effective rates were higher than the statutory rates
primarily as a result of state taxes and nondeductible goodwill amortization.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
Revenues
Revenues for the year ended December 31, 1995 increased $57.3 million, or
34.6%, to $222.8 million compared to $165.5 million for the year ended
December 31, 1994. Revenues increased despite significant production decreases
on key vehicles served by the Company including the Ford Escort, Taurus/Sable,
and Econoline and Chrysler LH line. These decreases were offset by new
business that began production during the year and the full year effects of
the Company's acquisitions of Edgewood in May 1994 and Kalamazoo in June 1994.
Cost of Sales
Cost of sales, as a percentage of revenues, decreased to 83.2% for the year
ended December 31, 1995 compared to 86.4% for the year ended December 31,
1994. The improvement in gross margins was a result of the productivity
improvement initiatives in place and synergies realized from the acquisitions
of Edgewood and Kalamazoo. These were partially offset by higher raw material
costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $14.3 million, or
6.5% of revenues, for the year ended December 31, 1995 compared to $7.4
million, or 4.5% of revenues, for the year ended December 31, 1994. The
increased expense was due in part to the full year effect of the acquisitions
of Edgewood and Kalamazoo combined with the incremental engineering, technical
and development costs associated with future programs.
Other
Amortization expense increased to $1.2 million for the year ended December
31, 1995 from $.8 million for the year ended December 31, 1994 due to
incremental goodwill amortization related to the Company's 1994 acquisitions.
Interest expense decreased to $1.8 million in 1995 from $1.9 million in 1994.
The decrease is due to the effect of the application of the proceeds from the
Company's IPO to reduce indebtedness. The provision for income taxes was at an
effective rate of 40.0% for the year ended December 31, 1995 and 40.7% for the
year ended December 31, 1994. The effective rates were higher than federal
statutory rates as a result of nondeductible goodwill amortization and state
income taxes.
22
<PAGE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO COMBINED YEAR ENDED DECEMBER 31,
1993
Revenues
Revenues for the year ended December 31, 1994 increased $79.2 million, or
91.7%, to $165.5 million from $86.3 million for the combined year ended
December 31, 1993. Approximately $70 million of the increase was due to the
incremental effects of the acquisitions of Edgewood and Kalamazoo. The
remaining increase was from ongoing operations resulting from increased
business on models served by the Company. The balance out of the Ford
Tempo/Topaz in April 1994 and the reduction in Ford's Aerostar mini-van
production in May 1994 offset a portion of the benefits from the continued
recovery in the North American automotive market.
Cost of Sales
Cost of sales, as a percentage of revenues, increased to 86.4% for the year
ended December 31, 1994 compared to 83.8% for the combined year ended December
31, 1993. The Company's margins were lower than 1993 levels due to lower
margins associated with the acquired businesses, higher prices on certain non-
contract steel purchases and costs associated with the launch of new programs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $3.1 million, but
decreased from 5.1% of revenue for the combined year ended December 31, 1993
compared to 4.5% in 1994. The increased costs were reflective of the acquired
businesses and engineering and development activities associated with future
growth in new business.
Other
Amortization expenses increased to $.8 million in 1994 from $.2 million for
the combined year ended December 31, 1993 due to incremental goodwill
amortization related to the Company's 1994 acquisitions. Interest expense
increased to $1.9 million for the year ended December 31, 1994 from $.7 million
for the combined year ended December 31, 1993. The increase was, in part, the
result of additional borrowings to fund the Company's 1994 acquisitions and
higher interest rates on the Company's variable rate indebtedness, offset by
the effect of the application of the proceeds from the IPO to reduce
outstanding indebtedness. The provision for income taxes was at an effective
rate of 40.7% for the year ended December 31, 1994 and 42.3% for the combined
year ended December 31, 1993. The decrease was due primarily to the lower
relative impact of permanent differences on pretax income. The effective rates
were higher than federal statutory rates as a result of nondeductible goodwill
amortization and state income taxes.
SEASONALITY
The Company's performance is dependent on automotive vehicle production,
which is seasonal in nature. The third calendar quarter is historically the
weakest due to the impact of OEM plant shutdowns in July for vacation and model
changeovers.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company had approximately $39 million of indebtedness
outstanding under its Credit Agreement. In connection with the MSTI
Acquisition, the Company and its lenders amended the terms of the Credit
Agreement to permit the acquisition and the related financing arrangements. The
Credit Agreement, as amended, consists of a revolving credit facility with a
committed amount of $75.0 million (subject to eligible accounts receivable and
inventory, as defined in the Credit Agreement, which exceeded $75.0 million
after giving effect to the MSTI Acquisition). The Credit Agreement matures in
January 2001 and bears interest at variable rates equal to, at the Company's
option, either a prime-based rate or LIBOR plus a variable margin. The interest
rate under the revolving credit facility was 7.6% at May 31, 1996. The Credit
Agreement is secured by substantially all of the assets of the Company and
provides for the issuance of letters of credit to collateralize the outstanding
IRBs. At May 31, 1996, the Company had $25.3 million of indebtedness
outstanding under the
23
<PAGE>
revolving credit facility, including approximately $18 million borrowed at the
time of the MSTI Acquisition. The Company intends to use a portion of the net
proceeds of the Offering to repay all of its borrowings under the Credit
Agreement.
At March 31, 1996, the Company also had $43.8 million of indebtedness
outstanding pursuant to IRBs issued with the City of Bardstown, Kentucky.
Proceeds from these IRBs were used to finance construction of a 240,000 square
foot manufacturing facility and the related purchase of equipment. The
Bardstown IRBs, which are due June 1, 2024 and March 1, 2025, are
collateralized by a letter of credit. As of March 31 1996, $29.2 million of
the proceeds had been expended or committed for the first phase of the
facility and related equipment. The unexpended proceeds from the Bardstown
IRBs of $14.6 million at March 31, 1996, are invested in treasury securities
and will be used to finance the second phase of the facility. These IRBs bear
interest at a floating rate which is adjusted weekly as determined by the bond
remarketing agent (5.5% at March 31, 1996 and 5.85% at December 31, 1995). The
second phase of the facility, which includes the purchase and installation of
additional processing equipment, is anticipated to be completed by the end of
1998.
At March 31, 1996, the Company had $3.6 million in outstanding indebtedness
relating to IRBs issued in connection with the construction of its Auburn,
Indiana plant. The Auburn IRBs are collateralized by a letter of credit,
certain equipment and a mortgage on the Company's Auburn, Indiana plant. The
Auburn IRBs are payable in annual installments of $720,000 through September
2000 and bear interest at a floating rate which is adjusted weekly as
determined by the bond remarketing agent (3.70% at March 31, 1996 and 5.85% at
December 31, 1995).
On January 16, 1996, the Company acquired all of the outstanding common
stock of Trylon for total cash consideration, including transaction costs, of
approximately $25 million. To finance the acquisition, the Company and its
lenders amended the Credit Agreement to provide, among other things, a $25.0
million term loan, which was repaid in May 1996 using a portion of the
proceeds from the sale of the Senior Notes and borrowings under the revolving
credit facility.
On May 6, 1996, the Company agreed to assume production of certain parts
previously manufactured at a non-acquired MascoTech facility and will make
payments to MascoTech equal to 5% of the revenues to be derived by the Company
during the first twelve months of production from each assumed purchase order
resourced to the Company. The Company will also acquire selected inventory,
tooling and production equipment used for such production at an estimated cost
of approximately $6 million. The purchased assets will be transferred to the
Company's existing facilities over the remainder of 1996.
On May 31, 1996, the Company purchased MSTI from MascoTech for an aggregate
purchase price of approximately $79 million (including payment of related fees
and expenses). The aggregate consideration paid by the Company consisted of
(i) 785,000 shares of Common Stock, (ii) $55.0 million in cash (subject to
working capital adjustments), and (iii) warrants to purchase an aggregate of
200,000 shares of Common Stock at an exercise price of $18.00 per share. In
addition, the Company issued a 7% promissory note in favor of MascoTech
payable approximately one year following the acquisition in an aggregate
principal amount of $5.0 million, which is subject to reduction based on the
operating profits of the MSTI facilities for the 12 months following the
acquisition. Pursuant to the terms of the acquisition, the Company is required
to make additional earn-out payments to MascoTech if certain operating targets
are achieved by the MSTI facilities in the first three years following the
acquisition. If all such operating targets are met, the earn-out payments will
not exceed $30.0 million less the principal amount of the promissory note
issued to MascoTech.
The Company financed the cash portion of the purchase price of MSTI through
the issuance in two series of Senior Notes having an aggregate principal
amount of $65.0 million. The $40.0 million of Series A Senior Notes have a
final maturity on June 1, 2006 and require annual principal payments
commencing on June 1, 2000 and continuing every year thereafter until their
final maturity. The $25.0 million of Series B Senior Notes have a final
maturity on June 1, 2008 and require annual principal payments commencing on
June 1, 2004 and continuing every year thereafter until their final maturity.
The Senior Notes require the Company to make semi-annual interest payments
commencing December 1, 1996. The Senior Notes are guaranteed by all of the
Company's significant subsidiaries.
24
<PAGE>
The Senior Notes rank pari passu with the Company's other senior secured
indebtedness and are ratably secured by the accounts receivable, inventory,
owned personal property and certain real property of the Company. On or after
June 30, 1996, at the Company's request, the collateral securing the Senior
Notes will be released in the event that (i) the Company's other senior
creditors which are, at that time, ratably secured by the collateral have given
their approval to such a release, (ii) the Company's consolidated adjusted net
worth is greater than $125.0 million and (iii) the Company has a consolidated
funded debt to consolidated total capitalization of not greater than 50%. The
net proceeds from the sale of the Senior Notes not used to finance the MSTI
Acquisition were used, together with borrowings under the revolving credit
facility portion of the Credit Agreement, to repay in full the $25.0 million
term loan incurred by the Company in connection with the Trylon Acquisition.
Following the consummation of the Offering contemplated hereby, the Company
expects to enter into the New Credit Agreement. Based upon discussions with its
principal lender, the Company expects that the New Credit Agreement will
provide for borrowings of up to $75 million and have a scheduled maturity in
June 2001. The New Credit Agreement will be unsecured and will generally
contain less restrictive covenants and better pricing terms than the Credit
Agreement. To date, no definitive agreements have been executed and no
assurance can be given that the New Credit Agreement will be executed on such
terms.
During the three months ended March 31, 1996 and the year ended December 31,
1995, the Company generated $6.8 million and $13.9 million, respectively, of
cash which was used to partially fund capital expenditures.
The Company has made substantial investments in manufacturing technology and
product design capability to support its products. Capital expenditures were
$2.3 million for the three months ended March 31, 1996 and $6.8 million in the
comparable period of 1995. The Company currently has budgeted $17.7 million for
capital expenditures in the remaining months of 1996 and $24.5 million for
1997, primarily for equipment and dedicated tooling purchases. Capital
expenditures in 1996 and 1997 are expected to be financed either with cash
generated from operations or borrowings under the Credit Agreement or the New
Credit Agreement, as the case may be.
The Company believes the borrowing availability under its Credit Agreement or
New Credit Agreement, as the case may be, together with funds generated by
operations and the remaining net proceeds from the Offering, should provide the
Company with the liquidity and capital resources to pursue its business
strategy through 1996, with respect to working capital, capital expenditures
and other operating needs. To fund additional acquisitions, the Company may
have to arrange for additional financing. Under present conditions, management
does not believe access to funds will restrict its ability to pursue its
acquisition strategy.
EFFECTS OF INFLATION
Inflation generally affects the Company by increasing the interest expense of
floating rate indebtedness and by increasing the cost of labor, equipment and
raw materials. Management believes that inflation has impacted the Company's
business over the past 18 months because of rising labor costs and raw material
costs, principally steel. Certain of the Company's contracts with customers
provide that increases in the Company's cost of raw materials may be passed
through to the customer, subject to certain limitations.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, a fair value based
method of accounting for employee stock options or similar equity interests for
fiscal years beginning after December 15, 1995. The Company has concluded that
it will not adopt the accounting requirements of SFAS No. 123, but will conform
to the disclosure requirements contained therein, which require the disclosure
of pro forma income and earnings per share information as if this fair value
method of accounting had been applied. This disclosure will have no impact on
the Company's results of operations or financial position.
25
<PAGE>
BUSINESS
GENERAL
The Company is a leading designer and producer of high-quality, engineered
metal stampings and assemblies used by major North American OEMs, including
Ford, Honda, Chrysler, General Motors, Mazda, Toyota and Nissan. The Company's
products range from engineered mechanical parts, such as hood and deck lid
hinges and brake components, to large structural stampings and assemblies,
such as body pillars, chassis, suspension and floor pan components and major
housing assemblies. The majority of the Company's revenues are derived from
complex, high value-added products, primarily assemblies which generally
consist of multiple parts which the Company stamps and combines with various
welded or fastened components. The Company's revenues have grown rapidly
through a focused strategy of internal growth and a highly disciplined
acquisition program. Since 1993, revenues have increased from $86.3 million to
$222.8 million in 1995, a compound annual growth rate of approximately 61%.
On May 31, 1996, the Company acquired MSTI, a leading supplier of complex,
high value-added stampings used in chassis and suspension systems for North
American OEMs. The MSTI Acquisition expands the Company's product offerings to
include chassis and suspension components, increases the Company's product
content on several of the most popular light truck models and enhances new
business opportunities with OEMs. On a pro forma basis, the Company had
revenues of approximately $424 million in 1995, which the Company believes
makes it the third largest independent supplier of automotive stampings and
assemblies to North American OEMs.
The Company manufactures products for a wide variety of car and light truck
models, including nine of the ten best-selling vehicles in the United States
in 1995. Two of the Company's highest content per car models, the Ford Taurus
and the Honda Accord, have been the best-selling cars in the United States for
the past eleven years. In addition, two of the Company's highest content per
light truck models, the Ford Explorer and F-Series Pick-up, were the best-
selling sport utility vehicle and pick-up truck in North America in 1995. As a
result of its long history of high-efficiency/high-quality manufacturing and
extensive service capabilities as well as strategic acquisitions, the Company
has gained access to most OEMs and has become a long-term preferred supplier
to Ford, the Company's largest customer, as well as its other major customers.
In addition to receiving numerous quality awards, the Company has consistently
received one of Ford's highest commercial ratings for suppliers in its
stamping segment.
STRATEGY
The Company operates in the large and highly fragmented stamping segment of
the automotive supply industry, which has recently begun to undergo
significant consolidation. To lower costs and improve quality, OEMs are
reducing their supplier base by awarding sole-source contracts to full-service
stamping suppliers who are able to supply larger segments of a vehicle. OEMs'
criteria for supplier selection include not only cost, quality and
responsiveness, but also full-service design, engineering and program
management capabilities. In addition, suppliers increasingly will be required
by OEMs to deliver their products and services on a global basis. As a full-
service supplier with strong OEM relationships, the Company expects to benefit
from the continued consolidation within the automotive stamping segment.
The Company's strategy is designed to capitalize on the opportunities
created by the consolidation of stamping suppliers through continued internal
growth and pursuit of strategic acquisitions that complement its existing
business. The Company believes its strong customer relationships with OEMs
enable it to more quickly identify business opportunities and react to
customer needs during all stages of vehicle design.
26
<PAGE>
The key elements of the Company's strategy are:
Technical Design, Engineering and Program Management Capabilities. The
Company strives to maintain a technological advantage through investment in
research and product development, advanced engineering and program management.
The Company works with OEMs throughout the product development process from
concept vehicle and prototype development through the design and
implementation of manufacturing processes, in some cases by periodically
placing Company employees at customer facilities.
Efficient Manufacturing/Continuous Improvement Programs. In response to
OEMs' increasingly stringent demands, the Company has implemented
manufacturing practices designed to maximize quality and timeliness of
delivery and eliminate waste and inefficiency. The Company has continued to
upgrade its manufacturing technology and product design capability through
substantial investment in design and manufacturing equipment and highly-
trained engineering personnel.
Strategic Acquisitions. The Company believes that consolidation in the
stamping segment will continue to provide attractive opportunities to acquire
high-quality companies that complement its existing business. The Company
seeks to make acquisitions that (i) provide additional product, manufacturing
and technical capabilities, (ii) increase the number of models for which the
Company supplies products and the content supplied for existing models, (iii)
add new customers and (iv) broaden the Company's geographic coverage. Since
1993, the Company has acquired four businesses. The Company intends to seek
future acquisitions or develop strategic alliances that will strengthen the
Company's ability to supply its products on a global basis. While the Company
manages its manufacturing facilities, including acquired facilities, on a
decentralized basis, all advanced design/engineering, marketing and sales
functions are integrated in order to optimize customer relationships and
facilitate management of vehicle programs.
Broad Product Capabilities. The Company believes that its ability to offer a
broad range of products will provide the Company with a competitive advantage
as OEMs continue to consolidate their stamping suppliers. The Company's North
American content per vehicle has increased from $6.23 in 1993 to $14.92 in
1995, and $28.37 on a pro forma basis after giving effect to the acquisitions
of Trylon and MSTI. The MSTI Acquisition further broadens the Company's
product offerings into chassis and suspension components. The Company seeks to
increase volume by offering a broader range of its products to customers for
each vehicle model and by developing new products for customers.
Management and Workforce Incentives. The Company's management team has
extensive experience in supplying OEMs and has a significant stake in the
Company's success. After the Offering, the Company's management team will
continue to own approximately 16% of the Common Stock on a fully diluted
basis. To increase employee productivity, the Company utilizes incentive
programs for all salaried and hourly employees and provides incentives for
employees who take advantage of its continuous improvement programs and who
provide cost saving ideas. The Company's decentralized management style
encourages employee participation in refining and improving production
processes.
RECENT ACQUISITIONS
On May 31, 1996, the Company completed its most recent acquisition with the
purchase of MSTI from MascoTech. MSTI, a leading supplier of complex, high
value-added stampings used in chassis and suspension systems for North
American OEMs, had net revenues of $152.9 million in 1995. The Company paid an
aggregate of approximately $79 million for MSTI (including the payment of
related fees and expenses), plus additional earn-out payments if certain
operating targets are achieved by the MSTI facilities in the first three years
following the acquisition. In a separate transaction, the Company has agreed
to assume production of certain parts previously manufactured at a non-
acquired MascoTech facility and will make payments to MascoTech equal to 5% of
the revenues to be derived by the Company during the first twelve months of
production from each assumed purchase order resourced to the Company. The
Company will also acquire selected inventory, tooling and production equipment
used for such production at an estimated cost of approximately $6 million. The
purchased assets will be transferred to the Company's existing facilities over
the remainder of 1996.
27
<PAGE>
The Company believes that the MSTI Acquisition will provide the Company with
several strategic benefits, including the following:
Additional Product Offerings. The MSTI Acquisition has expanded the
Company's product offerings by adding complex, high value-added metal
stampings used in chassis and suspension systems. The Company believes that
its ability to produce a larger segment of a vehicle as a result of the MSTI
Acquisition will afford it with significant opportunities to increase sales as
OEMs continue to consolidate their supplier base.
Complementary New Technology. The MSTI Acquisition provides chassis and
suspension technology as well as providing substantial value-added processing
technologies including assembly, painting and welding. The Company believes
that these acquired technologies will provide significant additional
opportunities to both serve existing customers and secure new business.
Increased Model Penetration. As a result of the MSTI Acquisition, the
Company will increase its content per vehicle on key light trucks and sport
utility vehicles such as the Ford F-Series and Explorer and the Chrysler Grand
Cherokee as well as on high volume passenger cars such as the Ford
Taurus/Sable. As a result of this increased model penetration, the Company
believes that it will have greater opportunities to supply additional parts
for such models.
The MSTI Acquisition has enabled the Company to increase its content per
vehicle on the following models:
<TABLE>
<CAPTION>
CUSTOMER CAR MODELS TRUCK MODELS
-------- ---------- ------------
<S> <C> <C>
Ford Taurus/Sable, Econoline, Explorer, Villager, F-Series, Ranger,
Contour/Mystique, Escort Medium Trucks, Expedition
Chrysler Neon, Stratus/Cirrus Grand Cherokee, Voyager, Caravan, Ram Pick-up,
Dakota, Ram Van, Wrangler
General Motors Lumina C/K Truck, Blazer, Chevy Van, Suburban
Nissan Quest
</TABLE>
In January 1996, the Company acquired Trylon for approximately $25 million
in cash, including transaction costs. The Trylon Acquisition (i) broadened the
Company's product offerings to include small, precision metal stampings and
assemblies, which were previously outsourced to third parties, (ii)
established a significant relationship between the Company and General Motors
and (iii) increased content on Ford models, primarily the Villager. Trylon
generated $47.9 million in revenues in 1995.
In June 1994, the Company acquired Kalamazoo, a supplier of structural
stampings and assemblies that added a structural component to the Company's
product offerings and increased model penetration with Ford.
In May 1994, the Company acquired Edgewood, which added engineered
mechanical stampings, primarily hood and deck lid hinges, and structural
components to the Company's product offerings, increased model penetration
with the Company's existing customers and provided the Company with a
significant new customer, Mazda.
PRODUCTS
The Company's products consist primarily of unexposed structural stampings
and assemblies and engineered mechanical parts, many of which are critical to
the structural integrity of the vehicle. These stampings and assemblies are
attached directly to the frame of an automobile at the OEM assembly plant and
comprise the major structure of a vehicle. Mechanical components manufactured
by the Company, such as hood and deck lid hinges, are attached to larger
structural components. These parts use various grades and thicknesses of steel
including hot and cold rolled, galvanized, organically coated, stainless and
aluminized steel. The Company does not produce exposed sheet metal components,
such as exterior body panels. See "Suppliers and Raw Materials."
The Company's primary products are illustrated on the inside front cover
page of this Prospectus.
28
<PAGE>
Although a portion of the Company's stampings are sold directly to OEMs as
finished products, most are used by the Company to produce assemblies or final
products including multiple parts that are welded or otherwise fastened
together by the Company. In 1995, assemblies represented a majority of the
Company's revenues.
CUSTOMERS AND MARKETING
The North American automotive market is dominated by General Motors, Ford
and Chrysler, although Japanese and other foreign manufacturers have captured
a substantial portion of this market. The Company supplies its products
primarily to Ford, Honda, Chrysler, General Motors, Mazda, Toyota and Nissan.
The Company's customers award contracts that normally cover parts to be
supplied for a particular car model. Such contracts typically extend over the
life of the model, which is generally four to seven years and do not require
the purchase by the customer of any minimum number of parts. As a result, the
primary risk to the Company is that an OEM will produce fewer units of a model
than anticipated. The Company supplies parts for a broad cross-section of both
new and mature models, thereby reducing its reliance on any particular model.
For example, the Company supplies parts for substantially all models produced
by Ford, Honda and Chrysler. The following table presents an overview of the
major models for which the Company supplies products:
<TABLE>
<CAPTION>
CUSTOMER CAR MODELS TRUCK MODELS
-------- ---------- ------------
<S> <C> <C>
Ford Taurus/Sable, Contour/ Mystique, Econoline, Explorer, Villager,
Mustang, Escort, Crown Victoria, Aerostar, Windstar, F-Series,
Grand Marquis, Probe, Continental Ranger, Medium Trucks,
Expedition
Honda Accord, Civic, Acura Integra
Chrysler Concorde/Intrepid/Vision, Neon, Grand Cherokee, Voyager,
Viper, Stratus/Cirrus Caravan, Ram Pick-up,
Dakota, Ram Van, Wrangler
General Motors Cavalier, Sunfire, Grand Am, C/K Truck, Blazer,
Lumina, Grand Prix Chevy Van, Suburban
Mazda 626, MX6
Toyota Avalon, Camry Mini-van
Nissan Sentra Quest
</TABLE>
Most of the parts the Company produces have a lead time of two to five years
from product development to production. See "Design and Engineering Support."
Since 1988, the Company has been the leading supplier for hood and deck hinges
at Ford and Chrysler and is responsible for the design and production of such
products. The selling prices of these products are generally negotiated
between the Company and its customers and are typically not subject to a
competitive bid process.
The Company has been awarded new business (i.e., parts not previously
supplied by the Company) for the calendar year indicated for the models set
forth below:
<TABLE>
<CAPTION>
YEAR MODELS
---- ------
<S> <C>
1996.................... Ford Escort, Taurus/Sable, Chrysler Dakota, Acura Integra, Toyota Camry
1997.................... Ford Escort Coupe, Ranger, Continental, Honda Accord, Toyota Mini-van
1998.................... Ford Medium Truck, Lincoln
</TABLE>
Sales of the Company's products to OEMs are made directly by the Company's
sales and engineering force, headquartered at the technical center located in
Farmington Hills, Michigan. Through the technical center, the Company services
its OEM customers and manages its continuing programs of product design
improvement and development. The Company's sales and engineering force
consists of approximately 150 individuals, some of whom are periodically
placed at various customer facilities to facilitate the development of new
programs.
29
<PAGE>
DESIGN AND ENGINEERING SUPPORT
The Company strives to maintain a technological advantage through investment
in product development and advanced engineering capabilities. The Company's
engineering staff currently consists of approximately 140 full-time engineers
whose responsibilities range from research and development, advanced product
development, product design, testing and initial prototype development to the
design and implementation of manufacturing processes.
Because assembled parts must be designed at an early stage in the
development of new vehicles or model revisions, the Company is increasingly
given the opportunity to utilize its product engineering resources early in
the planning process. Advanced development engineering resources create
original engineering designs, computer-aided designs, feasibility studies,
working prototypes and testing programs to meet customer specifications. The
Company's advanced development capabilities have resulted in several
innovations in hinge design that have provided significant benefits to the
Company's customers. These include, among others, adjustable single pivot
hinges, multi-link hinges, lift-assisted deck hinges and an integrated hood
catcher. The Company also has full service design capability for chassis
components.
The Company's manufacturing engineering capabilities enable it to design and
build high-quality and efficient manufacturing systems, processes and
equipment and to continually improve its production processes and equipment.
The Company's manufacturing engineers are located at each of its manufacturing
facilities.
MANUFACTURING AND FACILITIES
Stamping involves passing metal through dies in a stamping press to form the
metal into three-dimensional parts. The Company produces stamped parts using
precision single-stage, progressive and transfer presses, ranging in size from
150 to 2000 tons, which perform multiple functions as raw material proceeds
through the press and is converted into a finished product. A single-stage
press performs a single processing function to a piece of metal. A progressive
press leaves a thin band of connecting metal in place, which permits the
ultimate part to progress through the different stages of the press during the
stamping process. A transfer press is used in conjunction with a mechanical
transfer system, which transfers only the metal part through the various
stages of the press. A transfer press is designed to maximize raw material
utilization by eliminating the need to leave a thin band of connecting metal
in place during the stamping process. Approximately 15% of the Company's
presses are transfer presses, with the remaining 85% being either hand-fed,
tandem or progressive press machines. The Company continually invests in its
press technology to increase flexibility, improve safety and minimize die
changeover time. During 1995, the Company's employees trained on improving die
changeover times. For example, at the Auburn, Indiana manufacturing facility,
a team of employees reduced die changeovers of a 500-ton press from 109
minutes in July 1995 to approximately 14 minutes by January 1996. The faster
changeover times have allowed the Company to increase its product throughput
and to reduce its employee overtime.
After forming is completed, stampings that are to be used in assemblies are
placed in work-in-progress staging areas from which they are fed into cell-
oriented assembly operations that produce complex, value-added assemblies
through the combination of multiple parts that are welded or fastened
together. The Company's assembly operations are performed on either dedicated,
high-volume welding/fastening machines or on flexible-cell oriented robotic
lines for units with lower volume production runs. The assembly machines
attach additional parts, fixtures or stampings to the original metal
stampings. In addition to standard production capabilities, the Company's
assembly machines are also able to perform various statistical control
functions and identify improper welds and attachments. The Company continually
works with manufacturers of fixed/robotic welding systems to develop faster,
more flexible machinery. Several of the Company's welding systems were
designed by the Company.
A significant component of the Company's continuous improvement program is
the formation of Kaizen teams. Kaizen teams are groups of seven to ten people
which meet bi-monthly for periods of two to four days to solve specific
manufacturing issues. Issues dealt with by the Kaizen teams are determined by
a steering
30
<PAGE>
committee. Kaizen teams have the autonomy to redesign the manufacturing process
and the authority and funds to implement recommended changes throughout the
Company.
OEMs have established quality rating systems involving rigorous inspections
of suppliers' facilities and operations. OEMs' factory rating programs provide
a quantitative measure of a company's success in improving the quality of its
operations. The Company has received quality awards from Ford (Q1) and Chrysler
(Pentastar) and has consistently received one of Ford's highest commercial
ratings for suppliers in the stamping segment. The automotive industry has
recently adopted a quality rating system known as QS-9000. The Company is
currently in the process of becoming QS-9000 certified, which it expects to
complete by the end of 1996.
The Company maintains several manufacturing facilities located in close
proximity to many of the high-volume vehicle assembly plants in the United
States. One of the primary goals of the new Bardstown facility is to satisfy
the just-in-time delivery requirements of Toyota in Georgetown, Kentucky;
Nissan in Smyrna, Tennessee; and Ford in Louisville, Kentucky.
The following table provides information regarding the Company's principal
facilities.
<TABLE>
<CAPTION>
DATE
SQUARE TYPE OF DESCRIPTION ACQUIRED OR
LOCATION FOOTAGE INTEREST OF USE FIRST OCCUPIED
- -------- ------- -------- ------------------------- --------------
<S> <C> <C> <C> <C>
Bardstown, Kentucky..... 240,000 Owned Manufacturing 1995
Kalamazoo, Michigan 222,000 Owned/ Manufacturing/ 1994
(3 locations).......... Leased Warehouse/Office
Traverse City, Michigan 220,000 Owned Manufacturing 1996
(4 locations)..........
Greenville, Michigan.... 160,000 Owned Manufacturing/Office 1993
Auburn, Indiana......... 132,000 Owned Manufacturing/Office 1993
Kendallville, 132,000 Owned Manufacturing 1996
Indiana(1).............
Romulus, Michigan....... 115,000 Leased Manufacturing/Office 1994
Bluffton, Ohio(1)....... 102,000 Owned Manufacturing 1996
Rochester Hills, 89,000 Leased Office/Engineering/Design 1996
Michigan(1)............
Manchester, Michigan.... 61,000 Owned Manufacturing 1994
Upper Sandusky, Ohio(1). 56,000 Owned Manufacturing 1996
Grand Rapids, Michigan.. 23,000 Leased Operating Headquarters 1993
Farmington Hills, 12,000 Leased Engineering/Design 1994
Michigan...............
Minneapolis, Minnesota.. 5,700 Leased Corporate Headquarters 1993
</TABLE>
- --------
(1) Acquired in connection with the MSTI Acquisition.
Management believes that substantially all of its property and equipment is
in good condition. In order to increase efficiency, the Company expects to make
capital expenditures for equipment upgrades at the facilities recently acquired
in the MSTI Acquisition. See "Management's Discussion and Analysis of Results
of Operations and Financial Condition--Liquidity and Capital Resources."
In order to increase capacity to meet anticipated needs, the Company has
constructed a 240,000 square foot manufacturing facility in Bardstown,
Kentucky. This facility is being equipped in two phases. Phase one, which
included construction of the basic structure and installation of a portion of
the equipment, has been completed and the Company began shipping products from
the facility in the third quarter of 1995. Phase one of the new facility is
being used primarily to accommodate new business awards, including the redesign
of the Ford Taurus/Sable and the Ford Escort. Phase two of the Bardstown
facility, which includes the purchase and installation of additional production
equipment, is anticipated to be completed by the end of 1998. As of March 31,
1996, the Company had $14.6 million of restricted cash from the issuance of
IRBs to finance phase two of the Bardstown facility. The new facility is
currently operating at 50% of phase one capacity, which the Company expects to
increase as the facility ramps up production.
31
<PAGE>
The Company believes that its existing facilities will be adequate to meet
its production demands for the foreseeable future. The Company's facilities
were specifically designed for the manufacturing of the Company's products.
The utilization and capacity of such facilities are dependent upon the mix of
products being produced by the Company.
COMPETITION
As a result of the MSTI Acquisition, the Company believes it is the third
largest independent supplier of automotive stampings and assemblies to North
American OEMs based on net sales. The Company operates in a highly
competitive, fragmented environment, with a limited number of competitors
generating revenues in excess of $200 million. The number of the Company's
competitors has decreased in recent years and is expected to continue to
decrease due to the supplier consolidation resulting from changing OEM
policies. The Company's largest competitors include The Budd Company, a
subsidiary of Thyssen AG ("Budd"), Magna International Inc. ("Magna"), Midway
Products Corp., Modern Tool & Die Co., L&W Engineering and divisions of OEMs
with internal stamping and assembly operations, all of which have substantial
financial resources.
The Company principally competes for new business both at the beginning of
the development of new models and upon the redesign of existing models. New
model development generally begins two to five years before the marketing of
such models to the public. Once a producer has been designated to supply parts
for a new program, an OEM usually will continue to purchase those parts from
the designated producer for the life of the program, although not necessarily
for a redesign. Competitive factors in the market for the Company's products
include product quality and reliability, cost and timely delivery, technical
expertise and development capability, new product innovation and customer
service.
The Company competes with Magna across most of the Company's product lines,
while the Company competes with its other significant competitors in various
segments of its product lines. For example, the Company competes with Budd for
large stampings, while it competes with ITT Automotive for hinge business.
Aetna Industries, Active Tool & Die Co., AG Simpson, Lobdell-Emory Mfg. Co.
and L&W Engineering compete with the Company for medium-size structural
stampings.
SUPPLIERS AND RAW MATERIALS
The primary raw material used to produce structural stampings and assemblies
is steel. The Company purchases hot- and cold-rolled, galvanized, organically
coated, stainless and aluminized steel from a variety of suppliers. The
Company employs just-in-time manufacturing and sourcing systems enabling it to
meet customer requirements for faster deliveries while minimizing its need to
carry significant inventory levels. The Company has not experienced any
significant shortages of raw materials and normally does not carry inventories
of raw materials or finished products in excess of those reasonably required
to meet production and shipping schedules. Raw materials accounted for
approximately 50% of the Company's production costs in 1995 and steel
accounted for approximately 65% to 70% of raw material costs in 1995.
Honda and Chrysler purchase all of the steel used by the Company for their
models directly from steel producers. The Company anticipates that Ford will
begin purchasing steel directly from steel producers for the Company during
1996. As a result, the Company will have minimal exposure to changes in steel
prices for parts supplied to Ford, Honda and Chrysler, which collectively
represented 93% of the Company's revenues in 1995.
The Company expects that the content level of metal in cars and light trucks
will remain constant or increase slightly due to the trend toward increased
vehicle size and a greater emphasis on metal recycling. Although the search
for improved fuel economy and weight reduction has resulted in attempts to
reduce the sheet metal content of light vehicles, an efficient, cost-effective
substitute for steel used in the Company's products has not been found. While
various polymers have been used recently for fenders, hoods and decks, such
products do not have the inherent strength or structural integrity to be used
for structural components. The Company is involved in an ongoing evaluation of
the potential for the use of aluminum and of specialty steel in its products.
32
<PAGE>
Other raw materials purchased by the Company include dies, fasteners,
tubing, springs, rivets and rubber products, all of which are available from
numerous sources.
EMPLOYEES
Immediately following the completion of the MSTI Acquisition, the Company
had approximately 2,700 employees, including approximately 800 former MSTI
employees. The Company believes that its future success will depend in part on
its ability to continue to recruit, retain and motivate qualified personnel at
all levels of the Company. The Company has instituted a large number of
employee programs to increase employee morale and expand the employees'
participation in the Company's business, including the formation of Kaizen
teams. The Company has approximately 1,100 hourly employees represented by
labor unions, including 120 former MSTI employees who voted to be represented
by the UAW shortly before the MSTI Acquisition. The Company has not
experienced any work stoppages and considers its relations with its employees
to be good.
ENVIRONMENTAL MATTERS
The Company believes it conducts its operations in substantial compliance
with applicable environmental and occupational health and safety laws. The
Company does not expect to incur material capital expenditures for
environmental compliance during its current or succeeding fiscal year.
However, as is the case with manufacturers in general, if a release of
hazardous substances occurs on or from the Company's properties or at any
associated offsite disposal location, or if contamination from prior
activities is discovered at any of the Company's properties, the Company may
be held liable and the amount of such liability could be material. In
connection with the Trylon and MSTI Acquisitions, MascoTech has agreed to
indemnify the Company for certain environmental matters, including replacement
of underground storage tanks at the Traverse City facilities and any
remediation that may be required at the Kendallville facility.
LEGAL PROCEEDINGS
The Company is not currently involved in any material lawsuits. The Company
believes it maintains adequate insurance, including product liability
coverage. The Company historically has not been required to pay any material
liability claims.
33
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
S.A. Johnson............ 56 Chairman and Director
Adrian Vander Starre.... 63 Vice Chairman and Director
Dugald K. Campbell...... 49 President, Chief Executive Officer and Director
James R. Lozelle........ 50 Executive Vice President and Director
Michael W. Doherty...... 53 Vice President
Anthony A. Barone....... 46 Vice President and Chief Financial Officer
Paul D. Rysenga......... 54 Vice President
Ronald E. Gavalis....... 58 Vice President
Scott D. Rued........... 39 Vice President, Corporate Development and Director
Luigi Candusso.......... 46 Vice President
</TABLE>
S.A. (Tony) Johnson has served as Chairman and a Director of the Company
since April 1993. Mr. Johnson is the founder, Chief Executive Officer and
President of Hidden Creek Industries ("Hidden Creek"), a private industrial
management company based in Minneapolis which has provided certain management
and other services to the Company. Mr. Johnson is also the Managing Partner of
J2R Partners ("J2R"). Prior to forming Hidden Creek, Mr. Johnson served from
1985 to 1989 as Chief Operating Officer of Pentair, Inc., a diversified
industrial company. From 1981 to 1985, Mr. Johnson was President and Chief
Executive Officer of Onan Corp., a diversified manufacturer of electrical
generating equipment and engines for commercial, defense and industrial
markets. Mr. Johnson served as Chairman and a director of Automotive
Industries Holding, Inc. from May 1990 to August 1995.
Adrian Vander Starre has served as Vice Chairman and a Director of the
Company since April 1993. Mr. Vander Starre served as President, Chief
Executive Officer and a director of the Predecessor from 1978 to 1993. Mr.
Vander Starre originally joined the Predecessor in 1965 as Controller and
later served as Treasurer from 1974 to 1978. Mr. Vander Starre has entered
into a consulting agreement with the Company under which he performs such
duties as may be assigned by the Board of Directors.
Dugald K. Campbell has served as President and Chief Executive Officer of
the Company since December 1993. From 1991 to 1993, Mr. Campbell served as a
consultant to Hidden Creek. From 1988 to 1991, he served as Vice President and
General Manager of the Sensor Systems Division of Siemens Automotive, a
manufacturer of engine management systems and components. From 1972 to 1988,
he held various executive, engineering and marketing positions with Allied
Automotive, a manufacturer of vehicle systems and components and a subsidiary
of Allied Signal Corporation.
James R. Lozelle has served as Executive Vice President for the Tower
Automotive Technical Center, with responsibility for advanced product
development and customer service, and a Director of the Company since the
Company's acquisition of Edgewood in May 1994. In such capacity, Mr. Lozelle
has also assumed responsibility for the MSTI technical center. Mr. Lozelle
served as President of Edgewood from 1982 until it was acquired by the
Company. Mr. Lozelle joined Edgewood in 1970 and served as Vice President from
1971 to 1982. Mr. Lozelle is past chairman of the Precision Metalforming
Association ("PMA"), the leading stamping industry trade association, and past
chairman of the PMA's Government Affairs Committee.
Michael W. Doherty has served as Vice President, with responsibility for
program management and overall business planning including global strategy,
since April 1993. From October 1992 until April 1993, Mr. Doherty served as
Senior Vice President of the Predecessor, with responsibility for sales and
engineering. From 1978 to 1992, Mr. Doherty served as the Predecessor's Vice
President, Sales and Engineering.
34
<PAGE>
Anthony A. Barone has served as Vice President and Chief Financial Officer
since May 1995. From 1984 to 1995, Mr. Barone served as Chief Financial
Officer of O'Sullivan Corporation, a manufacturer of interior trim components
for the automotive industry.
Paul D. Rysenga has served as Vice President of the Company, with
responsibility for the Company's operations in Greenville, Romulus and
Traverse City, Michigan, since October 1995. Mr. Rysenga is also responsible
for the newly acquired MSTI operating facilities. From June 1994 to October
1995, Mr. Rysenga had responsibility for the Company's operations in Auburn,
Indiana. From July 1991 to June 1994, Mr. Rysenga served as Executive Vice
President and General Manager at Kalamazoo. From 1988 to July 1991, Mr.
Rysenga was Executive Director of Eastman Sterling Pharmaceutical, a division
of Eastman Kodak.
Ronald E. Gavalis has served as Vice President of the Company, with
responsibility for capacity planning, quality operating systems and QS-9000
certification, since April 1995. From June 1994 to April 1995, Mr. Gavalis had
responsibility for the Company's Greenville, Michigan operations. Mr. Gavalis
joined the Predecessor in 1983 as Director of Manufacturing, and served as the
Predecessor's Vice President, Manufacturing, from 1985 until 1989 and as its
Vice President, Operations, from 1989 until June 1994.
Scott D. Rued has served as Vice President, Corporate Development, and a
Director of the Company since April 1993. Mr. Rued served as Vice President,
Chief Financial Officer and a Director of Automotive Industries Holding, Inc.
from April 1990 to August 1995. Mr. Rued, a partner of J2R, has also served as
Executive Vice President and Chief Financial Officer of Hidden Creek since
January 1994 and served as its Vice President--Finance and Corporate
Development from June 1989 through 1993. Mr. Rued is also a director of The
Rottlund Company, Inc., a corporation engaged in the development and sale of
residential real estate.
Luigi Candusso has served as Vice President of the Company, with
responsibility for the Company's operations in Kalamazoo, Michigan and
Bardstown, Kentucky, since April 1995. Since October 1995, Mr. Candusso has
also had responsibility for the Company's operations in Auburn, Indiana. From
1990 to April 1995, Mr. Candusso served as Vice President and General Manager
of the Sensor Systems Division of Siemens Automotive, a manufacturer of engine
management systems and components. From 1988 to 1990, Mr. Candusso served as
Vice President of Operations of Fabricated Steel Products (FABCO), a division
of Indal Canada.
35
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
Unless otherwise noted, the following table sets forth certain information
regarding ownership of the Common Stock as of June 14, 1996 and after
completion of the Offering by (i) the beneficial owners of more than 5% of the
Common Stock of the Company, (ii) all Directors and executive officers of the
Company, (iii) all Directors and executive officers of the Company as a group
and (iv) the Selling Stockholders. To the knowledge of the Company, each of
such stockholders has sole voting and investment power as to the shares shown
unless otherwise noted. Beneficial ownership of the Common Stock listed in the
table has been determined in accordance with the applicable rules and
regulations promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act").
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO OWNED AFTER THE
DIRECTORS, EXECUTIVE THE OFFERING SHARES TO BE OFFERING (1)
OFFICERS ----------------- SOLD IN THE -----------------
AND 5% STOCKHOLDERS NUMBER PERCENT OFFERING NUMBER PERCENT
- -------------------- --------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Onex (2)(3)................. 6,597,396 55.3% 1,500,000 4,427,396 31.8%
MascoTech, Inc. (4)......... 985,000 8.1 500,000 485,000 3.4
J2R Partners (5)............ 593,149 5.0 -- 593,149 4.3
First Bank Systems, Inc.
(6)........................ 595,900 5.0 -- 595,900 4.3
S.A. Johnson (5)(7)......... 798,701 6.7 66,666 (8) 732,035 5.2
Adrian Vander Starre (9).... 38,702 * -- 38,702 *
Dugald K. Campbell (10)..... 238,989 2.0 -- 238,989 1.7
James R. Lozelle (11)....... 436,751 3.5 100,000 336,751 2.4
Michael W. Doherty (12)..... 278,470 2.4 25,000 253,470 1.8
Anthony A. Barone........... 6,000 * -- 6,000 *
Paul D. Rysenga............. 3,400 * -- 3,400 *
Ronald E. Gavalis........... 72,294 * -- 72,294 *
Scott D. Rued (5)(13)....... 644,519 5.5 16,666 (8) 627,853 4.5
Luigi Candusso.............. 6,000 * -- 6,000 *
W.H. Clement (5)(14)........ 711,926 6.0 -- 711,926 5.1
Eric J. Rosen (2)........... 10,000 * -- 10,000 *
Matthew O. Diggs, Jr. (15).. 6,000 * -- 6,000 *
Kim B. Clark................ -- -- -- -- --
F.J. Loughrey............... 1,000 * -- 1,000 *
All Directors and executive
officers as a group (15
persons)................... 2,066,454 16.8 208,332 1,858,122 13.0
OTHER SELLING STOCKHOLDERS:
Robert R. Hibbs (5)(16)..... 634,259 5.4 5,556 (8) 628,703 4.5
Mary L. Johnson (5)(17)..... 612,593 5.2 5,556 (8) 607,037 4.4
Carl E. Nelson (5)(18)...... 635,371 5.4 5,556 (8) 629,815 4.5
Doherty Charitable Remainder
Trust
#3 (19) ................... 45,000 * 45,000 -- --
</TABLE>
- --------
*Less than one percent.
(1) Does not reflect the exercise of the Underwriters' over-allotment option
and does not give effect to any purchases, if any, by such persons in the
Offering. In the event the over-allotment option is exercised in full,
the Company, Onex and the partners of J2R in the aggregate (excluding Mr.
Clement) will sell an additional 100,500, 525,000 and 15,000 shares,
respectively, in the Offering.
(2) Prior to the Offering, Onex had shared voting power of 6,597,396 shares
and sole dispositive power of 3,531,778 shares. Upon completion of the
Offering, Onex is expected to have shared voting power with respect to
4,427,396 shares and sole dispositive power of 2,031,778 shares. See
Footnote 3. Eric J. Rosen, a Director of the Company, is Managing
Director of Onex Investment Corp. and disclaims beneficial ownership of
all shares of Common Stock owned by Onex. The record holder of such
shares listed in the table as owned by Onex is ONEX DHC LLC, an affiliate
of Onex ("Onex DHC"). Onex DHC and Onex Investment Corp. are both wholly
owned subsidiaries of Onex Corporation. The address for Onex DHC, Onex
and Mr. Rosen is c/o Onex Investment Corp., 712 Fifth Avenue, 40th Floor,
New York, New York 10019.
(3) Onex, J2R, MascoTech, Messrs. Johnson, Vander Starre, Campbell, Lozelle,
Doherty, Gavalis, Rued, Clement and certain of the Company's other
existing stockholders have entered into agreements pursuant to which such
stockholders agreed to vote their shares of the Company's voting stock in
the same manner as Onex votes its shares on all matters presented to the
Company's stockholders for a vote and, to the extent permitted by law,
granted to Onex a proxy to effectuate such agreement.
(Footnotes continued on following page)
36
<PAGE>
(4) Represents 785,000 shares and the MSTI Warrants to purchase 200,000
shares of Common Stock that were issued to MascoTech in connection with
the MSTI Acquisition. The address for MascoTech is 21001 Van Born Road,
Taylor, Michigan 48180.
(5) On June 12, 1996, J2R distributed an aggregate of 111,111 shares of
Common Stock to its partners, of which 100,000 shares will be sold in the
Offering. The partners of J2R are S.A. Johnson, Scott D. Rued, W. H.
Clement, Robert R. Hibbs, Mary L. Johnson and Carl E. Nelson. The address
for J2R is c/o Tower Automotive, Inc., 4508 IDS Center, Minneapolis,
Minnesota 55402.
(6) First Bank Systems, Inc. reported as of December 31, 1995 sole voting and
dispositive power with respect to 595,900 shares of Common Stock, which
represented approximately 5.1% of the outstanding Common Stock at that
time. The address for First Bank Systems, Inc. is 601 2nd Avenue South,
Minneapolis, Minnesota 55402.
(7) Includes the shares owned by J2R, of which Mr. Johnson is Managing
Partner, and 205,552 shares owned by Mr. Johnson. The address for Mr.
Johnson is c/o Tower Automotive, Inc., 4508 IDS Center, Minneapolis,
Minnesota 55402.
(8) Reflects the shares of Common Stock received upon the distribution from
J2R for sale in the Offering.
(9) Includes 38,702 shares held in an irrevocable trust for the benefit of
Mr. Vander Starre's children as to all of which Mr. Vander Starre's
children are the trustees. Mr. Vander Starre disclaims beneficial
ownership of the shares held in trust.
(10) Includes 7,800 shares owned by Mr. Campbell's wife, 350 shares owned by
Mr. Campbell's child and 78,000 shares held in an annuity trust, of which
Mr. Campbell is the trustee. Mr. Campbell disclaims beneficial ownership
of the shares held by his wife, his child and in trust.
(11) Includes 396,000 shares of Common Stock issuable upon the conversion of
Convertible Notes and 37,578 shares issuable upon the exercise of
currently exercisable options held by Mr. Lozelle prior to the Offering.
Does not include options to purchase 65,406 shares of Common Stock held
by Mr. Lozelle as a result of such options not being exercisable within
60 days. The shares of Common Stock to be sold by Mr. Lozelle in the
Offering will be issued as a result of the conversion of certain of the
Convertible Notes.
(12) Includes 275,970 shares owned by Mr. Doherty and 2,500 shares issuable
upon the exercise of currently exercisable options held by Mr. Doherty.
(13) Includes the shares owned by J2R, of which Mr. Rued is a partner, and
51,370 shares owned by Mr. Rued. Mr. Rued disclaims beneficial ownership
of the shares owned by J2R. Mr. Rued's address is c/o Tower Automotive,
Inc., 4508 IDS Center, Minneapolis, Minnesota 55402.
(14) Includes the shares owned by J2R, of which Mr. Clement is a partner,
88,077 shares owned by Mr. Clement and an aggregate of 30,700 shares held
in trusts for the benefit of Mr. Clement's grandchildren, as to all of
which trusts Mr. Clement serves as the sole trustee. Mr. Clement
disclaims beneficial ownership of the shares owned by J2R and the shares
held in trust. The address for Mr. Clement is c/o Tower Automotive, Inc.,
4508 IDS Center, Minneapolis, Minnesota 55402.
(15) Includes 6,000 shares owned by EJJM Partnership, of which Mr. Diggs is
the General Partner. Mr. Diggs disclaims beneficial ownership of the
shares owned by EJJM Partnership.
(16) Includes the shares owned by J2R, of which Mr. Hibbs is a partner and
41,110 shares owned by Mr. Hibbs. Mr. Hibbs disclaims beneficial
ownership of the shares owned by J2R.
(17) Includes the shares owned by J2R, of which Ms. Johnson is a partner and
19,444 shares owned by Ms. Johnson. Ms. Johnson disclaims beneficial
ownership of the shares owned by J2R.
(18) Includes the shares owned by J2R, of which Mr. Nelson is a partner and
42,222 shares owned by Mr. Nelson. Mr. Nelson disclaims beneficial
ownership of the shares owned by J2R.
(19) Represents shares that were donated by Mr. Doherty and his spouse to such
trust prior to the Offering.
The Company will pay all expenses of the Offering attributable to the
Selling Stockholders other than underwriting discounts and commissions and
legal fees and expenses that may be incurred by certain of the Selling
Stockholders. The Company, Onex and the partners of J2R in the aggregate
(excluding Mr. Clement) have each granted the Underwriters an option to
purchase up to an additional 100,500, 525,000 and 15,000, respectively, shares
of Common Stock solely to cover over-allotments in the sale of the shares in
the Offering.
J2R will distribute additional shares of Common Stock to its partners for
their sale to the Underwriters in the event the Underwriters' over-allotment
option is exercised.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, Onex and certain stockholders, including J2R and its partners,
S. A. Johnson, Scott D. Rued, W. H. Clement, Robert R. Hibbs, Mary L. Johnson
and Carl E. Nelson (collectively, the "J2R Investors"), and Mr. Lozelle and
his brother, are parties to a registration agreement pursuant to which the
Company has granted such stockholders rights to register their shares of
Common Stock.
The Company, Onex, Messrs. Doherty and Lozelle and certain other members of
management are parties to a Management Stockholders Agreement pursuant to
which each individual has agreed to vote his or its shares in the same manner
that Onex votes its shares of Common Stock. The Management Stockholders
Agreement will terminate by its terms if Onex and its affiliates holds less
than one-fifth of all outstanding shares of Common Stock. In addition, the
Company, Onex, J2R and the J2R Investors and certain other investors are
parties to an Investor Stockholders Agreement pursuant to which each party has
agreed to vote his or its shares in the same manner that Onex votes its shares
of Common Stock.
37
<PAGE>
The Company leases its Romulus, Michigan manufacturing facility from 8900
Inkster Associates, a partnership of which Mr. Lozelle holds a 46.7%
partnership interest. The lease expires February 28, 1999. The expense under
this lease was $454,000 for the year ended December 31, 1995. The Company
believes the terms of the lease agreement are no less favorable than could have
been obtained pursuant to arm's length transactions with unaffiliated parties.
In April 1993, the Company paid Hidden Creek $500,000 for services in
connection with the R.J. Tower Acquisition and entered into a Management
Agreement with Hidden Creek, a partnership affiliated with Onex, J2R and the
J2R Investors, pursuant to which Hidden Creek has provided strategic direction,
management and financial services to the Company. In 1993 and 1994, Hidden
Creek received $354,170 and $333,000, respectively, for providing such
services. The Management Agreement was terminated upon the completion of the
Company's IPO. In May 1994, the Company paid Hidden Creek $250,000 for services
in connection with the acquisition of Edgewood. In addition, Hidden Creek
received a fee from the Company of $250,000 for services in connection with the
acquisition of Kalamazoo.
In May 1994, the following stockholders acquired shares of Common Stock as
set forth below:
<TABLE>
<CAPTION>
NUMBER AGGREGATE
NAME OF SHARES CONSIDERATION
---- --------- -------------
<S> <C> <C>
Onex.............................................. 788,831 $ 2,543,599
J2R............................................... 197,207 4,176
S.A. Johnson...................................... 32,329 83,534
Scott D. Rued..................................... 12,931 33,413
Robert R. Hibbs................................... 12,931 33,413
Mary L. Johnson................................... 3,232 8,351
Carl E. Nelson.................................... 9,698 25,059
</TABLE>
Onex and J2R are parties to a Co-Investment Agreement pursuant to which they
have agreed to an allocation of the purchase price of their investments. As a
result of this allocation, the combined price per share paid by Onex and J2R in
connection with the purchase of the above-described shares is the same price
per share paid by all other stockholders acquiring shares at such time.
In May 1994, the Company and Mr. Lozelle entered into an Employment Agreement
in connection with the acquisition of Edgewood. The Employment Agreement
provides that Mr. Lozelle shall serve as an Executive Vice President of the
Company until May 4, 1999 or his earlier resignation, death, disability or
termination. The Employment Agreement also provides that Mr. Lozelle will
receive an annual base salary of $200,000 plus annual bonus of up to 30% of his
annual base salary for attaining goals developed by the Company's Board of
Directors and Mr. Lozelle. In May 1994, Mr. Lozelle and the Company also
entered into a Stock Option Agreement pursuant to which Mr. Lozelle was granted
an option to purchase 102,984 shares of Common Stock at an exercise price of
$6.55 per share. The option vests and becomes exercisable with respect to one-
third of the shares covered on each of May 4, 1996, 1997 and 1998; provided
that Mr. Lozelle is still employed by the Company on each such date. In May
1994 in connection with the acquisition of Edgewood, Mr. Lozelle also received
$4,366,094 in cash and $2,407,361 in principal amount of Convertible Notes. Mr.
Lozelle's brother received $2,411,654 in cash and $1,415,222 in principal
amount of Convertible Notes. The shares of Common Stock to be sold by Mr.
Lozelle in the Offering will be issued as a result of the conversion of certain
Convertible Notes.
Messrs. Johnson and Rued provide the Company with strategic direction,
management and financial services with an annual allocation of salary costs of
$200,000 and $100,000, respectively, and will be eligible for performance-based
bonuses of up to 50% of their base salaries.
In connection with the MSTI Acquisition, the Company and MascoTech entered
into an agreement pursuant to which the Company agreed to permit MascoTech to
participate in this Offering and to use its best efforts to
38
<PAGE>
cause a shelf registration statement relating to MascoTech's remaining shares
(including shares issuable upon exercise of the MSTI Warrants) to be filed and
declared effective under the Securities Act within 120 days following this
Offering. In addition, MascoTech is entitled to include its shares of Common
Stock, at the Company's expense, in any registration statement filed by the
Company to register any of its securities under the Securities Act, subject to
certain conditions. The Company has agreed to indemnify MascoTech against
certain liabilities, including liabilities under the Securities Act, in
connection with such registrations. Under this agreement, MascoTech has agreed
to vote its shares of Common Stock in the same manner as Onex votes its shares
until the earlier of the date on which MascoTech transfers such shares or May
31, 2006.
UNDERWRITING
The Underwriters named below, for whom PaineWebber Incorporated, Robert W.
Baird & Co. Incorporated and Piper Jaffray Inc. are acting as representatives
(collectively, the "Representatives"), have severally agreed, subject to the
terms and conditions of the Underwriting Agreement, by and among the Company,
the Selling Stockholders and the Representatives (the "Underwriting
Agreement") (a copy of which is filed as an exhibit to the Registration
Statement, of which this Prospectus is a part), to purchase from the Company
and the Selling Stockholders, and the Company and the Selling Stockholders
have agreed to sell, the respective number of shares of Common Stock set forth
opposite their names below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
PaineWebber Incorporated...........................................
Robert W. Baird & Co. Incorporated.................................
Piper Jaffray Inc..................................................
---------
Total.......................................................... 4,270,000
=========
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to certain conditions, to purchase all of the shares of Common Stock being
sold pursuant to such Underwriting Agreement (other than those covered by the
over-allotment option described below), if any are purchased. The Underwriting
Agreement provides that, in the event of a default by an Underwriter, in
certain circumstances, the purchase commitments of non-defaulting Underwriters
may be increased or the Underwriting Agreement may be terminated.
The Company and the Selling Stockholders have been advised by the
Representatives that the Underwriters propose to offer the Common Stock to the
public initially at the public offering price set forth on the cover of this
Prospectus and to certain dealers at such price less a concession not in
excess of $. per share and that the Underwriters may allow and such dealers
may reallow a concession not in excess of $. per share to other dealers. The
public offering price and other selling terms may be changed by the
Representatives after this offering. Robert W. Baird & Co. Incorporated
("Baird") acted as a representative of the underwriters in the IPO in August
1994, was the underwriter and serves as remarketing agent for the Bardstown
IRBs, and has from time to time provided financial advisory services to the
Company. Baird will receive an advisory fee for serving as financial advisor
to the Company in connection with the MSTI Acquisition.
The Company and certain of the Selling Stockholders have granted to the
Underwriters an over-allotment option, exercisable during the 30-day period
following the date of this Prospectus, to purchase up to 640,500 additional
shares of Common Stock at the public offering price less the underwriting
discount set forth on the cover page of this Prospectus. If the Underwriters
exercise their over-allotment option, the Underwriters have
39
<PAGE>
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 4,270,000 shares of Common
Stock offered hereby. The Underwriters may exercise the option only to cover
over-allotments made in connection with the sale of the shares of Common Stock
offered hereby.
The Company, its significant subsidiaries and the Selling Stockholders have
agreed to indemnify the Underwriters and any person who controls the
Underwriters against certain liabilities, including certain liabilities under
the Securities Act.
The Company has agreed that, without the prior written consent of
PaineWebber Incorporated, as representative of the Underwriters, it will not,
directly or indirectly, assign, transfer, offer, sell, contract to sell, grant
any option to sell, hypothecate or otherwise dispose of any shares of Common
Stock or any securities convertible into or exchangeable for, or any warrants
or other rights to purchase or acquire, Common Stock for a period of 120 days
after the date of this Prospectus, except issuances of Common Stock (i)
pursuant to the Underwriting Agreement, (ii) pursuant to stock options
currently outstanding or which may hereafter be granted under existing stock
options plans of the Company, (iii) as a result of purchases under the
Company's Employee Stock Purchase Plan, (iv) upon the conversion of the
Convertible Notes or (v) upon the exercise of the MSTI Warrants. In addition,
the Company's Directors, executive officers and certain significant
stockholders, who in the aggregate currently own approximately 50% of the
outstanding Common Stock, have agreed that they will not, directly or
indirectly, assign, transfer, offer, offer to sell, sell, contract to sell,
grant any option to sell, hypothecate or otherwise dispose of any shares of,
or require the Company to file with the Commission a registration statement
under the Securities Act to register, Common Stock or any securities
convertible into or exchangeable for, or any rights to purchase or acquire,
Common Stock for a period of 120 days after the date of this Prospectus except
pursuant to the Underwriting Agreement, without the prior written consent of
PaineWebber Incorporated, as representative of the Underwriters.
In connection with the Offering, certain Underwriters and selling group
members (if any) or their respective affiliates who are qualified registered
market makers on the Nasdaq Stock Market, may engage in passive market making
transactions in the Common Stock on the Nasdaq Stock Market in accordance with
Rule 10b-6A under the Exchange Act during the two business day period before
commencement of offers or sales of the Common Stock. The passive market making
transactions must comply with applicable volume and price limits and be
identified as such. In general, a passive market maker may display its bid at
a price not in excess of the highest independent bid for the security. If all
independent bids are lowered below the passive market maker's bid, however,
such bid must then be lowered when certain purchase limits are exceeded.
LEGAL MATTERS
Certain legal matters regarding the issuance of the shares of Common Stock
being offered hereby have been passed upon for the Company by Kirkland &
Ellis, Chicago, Illinois (a partnership which includes professional
corporations). Certain legal matters will be passed upon for the Underwriters
by Gardner, Carton & Douglas, Chicago, Illinois.
EXPERTS
The audited financial statements incorporated by reference into this
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of
said firm as experts in accounting and auditing.
40
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement," which
term shall include any amendments thereto) on Form S-3 under the Securities
Act, with respect to the shares of Common Stock offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and to
which reference is hereby made. Statements made in this Prospectus as to the
contents of any document referred to are not necessarily complete. With
respect to each such document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Registration Statement may be inspected and
copied at the public reference facilities maintained by the Commission
referred to below.
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and
information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained at prescribed rates by
writing the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.
Such reports, proxy statements and other information can also be inspected at
the offices of the Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C.
20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus
and shall be deemed to be a part hereof:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as amended.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996.
3. The Company's Current Report on Form 8-K, dated January 29, 1996, as
amended by its Form 8-K/A filed on March 29, 1996.
4. The Company's Current Report on Form 8-K, dated May 31, 1996, as amended
by its Form 8-K/A No. 1 filed on June 4, 1996.
5. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed on August 8, 1994.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the Offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from
their respective dates of filing. Any statement contained herein or in any
document incorporated or deemed to be incorporated shall be deemed to be
modified or superseded for all purposes of this Prospectus to the extent that
a statement contained in this Prospectus or in any subsequently filed document
which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in this Prospectus (other than exhibits thereto, unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates). Requests should be directed to: Tower
Automotive, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402, Attention:
Shareholder Services (telephone number (612) 342-2310).
41
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUB-
SEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECU-
RITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
Use of Proceeds........................................................... 10
Market Price of and Dividends on Common Stock............................. 11
Capitalization............................................................ 12
Unaudited Pro Forma Financial Statements.................................. 13
Selected Financial Data................................................... 19
Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... 21
Business.................................................................. 26
Management................................................................ 34
Principal and Selling Stockholders........................................ 36
Certain Relationships and Related Transactions............................ 37
Underwriting.............................................................. 39
Legal Matters............................................................. 40
Experts................................................................... 40
Available Information..................................................... 41
Incorporation of Certain Documents by Reference........................... 41
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4,270,000 SHARES
LOGO
TOWER AUTOMOTIVE, INC.
COMMON STOCK
----------------
PROSPECTUS
----------------
PAINEWEBBER INCORPORATED
ROBERT W. BAIRD & CO.
INCORPORATED
PIPER JAFFRAY INC.
----------------
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses of the Registrant in connection
with the issuance and distribution of the securities being registered, other
than underwriting discounts and commissions. All such amounts are estimates,
other than the filing fees payable to the Commission, the National Association
of Securities Dealers, Inc. ("NASD") and the Nasdaq Stock Market.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 41,379
NASD filing fee................................................. 12,500
Nasdaq Stock Market listing fee................................. 17,500
Printing and mailing expenses................................... 100,000
Legal fees and expenses......................................... 150,000
Blue sky fees and expenses...................................... 10,000
Accounting fees and expenses.................................... 100,000
Miscellaneous................................................... 118,621
--------
Total....................................................... $550,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
permits a Delaware corporation to limit the personal liability of its
directors in accordance with the provisions set forth therein. The Restated
Certificate of Incorporation of the Registrant provides that the personal
liability of its directors shall be limited to the fullest extent permitted by
applicable law.
Section 145 of the General Corporation Law of the State of Delaware contains
provisions permitting corporations organized thereunder to indemnify
directors, officers, employees or agents against expenses, judgments and fines
reasonably incurred and against certain other liabilities in connection with
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person was or is a director, officer, employee or agent of the
corporation. The Restated Certificate of Incorporation of the Registrant
provides for indemnification of its directors and officers to the fullest
extent permitted by applicable law.
The form of Underwriting Agreement attached hereto as Exhibit 1.1, which
provides for, among other things, the Registrant's sale to the Underwriters of
the securities being registered herein, will obligate the Underwriters to
indemnify the registrant and the Registrant's officers and directors against
certain liabilities under the Securities Act of 1933, as amended (the
"Securities Act").
ITEM 16. EXHIBITS.
The following exhibits are filed pursuant to Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------------- ------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement.
2.1 Stock Purchase Agreement, dated as of May 31, 1996, among Tower
Automotive, Inc., R.J. Tower Corporation and MascoTech, Inc.,
incorporated by reference to Exhibit 2.1 of the Company's Current Report
on Form 8-K, dated May 31, 1996 (Commission File No. 0-24644).
*4.1 Specimen Certificate for shares of Common Stock, incorporated by
reference to Exhibit 4.1 of the Company's Form S-1 Registration
Statement (Registration No. 33-80320) (the "Form S-1").
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------------- ------------------------------------------------------------------------
<S> <C>
*4.2 Amended and Restated Certificate of Incorporation of the Company,
incorporated by reference to Exhibit 3.1 of the Form S-1.
*4.3 Amended and Restated By-Laws of the Company, incorporated by reference
to Exhibit 3.2 of the Form S-1.
5.1 Opinion of Kirkland & Ellis regarding legality of securities being
registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Kirkland & Ellis--included in Exhibit 5.1.
*24.1 Powers of Attorney (included in Part II of the Registration Statement).
</TABLE>
- --------
*Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE IT MEETS ALL
THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO.
1 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF MINNEAPOLIS, MINNESOTA, AS OF JUNE
18, 1996.
Tower Automotive, Inc.
/s/ Scott D. Rued
By: _________________________________
Scott D. Rued
Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND AS OF THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and June 18, 1996
____________________________________ Director
S.A. Johnson
* Director June 18, 1996
____________________________________
Adrian Vander Starre
* President, Chief Executive June 18, 1996
____________________________________ Officer and Director
Dugald K. Campbell (Principal Executive
Officer)
* Vice President and Chief June 18, 1996
____________________________________ Financial Officer
Anthony A. Barone (Principal Financial and
Accounting Officer)
* Director June 18, 1996
____________________________________
James R. Lozelle
/s/ Scott D. Rued Director June 18, 1996
____________________________________
Scott D. Rued
* Director June 18, 1996
____________________________________
William H. Clement
* Director June 18, 1996
____________________________________
Eric J. Rosen
Director
____________________________________
Matthew O. Diggs, Jr.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Director
____________________________________
E.J. Loughrey
Director
____________________________________
Kim B. Clark
* The undersigned, by signing his name hereto, does sign and execute this
Amendment No. 1 to Registration Statement pursuant to the Powers of Attorney
executed by the above-named officers and directors of the Company and
previously filed with the Securities and Exchange Commission on behalf of
such officers and directors.
/s/ Scott D. Rued
____________________________________
Scott D. Rued,
Attorney-in-Fact
</TABLE>
II-4
<PAGE>
Draft: 6/19/96
4,910,500 Shares
TOWER AUTOMOTIVE, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
June ___, 1996
PAINEWEBBER INCORPORATED
ROBERT W. BAIRD & CO. INCORPORATED
PIPER JAFFRAY INC.
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
Tower Automotive, Inc., a Delaware corporation (the "Company"), and
the persons named in Schedule I (the "Selling Shareholders") propose to sell an
aggregate of 4,270,000 shares (the "Firm Shares") of the Company's Common Stock,
$.01 par value per share (the "Common Stock"), of which 2,000,000 shares are to
be issued and sold by the Company and an aggregate of 2,270,000 shares are to be
sold by the Selling Shareholders in the respective amounts set forth opposite
their respective names in Schedule I, in each case to you and to the other
underwriters named in Schedule II (collectively, the "Underwriters"), for whom
you are acting as representatives (the "Representatives"). The Company and
certain of the Selling Shareholders have also agreed to grant to you and the
other Underwriters an option (the "Option") to purchase up to an additional
640,500 shares of Common Stock as set forth in Schedule III (the "Option
Shares") on the terms and for the purposes set forth in Section 1(b). The Firm
Shares and the Option Shares are hereinafter collectively referred to as the
"Shares."
The public offering price per share for the Shares and the purchase
price per share for the Shares to be paid by the several Underwriters shall be
agreed upon by the Company, the
<PAGE>
Selling Shareholders and the Representatives, acting on behalf of the several
Underwriters, and such agreement shall be set forth in a separate written
instrument substantially in the form of Exhibit A hereto (the "Price
Determination Agreement"). The Price Determination Agreement may take the form
of an exchange of any standard form of written telecommunication among the
Company, the Selling Shareholders and the Representatives and shall specify such
applicable information as is indicated in Exhibit A hereto. The offering of the
Shares will be governed by this Agreement, as supplemented by the Price
Determination Agreement. From and after the date of the execution and delivery
of the Price Determination Agreement, this Agreement shall be deemed to
incorporate, and, unless the context otherwise indicates, all references
contained herein to "this Agreement" and to the phrase "herein" shall be deemed
to include the Price Determination Agreement.
Each Selling Shareholder has executed and delivered a Custody
Agreement and a Power of Attorney in the form attached hereto as Exhibit B
(collectively, the "Agreement and Power of Attorney") pursuant to which each
Selling Shareholder has placed his Firm Shares in custody and appointed the
person or persons designated therein as a committee (the "Committee") with
authority to execute and deliver this Agreement on behalf of such Selling
Shareholder and to take certain other actions with respect thereto and hereto.
The Company and the Selling Shareholders confirm as follows their
respective agreements with the Representatives and the several other
Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the respective representations, warranties
and agreements of the Company and the Selling Shareholders herein contained and
subject to all the terms and conditions of this Agreement, (i) the Company and
each of the Selling Shareholders, severally and not jointly, agree to sell to
the several Underwriters and (ii) each of the Underwriters, severally and not
jointly, agrees to purchase from the Company and the Selling Shareholders, at
the purchase price per share for the Firm Shares to be agreed upon by the
Representatives, the Company and the Selling Shareholders in accordance with
Section 1(c) or 1(d) and set forth in the Price Determination Agreement, the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule II, plus such additional number of Firm Shares which such Underwriter
may become obligated to purchase pursuant to Section 9 hereof. Schedule II may
be attached to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement,
the Company and certain of the Selling Shareholders grant the Option to the
several Underwriters to purchase, severally and not jointly, up to 640,500
Option Shares from the Company and certain of the Selling Shareholders, as set
forth in Schedule III, at the same price per share as the Underwriters shall pay
for the Firm Shares. The Option may be exercised only to cover over-allotments
in the sale of the Firm Shares by the Underwriters and may be exercised in whole
or in part at any time (but not more than once) on or before the 30th day after
the date of this Agreement (or, if the Company has elected to rely on Rule 430A,
on or before the 30th day after the date of the Price Determination Agreement),
upon written, telegraphic or facsimile notice (the "Option Shares Notice") by
the Representatives to the Committee no later than 12:00 noon, New
-2-
<PAGE>
York City time, at least two and no more than five business days before the date
specified for closing in the Option Shares Notice (the "Option Closing Date"),
setting forth the aggregate number of Option Shares to be purchased and the time
and date for such purchase. On the Option Closing Date, the Company and certain
of the Selling Shareholders, will issue and sell to the Underwriters the number
of Option Shares set forth in the Option Shares Notice, and each Underwriter
will purchase such percentage of the Option Shares as is equal to the percentage
of Firm Shares that such Underwriter is purchasing, as adjusted by the
Representatives in such manner as they deem advisable to avoid fractional
shares.
(c) The initial public offering price per share for the Firm
Shares and the purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be agreed upon and set forth in the Price
Determination Agreement. In the event such price has not been agreed upon and
the Price Determination Agreement has not been executed by the close of business
on the fourteenth business day following the date on which the Registration
Statement becomes effective, this Agreement shall terminate forthwith, without
liability of any party to any other party except that Section 7 shall remain in
effect.
2. Delivery and Payment. The closing of the sale of the Firm Shares
shall occur at the office of Gardner, Carton & Douglas, 321 North Clark Street,
Chicago, Illinois 60611, against payment of the purchase price by immediately
available funds to the order of each of the Company and the Committee, for
credit to the account of the Company and the Custodian (as hereinafter defined)
on behalf of each of the Selling Shareholders. Such payment shall be made at
10:00 a.m., New York City time, on the [third] business day after the date on
which the first bona fide offering of the Shares to the public is made by the
Underwriters or at such time on such other date, not later than ten business
days after such date, as may be agreed upon by the Company and the
Representatives (such date is hereinafter referred to as the "Closing Date").
Notwithstanding the foregoing, delivery of the Firm Shares shall be made to the
Representatives for the accounts of the Underwriters at DTC in New York, New
York.
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place on the Option Closing Date (which may be the Closing Date) at the same
office as specified above for the Closing Date.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Shares and Option Shares by the Company to the
respective Underwriters shall be borne by the Company. The cost of tax stamps,
if any, in connection with the sale of the Firm Shares and Option Shares by the
Selling Shareholders shall be borne by the Selling Shareholders. The Company and
the Selling Shareholders will pay and save each Underwriter
-3-
<PAGE>
and any subsequent holder of the Shares harmless from any and all liabilities
with respect to or resulting from any failure or delay in paying Federal and
state stamp and other transfer taxes, if any, which may be payable or determined
to be payable in connection with the original issuance or sale to such
Underwriter of the Firm Shares and Option Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-5015) on Form S-3 relating to the
Shares, including a preliminary prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a preliminary
prospectus as contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules
and Regulations included at any time as part of the registration statement.
Copies of such registration statement and amendments and of each related
preliminary prospectus have been delivered to the Representatives. The term
"Registration Statement" means the registration statement as amended at the time
it becomes or became effective (the "Effective Date"), including financial
statements and all exhibits and any information deemed to be included by Rule
430A or Rule 434 of the Rules and Regulations. If the Company files a
registration statement to register a portion of the Shares and relies on Rule
462(b) of the Rules and Regulations for such registration statement to become
effective upon filing with the Commission (the "Rule 462 Registration
Statement"), then any reference to the "Registration Statement" shall be deemed
to include the Rule 462 Registration Statement, as amended from time to time.
The term "Prospectus" means the prospectus as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, if no such filing is
required, the form of final prospectus included in the Registration Statement at
the Effective Date. Any reference herein to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the Effective Date or the date of such preliminary
prospectus or the Prospectus, as the case may be. Any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act after the
Effective Date, or the date of any preliminary prospectus or the Prospectus, as
the case may be, and deemed to be incorporated therein by reference.
(b) On the Effective Date, the date the Prospectus is first filed
with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent to and including the Closing Date and, if later, the Option Closing
Date and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or
-4-
<PAGE>
supplement thereto), including the financial statements included or incorporated
by reference in the Prospectus, did or will comply with all applicable
provisions of the Act, the Exchange Act, the rules and regulations thereunder
(the "Exchange Act Rules and Regulations") and the Rules and Regulations and
will contain all statements required to be stated therein in accordance with the
Act, the Exchange Act, the Exchange Act Rules and Regulations and the Rules and
Regulations. On the Effective Date and when any post-effective amendment to the
Registration Statement becomes effective, no part of the Registration Statement
or any such amendment did or will contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading. At the Effective Date,
the date the Prospectus or any amendment or supplement to the Prospectus is
filed with the Commission and at the Closing Date and, if later, the Option
Closing Date, the Prospectus did not or will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing representations and warranties in this
Section 3(b) do not apply to any statements or omissions made in reliance on and
in conformity with information relating to any Underwriter furnished in writing
to the Company by the Representatives specifically for inclusion in the
Registration Statement or Prospectus or any amendment or supplement thereto. For
all purposes of this Agreement, the paragraph that appears immediately above the
names of the Representatives on the cover page of the Prospectus, the legends on
the inside front cover of the Prospectus and the section of the Prospectus
titled "Underwriting" constitutes the only information relating to any
Underwriter furnished in writing to the Company by the Representatives
specifically for inclusion in the preliminary prospectus, the Registration
Statement or the Prospectus. The Company has not distributed any offering
material in connection with the offering or sale of the Shares other than the
Registration Statement, the preliminary prospectus, the Prospectus or any other
materials, if any, permitted by the Act.
(c) The documents which are incorporated by reference in the
preliminary prospectus and the Prospectus or from which information is so
incorporated by reference, when they become effective or were filed with the
Commission, as the case may be, complied in all material respects with the
requirements of the Act or the Exchange Act, as applicable, the Exchange Act
Rules and Regulations and the Rules and Regulations; and any documents so filed
and incorporated by reference subsequent to the Effective Date shall, when they
are filed with the Commission, conform in all material respects with the
requirements of the Act and the Exchange Act, as applicable, the Exchange Act
Rules and Regulations and the Rules and Regulations.
(d) The only subsidiaries (as defined in the Rules and
Regulations) of the Company are the subsidiaries listed on Exhibit F to this
Agreement (the "Subsidiaries"). The Company and each of its Subsidiaries is, and
at the Closing Date will be, a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation. The
Company and each of its Subsidiaries has, and at the Closing Date will have,
full power and authority to conduct all the activities conducted by it, to own
or lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. The Company and each
of its Subsidiaries is, and at the Closing Date will be, duly licensed or
qualified to do business and in good standing as a foreign corporation in all
-5-
<PAGE>
jurisdictions in which the nature of the activities conducted by it or the
character of the assets owned or leased by it makes such licensing or
qualification necessary, except for any jurisdiction wherein the failure to be
duly licensed or qualified would not materially and adversely affect the
business, properties, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole. All of the outstanding shares of
capital stock of the Subsidiaries have been duly authorized and validly issued,
and are fully paid and non-assessable and, except as to the shares of the
principal Subsidiaries or as otherwise set forth in the Prospectus, are owned by
the Company free and clear of all liens, encumbrances and claims whatsoever.
Except for the stock of the principal Subsidiaries and as disclosed or
incorporated by reference in the Prospectus, the Company does not own, and at
the Closing Date will not own, directly or indirectly, any shares of stock or
any other equity or long-term debt securities of any corporation or have any
equity interest in any firm, partnership, joint venture (other than a German
joint venture), association or other entity. Complete and correct copies of the
certificates of incorporation and of the by-laws of the Company and each of the
Subsidiaries which are named on the signature pages of this Agreement, and all
amendments thereto, have been delivered to the Representatives, and no changes
therein will be made subsequent to the date hereof and prior to the Closing Date
or, if later, the Option Closing Date.
(e) The outstanding shares of Common Stock have been, and the
Shares to be issued and sold by the Company upon such issuance will be, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right. The description of the Common Stock in the
Registration Statement and the Prospectus is, and at the Closing Date will be,
accurate in all respects. Except as set forth in the Prospectus, the Company
does not have outstanding, and at the Closing Date will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any shares of Common Stock, any shares of capital stock of any
Subsidiary or any such warrants, convertible securities or obligations.
(f) The financial statements and schedules included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly the consolidated financial condition of the Company as of the
respective dates thereof and the consolidated results of operations and cash
flows of the Company for the respective periods covered thereby, all in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the entire period involved, except as otherwise disclosed in
the Prospectus. The pro forma financial statements and other pro forma financial
information included in the Registration Statement or the Prospectus (i) present
fairly in all material respects the information shown therein, (ii) have been
prepared in accordance with Article 11 of Regulation S-X relating to pro forma
financial statements and (iii) have been properly computed on the bases
described therein. The assumptions used in the preparation of the pro forma
financial statements and other pro forma financial information included in the
Registration Statement or the Prospectus are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or circumstances
referred to therein. No other financial statements or schedules of the Company
are required by the Act, the Exchange Act or the Rules and Regulations to be
included in the Registration Statement or the Prospectus. Arthur Andersen LLP
(the "Accountants"), who have reported on such financial statements and
schedules, are independent accountants with respect to
-6-
<PAGE>
the Company as required by the Act and the Rules and Regulations. The
statements, if any, included or incorporated by reference in the Registration
Statement with respect to the Accountants pursuant to Rule 509 of Regulation S-K
of the Rules and Regulations are true and correct in all material respects.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not been and will not have been any change in the
capitalization of the Company, or any material adverse change, arising for any
reason whatsoever, in the business, properties, financial condition or results
of operations of the Company and its Subsidiaries, taken as a whole, (ii)
neither the Company nor any of its Subsidiaries has incurred nor will it incur
any material liabilities or obligations, direct or contingent, nor has it
entered into nor will it enter into any material transactions (except in the
ordinary course of business) other than pursuant to this Agreement and the
transactions referred to herein and (iii) the Company has not and will not have
paid or declared any dividends or other distributions of any kind on any class
of its capital stock.
(h) The Company is not an "investment company" required to be
registered under the Investment Company Act of 1940, or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company"
required to be registered under the Investment Company Act of 1940, as each such
term is defined in the Investment Company Act of 1940, as amended.
(i) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any of their respective officers in their capacity as such,
before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding would materially and adversely affect
the Company and its Subsidiaries, taken as a whole, or the business, properties,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.
(j) The Company and each of its Subsidiaries has, and at the
Closing Date will have, (i) all material governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry on its
business as contemplated in the Prospectus, including those relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, "Environmental
Laws"), (ii) complied in all material respects with all laws, regulations and
orders applicable to it or its business, including Environmental Laws, or those
relating to discrimination in the hiring, promotion or pay of employees, wages
and hours, or employee benefits, which, in each case, which would materially and
adversely affect the Company and its Subsidiaries, taken as a whole, or the
business, properties, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole, and (iii) performed all of the
obligations required to be performed by it, and is not, and at the Closing Date
will not be, in default, under any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note agreement, lease,
contract or other agreement or instrument (collectively, a
-7-
<PAGE>
"contract or other agreement") to which it is a party or by which its property
is bound or affected, which default would materially and adversely affect the
business, properties, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole. Neither the Company nor any of
its Subsidiaries is, nor at the Closing Date will any of them be, in violation
of any provision of its certificate of incorporation or by-laws.
(k) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
in connection with the authorization, issuance, transfer, sale or delivery of
the Shares by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby, except such as have been obtained
under the Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the Underwriters of the Shares to be sold by the
Company.
(l) The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof, except to the extent that the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law, and except to the extent that
enforcement of the indemnification and contribution provisions of this Agreement
may be limited by applicable public policy and the discretion of the court
before which any proceeding therefor may be brought. The performance of this
Agreement and the consummation of the transactions contemplated hereby and the
application of the net proceeds from the offering and sale of the Shares to be
sold by the Company in the manner set forth in the Prospectus under "Use of
Proceeds" will not result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Company or any of its Subsidiaries
pursuant to the terms or provisions of, or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or give any
other party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, the certificate of incorporation or by-
laws of the Company or any of its Subsidiaries, any contract or other agreement
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of its properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to the business or properties of the Company or any of its
Subsidiaries.
(m) The Company and each of its Subsidiaries has good and
marketable title to all properties and assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Prospectus or the Company's most recent
Annual Report on Form 10-K, or as are not material to the business of the
Company or its Subsidiaries.
-8-
<PAGE>
(n) There is no document or contract of a character required to
be described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required.
(o) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(p) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement other than rights which have been given effect by
inclusion of securities in the offering made pursuant to the Registration
Statement or rights which have been waived.
(q) The Shares are duly authorized for listing, subject to
official notice of issuance, on the Nasdaq Stock Market.
(r) Neither the Company nor any of its Subsidiaries is involved
in any labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which would materially and adversely affect the business,
properties, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.
(s) The Company has complied, and until the completion of the
distribution of the Shares, will comply with all of the provisions of
(including, without limitation, filing all forms required by) Section 517.075 of
the Florida Securities and Investor Protection Act and regulation 3E-900.001
issued thereunder with respect to the offering and sale of the Shares.
4. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder, severally and not jointly, represents, warrants and
covenants to each Underwriter that:
(a) Such Selling Shareholder has full power and authority to
enter into this Agreement and the Agreement and Power of Attorney. All
authorizations and consents necessary for the execution and delivery by such
Selling Shareholder of the Agreement and Power of Attorney, and for the
execution of this Agreement on behalf of such Selling Shareholder, have been
given. Each of the Agreement and Power of Attorney and this Agreement has been
duly authorized, executed and delivered by or on behalf of such Selling
Shareholder [and constitutes a valid and binding agreement of such Selling
Shareholder and is enforceable against such Selling Shareholder in accordance
with the terms thereof and hereof, except to the extent that enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the enforcement of
the rights of creditors or by equitable principles, regardless of whether
enforcement is sought in a proceeding in equity or at law, and except to the
extent that enforcement of the indemnification and contribution provisions of
each of the Agreement and
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<PAGE>
Power of Attorney and this Agreement may be limited by applicable public policy
and the discretion of the court before which any proceeding therefor may be
brought.]
(b) Such Selling Shareholder now has, and at the time of delivery
thereof hereunder will have, (i) good and marketable title to the Shares to be
sold by such Selling Shareholder hereunder, free and clear of all liens,
encumbrances and claims whatsoever (other than pursuant to the Agreement and
Power of Attorney), and (ii) full legal right and power to sell, transfer and
deliver such Shares to the Underwriters hereunder and to make the
representations, warranties and agreements made by such Selling Shareholder
herein. Upon the delivery of and payment for such Shares hereunder, such Selling
Shareholder will deliver good and marketable title thereto, free and clear of
all liens, encumbrances and claims whatsoever.
(c) On the Closing Date or the Option Closing Date, as the case
may be, all stock transfer or other taxes (other than income taxes) which are
required to be paid in connection with the sale and transfer of the Shares to be
sold by such Selling Shareholder to the several Underwriters hereunder will have
been fully paid or provided for by such Selling Shareholder and all laws
imposing such taxes will have been fully complied with.
(d) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
for the consummation by such Selling Shareholder of the transactions on its part
contemplated herein and in the Agreement and Power of Attorney, except such as
have been obtained under the Act or the Rules and Regulations and such as may be
required under state securities or Blue Sky laws or the by-laws and rules of the
NASD in connection with the purchase and distribution by the Underwriters of the
Shares to be sold by such Selling Shareholder.
(e) All information with respect to such Selling Shareholder
contained in the Registration Statement and the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any amendment
or supplement thereto) does not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(f) Other than as permitted by the Act and the Rules and
Regulations, such Selling Shareholder has not distributed and will not
distribute any preliminary prospectus, the Prospectus or any other offering
material in connection with the offering and sale of the Shares. Such Selling
Shareholder has not taken, directly or indirectly, any action intended, or which
might reasonably be expected, to cause or result in, under the Act or otherwise,
or which has caused or resulted in, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares.
(g) Certificates in negotiable form for the Firm Shares to be
sold hereunder by such Selling Shareholder have been placed in custody, for the
purpose of making delivery of such Firm Shares under this Agreement, under the
Agreement and Power of Attorney which appoints KeyCorp Shareholder Services,
Inc. as custodian (the "Custodian") for each Selling Shareholder. Such Selling
Shareholder agrees that the Shares represented by the certificates held in
custody for him, her or it under the Agreement and Power of Attorney are for
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the benefit of and coupled with and subject to the interest hereunder of the
Custodian, the Committee, the Underwriters, each other Selling Shareholder and
the Company, that the arrangements made by such Selling Shareholder for such
custody and the appointment of the Custodian and the Committee by such Selling
Shareholder are irrevocable, and that the obligations of such Selling
Shareholder hereunder shall not be terminated by operation of law, whether by
the death, disability, incapacity or liquidation of any Selling Shareholder or
the occurrence of any other event. If any Selling Shareholder should die, become
disabled or incapacitated or be liquidated or if any other such event should
occur before the delivery of the Shares hereunder, certificates for the Shares
shall be delivered by the Custodian in accordance with the terms and conditions
of this Agreement and actions taken by the Committee and the Custodian pursuant
to the Agreement and Power of Attorney shall be as valid as if such death,
liquidation, incapacity or other event had not occurred, regardless of whether
or not the Custodian or the Committee, or either of them, shall have received
notice thereof.
5. Agreements of the Company and the Selling Shareholders. The
Company agrees, and the Selling Shareholders (as to Sections 5(i), (j), (n),
(o), (p) and (q)) agree, severally and not jointly, with the several
Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective, and will notify the Representatives
promptly, and will confirm such advice in writing, (i) when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective, (ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, (iv) of the happening of
any event during the period mentioned in the second sentence of Section 5(e)
that in the judgment of the Company makes any statement made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein, in the light of the circumstances in which they are made, not
misleading and (v) of receipt by the Company or any representative of the
Company of any other communication from the Commission relating to the Company,
the Registration Statement, any preliminary prospectus or the Prospectus. If at
any time the Commission shall issue any order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal of such order at the earliest possible moment. The Company
will use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to Rule 430A and to notify the
Representatives promptly of all such filings.
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(c) The Company will furnish to the Representatives, without
charge, four signed copies of the Registration Statement and of any post-
effective amendment thereto, including financial statements and schedules, and
all exhibits thereto (including any document filed under the Exchange Act and
deemed to be incorporated by reference into the Prospectus), and will furnish to
the Representatives, without charge, for transmittal to each of the other
Underwriters, a copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules but without
exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to each of the Underwriters, without charge, as many copies
of the Prospectus or any amendment or supplement thereto as the Representatives
may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the several Underwriters and by all dealers
to whom the Shares may be sold, both in connection with the offering or sale of
the Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or if it is necessary to supplement or amend the Prospectus to
comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies thereof as the
Representatives may reasonably request. The Company shall not file any document
under the Exchange Act before the termination of the offering of the Shares by
the Underwriters if such document would be deemed to be incorporated by
reference into the Prospectus which is not approved by the Representatives after
reasonable notice thereof.
(f) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representatives and counsel to
the Underwriters in connection with the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may request; provided, that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
general service of process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the Effective
Date, the Company will furnish to the Representatives and each other Underwriter
who may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full
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calendar month following the calendar quarter in which the Effective Date falls,
an earnings statement (which need not be audited but shall be in reasonable
detail) for a period of 12 months ended commencing after the Effective Date, and
satisfying the provisions of Section 11(a) of the Act (including Rule 158 of the
Rules and Regulations).
(i) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Representatives, all costs and expenses incident to
the performance of the obligations of the Company and the Selling Shareholders
under this Agreement, including but not limited to costs and expenses of or
relating to (i) the preparation, printing and filing of the Registration
Statement and exhibits to it, each preliminary prospectus, the Prospectus and
any amendment or supplement to the Registration Statement or the Prospectus,
(ii) the preparation and delivery of certificates representing the Shares, (iii)
the printing of this Agreement, the Agreement Among Underwriters, any Dealer
Agreements, any Underwriters' Questionnaire and the Agreement and Power of
Attorney (if any such documents are printed), (iv) furnishing (including costs
of shipping, mailing and courier) such copies of the Registration Statement, the
Prospectus and any preliminary prospectus, and all amendments and supplements
thereto, as may be requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold, (v) the
listing of the Shares on the Nasdaq Stock Market, (vi) any filing fees required
to be made by the Underwriters with the NASD, (vii) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions designated pursuant to Section 5(f), including the
fees (not to exceed $10,000), disbursements and other charges of counsel to the
Underwriters in connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda, (viii) counsel to the
Company and counsel to the Selling Shareholders, (ix) the transfer agent for the
Shares and (x) the Accountants, and each Selling Shareholders will pay, or
reimburse if paid by the Representatives, all necessary transfer taxes in
connection with the sale and delivery to the Underwriters of the Shares agreed
to be sold by each such Selling Shareholder under this Agreement.
(j) If this Agreement shall be terminated by the Company or the
Selling Shareholders pursuant to any of the provisions hereof (otherwise than
pursuant to Section 9) or if for any reason the Company or any Selling
Shareholder shall be unable to perform its obligations hereunder, the Company
will reimburse the several Underwriters for all out-of-pocket expenses
(including the fees, disbursements and other charges of counsel to the
Underwriters) reasonably incurred by them in connection herewith.
(k) The Company will not at any time, directly or indirectly,
take any action intended, or which might reasonably be expected, to cause or
result in, or which will constitute, stabilization of the price of the shares of
Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering and
sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds."
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<PAGE>
(m) The Company will not, and will cause each of its executive
officers, directors and each beneficial owner of more than 5% of the outstanding
shares of Common Stock (other than First Bank Systems, Inc.) to enter into
agreements with the Representatives in the form set forth in Exhibit C to the
effect that they will not, for a period of 120 days after the commencement of
the public offering of the Shares, without the prior written consent of
PaineWebber Incorporated, assign, transfer, offer, sell, contract to sell, grant
any option to sell, hypothecate or otherwise dispose of, or require the Company
to file with the Commission a registration statement under the Securities Act to
register, any shares of Common Stock or any securities convertible into or
exchangeable for, or any warrants or other rights to purchase or acquire shares
of Common Stock (other than pursuant to existing employee stock option plans of
the Company, as a result of purchases under the Company's Employee Stock
Purchase Plan, upon the conversion of the Convertible Notes (as defined in the
Prospectus) or upon the exercise of the MSTI Warrants (as defined in the
Prospectus).
(n) The Selling Shareholders will enter into agreements with the
Representatives in the form set forth in Exhibit C to the effect that they will
not, for a period of 120 days after the commencement of the public offering of
the Shares, without the prior written consent of PaineWebber Incorporated,
assign, transfer, offer, sell, contract to sell, grant any option to sell,
hypothecate or otherwise dispose of any shares of Common Stock or any securities
convertible into or exchangeable for, or any warrants or other rights to
purchase or acquire shares of Common Stock other than pursuant to bona fide
gifts to persons who agree in writing with PaineWebber Incorporated to be bound
by the provisions of this Section 5(n).
(o) The Selling Shareholders will not, without the prior written
consent of PaineWebber Incorporated, make any bid for or purchase any shares of
Common Stock until the completion of the distribution by the Underwriters
pursuant to this Agreement.
(p) As soon as any Selling Shareholder is advised thereof, such
Selling Shareholder will advise PaineWebber Incorporated and confirm such advice
in writing, (i) of receipt by such Selling Shareholder, or by any representative
of such Selling Shareholder, of any communication from the Commission relating
to the Registration Statement, the Prospectus or any preliminary prospectus, or
any notice or order of the Commission relating to the Company or any of the
Selling Shareholders in connection with the transactions contemplated by this
Agreement and (ii) of the happening of any event during the period from and
after the Effective Date that in the judgment of such Selling Shareholder makes
any statement made in the Registration Statement or the Prospectus relating to
such Selling Shareholder untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein relating to such Selling Shareholder, in the light of the circumstances
in which they were made, not misleading.
(q) The Selling Shareholders will deliver to PaineWebber
Incorporated prior to or on the Effective Date a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
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<PAGE>
6. Conditions of the Obligations of the Underwriters. In addition to
the execution and delivery of the Price Determination Agreement, the obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by PaineWebber Incorporated not later than 5:00
p.m., New York City time, on the date of this Agreement or at such later date
and time as shall be consented to in writing by PaineWebber Incorporated and
that all filings, if any, required by Rule 424 of the Rules and Regulations and
Rule 430A shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to PaineWebber Incorporated and PaineWebber
Incorporated did not object thereto in good faith, and PaineWebber Incorporated
shall have received certificates, dated the Closing Date and the Option Closing
Date and signed by the Chief Executive Officer or the Chairman of the Board of
Directors of the Company and the Chief Financial Officer of the Company (who
may, as to proceedings threatened, rely upon the best of their information and
belief), to the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there shall not have been
a material adverse change in the general affairs, business, business prospects,
properties, management, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, in each case other than as set
forth in or contemplated by the Registration Statement and the Prospectus and
(ii) neither the Company nor any of its Subsidiaries shall have sustained any
material loss or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement and the
Prospectus, if in the judgment of PaineWebber Incorporated any such development
makes it impracticable or inadvisable to consummate the sale and delivery of the
Shares by the Underwriters at the initial public offering price.
(d) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
Subsidiaries or any of their respective officers or directors in their
capacities as such, before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, in
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which litigation or proceeding an unfavorable ruling, decision or finding would
materially and adversely affect the business, properties, business prospects,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.
(e) Each of the representations and warranties of the Company and
the Selling Shareholders contained herein shall be true and correct in all
material respects at the Closing Date and, with respect to the Option Shares, at
the Option Closing Date, as if made at the Closing Date and, with respect to the
Option Shares, at the Option Closing Date, and all covenants and agreements
herein contained to be performed on the part of the Company and the Selling
Shareholders and all conditions herein contained to be fulfilled or complied
with by the Company and the Selling Shareholders at or prior to the Closing Date
and, with respect to the Option Shares, at or prior to the Option Closing Date,
shall have been duly performed, fulfilled or complied with.
(f) PaineWebber Incorporated shall have received opinions, each
dated the Closing Date and, with respect to the Option Shares, the Option
Closing Date, and satisfactory in form and substance to counsel for the
Underwriters, from Kirkland & Ellis, counsel to the Company, to the effect set
forth in Exhibit D and from counsel for each Selling Shareholder, to the effect
set forth in Exhibit E.
(g) PaineWebber Incorporated shall have received an opinion,
dated the Closing Date and the Option Closing Date, from Gardner, Carton &
Douglas, counsel to the Underwriters, with respect to the Registration
Statement, the Prospectus and this Agreement, which opinion shall be
satisfactory in all respects to PaineWebber Incorporated.
(h) On the date of the Prospectus, the Accountants shall have
furnished to PaineWebber Incorporated a letter, dated the date of its delivery,
addressed to PaineWebber Incorporated and in form and substance satisfactory to
PaineWebber Incorporated, confirming that they are independent accountants with
respect to the Company as required by the Act and the Rules and Regulations,
opining that the financial and other statistical and numerical information
contained in the Registration Statement or incorporated by reference therein
complies as to form with the applicable accounting requirements of the Act and
the Rules and Regulations, and stating certain other matters as agreed between
PaineWebber Incorporated and the Accountants as to the financial and other
statistical and numerical information contained in the Registration Statement or
incorporated by reference therein, including any changes in the capital stock,
increases in short-term debt or long-term debt of the Company and its
Subsidiaries, on a consolidated basis, or any decrease in consolidated working
capital or net assets or in consolidated revenues, operating income or in the
total or per share amounts of net income. At the Closing Date and, as to the
Option Shares, the Option Closing Date, the Accountants shall have furnished to
PaineWebber Incorporated a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set forth in
the letter from the Accountants, that nothing has come to their attention during
the period from the date of the letter referred to in the prior sentence to a
date (specified in the letter) not more than five days prior to the Closing Date
and the Option Closing Date which would require any change in their letter dated
the date of the Prospectus, if it were required to be dated and delivered at the
Closing Date and the Option Closing Date.
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(i) At the Closing Date and, as to the Option Shares, the Option
Closing Date, there shall be furnished to PaineWebber Incorporated an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to PaineWebber Incorporated, to the effect that:
(i) Each signer of such certificate has carefully examined
the Registration Statement and the Prospectus (including any documents
filed under the Exchange Act and deemed to be incorporated by reference
into the Prospectus) and (A) as of the date of such certificate, such
documents are true and correct in all material respects and do not omit to
state a material fact required to be stated therein or necessary in order
to make the statements therein not untrue or misleading and (B) since the
Effective Date, no event has occurred as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading in any material respect and there has been
no document required to be filed under the Exchange Act and the Exchange
Act Rules and Regulations that upon such filing would be deemed to be
incorporated by reference into the Prospectus that has not been so filed.
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally made, and are, at
the time such certificate is delivered, true and correct in all material
respects.
(iii) Each of the covenants required herein to be performed
by the Company on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
(j) At the Closing Date, there shall have been furnished to
PaineWebber Incorporated by each of the Selling Shareholders, and on the Option
Closing Date, there shall have been furnished to PaineWebber Incorporated by
each of the Selling Shareholders selling Option Shares, an accurate certificate,
dated the date of its delivery, in form and substance satisfactory to
PaineWebber Incorporated, to the effect that the representations and warranties
of each such Selling Shareholder contained herein are true and correct in all
material respects on and as of the date of such certificate as if made on and as
of the date of such certificate, and each of the covenants and conditions
required herein to be performed or complied with by each such Selling
Shareholders on or prior to the date of such certificate has been duly, timely
and fully performed or complied with.
(k) On or prior to the Closing Date, PaineWebber Incorporated
shall have received the executed agreements referred to in Sections 5(m) and
(n).
(l) The Shares shall be qualified for sale in such states as
PaineWebber Incorporated may reasonably request, each such qualification shall
be in effect and not subject to any stop order or other proceeding on the
Closing Date and the Option Closing Date.
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(m) Prior to the Closing Date, the Shares shall have been duly
authorized for listing by the Nasdaq Stock Market upon official notice of
issuance.
(n) The Company and the Selling Shareholders shall have furnished
to PaineWebber Incorporated such certificates, in addition to those specifically
mentioned herein, as PaineWebber Incorporated may have reasonably requested as
to the accuracy and completeness at the Closing Date and the Option Closing Date
of any statement in the Registration Statement or the Prospectus or any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus, as to the accuracy at the Closing Date and the
Option Closing Date of the representations and warranties of the Company and the
Selling Shareholders herein, as to the performance by the Company and the
Selling Shareholders of its and their respective obligations hereunder, or as to
the fulfillment of the conditions concurrent and precedent to the obligations
hereunder of PaineWebber Incorporated.
7. Indemnification and Contribution.
(a) Each of the Company and those Subsidiaries of the Company set
forth on the signature pages of this Agreement (for purposes of this Section 7,
the use of the term "Company" shall include such Subsidiaries) will indemnify
and hold harmless each Selling Shareholder and each Underwriter, the directors,
officers, employees and agents of each Underwriter and each person, if any, who
controls each Selling Shareholder or each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and against any and
all losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement (subject to Section 7(d)) of, any action, suit
or proceeding between any of the indemnified parties and any indemnifying
parties or between any indemnified party and any third party, or otherwise, or
any claim asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities, expenses
or damages arise out of or are based on any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or in any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Prospectus, or
the omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading; provided that the Company will not be liable to the extent that such
loss, claim, liability, expense or damage arises from the sale of the Shares in
the public offering to any person by an Underwriter and is based on an untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to any Selling Shareholder or any
Underwriter furnished in writing to the Company by any Selling Shareholder or
PaineWebber Incorporated on behalf of any Underwriter expressly for inclusion in
the Registration Statement, any preliminary prospectus or the Prospectus, and
provided further that the Company will not be liable to the extent that such
loss, claim, liability, expense or damage arises solely from an untrue statement
of a material fact contained in, or the omission of a material fact from, any
preliminary prospectus which untrue statement or omission was corrected in the
Prospectus, if the Company sustains the burden of proving that an Underwriter
sold Shares to the person alleging such loss, claim, liability, expense or
damage
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without sending or giving, at or prior to the written confirmation of such sale,
a copy of the Prospectus (or of the Prospectus as then amended or supplemented
if the Company had previously furnished copies thereof to such Underwriter).
This indemnity agreement will be in addition to any liability that the Company
might otherwise have.
(b) Each Selling Shareholder, severally in proportion to the
number of Shares actually sold by such Selling Shareholder or by its
subsidiaries or affiliates, will indemnify and hold harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter and each
person, if any, who controls each Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act from and against any and all
losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement (subject to Section 7(d)) of, any action, suit
or proceeding between any indemnified party and any such indemnifying party or
between any indemnified party and any third party, or otherwise, or any claim
asserted), to which they, or any of them, may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or in any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Prospectus, or
the omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading, but only insofar as any such loss, claim, liability, expense or
damage arises from the sale of the Shares in the public offering to any person
by an Underwriter and is based on an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to such Selling Shareholder furnished in writing to the
Company by such Selling Shareholder expressly for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus. In no event shall any
Selling Shareholder be required to pay any amount in indemnification under this
Section 9(b) in excess of the net proceeds from the offering received by such
Selling Shareholder under this Agreement. This indemnity agreement will be in
addition to any liability that any Selling Shareholder might otherwise have.
(c) Each Underwriter will indemnify and hold harmless the
Company, the Selling Shareholders, each person, if any, who controls the Company
or the Selling Shareholders within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, each director of the Company and each officer of
the Company who signs the Registration Statement to the same extent as the
foregoing indemnity from the Company and the Selling Shareholders to each
Underwriter, but only insofar as losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
PaineWebber Incorporated on behalf of such Underwriter expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus. This
indemnity will be in addition to any liability that each Underwriter might
otherwise have.
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(d) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and after notice
from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(i) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (iii) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (iv) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent will not be unreasonably withheld). No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section 7 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable
-20-
<PAGE>
from the Company, the Selling Shareholders or the Underwriters, the Company, the
Selling Shareholders and the Underwriters will contribute to the total losses,
claims, liabilities, expenses and damages (including any investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted, but
after deducting any contribution received by the Company or the Selling
Shareholders from persons other than the Underwriters, such as persons who
control the Company or the Selling Shareholders within the meaning of the Act,
officers of the Company who signed the Registration Statement and directors of
the Company, who also may be liable for contribution) to which the Company, the
Selling Shareholders or any one or more of the Underwriters may be subject in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and Selling Shareholders on the one hand and the
Underwriters on the other. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Shareholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. If, but only if, the allocation provided by the foregoing sentence
is not permitted by applicable law, the allocation of contribution shall be made
in such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the Company
and the Selling Shareholders, on the one hand, and the Underwriters, on the
other, with respect to the statements or omissions which resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Selling
Shareholders, on the one hand, or PaineWebber Incorporated on behalf of the
Underwriters, on the other hand, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 7(e) were to be determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 7(e) shall be deemed to
include, for purposes of this Section 7(e), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7(e), no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts received by it, and no Selling Shareholder
shall be required to contribute any amount in excess of the net proceeds from
the offering received by such Selling Shareholder under this Agreement or to
contribute any amount in respect of losses, claims, liabilities, expenses,
damages or amounts paid in settlement that such Selling Shareholder would not be
obligated to indemnify under Section 7(b). No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations to contribute as provided in this Section
7(e) are, as to the
-21-
<PAGE>
Underwriters, several in proportion to their respective underwriting obligations
and not joint, and as to the Selling Shareholders, several in proportion to the
net proceeds from the offering received by them and not joint. For purposes of
this Section 7(e), any person who controls a party to this Agreement within the
meaning of the Act will have the same rights to contribution as that party, and
each officer of the Company who signed the Registration Statement will have the
same rights to contribution as the Company, subject in each case to the
provisions hereof. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 7(e), will notify any such
party or parties from whom contribution may be sought, but the omission so to
notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 7(e). No
party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
(f) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company and the Selling
Shareholders contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of any of the Shares and payment therefor or (iii)
any termination of this Agreement.
8. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, on or prior to the Option Closing Date), by notice
to the Company from PaineWebber Incorporated, without liability on the part of
any Underwriter to the Company or any Selling Shareholder, if, prior to delivery
and payment for the Shares (or the Option Shares, as the case may be), in the
sole judgment of PaineWebber Incorporated, (i) trading in any of the equity
securities of the Company shall have been suspended by the Commission, by an
exchange that lists the Shares or by the Nasdaq Stock Market, (ii) trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum or maximum prices shall have been generally established on
such exchange, or additional material governmental restrictions, not in force on
the date of this Agreement, shall have been imposed upon trading in securities
generally by such exchange or by order of the Commission or any court or other
governmental authority, (iii) a general banking moratorium shall have been
declared by either Federal or New York State authorities or (iv) any material
adverse change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any outbreak
or material escalation of hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis shall have occurred, the
effect of any of which is such as to make it, in the sole judgment of
PaineWebber Incorporated, impracticable or inadvisable to market the Shares on
the terms and in the manner contemplated by the Prospectus.
9. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Shares which it or
they have agreed to purchase hereunder, and the aggregate number of Firm Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of Firm Shares,
the other Underwriters shall be obligated, severally, to purchase the Firm
-22-
<PAGE>
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Firm Shares which
they have respectively agreed to purchase pursuant to Section 1 bears to the
aggregate number of Firm Shares which all such non-defaulting Underwriters have
so agreed to purchase, or in such other proportions as PaineWebber Incorporated
may specify; provided that in no event shall the maximum number of Firm Shares
which any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by more than one-ninth of the number of
Firm Shares agreed to be purchased by such Underwriter without the prior written
consent of such Underwriter. If any Underwriter or Underwriters shall fail or
refuse to purchase any Firm Shares and the aggregate number of Firm Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-tenth of the aggregate number of the Firm Shares and
arrangements satisfactory to PaineWebber Incorporated, the Company and the
Committee for the purchase of such Firm Shares are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter, or the Company or any Selling Shareholder for
the purchase or sale of any Shares under this Agreement. In any such case either
PaineWebber Incorporated or the Company and the Committee shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. Any
action taken pursuant to this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. Miscellaneous. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, Tower
Automotive, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402 Attention: Scott
D. Rued, (b) if to any Selling Shareholder, to KeyCorp Shareholder Services,
Inc., 127 Public Square, Cleveland Ohio 44114, or (c) if to the Underwriters, to
PaineWebber Incorporated at the offices of PaineWebber Incorporated, 1285 Avenue
of the Americas, New York, New York 10019, Attention: Corporate Finance
Department. Any such notice shall be effective only upon receipt. Any notice
under Section 8 or 9 may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company and the Selling Shareholders and of the
controlling persons, directors and officers referred to in Section 7, and their
respective successors and assigns, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term "successors and assigns" as
used in this Agreement shall not include a purchaser, as such purchaser, of
Shares from any of the several Underwriters.
All representations, warranties and agreements of the Company and the
Selling Shareholders contained herein or in certificates or other instruments
delivered pursuant hereto, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
of their controlling persons and shall survive delivery of and payment for the
Shares hereunder.
-23-
<PAGE>
Any action required or permitted to be taken by the Representatives
under this Agreement may be taken by them jointly or by PaineWebber
Incorporated.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE. This Agreement may be signed in two or more
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by PaineWebber
Incorporated and the Company.
-24-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Shareholders and the several Underwriters.
Very truly yours,
TOWER AUTOMOTIVE, INC.
By: ________________________
Title:
Each of the Subsidiaries of the Company set forth
below executes this Agreement for the purpose of
providing the indemnification and contribution in
Section 7.
R.J. TOWER CORPORATION
(Michigan)
By: ________________________
Title:
R.J. TOWER CORPORATION
(Kentucky)
By: ________________________
Title:
R.J. TOWER CORPORATION
(Indiana)
By: ________________________
Title:
EDGEWOOD MANUFACTURING
CORP.
By: ________________________
Title:
KALAMAZOO STAMPING AND DIE
COMPANY
By: ________________________
Title:
-25-
<PAGE>
TRYLON CORPORATION
By: ________________________
Title:
TOWER AUTOMOTIVE DELAWARE,
INC.
By: ________________________
Title:
THE SELLING SHAREHOLDERS NAMED
IN SCHEDULE I ATTACHED HERETO
By: The Committee
By: _________________________
-26-
<PAGE>
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
ROBERT W. BAIRD & CO. INCORPORATED
PIPER JAFFRAY INC.
Acting on behalf of themselves
and as the Representatives of the
other several Underwriters
named in Schedule II hereof.
PAINEWEBBER INCORPORATED
By: ________________________
Title:
By: ROBERT W. BAIRD & CO. INCORPORATED
By:_________________________
Title:
By: PIPER JAFFRAY INC.
By:__________________________
Title:
-27-
<PAGE>
SCHEDULE I
FIRM SHARES TO BE SOLD BY THE
SELLING SHAREHOLDERS
<TABLE>
<CAPTION>
Name of Number of
Selling Firm Shares
Shareholder to be Sold
- ----------- -----------
<S> <C>
ONEX DHC LLC 1,500,000
MascoTech, Inc. 500,000
S.A. Johnson 66,666
James R. Lozelle 100,000
Michael W. Doherty 25,000
Doherty Charitable Remainder Trust #3 45,000
Scott D. Rued 16,666
Robert R. Hibbs 5,556
Mary L. Johnson 5,556
Carl E. Nelson 5,556
---------
Total........................... 2,270,000
</TABLE>
<PAGE>
SCHEDULE II
UNDERWRITERS
<TABLE>
<CAPTION>
Name of Number of
Selling Firm Shares
Underwriters to be Purchased
- ----------- ---------------
<S> <C>
PaineWebber Incorporated
Robert W. Baird & Co. Incorporated
Piper Jaffray Inc.
Total............................... _______________
</TABLE>
<PAGE>
SCHEDULE III
OPTION SHARES TO BE SOLD
BY THE COMPANY AND THE
SELLING SHAREHOLDERS
<TABLE>
<CAPTION>
Name of Maximum
Company Number of
or Selling Option Shares
Shareholder to be Sold
- ----------- -------------
<S> <C>
Tower Automotive, Inc. 100,500
ONEX DHC LLC 525,000
S.A. Johnson 10,000
Scott D. Rued 2,500
Robert R. Hibbs 833
Mary L. Johnson 833
Carl E. Nelson 833
Total....... 640,500
</TABLE>
<PAGE>
EXHIBIT A
TOWER AUTOMOTIVE, INC.
_____________________
PRICE DETERMINATION AGREEMENT
-----------------------------
June __, 1996
PAINEWEBBER INCORPORATED
ROBERT W. BAIRD & CO. INCORPORATED
PIPER JAFFRAY INC.
As Representatives of the several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
Reference is made to the Underwriting Agreement, dated June ___, 1996
(the "Underwriting Agreement"), among Tower Automotive, Inc., a Delaware
corporation (the "Company"), the Selling Shareholders named in Schedule I
thereto or hereto (the "Selling Shareholders"), and the several Underwriters
named in Schedule II thereto or hereto (the "Underwriters"), for whom
PaineWebber Incorporated, Robert W. Baird & Co. Incorporated and Piper Jaffray
Inc. are acting as Representatives (the "Representatives"). The Underwriting
Agreement provides for the purchase by the Underwriters from the Company and the
Selling Shareholders, subject to the terms and conditions set forth therein, of
an aggregate of ________ shares (the "Firm Shares") of the Company's common
stock, par value $.01 per share. This Agreement is the Price Determination
Agreement referred to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned
agree with the Representatives as follows:
The initial public offering price per share for the ___ Shares shall
be $_______.
The purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be $_______ representing an amount equal to the
initial public offering price set forth above, less $______ per share.
<PAGE>
The Company represents and warrants to each of the Underwriters that
the representations and warranties of the Company set forth in Section 3 of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
The Selling Shareholders represent and warrant to each of the
Underwriters that the representations and warranties of the Selling Shareholders
set forth in Section 4 of the Underwriting Agreement are accurate as though
expressly made at and as of the date hereof.
As contemplated by the Underwriting Agreement, attached as Schedule II
is a completed list of the several Underwriters, which shall be a part of this
Agreement and the Underwriting Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
If the foregoing is in accordance with your understanding of the
agreement among the Underwriters, the Company and the Selling Shareholders,
please sign and return to the Company a counterpart hereof, whereupon this
instrument along with all counterparts and together with the Underwriting
Agreement shall be a binding agreement among the Underwriters, the Company and
the Selling Shareholders in accordance with its terms and the terms of the
Underwriting Agreement.
Very truly yours,
TOWER AUTOMOTIVE, INC.
By:_________________________
Title:
2
<PAGE>
THE SELLING SHAREHOLDERS NAMED IN
SCHEDULE I TO THE UNDERWRITING AGREEMENT
By: The Committee
By:_________________________
Confirmed as of the date
first above mentioned:
PAINEWEBBER INCORPORATED
ROBERT W. BAIRD & CO. INCORPORATED
PIPER JAFFRAY INC.
Acting on behalf of themselves
and as the Representatives
of the other several Underwriters
named in Schedule II hereof.
By: PAINEWEBBER INCORPORATED
By: ________________________
Title:
ROBERT W. BAIRD & CO. INCORPORATED
By: _______________________
Title:
PIPER JAFFRAY INC.
By: _______________________
Title:
3
<PAGE>
EXHIBIT B
POWER OF ATTORNEY
TOWER AUTOMOTIVE, INC.
Common Stock
Scott D. Rued
Carl E. Nelson
c/o Tower Automotive, Inc.
4508 IDS Center
Minneapolis, Minnesota 55402
Dear Sirs:
The undersigned understands that Tower Automotive, Inc., a Delaware
corporation (the "Company"), has filed a Registration Statement under the
Securities Act of 1933, as amended (the "Act"), in connection with the proposed
public offering and sale by the Company, the undersigned (the "Selling
Shareholder") and certain other Selling Shareholders of the Company's Common
Stock, par value $.01 per share (the "Common Stock"). The Common Stock will be
sold pursuant to the Underwriting Agreement to be dated the date hereof, by and
among the Company, the Selling Shareholders and the Representatives of the
several Underwriters (the "Underwriting Agreement"). Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed to them in the
Underwriting Agreement.
The Selling Shareholder desires to sell certain shares of Common Stock
and to include such shares among the shares covered by the Registration
Statement. The number of shares of Common Stock which the undersigned desires to
sell (the "Shares") is set forth beneath the signature of the Selling
Shareholder below.
Concurrently with the execution and delivery of this Power of
Attorney, the undersigned is delivering to you, or requesting the Company to
deliver to you, certificates for the Shares, which you are authorized to deposit
with KeyCorp Shareholder Services, Inc., as custodian (the "Custodian"),
pursuant to a custody agreement in the form attached as Attachment A (the
"Custody Agreement").
1. In connection with the foregoing, the Selling Shareholder hereby
makes, constitutes and appoints you collectively, and each of you, individually
(a "Member") and each
<PAGE>
of your respective substitutes under Section 3, the true and lawful attorneys-
in-fact of the undersigned (the Members or either of them or their respective
substitutes, being herein referred to collectively and individually as the
"Committee"), with full power and authority, in the name and on behalf of the
Selling Shareholder:
(a) To enter into the Custody Agreement and deposit with the
Custodian pursuant thereto the certificates for the Shares delivered to the
Committee concurrently herewith;
(b) For the purpose of effecting the sale of the Shares, to
execute and deliver (i) the Underwriting Agreement and (ii) the Price
Determination Agreement, to be dated the date hereof, by and among the Company,
the Selling Shareholders and the Representatives of the several Underwriters;
(c) To endorse, transfer and deliver certificates for the Shares
to or on the order of the Representatives or to their nominee or nominees, and
to give such orders and instructions to the Custodian as the Committee may in
its sole discretion determine with respect to (i) the transfer on the books of
the Company of the Shares in order to effect such sale (including the names in
which new certificates for such Shares are to be issued and the denominations
thereof); (ii) the delivery to or for the account of the Representatives of the
certificates for the Shares against receipt by the Custodian of the full
purchase price to be paid therefor; (iii) the remittance to the Selling
Shareholder of the Selling Shareholder's share of the proceeds, after payment of
the expenses, if any, from the sale of the Shares as described in the
Underwriting Agreement; and (iv) the return to the Selling Shareholder of
certificates representing the number of Shares, if any, deposited with the
Custodian but not sold by the Selling Shareholder under the Registration
Statement for any reason;
(d) To retain Kirkland & Ellis (who are also counsel to the
Company) as legal counsel for the individual Selling Shareholders; Kaye,
Scholer, Fierman, Hays & Handler, LLP as legal counsel for ONEX DHC LLC; Davis
Polk & Wardwell as legal counsel for MascoTech, Inc.; and Borre, Peterson,
Fowler & Reens as legal counsel to the Doherty Charitable Remainder Trust #3 in
connection with any and all matters referred to herein;
(e) To take for the Selling Shareholder all steps deemed
necessary or advisable by the Committee in connection with the registration of
the Shares under the Act, including, without limitation, filing amendments to
the Registration Statement, requesting acceleration of effectiveness of the
Registration Statement, and advising the Securities and Exchange Commission that
the reason the Selling Shareholder is offering the Shares for sale is to
diversify the Selling Shareholder's investments and to assist the Company in
enlarging the public market for the Common Stock;
(f) To make, acknowledge, verify and file on behalf of the
Selling Shareholder applications, consents to service of process and such other
undertakings or reports as may be required by law with state commissioners or
officers administering state securities or Blue Sky laws and to take any other
action required to facilitate the qualification of the Shares under the
securities or Blue Sky laws of the jurisdictions in which the Shares are to be
offered;
2
<PAGE>
(g) If necessary, to endorse (in blank or otherwise) on behalf of
the Selling Shareholder the certificate or certificates representing the Shares,
or a stock power or powers attached to such certificate or certificates; and
(h) To make, execute, acknowledge and deliver all such other
contracts, orders, receipts, notices, requests, instructions, certificates,
letters and other writings and, in general, to do all things and to take all
action which the Committee in its sole discretion may consider necessary or
proper in connection with or to carry out the aforesaid sale of the Shares, as
fully as could the Selling Shareholder if personally present and acting.
2. This Power of Attorney and all authority conferred hereby is
granted and conferred subject to and in consideration of the interests of the
Company, the Representatives, the Underwriters and the other Selling
Shareholders and, for the purpose of completing the transactions contemplated by
this Power of Attorney, this Power of Attorney and all authority conferred
hereby shall be irrevocable and shall not be terminated by any act of the
Selling Shareholder or by operation of law, whether by the death, disability,
incapacity or liquidation of the Selling Shareholder or by the occurrence of any
other event or events (including without limitation the termination of any trust
or estate for which the Selling Shareholder is acting as a fiduciary or
fiduciaries), and if, after the execution hereof, the Selling Shareholder shall
die or become disabled or incapacitated or is liquidated, or if any other such
event or events shall occur before the completion of the transactions
contemplated by this Power of Attorney, the Committee shall nevertheless be
authorized and directed to complete all such transactions as if such death,
disability, incapacity, liquidation or other event or events had not occurred
and regardless of notice thereof.
3. Each Member shall have full power to make and substitute any
person in the place and stead of such Member, and the Selling Shareholder hereby
ratifies and confirms all that each Member or substitute or substitutes shall do
by virtue of these presents. All actions hereunder may be taken by any one
Member or his substitute. In the event of the death, disability or incapacity of
any Member, the remaining Member shall appoint a substitute therefor.
4. The Selling Shareholder hereby represents, warrants and covenants
that:
(a) All information with respect to the Selling Shareholder
contained in the Registration Statement and the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any amendment
or supplement thereto) does not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
(b) In connection with the offering of the Shares, the Selling
Shareholder has not taken, and will not take, directly or indirectly, any action
intended to, or which might reasonably be expected to, cause or result in, under
the Act or otherwise, or which has caused or resulted in, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares;
3
<PAGE>
(c) Other than as permitted by the Act and the Rules and
Regulations, the Selling Shareholder has not distributed and will not distribute
any preliminary prospectus, the Prospectus or any other offering material in
connection with the offering and sale of the Shares;
(d) As soon as the Selling Shareholder is advised thereof, the
Selling Shareholder will advise PaineWebber Incorporated and confirm such advice
in writing, (i) of receipt by the Selling Shareholder, or by any representative
of the Selling Shareholder, of any communication from the Commission relating to
the Registration Statement, the Prospectus or any preliminary prospectus, or any
notice or order of the Commission relating to the Company or any of the Selling
Shareholders in connection with the transactions contemplated by the
Underwriting Agreement and (ii) of the happening of any event during the period
from and after the Effective Date that in the judgment of the Selling
Shareholder makes any statement made in the Registration Statement or the
Prospectus relating to the Selling Shareholder untrue, or that requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements therein, relating to the Selling Shareholder, in the
light of the circumstances in which they were made, not misleading;
(e) The Selling Shareholder has, and at the time of delivery of
the Shares to the Representatives will have, full power and authority to enter
into and deliver this Power of Attorney, to carry out the terms and provisions
hereof and to make all the representations, warranties and covenants contained
herein; and
[(f) This Power of Attorney is the valid and binding agreement of
the Selling Shareholder and is enforceable against the Selling Shareholder in
accordance with its terms, except to the extent that enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law, and except to the extent that
enforcement of the indemnification provisions of this Power of Attorney may be
limited by applicable public policy and the discretion of the court before which
any proceeding therefor may be brought.]
5. The representations, warranties and covenants of the Selling
Shareholder in this Power of Attorney are made for the benefit of, and may be
relied upon by, the other Selling Shareholders, the Committee, the Company, the
Custodian, the Underwriters, the Representatives and their representatives,
agents and counsel.
6. (a) The Committee shall be entitled to act and rely upon any
statement, request, notice or instruction respecting this Power of Attorney
given to it by the Selling Shareholder, not only as to the authorization,
validity and effectiveness thereof, but also as to the truth and acceptability
of any information therein contained.
(b) It is understood that the Committee assumes no responsibility
or liability to any person other than to deal with the Shares deposited with it
and the proceeds from the sale of the Shares in accordance with the provisions
hereof. The Committee makes no representations with respect to and shall have no
responsibility for the Registration Statement,
4
<PAGE>
the Prospectus or any Preliminary Prospectus nor, except as expressly provided
herein, for any aspect of the offering of Common Stock, and it shall not be
liable for any error of judgment or for any act done or omitted or for any
mistake of fact or law except for its own negligence or bad faith. The Selling
Shareholder agrees to indemnify the Committee for and to hold the Committee
harmless against any loss, claim, damage or liability incurred on its part
arising out of or in connection with it acting as the Committee under this Power
of Attorney, as well as the cost and expense of investigating and defending
against any such loss, claim, damage or liability, except to the extent such
loss, claim, damage or liability is due to the negligence or bad faith of the
Member seeking indemnification. The Selling Shareholder agrees that the
Committee may consult with counsel of its own choice (who may be counsel for the
Company) and it shall have full and complete authorization and protection for
any action taken or suffered by it hereunder in good faith and in accordance
with the opinion of such counsel.
(c) It is understood that the Committee may, without breaching
any express or implied obligation to the Selling Shareholder hereunder, release,
amend or modify any other Power of Attorney granted by any other Selling
Shareholder.
7. It is understood that the Committee shall serve entirely without
compensation.
8. THIS POWER OF ATTORNEY SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
This Power of Attorney may be signed in two or more counterparts with
the same effect as if the signature thereto and hereto were upon the same
instrument.
In case any provision in this Power of Attorney shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
This Power of Attorney shall be binding upon the Committee and the
Selling Shareholder and the heirs, legal representatives, distributees,
successors and assigns of the Selling Shareholder.
5
<PAGE>
Dated: June __, 1996
Very truly yours,
/*/
_____________________________
Name:
/*/
_____________________________
Name:
Signature(s) of Selling
Shareholder(s)
_____________________________
_____________________________
(Address)
SHARES TO BE SOLD:
_____ shares of Common Stock
ACKNOWLEDGED AND ACCEPTED:
The Committee:
______________________________
Scott D. Rued
______________________________
Carl E. Nelson
- ----------------------------
/*/ To be signed in exactly the same manner as the shares are registered.
6
<PAGE>
ATTACHMENT A
CUSTODY AGREEMENT
-----------------
CUSTODY AGREEMENT, dated June __, 1996, among KeyCorp Shareholder
Services, Inc., as Custodian (the "Custodian"), and the persons listed on Annex
I hereto (each a "Selling Shareholder" and collectively the "Selling
Shareholders").
Tower Automotive, Inc., a Delaware corporation (the "Company"), has
filed a Registration Statement (the "Registration Statement") with the
Securities and Exchange Commission to register for sale to the public under the
Securities Act of 1933, as amended (the "Act"), shares of the Company's common
stock, $.01 par value per share (the "Common Stock").
The shares covered by the Registration Statement consist of (a) up to
2,100,500 shares of Common Stock to be sold by the Company and (b) an aggregate
of up to 2,810,000 shares of Common Stock (the "Shares") to be sold by the
Selling Shareholders.
Each of the Selling Shareholders has executed and delivered a Power of
Attorney (the "Power of Attorney") naming Scott D. Rued and Carl E. Nelson, and
each of them, as his, her or its attorney-in-fact (the "Committee"), for certain
purposes, including the execution, delivery and performance of this Agreement in
his, her or its name, place and stead, in connection with the proposed sale by
each Selling Shareholder of the number of Shares set forth opposite such Selling
Shareholder's name in Annex I.
1. A custody arrangement is hereby established by the Selling
Shareholders with the Custodian with respect to the Shares, and the Custodian is
hereby instructed to act in accordance with this Agreement and any amendments or
supplements hereto authorized by the Committee.
2. There are herewith delivered to the Custodian, and the Custodian
hereby acknowledges receipt of, certificates representing the Shares, which
certificates have been endorsed in blank or are accompanied by duly executed
stock powers, in each case with all signatures guaranteed by a participant in
the Securities Transfer Agents Medallion Program, the Stock Exchanges Medallion
Program or the New York Stock Exchange Inc. Medallion Signature Program. Such
certificates are to be held by the Custodian for the account of the Selling
Shareholders and are to be disposed of by the Custodian in accordance with this
Agreement.
3. The Custodian is authorized and directed by the Selling
Shareholders:
(a) To hold the certificates representing the Shares delivered by
the Selling Shareholders in its custody;
(b) On or immediately prior to the settlement date for any Shares
sold pursuant to the Registration Statement (the "Closing Date"), to cause such
Shares to be transferred on the books of the Company into such names as the
Custodian shall have been
<PAGE>
instructed by the Representatives (the "Representatives") of the several
Underwriters (the "Underwriters"); to cause to be issued, against surrender of
the certificates for the Shares, a new certificate or certificates for such
Shares, free of any restrictive legend, registered in such name or names; to
deliver such new certificates representing such Shares to the Representatives,
as instructed by the Representatives on the Closing Date, for their account or
accounts against full payment therefor; and to give receipt for such payment;
provided, however, that the Custodian will be regarded as making no
representations and having no responsibilities as to the validity, sufficiency,
value or genuineness of any certificates or the shares represented thereby
deposited with it pursuant to this Agreement;
(c) To disburse such payments in the following manner: (i) to
itself, as agent for the Selling Shareholders, a reserve amount as designated in
writing by the Committee from which amount the Custodian shall pay, as soon as
reasonably practicable, (A) if so provided in the Underwriting Agreement by and
among the Company, the Selling Shareholders and the Representatives, the Selling
Shareholders' proportionate share of all expenses of the offering and sale of
the Shares, (B) to the extent not previously paid by the Company, its reasonable
disbursements for acting hereunder with respect to the sale of the Shares as set
forth in Schedule I, and (C) any applicable stock transfer taxes; and (ii) to
each Selling Shareholder, pursuant to the written instructions of the Committee,
(A) on the Closing Date, a sum equal to the share of the proceeds to which such
Selling Shareholder is entitled, as determined by the Committee, less the
reserve amount designated by the Committee, and (B) promptly after all proper
charges, disbursements, costs and expenses shall have been paid, any remaining
balance of the amount reserved under clause (i) above. Before making any payment
from the amount reserved under clause (i) above, the Custodian shall request and
receive the written approval of the Committee. To the extent the expenses
referred to in subclause (A) of clause (i) above, if any, exceed the amount
reserved, the Selling Shareholders shall remain liable for their proportionate
share of such expenses if so provided in the Underwriting Agreement.
4. Subject in each case to the indemnification obligations set forth
in Section 7 of the Underwriting Agreement, in the event Shares of any Selling
Shareholder are not sold prior to August 5, 1996, the Custodian shall deliver to
such Selling Shareholder as soon as practicable after termination of the
offering of the Shares, certificates representing such Shares deposited by such
Selling Shareholder. Certificates returned to any Selling Shareholder shall be
returned with any related stock powers, and any new certificates issued to the
Selling Shareholders with respect to such Shares shall bear any appropriate
legend reflecting the unregistered status thereof under the Act.
5. This Agreement is for the express benefit of the Company and the
Selling Shareholders, the Underwriters and the Representatives. The obligations
and authorizations of the Selling Shareholders hereunder are irrevocable and
shall not be terminated by any act of any Selling Shareholder or by operation of
law, whether by the death, disability, incapacity or liquidation of any Selling
Shareholder or by the occurrence of any other event or events (including without
limitation the termination of any trust or estate for which any Selling
2
<PAGE>
Shareholder is acting as a fiduciary or fiduciaries), and if after the execution
hereof any Selling Shareholder shall die or become disabled or incapacitated or
is liquidated, or if any other event or events shall occur before the delivery
of such Selling Shareholder's Shares hereunder to the Representatives, such
Shares shall be delivered to the Representatives in accordance with the terms
and conditions of this Agreement, as if such event had not occurred, regardless
of whether or not the Custodian shall have received notice of such event.
6. Until payment of the purchase price for the Shares has been made
to the Selling Shareholders or to the Custodian, the Selling Shareholders shall
remain the owner of (and shall retain the right to receive dividends and
distributions on, and to vote) the number of Shares delivered by each of them to
the Custodian hereunder. Until such payment in full has been made or until the
offering of Shares has been terminated, each Selling Shareholder agrees that it
will not give, sell, pledge, hypothecate, grant any lien on, transfer, deal with
or contract with respect to the Shares and any interests therein.
7. The Selling Shareholders, severally and not jointly, agree to
pay, or cause to be paid, to the Custodian the fee set forth on the attached
Schedule I. The Custodian shall assume no responsibility to any person other
than to deal with the certificates for the Shares and the proceeds from the sale
of the Shares represented thereby in accordance with the provisions hereof, and
the Selling Shareholders, severally and not jointly, hereby agree to indemnify
the Custodian for and to hold the Custodian harmless against any and all losses,
claims, damages or liabilities incurred on its part arising out of or in
connection with it acting as the Custodian pursuant hereto, or by reason of or
as a result of the Custodian complying with the instructions set forth herein or
with any written or oral instructions delivered to the Custodian pursuant hereto
as well as the cost and expenses (including reasonable fees and expenses of
legal counsel) of investigating and defending any such losses, claims, damages
or liabilities, except to the extent such losses, claims, damages or liabilities
are due to the gross negligence or bad faith of the Custodian. The Selling
Shareholders agree that the Custodian may consult with counsel of its own choice
(who may be counsel for the Company), and the Custodian shall have full and
complete authorization and protection for any action taken or suffered by the
Custodian hereunder in good faith and in accordance with the opinion of such
counsel and the Custodian shall be entitled to payment or reimbursement for
reasonable fees in connection with such consultation.
8. The Custodian shall not be liable for any action taken or
suffered by it in good faith in accordance with the instructions of the
Committee or its counsel other than any liability arising out of its gross
negligence or bad faith.
9. Each of the Selling Shareholders, severally and not jointly,
hereby represents and warrants that: (a) it has, and at the time of delivery of
its Shares to the Representatives will have, full power and authority to enter
into this Agreement and the Power of Attorney, to carry out the terms and
provisions hereof and thereof and to make all of the representations, warranties
and agreements contained herein and therein; and (b) this Agreement and the
Power of Attorney are the valid and binding agreements of such Selling
Shareholder and
3
<PAGE>
are enforceable against such Selling Shareholder in accordance with their
respective terms, except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law, and except to the extent that
enforcement of the indemnification provisions of this Agreement and the Power of
Attorney may be limited by applicable public policy and the discretion of the
court before which any proceeding therefor may be brought.
10. The Custodian's acceptance of this Agreement by the execution
hereof shall constitute an acknowledgment by the Custodian of the authorization
herein conferred and shall evidence the Custodian's agreement to carry out and
perform this Agreement in accordance with its terms.
11. The Custodian may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Custodian shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or any loss to the Selling Shareholders, the Company or the
Representatives resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued employment
thereof.
12. The parties to the Custody Agreement represent to the Custodian
that they have and shall continue to solicit the advice of their respective
counsel regarding the compliance with all applicable state and federal
securities laws in connection with the transactions contemplated by the Custody
Agreement and that they will act in accordance with such advice.
13. The Custodian shall be entitled to act and rely upon any
statement, request, notice or instruction with respect to this Agreement given
to it on behalf of any of the Selling Shareholders if the same shall be made or
given to the Custodian by the Committee, not only as to the authorization,
validity and effectiveness thereof, but also as to the truth and acceptability
of any information therein contained.
14. The Custodian shall have the right to resign at any time upon
thirty (30) days' prior written notice to the Committee.
15. This Agreement may be executed in two or more counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument. Execution by the Custodian of one counterpart hereof and its
delivery thereof to the Committee shall constitute the valid execution of this
Agreement by the Custodian.
16. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the Custodian, each of the Selling Shareholders and the
respective heirs, legal representatives, distributees, successors and assigns of
the Custodian and the Selling Shareholders. Any corporation into which the
Custodian or any successor custodian may be merged, or with which it may be
consolidated, or any corporation resulting from any merger or
4
<PAGE>
consolidation to which the Custodian or any successor custodian shall be a
party, or any corporation succeeding to the shareholder servicing business of
the Custodian or any successor custodian, shall be the successor to the
Custodian under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
17. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE, EXCEPT
THAT THE RIGHTS, DUTIES AND OBLIGATIONS OF THE CUSTODIAN SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF OHIO.
18. Any notice given pursuant to this Agreement shall be deemed given
if in writing and delivered in person, or if given by telephone or telegraph if
subsequently confirmed by letter: (i) if to a Selling Shareholder, to his, her
or its address set forth in Annex I; and (ii) if to the Custodian, to it at 127
Public Square, Cleveland, Ohio 44114.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
KEYCORP SHAREHOLDER SERVICES, INC.
as Custodian
By: __________________________________,
THE SELLING SHAREHOLDERS
LISTED IN ANNEX I HERETO:
By: The Committee
By: ________________________
Name:
5
<PAGE>
Annex I
-------
<TABLE>
<CAPTION>
Total
Names and Addresses Number of
of Selling Firm Shares
Shareholders to be Sold
- ------------------- -----------
<S> <C>
ONEX DHC LLC 1,500,000
c/o Onex Investment Corp.
712 Fifth Avenue, 40th Floor
New York, New York 10019
MascoTech, Inc. 500,000
21001 Van Born Road
Taylor, Michigan 48180
S.A. Johnson* 66,666
James R. Lozelle* 100,000
Michael W. Doherty* 25,000
Doherty Charitable Remainder Trust #3 45,000
c/o Barnabas Foundation
15127 S. 73rd Avenue, Suite G
Orland Park, Illinois 60462
Scott D. Rued* 16,666
Robert R. Hibbs* 5,556
Mary L. Johnson* 5,556
Carl E. Nelson* 5,556
----------
Total 2,270,000
</TABLE>
*Address:
c/o Tower Automotive, Inc.
4508 IDS Center
Minneapolis, Minnesota 55402
<PAGE>
Schedule I
----------
Custodian Fee
<PAGE>
EXHIBIT C
June __, 1996
PAINEWEBBER INCORPORATED
ROBERT W. BAIRD & CO. INCORPORATED
PIPER JAFFRAY INC.
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
In consideration of the agreement of the several Underwriters, for
which PaineWebber Incorporated, Robert W. Baird & Co. Incorporated and Piper
Jaffray Inc. (the "Representatives") intend to act as Representatives, to
underwrite a proposed public offering (the "Offering") of up to 4,910,500 shares
of Common Stock, par value $.01 per share (the "Common Stock") of Tower
Automotive, Inc., a Delaware corporation, as contemplated by a registration
statement with respect to such shares filed with the Securities and Exchange
Commission on Form S-3 (Registration No. 333-5015), the undersigned hereby
agrees that the undersigned will not, for a period of 120 days after the
commencement of the public offering of such shares, without the prior written
consent of PaineWebber Incorporated, assign, transfer, offer to sell, sell,
contract to sell, hypothecate, grant any option to sell, or otherwise dispose
of, or require the Company to file with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933 to register, any shares
of Common Stock or any securities convertible into or exchangeable for shares of
Common Stock or warrants or other rights to acquire shares of Common Stock of
which the undersigned is now, or may in the future become, the beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934),
other than pursuant to existing employee stock option plans of the Company, as a
result of purchases under the Company's Employee Stock Purchase Plan, upon the
conversion of the Convertible Notes (as defined in the Prospectus), upon the
exercise of the MSTI Warrants (as defined in the Prospectus).
Very truly yours,
By:________________________
Print Name: ________________________
<PAGE>
EXHIBIT D
Form of Opinion of
Counsel to the Company
----------------------
All references in this opinion to the Agreement shall include the
Price Determination Agreement.
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware and has the
full corporate power and authority required to conduct its business as described
in the Prospectus. The Company is duly qualified to do business as a foreign
corporation in good standing in the State of Michigan. The Company is the sole
record owner and, to our knowledge, the sole beneficial owner of all of the
outstanding capital stock of R.J. Tower Corporation, a Michigan corporation,
which is the sole record owner and, to our knowledge, the sole beneficial owner
of all of the outstanding capital stock of each of the other Subsidiaries.
2. Each of the Subsidiaries is a validly existing corporation in good
standing under the laws of the jurisdiction of its incorporation, has the full
corporate power and authority required to conduct its business as described in
the Prospectus and is duly qualified to do business as a foreign corporation in
good standing in the States listed on Exhibit A attached hereto which we have
been informed by the Company are the only states such Subsidiaries are qualified
to do business as a foreign corporation.
3. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
4. All of the outstanding shares of Common Stock of the Company
(including the Firm Shares to be sold by the Selling Stockholders) have been
duly authorized and validly issued and are fully paid and non-assessable. The
Firm Shares to be issued and sold by the Company pursuant to the Underwriting
Agreement has been duly authorized, and when issued and delivered to the
Underwriters against payment therefor as provided by the Underwriting Agreement,
will be validly issued and will be fully paid and non-assessable and, to our
knowledge, the issuance of the Firm Shares by the Company is not subject to any
preemptive or similar rights.
5. The execution, delivery and performance of the Underwriting Agreement
by the Company, compliance by the Company with all the provisions thereof and
the issuance and sale of the Firm Shares to be sold by the Company to the
Underwriters thereby will not require, to our knowledge, any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body, except such as may have been obtained under
the Securities Act and the Exchange Act, and such others as may be required
under other state
<PAGE>
securities or Blue Sky laws or foreign securities laws (as to which we express
no opinion), and will not conflict with or constitute a breach of any of the
terms or provisions of, or constitute a default under, the Restated Certificate
or the By-Laws or the agreements set forth as Exhibits 10.1 through 10.24 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
Exhibits No. 2.1 and 4.1 through 4.19 of the Company's Current Report on Form
8-K, dated May 31, 1996, as amended by its Form 8-K/A No. 1, dated June 3, 1996,
or, to our knowledge, violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the Company or its
property (other than federal securities laws).
6. We do not have knowledge which has caused us to conclude that there is
any legal or governmental proceeding which is pending or threatened against the
Company which is required to be described or incorporated by reference in the
Registration Statement or Prospectus but is not so described or incorporated by
reference, or any contract to which the Company is a party or to which any of
its property is subject which is required to be described or incorporated by
reference in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement that has not been so described,
incorporated by reference or filed.
7. The description of the Common Stock incorporated by reference into the
Prospectus and the Registration Statement is accurate in all material respects
and fairly represents the information required to be shown. The Registration
Statement and the Prospectus, including the documents incorporated by reference
therein (other than the financial statements and the notes thereto and the
supporting schedules and other financial and statistical data set forth therein
or incorporated by reference, as to which we express no opinion), as of the
effective date of the Registration Statement, and as to the Prospectus also on
the Closing Date and the Option Closing Date complied as to form in all material
respects with the requirements of the Securities Act and the applicable rules
and regulations thereunder.
8. The Commission has advised the Company that the Commission has entered
an order declaring the Registration Statement effective under the Securities Act
and we do not have any knowledge that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are
pending before or threatened by the Commission.
We have participated in the preparation of the Registration Statement
and the Prospectus and, without assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus or in any amendment or supplement thereto or in any
document incorporated by reference into the Prospectus, nothing has come to our
attention that causes us to believe that, as of the Effective Date the
Registration Statement, or any amendment thereto, contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that any Prospectus or any amendment or supplement thereto
including any documents incorporated by reference into the Prospectus, at the
time such Prospectus was issued, at the time any such amended or supplemented
Prospectus was issued, at the Closing Date and the Option Closing Date,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made, not
misleading (except that
2
<PAGE>
we express no opinion as to financial statements, schedules and other financial
data contained in the Registration Statement or the Prospectus or incorporated
by reference therein).
This letter is furnished by us solely for your benefit in connection
with the transactions referred to in the Agreement and may not be circulated to,
or relied upon by, any other person, except that this letter may be relied upon
by your counsel in connection with the opinion letter to be delivered to you
pursuant to Section 6(f) of the Agreement.
In rendering the foregoing opinion, counsel may rely, to the extent it
deems such reliance proper, on the opinions (in form and substance reasonably
satisfactory to Underwriters' counsel) of other counsel reasonably acceptable to
Underwriters' counsel as to matters governed by the laws of jurisdictions other
than the United States, the State of Illinois, the State of New York and the
Delaware General Corporation Law and as to matters of fact, upon certificates of
officers of the Company and of government officials; provided that such counsel
shall state that the opinion of any other counsel is satisfactory in form and
scope to such counsel. Copies of all such opinions and certificates shall be
furnished to counsel to the Underwriters on the Closing Date.
3
<PAGE>
EXHIBIT E
Form of Opinion
of Each Counsel to a
Selling Shareholder
-------------------
All references in this opinion to the Agreement shall include the
Price Determination Agreement.
1. The Power of Attorney and the Custody Agreement have been duly authorized,
executed and delivered by each Selling Shareholder (to which such counsel is
opining) [and are valid and binding agreements of each such Selling Shareholder,
enforceable against each such Selling Shareholder in accordance with the terms
thereof, except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of the rights of creditors
or by equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law, and except to the extent that enforcement of the
indemnification provisions of each of the Agreement and Power of Attorney and
this Agreement may be limited by applicable public policy and the discretion of
the court before which any proceeding therefor may be brought.].
2. The Underwriting Agreement has been duly authorized, executed and delivered
by each Selling Shareholder (to which such counsel is opining) [and is a valid
and binding agreement of each such Selling Shareholder, enforceable against each
such Selling Shareholder in accordance with its terms except to the extent that
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by equitable principles, regardless of
whether enforcement is sought in a proceeding in equity or at law, and except to
the extent that enforcement of the indemnification and contribution provisions
of the Underwriting Agreement may be limited by applicable public policy and the
discretion of the court before which any proceeding therefor may be brought.]
3. The sale of the Shares to the Underwriters by each Selling Shareholder (to
which such counsel is opining) pursuant to the Underwriting Agreement, the
compliance by each such Selling Shareholder with the other provisions of the
Underwriting Agreement, the Custody Agreement and the Power of Attorney and the
consummation by each such Selling Shareholder of the other transactions
contemplated in the Underwriting Agreement do not (i) result in any violation of
any provision of the charter, by-laws or other governing documents applicable to
each such Selling Shareholder, (ii) result in any violation of any statute, rule
or regulation, or any order, [judgment or decree] known to such counsel, of any
court or governmental agency or body having jurisdiction over each such Selling
Shareholder or the property of each such Selling Shareholder or (iii) result in
any breach or violation of any agreement or instrument known to
<PAGE>
such counsel to which each such Selling Shareholder is bound and which is
material to the transactions contemplated by the Underwriting Agreement.
4. No consent, approval, authorization or order of, or any filing or declaration
with, any court or governmental agency or body is required for the consummation
of the transactions contemplated by the Underwriting Agreement in connection
with the sale of the Shares by each Selling Shareholder (to which counsel is
opining) to be sold thereunder, except for registration of the Shares under the
Securities Act, and as may be required under other federal and state securities
laws in connection with the purchase and distribution of the Shares by the
Underwriters.
5. Upon the purchase by the Underwriters and the sale by each Selling
Shareholder (to which counsel is opining) of the Shares to be sold by it in
accordance with the terms and conditions of the Underwriting Agreement, valid
[or good and marketable] title to the Shares, free and clear of all
encumbrances, will be transferred to the Underwriters, [assuming that the
Underwriters purchase such Shares in good faith and without notice of any
adverse claim within the meaning of the New York Uniform Commercial Code.]
[The foregoing opinion is subject to the qualification that the
enforceability of the Power of Attorney, the Custody Agreement and the
Underwriting Agreement may be: (i) subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally; (ii) subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity),
including principles of commercial reasonableness or conscionability and an
implied covenant of good faith and fair dealing; and (iii) subject to any
limitation on the enforcement of the indemnification provisions of the Power of
Attorney and the Custody Agreement and the indemnification and contribution
provisions of the Underwriting Agreement by applicable public policy and by any
court before which any proceeding therefor may be brought.]
This letter is furnished by such counsel solely for your benefit in
connection with the transactions referred to in the Agreement and may not be
circulated to, or relied upon by, any other person, except that this letter may
be relied upon by your counsel in connection with the opinion letter to be
delivered to you pursuant to Section 6(g) of the Agreement.
In rendering the foregoing opinion, counsel may rely, to the extent it
deems such reliance proper, on the opinions (in form and substance reasonably
satisfactory to Underwriters' counsel) of other counsel reasonably acceptable to
Underwriters' counsel as to matters governed by the laws of jurisdictions other
than the United States and the States of New York, Illlinois or Michigan, as
appropriate, and the General Corporation Law of the State of Delaware and as to
matters of fact, upon certificates of any Selling Shareholder (to which counsel
is opining) and of government officials; provided that such counsel shall state
that the opinion of any other counsel is satisfactory in form and scope to such
counsel. Copies of all such opinions and certificates shall be furnished to
counsel to the Underwriters on the Closing Date.
2
<PAGE>
EXHIBIT F
Subsidiaries
Subsidiaries of Tower Automotive, Inc.
- --------------------------------------
R. J. Tower Corporation (Michigan)
Tower Automotive Export, Inc.
Subsidiaries of R. J. Tower Corporation (Michigan)
- --------------------------------------------------
R. J. Tower Corporation (Kentucky)
R. J. Tower Corporation (Indiana)
Edgewood Manufacturing Corp.
Kalamazoo Stamping and Die Company
Trylon Corporation
Tower Automotive Delaware, Inc.
<PAGE>
KIRKLAND & ELLIS
PARTNERSHIPS INCLUDING PROFESSIONAL CORPORATIONS
200 East Randolph Drive
Chicago, Illinois 60601
To Call Writer Direct: 312 861-2000 Facsimile:
312 861-2000 312 861-2200
June 19, 1996
Tower Automotive, Inc.
4508 IDS Center
Minneapolis, MN 55402
Re: Tower Automotive, Inc.
Registration Statement on Form S-3
Registration No. 333-5015
----------------------------------
Ladies and Gentlemen:
We are acting as special counsel to Tower Automotive, Inc., a Delaware
corporation (the "Company"), in connection with the proposed registration by the
Company of 2,100,500 shares (the "Primary Shares") of its Common Stock, par
value $.01 per share (the "Common Stock"), to be issued and sold by the Company
and up to 2,810,000 shares (the "Secondary Shares" and together with the Primary
Shares, the "Shares") of Common Stock to be sold by certain stockholders of the
Company (the "Selling Stockholders"), pursuant to a Registration Statement on
Form S-3 (Registration No. 333-5015), originally filed with the Securities and
Exchange Commission (the "Commission") on May 31, 1996, under the Securities Act
of 1933, as amended (the "Act") (such Registration Statement, as amended or
supplemented, is hereinafter referred to as the "Registration Statement"). The
Shares are to be sold pursuant to an underwriting agreement (the "Underwriting
Agreement") between the Company, the Selling Stockholders and PaineWebber
Incorporated, Robert W. Baird & Co. Incorporated and Piper Jaffray Inc., as
representatives of the several underwriters named therein.
In that connection, we have examined such corporate proceedings, documents,
records and matters of law as we have deemed necessary to enable us to render
this opinion.
<PAGE>
KIRKLAND & ELLIS
Tower Automotive, Inc.
June 19, 1996
Page 2
Based upon the foregoing, we are of the opinion:
(1) The Primary Shares are duly authorized, and, assuming (i) the Executive
Committee of the Board of Directors of the Company has taken all necessary
action to approve the issuance and sale of the Primary Shares pursuant to the
terms of the Underwriting Agreement and (ii) the Primary Shares have been duly
executed and delivered on behalf of the Company and issued in accordance with
the terms of the Underwriting Agreement upon receipt of the consideration to be
paid therefor, the Primary Shares will be validly issued, fully paid and
nonassessable.
(2) The Secondary Shares are duly authorized and validly issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. We also consent to the reference to
our firm under the heading "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission. This opinion and consent may be incorporated by
reference in a subsequent registration statement filed pursuant to Rule 462(b)
under the Act with respect to the registration of additional shares of Common
Stock for sale in the offering contemplated by the Registration Statement.
We do not find it necessary for the purposes of this opinion, and
accordingly we do not purport to cover herein, the application of the securities
or "Blue Sky" laws of the various States to the issuance and sale of the Shares.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the States of New York or Delaware or the federal law of the United
States be changed by legislative action, judicial decision or otherwise.
<PAGE>
KIRKLAND & ELLIS
Tower Automotive, Inc.
June 19, 1996
Page 3
This opinion is furnished to you in connection with the filing of the
Registration Statement and is not to be used, circulated, quoted or otherwise
relied upon for any other purpose.
Very truly yours,
KIRKLAND & ELLIS
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 26, 1996
incorporated by reference in Tower Automotive, Inc.'s Form 10-K for the year
ended December 31, 1995; our report dated March 31, 1994 included in Tower
Automotive, Inc.'s Form 10-K/A for the year ended December 31, 1995; our report
dated March 21, 1996 included in Tower Automotive, Inc.'s Form 8-K/A dated March
27, 1996; our report dated May 30, 1996 included in Tower Automotive, Inc.'s
Form 8-K dated May 31, 1996, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
June 18, 1996
