<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 1996
REGISTRATION NO. [333-08321]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
TRINITY INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3743 75-0225040
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
2525 STEMMONS FREEWAY
DALLAS, TEXAS 75207
(214) 631-4420
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
F. DEAN PHELPS
VICE PRESIDENT
TRINITY INDUSTRIES, INC.
2525 STEMMONS FREEWAY
DALLAS, TEXAS 75207
(214) 631-4420
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS TO:
CHARLES C. REEDER, ESQ. THEODORE J. KOZLOFF, ESQ.
LOCKE PURNELL RAIN HARRELL SKADDEN, ARPS, SLATE, MEAGHER & FLOM
(A PROFESSIONAL CORPORATION) 919 THIRD AVENUE
2200 ROSS AVENUE, SUITE 2200 NEW YORK, NEW YORK 10022
DALLAS, TEXAS 75201-6776 (212) 735-3500
(214) 740-8522
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective and all
other conditions to the merger described in the enclosed Proxy
Statement/Prospectus have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================
PROPOSED
MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AGGREGATE AMOUNT OF
TO BE REGISTERED (1) OFFERING PRICE (2) REGISTRATION FEE (3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $1.00 par
value (including the attached
Preferred Share Purchase Rights) $41,748,808 $5,779
=====================================================================================================
</TABLE>
(1) This Registration Statement relates to (i) the shares of common stock, par
value $1.00 per share ("Trinity Common Stock"), of the Registrant issuable
to holders of common stock, par value $.01 per share ("Transcisco Common
Stock"), of Transcisco Industries, Inc. ("Transcisco") pursuant to the
merger described in the enclosed Proxy Statement/Prospectus (the "Merger")
and (ii) the Trinity Preferred Share Purchase Rights that will be attached
to and represented by the certificates issued for the Trinity Common Stock
(which Preferred Share Purchase Rights have no market value independent of
the Trinity Common Stock to which they are attached). In the Merger, each
share of Transcisco Common Stock issued and outstanding immediately prior
to the effective time of the Merger will be converted into, exchanged for,
and represent the right to receive 0.1884 of a share of Trinity Common
Stock.
(2) Calculated pursuant to Rule 457(f) based on the number of shares of
Transcisco Common Stock outstanding as of July 15, 1996, using a value of
$5.875 per share (the average of the high and low sales prices reported on
the American Stock Exchange on July 15, 1996).
(3) Pursuant to Rule 457(b), the registration fee has been reduced by the
$8,616 paid on July 3, 1996 upon the filing with the Securities and
Exchange Commission, pursuant to the Securities Exchange Act of 1934, as
amended, of Transcisco's preliminary proxy materials with respect to the
proposed Merger.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
================================================================================
<PAGE> 3
CROSS REFERENCE SHEET PURSUANT TO
ITEM 501(B) OF REGULATION S-K, SHOWING THE LOCATION IN THE PROXY
STATEMENT/PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-4.
<TABLE>
<CAPTION>
S-4 ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT/PROSPECTUS
----------------------------- --------------------------------------
<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION.
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus . . . . . . . . . Outside Front Cover Page of Proxy
Statement/Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . . . . . Available Information; Incorporation of Certain
Documents by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information . . . . . . . . . . . . . . Summary; Selected Historical Financial Data of
Trinity; Selected Historical Financial
Data of Transcisco; Selected Per Share and Other
Data; Risk Factors
4. Terms of the Transaction . . . . . . . . . . . . . Summary; The Proposed Merger; Description of
Trinity Capital Stock; Comparison of
Stockholder Rights
5. Pro Forma Financial Information . . . . . . . . . . *
6. Material Contacts with the Company Being
Acquired . . . . . . . . . . . . . . . . . . . . Summary; The Proposed Merger
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be
Underwriters . . . . . . . . . . . . . . . . . . *
8. Interests of Named Experts and Counsel . . . . . . Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities . *
B. INFORMATION ABOUT THE REGISTRANT.
10. Information With Respect to S-3 Registrants . . . . *
11. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . *
12. Information With Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference;
Certain Information Regarding Trinity and Trinity
Y; Selected Historical Financial Data of Trinity
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
S-4 ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT/PROSPECTUS
----------------------------- ---------------------------------------
<S> <C> <C>
13. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
14. Information With Respect to Registrants Other
Than S-3 or S-2 Registrants . . . . . . . . . . . . *
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED.
15. Information With Respect to S-3 Companies . . . . . . *
16. Information With Respect to S-2 or S-3
Companies . . . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference;
Certain Information Regarding Transcisco; Selected
Historical Financial Data of Transcisco
17. Information With Respect to Companies Other
Than S-2 or S-3 Companies . . . . . . . . . . . . . *
D. VOTING AND MANAGEMENT INFORMATION.
18. Information if Proxies, Consents or Authorizations
Are to be Solicited . . . . . . . . . . . . . . . . Cover Page of Proxy Statement/Prospectus;
Incorporation of Certain Documents by
Reference; Summary; The Meeting; The
Proposed Merger
19. Information if Proxies, Consents or Authorizations
Are Not to be Solicited, or in an Exchange
Offer . . . . . . . . . . . . . . . . . . . . . . . *
</TABLE>
- --------------------
*Omitted because not required, inapplicable or answer is negative.
<PAGE> 5
TRANSCISCO INDUSTRIES, INC.
601 CALIFORNIA STREET, SUITE 1301
SAN FRANCISCO, CA 94108
July 19, 1996
Dear Fellow Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of
Stockholders of Transcisco Industries, Inc., a Delaware corporation
("Transcisco"), to be held at the Financial District Holiday Inn, 750 Kearny
Street, San Francisco, California, at 12:00 p.m., local time, on September 3,
1996, and any adjournment or postponement thereof (the "Meeting"). A Notice of
the Meeting, a proxy card, and a Proxy Statement/Prospectus containing
information about the matters to be acted upon are enclosed. All holders of
outstanding shares of Transcisco's common stock, par value $.01 per share
("Transcisco Common Stock"), as of the close of business on July 15, 1996 (the
"Record Date") are entitled to notice of and to vote at the Meeting.
At the Meeting, Transcisco's stockholders will be asked to
consider and vote upon a proposal to approve and adopt an Agreement and Plan of
Merger, dated as of June 17, 1996 (the "Merger Agreement"), by and among
Transcisco, Trinity Industries, Inc., a Delaware corporation ("Trinity"), and
Trinity Y, Inc., a Delaware corporation and a wholly-owned subsidiary of
Trinity ("Trinity Y"). Pursuant to the Merger Agreement, Trinity Y would be
merged (the "Merger") with and into Transcisco, which will continue in
existence as a wholly-owned subsidiary of Trinity.
In the Merger, and as more fully described in the accompanying
Proxy Statement/Prospectus and in the Merger Agreement included as an annex
thereto, each share of Transcisco Common Stock outstanding prior to the
effective time of the Merger will be converted into, exchanged for, and
represent the right to receive 0.1884 (the "Exchange Ratio") of a share of the
common stock (together with the attached Trinity Preferred Share Purchase
Rights), par value $1.00 per share ("Trinity Common Stock"), of Trinity. No
fractional shares of Trinity Common Stock will be issued in the Merger, and
each record holder of Transcisco Common Stock who would otherwise be entitled
to receive a fraction of a share of Trinity Common Stock will be entitled to
receive a cash payment in lieu thereof.
TRANSCISCO'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE
MERGER AND RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The Board reached this decision after careful consideration of a number of
factors, including the opinion of Schroder Wertheim & Co. Incorporated
("Schroder Wertheim"), Transcisco's financial advisor, to the effect that the
Exchange Ratio is fair to Transcisco stockholders from a financial point of
view. The full opinion of Schroder Wertheim, dated as of July 18, 1996, is
included as Annex B to the accompanying Proxy Statement/Prospectus, and
stockholders are urged to read the opinion in its entirety.
<PAGE> 6
At the Meeting, Transcisco's stockholders will also be asked
to (i) elect two Class I directors to hold office until the consummation of the
Merger, or if the Merger is not consummated, until the due election and
qualification of such directors' successors; (ii) approve an increase in the
number of shares of Transcisco Common Stock issuable under Transcisco's Amended
and Restated (1994) Stock Option Plan; (iii) ratify the selection of Ernst &
Young LLP as Transcisco's independent auditors for the fiscal year ending March
31, 1997; and (iv) transact such other business as may properly come before the
Meeting. Transcisco's Board of Directors recommends a vote FOR election of its
nominees as directors, a vote FOR the approval of an increase in the number of
shares issuable under Transcisco's Amended and Restated (1994) Stock Option
Plan, and a vote FOR the ratification of the selection of Ernst & Young LLP as
Transcisco's independent auditors for the fiscal year ending March 31, 1997.
The accompanying Proxy Statement/Prospectus provides a
detailed description of the proposed Merger, as well as the other items of
business scheduled for the Meeting. We urge you to read and consider it
carefully. A Letter of Transmittal which you can use to exchange your
Transcisco Common Stock is being mailed to holders of record of Transcisco
Common Stock with the accompanying Proxy Statement/Prospectus.
In view of the importance of the actions to be taken at the
Meeting, we urge you to read the enclosed material carefully and to complete,
sign, and date the enclosed proxy card and return it promptly in the enclosed
prepaid envelope, whether or not you plan to attend the Meeting. If you attend
the Meeting, you may vote your shares personally whether or not you have
previously submitted a proxy. Your prompt cooperation will be greatly
appreciated.
Sincerely yours,
EUGENE M. ARMSTRONG STEVEN L. PEASE
Chairman of the Board of Directors President and Chief Executive
Officer
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE AND RETURN YOUR PROXY PROMPTLY.
FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER.
<PAGE> 7
TRANSCISCO INDUSTRIES, INC.
601 CALIFORNIA STREET, SUITE 1301
SAN FRANCISCO, CA 94108
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 3, 1996
To The Stockholders of
Transcisco Industries, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Transcisco Industries, Inc., a Delaware corporation ("Transcisco"), will be
held on September 3, 1996, at 12:00 p.m., local time, at the Financial District
Holiday Inn, 750 Kearny Street, San Francisco, California, and any adjournments
or postponements thereof (the "Meeting"), for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of June 17, 1996 (the "Merger
Agreement"), by and among Transcisco, Trinity Industries, Inc., a Delaware
corporation ("Trinity"), and Trinity Y, Inc., a Delaware corporation and a
wholly-owned subsidiary of Trinity ("Trinity Y"). Pursuant to the Merger
Agreement, Trinity Y would be merged (the "Merger") with and into Transcisco,
which will continue in existence as a wholly-owned subsidiary of Trinity. In
the Merger, and as more fully described in the accompanying Proxy
Statement/Prospectus and in the Merger Agreement included as an annex thereto,
each share of Transcisco common stock, par value $.01 per share ("Transcisco
Common Stock"), outstanding prior to the effective time of the Merger will be
converted into, exchanged for, and represent the right to receive 0.1884 of a
share of the common stock (together with the attached Trinity Preferred Share
Purchase Rights), par value $1.00 per share, of Trinity ("Trinity Common
Stock"). No fractional shares of Trinity Common Stock will be issued in the
Merger, and each holder of Transcisco Common Stock who would otherwise be
entitled to receive a fraction of a share of Trinity Common Stock will be
entitled to receive a cash payment in lieu thereof;
2. To elect two Class I directors to hold office until the
consummation of the Merger, or if the Merger is not consummated, until such
directors' successors are duly elected and qualified;
3. To approve an increase in the number of shares of Transcisco Common
Stock issuable under Transcisco's Amended and Restated (1994) Stock Option
Plan;
4. To ratify the selection of Ernst & Young LLP as Transcisco's
independent auditors for the fiscal year ending March 31, 1997; and
5. To transact such other business as may properly come before the
Meeting.
Only holders of record of shares of Transcisco Common Stock as of the
close of business on July 15, 1996 are entitled to notice of and to vote at the
Meeting. The list of Transcisco stockholders entitled to vote at the Meeting
will be available for examination during the ten days prior to the Meeting at
the principal executive offices of Transcisco, 601 California Street, Suite
1301, San Francisco, California 94108.
<PAGE> 8
Under the Delaware General Corporation Law, holders of Transcisco
Common Stock who object to the Merger will not be entitled to dissenters'
rights.
By Order of the Board of Directors
GREGORY S. SAUNDERS
Secretary
July 19, 1996
<PAGE> 9
TRANSCISCO INDUSTRIES, INC.
PROXY STATEMENT
-----------------
TRINITY INDUSTRIES, INC.
PROSPECTUS
-----------------
This Proxy Statement and Prospectus ("Proxy Statement/Prospectus")
relates to the proposed merger (the "Merger") of Trinity Y, Inc., a Delaware
corporation ("Trinity Y") and a wholly-owned subsidiary of Trinity Industries,
Inc., a Delaware corporation ("Trinity"), with and into Transcisco Industries,
Inc. ("Transcisco"), a Delaware corporation, pursuant to an Agreement and Plan
of Merger, dated as of June 17, 1996 (the "Merger Agreement"), by and among
Transcisco, Trinity and Trinity Y.
In the Merger, Trinity Y would be merged with and into Transcisco,
which will continue in existence as a wholly-owned subsidiary of Trinity, and
each share of Transcisco's common stock, par value $.01 per share ("Transcisco
Common Stock"), outstanding prior to the Merger, will be converted into,
exchanged for, and represent the right to receive 0.1884 (the "Exchange Ratio")
of a share of the common stock (together with the attached Trinity Preferred
Share Purchase Rights), par value $1.00 per share ("Trinity Common Stock"), of
Trinity. No fractional shares of Trinity Common Stock will be issued in the
Merger, and each record holder of Transcisco Common Stock who would otherwise
be entitled to receive a fraction of a share of Trinity Common Stock will be
entitled to receive a cash payment in lieu thereof.
On July 15, 1996, the most recent practicable date prior to the
printing of this Proxy Statement/Prospectus, the closing price of Trinity
Common Stock as reported on the New York Stock Exchange (the "NYSE") Composite
Tape was $32.125 per share and the closing price of Transcisco Common Stock
reported on the American Stock Exchange (the "AMEX") Composite Tape was $5.750
per share.
This Proxy Statement/Prospectus constitutes both the proxy statement
of Transcisco relating to the solicitation of proxies by its Board of Directors
for use at the annual meeting of Transcisco stockholders to be held on
September 3, 1996 (the "Meeting") and the prospectus of Trinity included as
part of a Registration Statement filed with the Securities and Exchange
Commission (the "Commission") with respect to the shares of Trinity Common
Stock issuable in the Merger to holders of Transcisco Common Stock.
A Letter of Transmittal with which Transcisco stockholders can send
their shares of Transcisco Common Stock to the Exchange Agent is enclosed with
this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus and the accompanying form of proxy are
first being sent to Transcisco stockholders on or about July 19, 1996.
IN REVIEWING THIS PROXY STATEMENT/PROSPECTUS, TRANSCISCO STOCKHOLDERS
SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE HEADING "RISK
FACTORS."
THE SECURITIES TO WHICH THIS PROXY STATEMENT/PROSPECTUS RELATES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION,
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS JULY 19, 1996.
<PAGE> 10
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROXY STATEMENT/PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY TRINITY
OR TRANSCISCO. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS
PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A PROXY IN ANY JURISDICTION
TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER,
SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF
SECURITIES PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF TRINITY OR TRANSCISCO SINCE
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS. HOWEVER, IF ANY MATERIAL CHANGE
OCCURS DURING THE PERIOD THAT THIS PROXY STATEMENT/PROSPECTUS IS REQUIRED TO BE
DELIVERED, THIS PROXY STATEMENT/PROSPECTUS WILL BE AMENDED AND SUPPLEMENTED
ACCORDINGLY. ALL INFORMATION REGARDING TRINITY AND ITS SUBSIDIARIES IN THIS
PROXY STATEMENT/PROSPECTUS HAS BEEN SUPPLIED BY TRINITY, AND ALL INFORMATION
REGARDING TRANSCISCO AND ITS SUBSIDIARIES IN THIS PROXY STATEMENT/PROSPECTUS
HAS BEEN SUPPLIED BY TRANSCISCO.
AVAILABLE INFORMATION
Trinity and Transcisco are subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith each files reports, proxy statements, and other
information with the Commission. Copies of such reports, proxy statements, and
other information can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional
Offices of the Commission: 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 can be obtained at prescribed rates
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Additionally, copies of reports, proxy statements, and
other information filed with the Commission electronically by each of Trinity
and Transcisco may be inspected by accessing the Commission's Internet site at
http://www.sec.gov. Certain of the materials filed by Trinity may also be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005, and materials filed by Transcisco may be inspected at the offices of the
AMEX, 86 Trinity Place, New York, New York 10006.
Trinity has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the shares of Trinity Common Stock to be issued pursuant
to the Merger Agreement. This Proxy Statement/Prospectus does not contain all
the information set forth in the Registration Statement, certain portions of
which have been omitted pursuant to the rules and regulations of the
Commission. Such additional information may be obtained from the Commission's
principal office in Washington, D.C. Statements contained in this Proxy
Statement/Prospectus as to the contents of any contract or other document
referred to herein are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference.
2
<PAGE> 11
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Trinity (File No.
1-6903) pursuant to the Exchange Act are incorporated by reference in this
Proxy Statement/Prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended March 31, 1996;
provided that only the following sections of Trinity's 1996 Annual Report
to Stockholders, incorporated by reference in the Annual Report on Form
10-K, are incorporated by reference in this Proxy Statement/Prospectus:
"Corporate Profile" (page 3), "Financial Summary" (page 15), "Management's
Discussion and Analysis of Financial Condition" (pages 16-17), "Division
Officers" (page 30), "Report of Independent Auditors" (page 29) and
financial statements and supplementary data (pages 18-29). Portions of
Trinity's 1996 Annual Report to Stockholders not enumerated above are not
hereby incorporated. A copy of Trinity's Annual Report on Form 10-K
appears as Annex C to this Proxy Statement/Prospectus.
(2) Proxy Statement for Trinity's 1996 Annual Meeting of Stockholders;
provided that only the following portions of such Proxy Statement are
incorporated by reference in this Proxy Statement/Prospectus: "Voting
Securities and Stockholders" (page 2), "Election of Directors" (pages
3-4), and "Executive Compensation and Other Matters" (page 6). Portions
of the Proxy Statement for Trinity's 1996 Annual Meeting of Stockholders
not enumerated above are not hereby incorporated.
(3) Current Report on Form 8-K, dated June 29, 1996.
(4) All other documents filed by Trinity subsequent to the filing of this
Proxy Statement/Prospectus pursuant to Section 13(a) or 15(d) of the
Exchange Act and prior to the date of the final adjournment of the
Meeting.
The following documents filed with the Commission by Transcisco (File No.
1-9051) pursuant to the Exchange Act are incorporated by reference in this
Proxy Statement/Prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended March 31, 1996.
A copy of Transcisco's Annual Report on Form 10-K (without exhibits
thereto) appears as Annex D to this Proxy Statement/Prospectus.
(2) All other documents filed by Transcisco subsequent to the filing of
this Proxy Statement/Prospectus pursuant to Section 13(a) or 15(d) of
the Exchange Act and prior to the date of the final adjournment of the
Meeting.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Proxy Statement/Prospectus to the extent that a
statement contained herein or in any other subsequently filed document, which
also is or 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 Proxy
Statement/Prospectus.
This Proxy Statement/Prospectus incorporates by reference documents
relating to Trinity and Transcisco which are not presented herein or delivered
herewith. These documents (not including exhibits to such documents other than
exhibits specifically incorporated by reference into such documents) are
available without charge to any person including any beneficial owner, to whom
this Proxy Statement/Prospectus is delivered, upon written or oral request of
such person. Requests for such documents relating to Trinity should be
directed to Trinity, P.O. Box 568887, Dallas, Texas 75356-8887, Attention: F.
Dean Phelps; telephone number (214) 631-4420, and documents relating to
Transcisco should be directed to Transcisco, 601 California Street, Suite 1301,
San Francisco, California 94108, Attention: Gregory S. Saunders, telephone
number (415) 477-9703. To assure timely delivery of such documents, requests
for such documents should be made no later than August 26, 1996.
3
<PAGE> 12
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
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<S> <C> <C> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . 2 Indemnification of Transcisco's
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . 3 Directors and Officers . . . . . . . 33
SUMMARY OF PROXY STATEMENT/ PROSPECTUS . . . . . 6 Employment Agreements . . . . . . . . . 33
The Companies . . . . . . . . . . . . . . . . 6 Other Matters . . . . . . . . . . . . . 34
The Meeting . . . . . . . . . . . . . . . . . 7 Plans for Transcisco after the Merger . . . 34
The Proposed Merger . . . . . . . . . . . . . 8 The Merger Agreement . . . . . . . . . . . . 34
MARKET PRICE DATA AND DIVIDENDS . . . . . . . . . 14 The Merger . . . . . . . . . . . . . . . 34
SELECTED HISTORICAL FINANCIAL DATA OF TRINITY . . 15 Conversion of Shares of Transcisco
SELECTED HISTORICAL FINANCIAL DATA OF TRANSCISCO 16 Common Stock . . . . . . . . . . . . . . 34
RISK FACTORS . . . . . . . . . . . . . . . . . . 18 Treatment of Transcisco's Options . . . 35
Risks Associated with Railcar Segment . . . 18 Directors and Officers . . . . . . . . . 35
Risks Associated with Marine Products Charter and Bylaws . . . . . . . . . . . 35
Segment . . . . . . . . . . . . . . . . 18 Representations and Warranties . . . . . 35
Risks Associated with Construction Products Covenants of Transcisco, Trinity, and
Segment . . . . . . . . . . . . . . . . 18 Trinity Y . . . . . . . . . . . . . 35
Environmental Matters . . . . . . . . . . . 19 Conditions to the Merger . . . . . . . . 37
Competition . . . . . . . . . . . . . . . . 19 Termination . . . . . . . . . . . . . . 37
INTRODUCTION . . . . . . . . . . . . . . . . . . 20 Termination Fee . . . . . . . . . . . . 38
CERTAIN INFORMATION REGARDING TRINITY AND Accounting Treatment . . . . . . . . . . . . 38
TRINITY Y . . . . . . . . . . . . . . . . . 21 Regulatory Filings and Approvals . . . . . . 38
General . . . . . . . . . . . . . . . . . . 21 Antitrust . . . . . . . . . . . . . . . 38
Recent Developments . . . . . . . . . . . . 21 State Anti-Takeover Statutes . . . . . . . . 39
CERTAIN INFORMATION REGARDING TRANSCISCO . . . . 21 Certain Federal Income Tax Consequences of
General . . . . . . . . . . . . . . . . . . 21 the Merger . . . . . . . . . . . . . . . 39
Recent Developments . . . . . . . . . . . . . 21
THE MEETING . . . . . . . . . . . . . . . . . . . 22 Restrictions on Sales of Shares by
General . . . . . . . . . . . . . . . . . . 22 Affiliates . . . . . . . . . . . . . . . 40
Record Date . . . . . . . . . . . . . . . . 22 Stock Exchange Listing . . . . . . . . . . . 40
Quorum . . . . . . . . . . . . . . . . . . . 22 Dissenters' Rights . . . . . . . . . . . . . 40
Votes Required; Voting Rights . . . . . . . 22 IPTION OF TRINITY CAPITAL STOCK . . . . . . 40
Dissenters' Rights . . . . . . . . . . . . . 23 General . . . . . . . . . . . . . . . . . . 40
Solicitation of Proxies . . . . . . . . . . 23 Trinity Common Stock . . . . . . . . . . . . 40
THE PROPOSED MERGER . . . . . . . . . . . . . . . 24 DESCRIPTION OF TRINITY CAPITAL STOCK . .. . . . . 41
General . . . . . . . . . . . . . . . . . . 24 Delaware Anti-Takeover Law and Certain Anti-
Closing; Effective Time . . . . . . . . . . 24 Takeover Provisions . . . . . . . . . . 41
Conversion of Shares; Fractional Shares . . 24 Trinity Rights Plan . . . . . . . . . . 41
Exchange of Certificates . . . . . . . . . . 25 Trinity Preferred Stock . . . . . . . . 41
Background of the Merger . . . . . . . . . . 25 Advance Notice of Director Nominations . 41
Recommendation of the Transcisco Board and Delaware Anti-Takeover Statute . . . . . 42
Transcisco's Reasons for the Merger . . 27 Transfer Agent and Registrar . . . . . . . . 42
Projected Financial Information for DESCRIPTION OF TRANSCISCO CAPITAL STOCK
Transcisco . . . . . . . . . . . . . . . 27 STOCK . . . . . . . . . . . . . . . . . . . . 42
Opinion of Transcisco's Financial Advisor . 29 General . . . . . . . . . . . . . . . . . . . 42
Analysis of Purchase Price Premiums to Transcisco Common Stock . . . . . . . . . . . . . 42
Market Price . . . . . . . . . . . . 30 Transcisco Preferred Stock. . . . . . . . . . 42
Trinity Common Stock Price Analysis . . 30 Delaware Anti-Takeover Law and Certain
Valuation of Transcisco . . . . . . . . 31 Anti-Takeover Provisions . . . . . . . . 43
Transcisco Rail Services . . . . . . . . 31 Transcisco Stockholder Rights Plan . . . 43
Transcisco Leasing Company . . . . . . . 31 Transcisco Preferred Stock . . . . . . . 43
Transcisco Trading Company . . . . . . . 32 Classified Board of Directors . . . . . . 43
Other . . . . . . . . . . . . . . . . . 32 Advance Notice of Director Nominations. . 43
Summary . . . . . . . . . . . . . . . . 32 Delaware Anti-Takeover Statute. . . . . . 44
Trinity's Reasons for the Merger . . . . . . 33 Transfer Agent and Registrar. . . . . . . 44
Interests of Certain Persons in the Merger . 33 COMPARISON OF STOCKHOLDER RIGHTS . . . . . . . . . 44
General . . . . . . . . . . . . . . . . 33
</TABLE>
4
<PAGE> 13
<TABLE>
<CAPTION>
<S> <C>
Authorized Capital Stock . . . . . . . . . . 44
Voting Rights . . . . . . . . . . . . . . . 44
Amendments to Charter and Bylaws . . . . . . 44
Preemptive Rights; Cumulative Voting . . . . 45
Board of Directors . . . . . . . . . . . . . 45
Removal of Directors . . . . . . . . . . . . 45
Newly-Created Directorships and Vacancies . 45
Nomination of Directors . . . . . . . . . . 45
Stockholder Proposals . . . . . . . . . . . 45
Special Meetings of the Stockholders . . . . 46
Stockholder Action by Written Consent . . . 46
Limitation on Director's Liability . . . . . 46
Indemnification . . . . . . . . . . . . . . 46
ELECTION OF DIRECTORS . . . . . . . . . . . . . . 46
Nominees for Election . . . . . . . . . . . 46
Background of Nominees . . . . . . . . . . . 47
BOARD MEETINGS AND COMMITTEES . . . . . . . . . . 47
RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS . . . . . . . . . . . . 48
APPROVAL TO INCREASE THE NUMBER
OF SHARES ISSUABLE UNDER THE
AMENDED AND RESTATED (1994)
STOCK OPTION PLAN . . . . . . . . . . . . . 48
General . . . . . . . . . . . . . . . . . . 48
Administration of the Plan . . . . . . . . . 48
Options . . . . . . . . . . . . . . . . . . 49
Adjustments Upon Change in Capitalization . 49
U.S. Federal Income Tax Consequences . . . . 50
Nonstatutory Stock Options . . . . . . . . . 50
Incentive Stock Options . . . . . . . . . . 50
LEGAL MATTERS . . . . . . . . . . . . . . . . . . 51
EXPERTS . . . . . . . . . . . . . . . . . . . . . 51
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . 51
ANNEX A Agreement and Plan of Merger, dated as of
June 17, 1996, by and among Transcisco
Industries, Inc., Trinity Industries, Inc.
and Trinity Y
ANNEX B Opinion of Schroder Wertheim & Co.
Incorporated
ANNEX C Trinity's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996
ANNEX D Transcisco's Annual Report on Form 10-K
(without exhibits thereto) for the
fiscal year ended March 31, 1996
</TABLE>
5
<PAGE> 14
SUMMARY OF PROXY STATEMENT/PROSPECTUS
The following is a summary of certain information contained elsewhere
in this Proxy Statement/Prospectus. It is not, and is not intended to be,
complete in itself. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information contained elsewhere in this Proxy
Statement/Prospectus, including the Annexes hereto which are a part of this
Proxy Statement/Prospectus. Stockholders are encouraged to read carefully all
of the information contained in this Proxy Statement/Prospectus.
TRANSCISCO STOCKHOLDERS SHOULD CONSIDER CAREFULLY THE INFORMATION SET
FORTH HEREIN UNDER THE HEADING "RISK FACTORS" IN ADDITION TO THE OTHER
INFORMATION PRESENTED HEREIN.
THE COMPANIES
Trinity Industries, Inc. and Trinity Y, Inc. . . Trinity, with headquarters
in Dallas, Texas, manu-
factures and markets a wide
variety of products,
principally in six
business segments: Railcars,
Marine Products, Construction
Products, Containers, Metal
Components, and Leasing. The
principal executive offices
of Trinity are located at
2525 Stemmons Freeway,
Dallas, Texas 75207, and its
telephone number is (214)
631-4420. Trinity Y is a
direct, wholly-owned
subsidiary of Trinity,
organized under the laws of
the State of Delaware solely
for the purpose of merging
with Transcisco. Trinity Y
is not engaged in any
business operations. The
mailing address and telephone
number for Trinity Y are the
same as those for Trinity.
See "CERTAIN INFORMATION
REGARDING TRINITY AND TRINITY
Y."
Transcisco Industries, Inc. . . . . . . . . . . . Transcisco, with
headquarters in San
Francisco, California, is a
holding company whose primary
lines of business include (i)
nationwide railcar
maintenance through
Transcisco Rail Services
Company, operating ten
railcar repair and
maintenance facilities across
the United States; (ii)
specialty railcar leasing and
management services through
Transcisco Leasing Company,
providing innovative railcar
leasing and management
services for large utilities
and Class I railroads; and
(iii) Russian rail
transportation services
through Transcisco Trading
Company, a 23.5% shareholder
of SFAT, Russia's leading
privately-held rail
transportation firm. SFAT's
5,500 tankcar fleet is used
to transport petroleum and
petrochemicals for export.
The principal executive
offices of Transcisco are
located at 601 California
Street, Suite 1301, San
Francisco, California 94108,
and its telephone number is
(415) 477-9700. See "CERTAIN
INFORMATION REGARDING
TRANSCISCO."
Trading Markets and Market Price Data . . . . . . Shares of Transcisco Common
Stock are listed and traded
on the AMEX under the symbol
"TNI." Shares of Trinity
Common Stock are listed and
traded on the NYSE under the
symbol "TRN." The closing
prices of Transcisco Common
Stock and Trinity Common
Stock on May 3, 1996, the
last full trading day prior
to the announcement that
Transcisco and Trinity had
entered into a letter of
intent in contemplation of
the Merger,
6
<PAGE> 15
were $5.625 per share, as
reported by the AMEX
Composite Tape, and
$34.50 per share, as reported
by the NYSE Composite Tape,
respectively. The closing
prices of Transcisco Common
Stock and Trinity Common
Stock on June 17, 1996, the
last full trading day prior
to the announcement that
Transcisco and Trinity had
entered into the Merger
Agreement, were $5.75 per
share, as reported by the
AMEX Composite Tape, and
$35.25 per share, as reported
by the NYSE Composite Tape,
respectively. On July 15,
1996, the most recent
practicable date prior to the
printing of this Proxy
Statement/Prospectus, the
closing price of Transcisco
Common Stock, as reported by
the AMEX Composite Tape, was
$5.75 per share, and the
closing price of Trinity
Common Stock, as reported by
the NYSE Composite Tape, was
$32.125 per share. See
"MARKET PRICE DATA AND
DIVIDENDS."
THE MEETING
Time, Date and Place . . . . . . . . . . . . . . The Meeting will be held on
September 3, 1996, at
12:00 p.m., local time, at
the Financial District
Holiday Inn, 750 Kearny
Street, San Francisco,
California.
Purpose of the Meeting . . . . . . . . . . . . . Holders of Transcisco Common
Stock will be asked to:
(i) consider and vote upon
a proposal to approve and
adopt the Merger Agreement,
by and among Transcisco,
Trinity, and Trinity Y,
pursuant to which Trinity Y
will be merged with
and into Transcisco, which
would continue in existence
as a wholly-owned subsidiary
of Trinity; (ii) elect two
Class I directors to hold
office until the consummation
of the Merger, or if the
Merger is not consummated,
until the due election and
qualification of such
directors' successors; (iii)
approve an increase in the
number of shares of
Transcisco Common Stock
issuable under Transcisco's
Amended and Restated (1994)
Stock Option Plan; (iv)
ratify the selection of Ernst
& Young LLP as Transcisco's
independent auditors for the
fiscal year ending March 31,
1997; and (v) transact such
other business as may
properly come before the
Meeting.
Record Date . . . . . . . . . . . . . . . . . . . Only stockholders
of record of Transcisco
Common Stock at the close of
business on July 15, 1996
(the "Record Date") are
entitled to notice of and to
vote at the Meeting. On such
date, there were outstanding
5,412,725 shares of
Transcisco Common Stock held
by 338 holders of
record. See "THE
MEETING--Record Date."
Voting Rights . . . . . . . . . . . . . . . . . . Each share of
Transcisco Common Stock is
entitled to one vote with
respect to each matter
properly presented at the
Meeting. See "DESCRIPTION OF
TRANSCISCO CAPITAL
STOCK--Transcisco Common
Stock" and "THE
MEETING--Votes Required;
Voting Rights."
7
<PAGE> 16
Quorum; Votes Required . . . . . . . . . . . . . The presence, in
person or by proxy, at the
Meeting of the holders of a
majority of the shares of
Transcisco Common Stock
outstanding and entitled to
vote at the Meeting is
necessary to constitute a
quorum. The approval of the
Merger Agreement requires the
affirmative vote of holders
of a majority of the
outstanding shares of
Transcisco Common Stock. The
approval of an increase in
the number of shares issuable
under Transcisco's Amended
and Restated (1994) Stock
Option Plan and the
ratification of the selection
of Ernst & Young LLP as
Transcisco's independent
auditors for the fiscal year
ending March 31, 1997 will
each require the affirmative
vote of the holders of a
majority of the shares of
Transcisco Common Stock
present at the Meeting, in
person or by proxy, and
entitled to vote. The
election of two Class I
directors will require a
plurality of the votes cast
in the election of directors.
Security Ownership of
Transcisco's Management . . . . . . . . . . . . As of the Record
Date, the directors and
executive officers of
Transcisco (nine persons)
owned beneficially an
aggregate of 2,116,774
shares of the Transcisco
Common Stock (constituting
approximately 31.13% of
the outstanding shares), of
which 1,292,038 shares
(constituting approximately
19.0% of the outstanding
shares) were deemed
beneficially owned as a result
of the ownership of options to
purchase such shares and which
cannot be voted at the
Meeting. See "SECURITY
OWNERSHIP--Security Ownership
of Certain Beneficial Owners,
Directors and Management of
Transcisco." To the knowledge
of Trinity, no executive
officer or director of Trinity
owns any shares of Transcisco
Common Stock.
Revocability of Proxy . . . . . . . . . . . . . . Any Transcisco stockholder
who executes and
returns a proxy may revoke
such proxy at any time before
it is voted by (i) notifying
in writing the corporate
secretary (the "Corporate
Secretary") of Transcisco at
601 California Street, Suite
1301, San Francisco,
California 94108, (ii)
granting a subsequent proxy,
or (iii) appearing in person
and voting at the Meeting.
Attendance at the Meeting
will not in and of itself
constitute revocation of a
proxy.
THE PROPOSED MERGER
General . . . . . . . . . . . . . . . . . . . . . At the Effective
Time (as defined below),
pursuant to the Merger
Agreement, Trinity Y will be
merged with and into
Transcisco, which will
continue in existence as a
wholly-owned subsidiary of
Trinity (the "Surviving
Corporation" as distinguished
from Transcisco prior to the
Merger).
Closing; Effective Time . . . . . . . . . . . . . The Merger will
become effective upon the
filing of a certificate of
merger with the Secretary of
State of the State of
Delaware in accordance with
the Delaware General
Corporation Law (the
8
<PAGE> 17
"DGCL") (the "Effective
Time"). Such filing will be
made on the date of the
closing of the
Merger (the "Closing" or the
"Closing Date"). The Closing
will take place as soon as
practicable following the
approval of the Merger
Agreement by the Transcisco
stockholders and the
satisfaction or waiver of the
other conditions to each
party's obligation to
consummate the Merger. See
"THE PROPOSED
MERGER--Closing; Effective
Time."
Conversion of Shares . . . . . . . . . . . . . . In the Merger, each
share of Transcisco Common
Stock outstanding prior to
the Effective Time will be
converted into, exchanged
for, and represent the right
to receive 0.1884 (the
"Exchange Ratio") of a share
of Trinity Common Stock.
Fractional Shares . . . . . . . . . . . . . . . . Fractional shares
of Trinity Stock will not be
issued in the Merger. Holders
of Transcisco Common Stock
will be paid cash in lieu of
such fractional shares. See
"THE PROPOSED
MERGER--Fractional Shares."
Recommendation of the Transcisco Board of
Directors and Transcisco's Reasons for the
Merger . . . . . . . . . . . . . . . . . . . . THE BOARD OF DIRECTORS OF
TRANSCISCO (THE
"TRANSCISCO BOARD") BELIEVES
THAT THE MERGER IS FAIR TO
AND IN THE BEST INTERESTS OF
TRANSCISCO AND ITS
STOCKHOLDERS AND RECOMMENDS
THAT TRANSCISCO STOCKHOLDERS
VOTE FOR THE APPROVAL AND
ADOPTION OF THE MERGER
AGREEMENT. The Transcisco
Board has unanimously
approved the Merger and
resolved to recommend that
Transcisco stockholders vote
for approval and adoption of
the Merger Agreement. The
Transcisco Board considered
many factors in reaching its
conclusion to approve the
Merger Agreement and to
recommend that Transcisco
stockholders vote for
approval and adoption of the
Merger Agreement. See "THE
PROPOSED
MERGER--Recommendation of the
Transcisco Board and
Transcisco's Reasons for the
Merger."
Approval by the Trinity Board and
Trinity's Reasons for the Merger . . . . . . . The Board of Directors of
Trinity (the
"Trinity Board") has
unanimously approved the
Merger Agreement and the
transactions contemplated
thereby. The Merger does not
require the approval of the
Trinity stockholders. See
"THE PROPOSED
MERGER--Trinity's Reasons for
the Merger."
Opinion of Transcisco's Financial Advisor . . . . Schroder Wertheim &
Co. Incorporated ("Schroder
Wertheim") has delivered a
written opinion to the
Transcisco Board, dated as of
June 7, 1996 and as of
July 18, 1996, to the effect
that the Exchange Ratio
provided for by the Merger
Agreement is fair, from a
financial point of view, to
the Transcisco stockholders.
Schroder Wertheim's opinion is
based on market, economic,
9
<PAGE> 18
and other considerations as
they existed and could be
evaluated as of the date the
opinion was delivered. The
full opinion of Schroder
Wertheim, dated as of
July 18, 1996, is included as
Annex B to this Proxy
Statement/Prospectus, and
stockholders are urged to
read the opinion in its
entirety. See "THE PROPOSED
MERGER--Opinion of
Transcisco's Financial
Advisor."
Interests of Certain Persons in the Merger . . . In considering the
recommendation of the
Transcisco Board with respect
to the Merger Agreement,
stockholders should be aware
that certain members of
Transcisco's management and
the Transcisco Board have
certain interests in the
Merger that are in addition
to the interests of
stockholders of Transcisco
generally. See "SECURITY
OWNERSHIP--Security Ownership
of Certain Beneficial Owners,
Directors and Management of
Transcisco." The Transcisco
Board was aware of these
interests and considered
them, among other matters, in
approving the Merger
Agreement. See "THE PROPOSED
MERGER--Interests of Certain
Persons in the Merger."
Conditions to the Merger . . . . . . . . . . . . The respective
obligations of Transcisco,
Trinity Y, and Trinity to
consummate the Merger are
subject to a number of
conditions, including (i) the
approval of the Merger by
Transcisco's stockholders;
(ii) the absence of any
preliminary or permanent
injunction prohibiting the
consummation of the Merger;
(iii) the Registration
Statement having become
effective and not being the
subject of any stop order
proceedings; (iv) no action
having been taken by any
Federal or state governmental
agency that would prohibit
Trinity or the Surviving
Corporation's ownership of
Transcisco's business assets,
render Transcisco unable to
consummate the Merger, or
make such consummation
illegal; (v) the approval for
listing on the NYSE of the
Trinity Common Stock issuable
in the Merger; (vi) the
receipt by Transcisco of an
opinion from its counsel to
the effect that the Merger
will be treated for federal
income tax purposes as a
reorganization within the
meaning of Section 368(a) of
the Internal Revenue Code of
1986, as amended (the
"Code"); and (vii) the
receipt by Transcisco of an
opinion from Schroder
Wertheim, dated as of the
closing date of the Merger,
to the effect that the
Exchange Ratio is fair to
Transcisco's stockholders
from a financial point of
view. None of the foregoing
conditions are irrevocable.
Transcisco and Trinity may
determine to modify or waive
any condition to the
consummation of the Merger,
provided that no modification
or waiver by Transcisco that
requires stockholder approval
under applicable law,
Transcisco's amended and
restated certificate of
incorporation ("Transcisco
Certificate of
Incorporation"), or
Transcisco's bylaws
("Transcisco
10
<PAGE> 19
Bylaws") will occur unless
such approval is obtained.
In the event a modification or
waiver by Transcisco is
contemplated that requires
stockholder approval under
applicable law, a supplement
to this Proxy
Statement/Prospectus will be
distributed to stockholders
and proxies will be
resolicited. See "THE
MEETING--Solicitation of
Proxies." By letter dated
as of July 15, 1996, Trinity
and Transcisco each agreed to
waive the covenant (and the
condition that such covenant
be performed at or prior to
the Effective Time) that
required each to use
reasonable efforts to supply
the other with a comfort
letter with respect to the
financial data contained in
this Proxy
Statement/Prospectus.
Neither Trinity nor
Transcisco contemplates
waiving or modifying any of
the other foregoing
conditions. See "THE PROPOSED
MERGER--The Merger
Agreement--Conditions to the
Merger."
Other Acquisition Proposals . . . . . . . . . . . The Merger Agreement provides
that, prior to the
consummation or
termination of the Merger
Agreement, Transcisco and its
subsidiaries and
representatives and agents
will not initiate, solicit,
or encourage (including by
way of furnishing information
or assistance), or take
certain other actions to
facilitate, any inquiries or
the making of any proposals
to purchase or acquire any
equity securities or (except
in the ordinary course of
business) assets of, or merge
or combine with, Transcisco
or any of its subsidiaries
(an "Acquisition Proposal"),
or to enter into discussions
or negotiate with any person
or entity with respect to an
Acquisition Proposal or to
endorse or obtain an
Acquisition Proposal, in each
case subject to certain
exceptions necessary to
comply with the Transcisco
Board's fiduciary obligations
to the Transcisco
stockholders. See "THE
PROPOSED MERGER--The Merger
Agreement--Other Acquisition
Proposals."
Termination . . . . . . . . . . . . . . . . . . . The Merger Agreement may be
terminated and the Merger
abandoned at any time
prior to the Closing
Date (i) by mutual consent of
Transcisco and Trinity; (ii)
by Transcisco (a) if a
condition to the performance
of the Merger Agreement by
Transcisco is not fulfilled
on or before the time
specified for the fulfillment
thereof, (b) if any of the
representations and
warranties of Trinity and
Trinity Y that are qualified
with respect to materiality
are not true and correct in
all respects, and the breach
of the representation and
warranty is not curable or,
if curable, is not cured
within thirty days after
written notice, (c) if any of
the representations of
Trinity and Trinity Y that
are not qualified with
respect to materiality are
not true and correct in all
material respects, and the
breach of the representation
and warranty is not curable
or, if curable, is not cured
within thirty days after
written notice, (d) if there
has been a material breach of
any covenants or agreements
by
11
<PAGE> 20
Trinity or Trinity Y, which
breach is not curable or, if
curable, is not cured within
thirty days after written
notice, (e) if any suit,
action, or other proceeding
is pending or threatened
that, in Transcisco's
reasonable opinion,
materially and
adversely affects the
prospects of the Merger, (f)
if Trinity issues shares in a
transaction requiring
stockholder approval, or (g)
if the Transcisco Board
withdraws, modifies, or
changes, in a manner adverse
to Trinity, its approval or
recommendation of the Merger
Agreement in order to approve
and permit Transcisco to
execute an agreement relating
to a competing Acquisition
Proposal and determines,
based on a written opinion of
Transcisco's legal counsel,
that the failure to take such
action would result in a
breach of the Transcisco
Board's fiduciary duties;
(iii) by Trinity and Trinity
Y (a) if a condition to the
performance of the Merger
Agreement by Trinity and
Trinity Y is not fulfilled on
or before the time specified
for the fulfillment thereof,
(b) if any of the
representations and
warranties of Transcisco that
are qualified with respect to
materiality are not true and
correct in all respects, and
the breach of the
representation and warranty
is not curable or, if
curable, is not cured within
thirty days after written
notice, (c) if any of the
representations of Transcisco
that are not qualified with
respect to materiality are
not true and correct in all
material respects, and the
breach of the representation
and warranty is not curable
or, if curable, is not cured
within thirty days after
written notice, (d) if there
has been a material breach of
any covenants or agreements
by Transcisco, which breach
is not curable or, if
curable, is not cured within
thirty days after written
notice, or (e) if any suit,
action, or other proceeding
is pending or threatened
that, in Trinity's reasonable
opinion, materially and
adversely affects the
prospects of the Merger; or
(iv) by either Trinity or
Transcisco if (a) the Merger
shall not have been
consummated on or before
September 16, 1996, provided
that under certain
circumstances such date may
be extended to October 15,
1996 or (b) if a court of
competent jurisdiction or
agency or commission shall
have issued an order, decree,
or ruling or taken any other
action permanently
restraining, enjoining, or
otherwise prohibiting the
transactions contemplated by
the Merger Agreement and such
order, decree, ruling or
other action shall have
become final and non-
appealable provided certain
conditions are satisfied.
See "THE PROPOSED MERGER-The
Merger
Agreement-Termination."
Termination Fees . . . . . . . . . . . . . . . . In the event that
Transcisco terminates the
Merger Agreement to accept a
competing Acquisition
Proposal, Transcisco would be
required to pay Trinity
$200,000 on the date of
termination of the Merger
Agreement. Upon the
consummation of the
transaction contemplated by a
competing Acquisition
Proposal, Transcisco would be
required
12
<PAGE> 21
to make an additional
payment to Trinity of
$2,028,081.
Accounting Treatment . . . . . . . . . . . . . . The Merger will be
treated as a purchase by
Trinity for accounting and
financial reporting purposes.
See "THE PROPOSED
MERGER--Accounting
Treatment."
Certain Federal Income Tax Consequences of the
Merger . . . . . . . . . . . . . . . . . . . . . The Merger is
intended to qualify as a
reorganization within the
meaning of Section 368(a) of
the Code such that, for
federal income tax purposes,
the Merger will not result in
the recognition of gain or
loss by Trinity, Trinity Y,
Transcisco or the
stockholders of Transcisco.
Transcisco's obligation to
effect the Merger is
conditioned on the delivery
of an opinion from Skadden,
Arps, Slate, Meagher & Flom,
special counsel to
Transcisco, substantially to
the effect that, on the basis
of facts, representations,
and assumptions set forth in
such opinion for federal
income tax purposes the
Merger constitutes a
reorganization within the
meaning of Section 368(a) of
the Code. Transcisco will not
waive the condition requiring
the receipt of such an
opinion from its counsel.
Stockholders are urged to
consult their tax advisors as
to the tax consequences of
the Merger to them under
federal, state, local or any
other applicable law. See
"THE PROPOSED MERGER--Certain
Federal Income Tax
Consequences of the Merger."
Dissenters' Rights . . . . . . . . . . . . . . . Under the DGCL,
holders of Transcisco Common
Stock will not have
dissenters' rights in
connection with the Merger.
See "THE PROPOSED
MERGER--Dissenters' Rights."
Comparison of Stockholder Rights . . . . . . . . The rights of
Transcisco stockholders are
currently governed by the
DGCL, the Transcisco
Certificate of Incorporation,
and the Transcisco Bylaws.
Upon consummation of the
Merger, Transcisco
stockholders who receive
Trinity Common Stock in the
Merger will become
stockholders of Trinity, and
their rights will be governed
by the DGCL, Trinity's
certificate of incorporation
(the "Trinity Certificate of
Incorporation"), and
Trinity's bylaws ("Trinity
Bylaws"). For a summary of
the material differences
between the rights of
Transcisco stockholders and
the rights of Trinity
stockholders, see "COMPARISON
OF STOCKHOLDER RIGHTS."
13
<PAGE> 22
MARKET PRICE DATA AND DIVIDENDS
Trinity Common Stock is listed and traded on the NYSE under the symbol
"TRN." Transcisco Common Stock is listed and traded on the AMEX under the
symbol "TNI". The table below sets forth, for the quarters indicated, (i) the
quarterly per share cash dividends paid to holders of Trinity Common Stock,
(ii) the high and low sales prices of Trinity Common Stock as reported by the
NYSE Composite Tape, and (iii) the high and low sales prices of Transcisco
Common Stock, as reported by the AMEX Composite Tape.
<TABLE>
<CAPTION>
Dividends
Declared
Per
Trinity Price of
Price of Trinity Common Transcisco
Common Stock Shares Common Stock
---------------- ------ ------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1995:
First Quarter . . . . . . . . . . . . $40.000 $33.000 $0.17 $1.500 $0.938
Second Quarter . . . . . . . . . . . . $35.750 $30.625 $0.17 $1.500 $0.938
Third Quarter . . . . . . . . . . . . $35.375 $30.375 $0.17 $1.875 $1.000
Fourth Quarter . . . . . . . . . . . . $37.375 $31.375 $0.17 $1.500 $1.000
Year ended March 31, 1996:
First Quarter . . . . . . . . . . . . $40.375 $31.750 $0.17 $1.875 $1.000
Second Quarter . . . . . . . . . . . . $36.500 $30.625 $0.17 $3.688 $1.438
Third Quarter . . . . . . . . . . . . $32.750 $28.125 $0.17 $3.500 $2.625
Fourth Quarter . . . . . . . . . . . . $36.000 $30.750 $0.17 $5.750 $3.000
Year ending March 31, 1997:
First Quarter . . . . . . . . . . . . $36.250 $32.750 $0.17 $6.250 $4.625
Second Quarter (through July 15, 1996) $34.125 $32.000 $6.188 $5.750
</TABLE>
On May 3, 1996, the last full trading day prior to the announcement by
Transcisco and Trinity that they had entered into a letter of intent with
respect to the possible acquisition of Transcisco by Trinity, the closing
prices of Transcisco Common Stock and Trinity Common Stock were $5.625 per
share, as reported by the AMEX Composite Tape, and $34.50 per share as reported
by the NYSE Composite Tape, respectively. The closing prices of Transcisco
Common Stock and Trinity Common Stock on June 17, 1996, the last full trading
day prior to the public announcement of the Merger were $5.75 per share, as
reported by the AMEX Composite Tape, and $35.25 per share, as reported by the
NYSE Composite Tape, respectively. The closing prices of Transcisco Common
Stock and Trinity Common Stock on July 15, 1996, the most recent practicable
date prior to the printing of this Proxy Statement/Prospectus, were $5.75 per
share, as reported by the AMEX Composite Tape, and $32.125 per share, as
reported by the NYSE Composite Tape, respectively. STOCKHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS.
Transcisco has not paid cash dividends on Transcisco Common Stock
since 1990. Transcisco's senior loan agreement prohibits the payment of
dividends without the consent of Transcisco's senior lenders. Transcisco has
made no determination whether to declare dividends in the foreseeable future,
in the event that the Merger is not consummated. Future payment of dividends
on Transcisco Common Stock, in the event that the Merger is not consummated,
will depend on earnings, financial condition, capital requirements, and other
relevant factors.
On July 15, 1996, there were approximately 338 holders of record of
Transcisco Common Stock.
14
<PAGE> 23
SELECTED HISTORICAL FINANCIAL DATA OF TRINITY
The following table presents selected historical financial data of
Trinity and its consolidated subsidiaries for the periods indicated. The
historical financial data as of and for the five years ended March 31, 1996
were derived from Trinity's audited consolidated financial statements. The
data presented below should be read in conjunction with the consolidated
financial statements, related notes and other financial information of Trinity
included or incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT FOR PERCENT AND PER SHARE DATA)
YEAR ENDED MARCH 31
----------------------------------------------------
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . $ 2,496.0 2,314.9 1,784.9 1,540.0 1,273.3
Operating Profit . . . . . . . . . . . . . . . . $ 201.2 157.5 116.6 74.6 43.4
Interest expense, net (excluding Trinity's
leasing subsidiary) . . . . . . . . . . . . . . $ 14.8 11.4 4.0 3.3 6.4
Income before income taxes and cumulative effect
of change in accounting for income taxes . . . $ 186.3 147.5 114.2 72.1 39.7
Provision for income taxes . . . . . . . . . . . $ 72.5 58.4 45.9 27.1 15.4
Effective tax rate . . . . . . . . . . . . . . . % 38.9 39.6 40.2 37.6 38.8
Income before cumulative effect of change in
accounting for income taxes . . . . . . . . . . $ 113.8 89.1 68.3 45.0 24.3
Cumulative effect as of April 1, 1993 of change
in accounting for income taxes . . . . . . . . $ - - 7.9 - -
Net income . . . . . . . . . . . . . . . . . . . $ 113.8 89.1 76.2 45.0 24.3
Total assets . . . . . . . . . . . . . . . . . . $ 1,455.8 1,420.0 1,306.8 1,089.1 1,021.2
Long-term debt . . . . . . . . . . . . . . . . . $ 206.4 242.9 277.9 293.2 357.3
Stockholders' equity . . . . . . . . . . . . . . $ 746.0 641.2 570.5 507.3 379.0
Stock data (1)
Weighted average number of common and common
equivalent shares outstanding . . . . . . . . $ 41.9 40.5 40.3 35.4 34.2
Income per common and common equivalent share
before cumulative effect of change in
accounting for income taxes . . . . . . . . . $ 2.72 2.20 1.69 1.27 0.71
Cumulative effect of change in accounting for
income taxes . . . . . . . . . . . . . . . . . $ - - 0.20 - -
Net income per common and common equivalent
share . . . . . . . . . . . . . . . . . . . . $ 2.72 2.20 1.89 1.27 0.71
Dividends per share (2) . . . . . . . . . . . . $ 0.68 0.68 0.64 0.53 0.53
Book value per share . . . . . . . . . . . . . $ 17.93 15.95 14.37 12.95 11.13
</TABLE>
- ---------------
(1) On August 31, 1993, Trinity distributed a three-for-two stock split in the
form of a stock dividend. Accordingly, in the above table, share and per
share information has been restated to give effect to the stock split.
(2) In fiscal 1994, dividends per share were restated to $0.13 in the first
quarter and then increased to $0.17 for the last three quarters.
15
<PAGE> 24
SELECTED HISTORICAL FINANCIAL DATA OF TRANSCISCO
The following table presents selected historical financial data of
Transcisco and its consolidated subsidiaries for the periods indicated. The
historical financial data as of and for the two fiscal years ended March 31,
1996, as of and for the three-month period ended March 31, 1994 and as of and
for the three calendar years ended December 31, 1993 were derived from
Transcisco's audited consolidated financial statements. The data presented
below should be read in conjunction with the consolidated financial statements,
related notes, and other financial information of Transcisco included or
incorporated by reference in this Proxy Statement/Prospectus.
(IN THOUSANDS, EXCEPT RATIO AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTH
FISCAL YEARS ENDED PERIOD ENDED
MARCH 31 MARCH 31, CALENDAR YEARS ENDED DECEMBER 31
1996 1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------ ------------
(restated)
<S> <C> <C> <C> <C> <C> <C>
Results of Operations:
Revenues $42,630 $34,579 $ 7,221 $32,513 $31,833 $29,715
Income (loss) from
continuing operations before
equity in earnings of affiliated
companies, asset writedown,
reorganization items, income tax,
extraordinary gain and cumulative
effect of accounting change 3,874 571 (341) 674 1,622 (3,975)
Equity in earnings (loss) of
affiliated companies 5,975 2,019 -- -- (3,641) 1,134
Asset write-down (3,000) -- -- -- -- --
Reorganization items -- -- -- (4,086) (2,613) (4,278)
Income tax (provision) benefit (198) -- -- -- -- 818
------- ------- ------ -------- -------- --------
Income (loss) from
continuing operations 6,651 2,590 (341) (3,412) (4,632) (6,301)
Discontinued operations,
net of income tax -- -- -- (1,381) (4,146) (16,518)
------- ------- ------ -------- -------- --------
Net income (loss) before
extraordinary gain
and accounting change 6,651 2,590 (341) (4,793) (8,778) (22,819)
Extraordinary gain 6,058 -- -- 13,929 -- --
Cumulative effect of change to
the equity method of
accounting 7,590
------- ------- ------ -------- -------- --------
Net income (loss) $12,709 $10,180 $ (341) $ 9,136 $ (8,778) $(22,819)
======= ======= ====== ======== ======== ========
Per share data:
Net income (loss) -
continuing operations $ 1.09 $ 0.49 (0.06) $ (0.73) $ (1.05) $ (1.43)
Net loss - discontinued
operations -- -- -- (0.29) (0.94) (3.75)
Extraordinary gain 1.00 -- -- 2.97 -- --
Accounting change -- 1.44 -- -- -- --
------- ------- ------ -------- -------- --------
Net income (loss) per share $ 2.09 $ 1.93 $(0.06) $ 1.95 $ (1.99) $ (5.18)
======= ======= ====== ======== ======== ========
Dividends per share -- -- -- -- -- --
Book value per share $ 4.23 $ 2.43 $ 0.49 $ 0.62 (1.54) $ 0.45
Average shares outstanding 6,085 5,284 5,423 4,690 4,410 4,403
</TABLE>
16
<PAGE> 25
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Financial Position:
Current assets $12,147 $11,471 8,993 $ 8,919 14,319 $ 18,002
Total assets $44,046 $40,137 30,499 $ 30,564 45,693 $ 54,170
Long-term debt $ 3,561 $13,415 17,998 $ 18,683 $ 36 $ 72
Shareholders' equity (deficit) $25,760 $12,844 2,649 $ 2,916 (6,810) $ 1,968
Ratio of current assets
to current liabilities 1.35 1.16 1.00 1.05 1.50 2.20
Debt to equity ratio 0.14 1.04 7.24 6.71 -- 18.10
</TABLE>
17
<PAGE> 26
RISK FACTORS
In addition to the other information contained in this Proxy
Statement/Prospectus, the stockholders of Transcisco should consider the
following risk factors in deciding whether to approve the Merger.
RISKS ASSOCIATED WITH RAILCAR SEGMENT
Revenues derived from the manufacture and sale of railcars, principally
tank cars and freight cars, accounted for approximately 50%, 50% and 41% of
Trinity's revenues in fiscal years 1996, 1995 and 1994, respectively. Annual
production of railcars on an industry-wide basis has widely fluctuated over the
past two decades. The period from 1980 - 1988 was negatively impacted by
production overcapacity, the United States embargo on the exportation of grain
to the Soviet Union and changes in the tax laws regarding investment tax credit
and depreciation methods and lives. Since that time, however, the overall use
of railroads for freight transportation has increased industry overcapacity has
been reduced and a large number of railcars have reached or neared the end of
their useful economic lives. These factors, coupled with relatively strong
general economic conditions, have resulted in increased railcar production
industry-wide. There can be no assurance, however, that such factors and
economic conditions will remain favorable or that significant fluctuations in
such factors and conditions will not occur that may have a material adverse
affect on the results of operations and financial condition of Trinity.
Trinity markets to three broad categories of customers - railroads,
leasing companies, and end users, other than railroads, of railcars who are
shippers. Many times the economic factors and conditions motivating one
category of customers to acquire railcars may not equally motivate one or both
of the other categories of customers to acquire railcars. This factor
contributes to the limited predictability of railcar order flows. As a result,
there can be no assurance that Trinity would not be adversely affected by a
temporary shortage of railcar orders. In addition, due to the large size of
railcar orders, and variations in the mix of car types ordered, the number and
type of railcars produced in any given quarter (as well as the size of
Trinity's railcar orders) may fluctuate greatly and, consequently, Trinity's
quarterly revenues and income from operations may vary substantially.
Trinity's revenues and income from the railcar segment are also subject to the
effects of the capital budgeting patterns of its railcar customers.
RISKS ASSOCIATED WITH MARINE PRODUCTS SEGMENT
The shipbuilding industry is a highly competitive industry. In general,
during the 1990's, the U.S. shipbuilding industry has been characterized by
substantial excess capacity because of the significant decline in U.S. Navy
shipbuilding spending and the difficulties experienced by U.S. shipbuilders in
competing successfully for international commercial projects against foreign
shipyards, many of which are heavily subsidized by their governments. As a
result of these factors, competition by U.S. shipbuilders for domestic
commercial projects has remained intense. Such competition has resulted in
substantial pressure on pricing, and operating contracts for the construction
of vessels are usually awarded on a competitive bid basis. Although Trinity
believes customers consider, among other things, the availability and technical
capabilities of equipment and personnel, efficiency, condition of equipment,
safety record and reputation, price competition is currently a primary factor
in determining which qualified shipbuilder is awarded a contract.
On June 25, 1996, Trinity announced that its Board of Directors approved
an initial public offering of all the common stock of a newly incorporated
company that will acquire the assets and liabilities of a portion of Trinity's
Marine Products segment. The newly formed company, Halter Marine Group, Inc.
("Halter"), will engage in the business of constructing and repairing
ocean-going marine vessels. Halter filed a registration statement on Form S-1
with the Commission on June 27, 1996. The offering of the common stock would
be effected only pursuant to a prospectus included in a registration statement
which has been declared effective by the Commission.
RISKS ASSOCIATED WITH CONSTRUCTION PRODUCTS SEGMENT
Demand for Trinity's construction products is directly related to activity
in the construction industry and general economic conditions. Various economic
factors beyond Trinity's control affect the markets for its construction
products, including the level of new residential, commercial and infrastructure
construction activity, which is in turn affected by movement in interest rates,
the availability of short- and long-term financing and the availability of
public funds for infrastructure projects.
18
<PAGE> 27
ENVIRONMENTAL MATTERS
Trinity's subsidiaries are subject to comprehensive and frequently
changing federal, state and local environmental laws and regulations, including
those governing emissions of air pollutants, discharges of wastewater and storm
waters, and the disposal of non-hazardous and hazardous waste. Trinity
anticipates that it may incur additional costs in the future to comply with
currently existing laws and regulations, new regulatory requirements arising
from recently enacted statutes, particularly those relating to the Clean Air
Act Amendments of 1990, and any new statutory requirements.
COMPETITION
Trinity faces competition in each of its segments and has numerous
competitors, and some competitors in certain segments are larger and have
greater financial resources than Trinity. There can be no assurance that
Trinity will be able to continue to compete successfully in its markets.
Because Trinity competes, in part, on the technical advantages and cost of its
products, significant technical advances by competitors or the achievement by
such competitors of improved operating efficiencies that enable them to reduce
prices could reduce Trinity's competitive advantage and, thereby, adversely
affect Trinity's business and financial results.
19
<PAGE> 28
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to stockholders of
Transcisco in connection with the solicitation of proxies for use at the
Meeting to be held on September 3, 1996, at 12:00 p.m., local time, at the
Financial District Holiday Inn, 750 Kearny Street, San Francisco, California,
and at any adjournment or postponement thereof.
At the Meeting, Transcisco's stockholders will be asked to consider and
vote upon a proposal to approve and adopt the Merger Agreement by and among
Transcisco, Trinity and Trinity Y. Pursuant to the Merger Agreement, Trinity Y
would be merged with and into Transcisco, which would continue in existence as
a wholly-owned subsidiary of Trinity.
In the Merger, and as more fully described in this Proxy
Statement/Prospectus and in the Merger Agreement included as Annex A hereto,
each share of Transcisco Common Stock outstanding prior to the effective time
of the Merger will be converted into, exchanged for, and represent the right to
receive 0.1884 of a share of Trinity Common Stock.
THE TRANSCISCO BOARD HAS APPROVED THE MERGER AND RECOMMENDS A VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. The Transcisco Board reached
this decision after careful consideration of a number of factors, including the
opinion of Schroder Wertheim, Transcisco's financial advisor, to the effect
that the Exchange Ratio is fair to Transcisco stockholders from a financial
point of view. The full opinion of Schroder Wertheim, dated as of the date of
this Proxy Statement/Prospectus, is included as Annex B to this Proxy
Statement/Prospectus, and stockholders are urged to read the opinion in its
entirety.
At the Meeting, Transcisco's stockholders will also be asked to: (i) elect
two Class I directors to hold office until the consummation of the Merger, or
if the Merger is not consummated, until the due election and qualification of
such directors' successors; (ii) approve an increase in the number of shares of
Transcisco Common Stock issuable under Transcisco's Amended and Restated (1994)
Stock Option Plan; (iii) ratify the selection of Ernst & Young LLP as
Transcisco's independent auditors for the fiscal year ending March 31, 1997;
and (iv) transact such other business as may properly come before the Meeting.
The Transcisco Board recommends a vote FOR election of its nominees as
directors, a vote FOR the approval of an increase in the number of shares of
Transcisco Common Stock issuable under Transcisco's Amended and Restated (1994)
Stock Option Plan, and a vote FOR the ratification of the selection of Ernst &
Young LLP as Transcisco's independent auditors for the fiscal year ending March
31, 1997.
This Proxy Statement/Prospectus also constitutes the prospectus of Trinity
with respect to the shares of Trinity Common Stock to be issued pursuant to the
Merger Agreement.
All information contained or incorporated by reference herein concerning
Transcisco has been furnished by Transcisco, and all information contained or
incorporated by reference herein concerning Trinity has been furnished by
Trinity.
This Proxy Statement/Prospectus is first being mailed to Transcisco's
stockholders on or about July 19, 1996.
20
<PAGE> 29
CERTAIN INFORMATION REGARDING TRINITY AND TRINITY Y
GENERAL
Trinity was originally incorporated under the laws of the State of Texas
in 1933. On March 27, 1987, it became a Delaware corporation by merger into a
wholly-owned subsidiary of the same name. Its mailing address is P.O. Box
568887, Dallas, Texas 75356-8887; its principal executive offices are located
at 2525 Stemmons Freeway, Dallas, Texas 75207, and its telephone number at such
address is (214) 631-4420. Trinity Y is a direct, wholly-owned subsidiary of
Trinity. Trinity Y was organized under the laws of the State of Delaware on
June 5, 1996 solely for the purpose of merging with and into Transcisco.
Trinity Y is not engaged in any business operations. The mailing address and
telephone number of Trinity Y are the same as those of Trinity.
Trinity is engaged in the manufacture, marketing and leasing of a variety
of products consisting principally of (i) "Railcars" (i.e., railroad freight
cars), principally tank cars, hopper cars, gondola cars and intermodal cars and
miscellaneous other freight cars; (ii) "Marine Products" such as boats, barges
and various offshore service vessels for ocean and inland waterway service and
military vessels for the United States Government and, to a limited extent,
various size vessels for international transportation companies; (iii)
"Construction Products" such as highway guardrail and highway and railway
bridges, power plants, mills, etc., highway safety products, passenger loading
bridges and conveyor systems for airports and other people and baggage
conveyance requirements, ready mix concrete production and distribution, and
providing raw materials to owners, contractors and sub-contractors for use in
the building and foundation industry; (iv) "Containers" such as (a) extremely
large, heavy pressure vessels and other heavy welded products, including
industrial silencers, desalinators, evaporators, and gas processing systems,
(b) pressure and non- pressure containers for the storage and transportation of
liquefied gases, brewery products and other liquid and dry products, and (c)
heat transfer equipment for the chemical, petroleum and petrochemical
industries; (v) "Metal Components" such as weld fittings (tees, elbows,
reducers, caps, flanges, etc.,) used in pressure piping systems and container
heads (the ends of pressure and non-pressure containers) for use internally and
by other manufacturers of containers; and (vi) "Leasing" of its manufactured
railcars and barges to various industries.
Further information concerning Trinity is included in Annex C to this
Proxy Statement/Prospectus and is incorporated by reference herein as and only
to the extent set forth on page 3 hereof.
RECENT DEVELOPMENTS
On June 25, 1996, Trinity announced that its Board of Directors approved
an initial public offering of all of the common stock of a newly incorporated
company that will acquire the assets and liabilities of a portion of Trinity's
Marine Products segment. The newly-formed company, Halter Marine Group, Inc.
("Halter"), will engage in the business of constructing and repairing
ocean-going marine vessels. Halter filed a registration statement on Form S-1
with the Commission on June 27, 1996. The offering of Halter's common stock
would be effected only pursuant to a prospectus included in a registration
statement declared effective by the Commission.
On July 15, 1996, Trinity announced a 23 percent increase in net income
for the first quarter of fiscal 1997 over the first quarter of fiscal 1996.
For the first quarter ended June 30, 1996, Trinity reported record net
income of $33.8 million, or 80 cents per share, on revenues of $662.5 million.
This compares to net income of $27.5 million, or 66 cents per share, on
revenues of $604.7 million in the first quarter of the previous fiscal year.
CERTAIN INFORMATION REGARDING TRANSCISCO
GENERAL
Transcisco was incorporated in California in 1972 under the name PLM
Group. It was reincorporated in Delaware in 1985 as PLM Companies, Inc. In
1988, its name was changed to Transcisco Industries, Inc. Transcisco is an
international rail services firm whose primary lines of business include (i)
nationwide railcar maintenance through Transcisco Rail Services; (ii) specialty
railcar leasing management, maintenance, and intermediary services through
Transcisco Leasing Company; and (iii) Russian rail transportation services
through Transcisco Trading Company. The principal executive offices of
Transcisco are located at 601 California Street, Suite 1301, San Francisco,
California 94108, and its telephone number is (415) 477-9700.
Further information concerning Transcisco is included in Annex D to this
Proxy Statement/Prospectus and is incorporated by reference herein as and only
to the extent set forth on page 3 hereof.
RECENT DEVELOPMENTS
On July 17, 1996, Transcisco announced a 34% increase in earnings for the
first quarter ended June 30, 1996 versus the same period last year.
For the first fiscal quarter ended June 30, 1996, Transcisco's net income
was $2 million, or $0.30 per share, on revenues of $10.3 million. For the
comparable period last year, net income was $1.49 million, or $0.27 per share,
on revenues of $10.8 million.
21
<PAGE> 30
THE MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to stockholders of
Transcisco in connection with the solicitation of proxies for use at the
Meeting to be held on September 3, 1996, at 12:00 p.m., local time, at the
Financial District Holiday Inn, 750 Kearny Street, San Francisco, California,
and at any adjournment or postponement thereof.
At the Meeting, the holders of Transcisco Common Stock as of the record
date will be asked to (i) approve the Merger Agreement by and among Transcisco,
Trinity, and Trinity Y; (ii) approve an increase in the number of shares of
Transcisco Common Stock issuable under Transcisco's Amended and Restated (1994)
Stock Option Plan; (iii) elect two Class I directors; (iv) ratify the selection
of Ernst & Young LLP as Transcisco's independent auditors for the fiscal year
ending March 31, 1997; and (v) consider any other matters that may be properly
presented at the Meeting.
RECORD DATE
The Transcisco Board has fixed the close of business on July 15, 1996 as
the record date (the "Record Date") for the determination of holders of
Transcisco Common Stock entitled to notice of the Meeting. Only holders of
Transcisco Common Stock as of the Record Date will be entitled to vote at the
Meeting. On the Record Date, there were 5,412,725 shares outstanding of
Transcisco Common Stock.
QUORUM
The presence, in person or by proxy, at the Meeting of the holders of a
majority of the shares of Transcisco Common Stock outstanding and entitled to
vote at the Meeting will be necessary to constitute a quorum. Abstentions and
broker non-votes will be counted towards the presence of a quorum.
VOTES REQUIRED; VOTING RIGHTS
The approval of the Merger Agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Transcisco Common Stock.
The approval of an increase in the number of shares issuable under Transcisco's
Amended and Restated (1994) Stock Option Plan and the ratification of the
selection of Ernst & Young LLP as Transcisco's independent auditors for the
fiscal year ending March 31, 1997 will each require the affirmative vote of the
holders of a majority of the shares of Transcisco Common Stock present at the
Meeting, in person or by proxy, and entitled to vote. The election of the two
Class I directors will require a plurality of the votes cast in the election of
directors. No approval of the Merger Agreement by the stockholders of Trinity
is required.
If fewer shares of Transcisco Common Stock are voted in favor of the
Merger than the number required for approval, it is expected that the Meeting
will be postponed or adjourned for the purpose of allowing additional time for
soliciting and obtaining additional proxies or votes. If a motion to adjourn
the meeting is presented for the purpose of allowing additional time to solicit
proxies, stockholders providing proxies that are not voted against the Merger
will be deemed to have conferred discretionary authority to vote for such
adjournment, and shares voted against the Merger will be voted against a motion
to adjourn such meeting. See "--Solicitation of Proxies."
Brokers who hold shares in "street name" have the authority to vote on
certain matters when they do not receive instructions from beneficial owners.
However, this authority does not extend to voting on the Merger Agreement or
the increase in the number of shares issuable under Transcisco's Amended and
Restated (1994) Stock Option Plan. Accordingly, brokers who do not receive
instructions will not be entitled to vote on the Merger Agreement or the
increase in the number of shares issuable under Transcisco's Amended and
Restated (1994) Stock Option Plan. In tabulating the votes on the Merger,
abstentions and broker non-votes will be counted and will have the same effect
as a vote against the Merger. In tabulating the votes on the increase in the
number of shares issuable under Transcisco's Amended and Restated (1994) Stock
Option Plan, abstentions will be counted and will have the same effect as a
vote against the proposal to increase the number of shares issuable under
Transcisco's Amended and Restated (1994) Stock Option Plan; broker non-votes
will be disregarded and will have no effect on the outcome of the vote. In
tabulating the votes on the selection of Ernst & Young LLP as Transcisco's
auditors for the fiscal year ending March 31, 1997, abstentions and broker
non-votes will be counted and will have the same effect as a vote against such
matters. In tabulating
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<PAGE> 31
the vote on the election of directors, broker non-votes will be disregarded and
will have no effect on the outcome of the vote.
As of the Record Date, the directors and executive officers of Transcisco
(nine persons) owned beneficially an aggregate of 2,116,774 shares of
Transcisco Common Stock (constituting approximately 31.13% of the outstanding
shares) of which 1,292,038 shares (constituting approximately 19.0% of the
outstanding shares) were deemed beneficially owned as a result of the ownership
of options to purchase such shares. Shares of Transcisco Common Stock issued
after the Record Date (including shares issued pursuant to the exercise of
options) cannot be voted at the Meeting. See "SECURITY OWNERSHIP--Security
Ownership of Certain Beneficial Owners, Directors and Management of
Transcisco." To the knowledge of Trinity, no executive officer or director of
Trinity owns any shares of Transcisco Common Stock.
Except as set forth below and based solely on review of filings made
pursuant to the Exchange Act and information provided to Transcisco by certain
directors, officers, and shareholders previously holding 5% or more of the
outstanding shares of Transcisco Common Stock, no individual owned more than 5%
of Transcisco Common Stock as of the Record Date.
At the Record Date, Steven L. Pease, Transcisco's President and Chief
Executive Officer, beneficially owned 383,975 shares of Transcisco Common Stock
(constituting approximately 5.65% of the outstanding shares) of which 36,977
shares (constituting approximately 0.54% of the outstanding shares) were deemed
beneficially owned as a result of the ownership of options to purchase such
shares and which cannot be voted at the Meeting.
At the Record Date, Furman Selz SBIC, L.P. beneficially owned 972,667
shares of Transcisco Common Stock (constituting approximately 14.3% of the
outstanding shares) of which 972,667 shares (constituting approximately 14.3%
of the outstanding shares) were deemed beneficially owned as a result of the
ownership of options to purchase such shares and which cannot be voted at the
Meeting. Brian P. Friedman, a director of Transcisco, is an executive vice
president of Furman Selz LLC and the President of Furman Selz Investments LLC,
both affiliates of Furman Selz SBIC, L.P.
DISSENTERS' RIGHTS
Under the DGCL, holders of Transcisco Common Stock do not have dissenters'
rights in connection with the Merger.
SOLICITATION OF PROXIES
If a stockholder attends the Meeting, he or she may vote by ballot.
However, many of Transcisco's stockholders may be unable to attend the Meeting.
Therefore, the Transcisco Board is soliciting proxies so that each holder of
Transcisco Common Stock on the Record Date will have the opportunity to vote on
the proposals to be considered at the Meeting on which each is entitled to
vote.
When a proxy is returned properly signed and dated, the shares represented
thereby will be voted in accordance with the instructions on the proxy. If a
stockholder does not return a signed proxy or vote in person at the Meeting,
his or her shares will not be voted. Stockholders are urged to mark the boxes
on the proxy to indicate how their shares are to be voted. If a holder of
Transcisco Common Stock returns a signed proxy but does not indicate how his or
her shares are to be voted, the shares represented by the proxy will be voted
(i) for the approval and adoption of the Merger Agreement, (ii) for the
election of the Transcisco Board's nominees for election as directors, (iii)
for the approval of an increase in the number of shares of Transcisco Common
Stock issuable under Transcisco's Amended and Restated (1994) Stock Option
Plan, and (iv) for ratification of Ernst & Young LLP as Transcisco's
independent auditors for the fiscal year ended March 31, 1997.
The Transcisco Board does not know of any matters other than those
described in the notice of the Meeting that are to come before the Meeting. If
any other matters are brought before the Meeting, including, among other
things, a motion to adjourn or postpone the Meeting to another time or place
for the purpose of, among other things, permitting dissemination of information
regarding material developments relating to the Merger or soliciting additional
proxies in favor of the proposal to adopt and approve the Merger Agreement, one
or more of the persons named on the proxy card will vote the shares represented
by such proxy upon such matters as determined in their best judgment and
consistent with the voting rights of such shares as provided by the Transcisco
Bylaws and the DGCL; provided, however, that no proxy that is voted against the
proposal to approve and adopt the Merger Agreement will be voted in favor of
any adjournment
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<PAGE> 32
or postponement for the purpose of soliciting additional proxies. At any
subsequent reconvening of the Meeting, all proxies will be voted in the same
manner as such proxies would have been voted at the original convening of the
Meeting, except for proxies that have been effectively revoked or withdrawn
prior to such reconvened meeting. See "--Votes Required; Voting Rights."
Any Transcisco stockholder who executes and returns a proxy may revoke
such proxy at any time before it is voted by (i) notifying in writing the
Corporate Secretary of Transcisco at 601 California Street, Suite 1301, San
Francisco, California 94108, (ii) granting a subsequent proxy, or (iii)
appearing in person and voting at the Meeting. Additional proxy cards are
available from the Corporate Secretary. Attendance at the Meeting
will not in and of itself constitute revocation of a proxy.
In addition to solicitation by use of the mails, proxies may be solicited
by directors, officers, and employees of Transcisco in person or by telephone,
telegram or other means of communications. Such directors, officers, and
employees will not be additionally compensated but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation.
Arrangements will be made with custodians, nominees and fiduciaries for the
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such custodians, nominees and fiduciaries, and Transcisco will
reimburse such custodians, nominees and fiduciaries for reasonable expenses
incurred in connection therewith. Transcisco has retained Skinner & Co., Inc.,
a proxy solicitation firm, to assist with soliciting and tabulating proxies for
the Meeting at an estimated expense of approximately $3,000, plus reasonable
out-of-pocket expenses. Transcisco will bear all costs and expenses of this
solicitation other than expenses incurred in connection with the printing and
mailing of this Proxy Statement/Prospectus, which will be borne by Trinity.
TRANSCISCO STOCKHOLDERS SHOULD NOT SEND IN ANY SHARE CERTIFICATES WITH
THEIR PROXY CARDS. PROXY CARDS SHOULD BE SENT TO SKINNER & CO., INC., 660
MARKET STREET, SUITE 204, SAN FRANCISCO, CALIFORNIA 94104. SHARE CERTIFICATES
SHOULD BE SENT WITH THE ENCLOSED LETTER OF TRANSMITTAL TO THE BANK OF NEW YORK,
AS EXCHANGE AGENT, TENDER & EXCHANGE DEPARTMENT, P.O. BOX 11248, CHURCH STREET
STATION, NEW YORK, NEW YORK 10286-1248. APPROPRIATE ENVELOPES ARE ENCLOSED FOR
THIS PURPOSE.
THE PROPOSED MERGER
GENERAL
The following is a brief summary of certain aspects of the Merger. This
summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, a copy of which is included in this Proxy
Statement/Prospectus as Annex A and is incorporated herein by reference. A
description of the relative rights, privileges, and preferences of Transcisco
Common Stock on the one hand, and Trinity Common Stock, on the other, including
certain material differences between the rights of holders of such stock, is
set forth under "DESCRIPTION OF TRINITY CAPITAL STOCK", "DESCRIPTION OF
TRANSCISCO CAPITAL STOCK," and "COMPARISON OF STOCKHOLDER RIGHTS."
CLOSING; EFFECTIVE TIME
The closing of the transactions contemplated by the Merger Agreement (the
"Closing") will take place as promptly as practicable following the Meeting and
after the last of the regulatory approvals and other conditions set forth in
the Merger Agreement are satisfied or waived. The Merger will become effective
upon the filing of a certificate of merger with the Secretary of State of the
State of Delaware in accordance with the DGCL (the "Effective Time"). Such
filings will be made as soon as practicable after the Closing. The Closing will
take place as soon as practicable following the approval of the Merger
Agreement by Transcisco stockholders and the satisfaction or waiver of the
other conditions to each party's obligation to consummate the Merger.
CONVERSION OF SHARES; FRACTIONAL SHARES
Each share of Transcisco Common Stock outstanding prior to the Effective
Time will be converted into, exchanged for and represent the right to receive
0.1884 of a share of Trinity Common Stock. No fractional shares of Trinity
Common Stock will be issued in the Merger, and such fractional shares will not
entitle the owners thereof to any rights of a holder of Trinity Common Stock.
Instead, each record holder of Transcisco Common Stock who would otherwise have
been entitled to receive a fraction of a share of Trinity Common Stock upon
surrender of certificates representing Transcisco Common Stock for exchange
will, upon
24
<PAGE> 33
surrender of Transcisco Common Stock certificates, be entitled to receive a
cash payment (without interest) equal to the product of such fraction
multiplied by the "Average Price" of a share of Trinity Common Stock. For
purposes of the foregoing, the "Average Price" of a share of Trinity Common
Stock will be the average of the closing sales prices thereof as reported on
the NYSE Composite Tape over the ten trading days including and ending on the
second trading day preceding the closing date of the Merger.
EXCHANGE OF CERTIFICATES
Upon surrender of each certificate representing shares of Transcisco
Common Stock, the Exchange Agent will issue to the holder of such certificate,
as soon as practicable after the Effective Time, his or her shares of Trinity
Common Stock (and cash in lieu of fractional shares) and such certificate
representing shares of Transcisco Common Stock will thereafter be cancelled.
Until so surrendered and exchanged, each such certificate that prior to the
Effective Time represented shares of Transcisco Common Stock will represent
solely the right to receive shares of Trinity Common Stock pursuant to the
Merger Agreement (and cash in lieu of fractional shares).
After the Effective Time, there will be no transfers on the stock transfer
books of the Surviving Corporation of any shares of Transcisco Common Stock.
If, after the Effective Time, certificates formerly representing shares of
Transcisco Common Stock are presented to the Surviving Corporation or the
Exchange Agent, they will be cancelled and (subject to applicable abandoned
property, escheat and similar laws) exchanged for Trinity Common Stock (and
cash in lieu of fractional shares), as provided above.
No dividends or other distributions declared or made after the Effective
Time with respect to shares of Trinity Stock will be paid to the holder of any
unsurrendered certificate with respect to the shares of Trinity Stock such
holder is entitled to receive, and no cash payment in lieu of fractional shares
will be paid, until the holder of such certificate surrenders such certificate
in accordance with the provisions of the Merger Agreement.
At the Effective Time, all shares of Transcisco Common Stock that are
owned by Transcisco as treasury stock and any shares of Transcisco Common Stock
owned by Trinity, Trinity Y, or any other direct or indirect subsidiary of
Trinity will be cancelled and retired and will cease to exist, and no payment
or other consideration will be made in respect thereof.
BACKGROUND OF THE MERGER
In early 1995, Transcisco received two proposals, described below, which
were each subject to a number of conditions, concerning the possible
acquisition of Transcisco. On March 30, 1995, Trinity proposed (the "Trinity
Proposal"), a transaction in which Transcisco's stockholders would receive a
cash payment of $1.75 for each of their shares of Transcisco common stock. On
April 11, 1995, Johnstown America Industries, Inc. ("JA") proposed acquiring
Transcisco for $1.50 (which was later raised to $1.75) per share in cash (the
"JA Proposal" and together with the Trinity Proposal, the "Early 1995
Proposals"). JA publicly announced its interest in Transcisco on April 20,
1995. Transcisco had previously retained Schroder Wertheim, pursuant to an
engagement letter dated April 13, 1995, to act as Transcisco's exclusive
financial advisor regarding the Early 1995 Proposals and to prepare a business
valuation of Transcisco. Based on Schroder Wertheim's valuation assessment of
the Early 1995 Proposals, as well as other factors, the Transcisco Board
decided not to pursue either of the Early 1995 Proposals.
On May 24, 1995, Trinity indicated that it was interested in pursuing a
stock-for-stock transaction in which it would issue 335,000 shares of Trinity
Common Stock having an aggregate value of $13.0 million based on Trinity's
$38.75 per share price at the time, which was equivalent to approximately $2.25
per share of Transcisco Common Stock, in exchange for all of the issued and
outstanding shares of Transcisco Common Stock. After a review of this proposal
by Transcisco and Schroder Wertheim, and based on the analyses performed and
the conclusions reached in evaluating the Early 1995 Proposals, the Transcisco
Board declined to pursue this proposal.
On July 20, 1995, Trinity proposed a transaction in which it would pay
$17.0 million (approximately $2.87 per share of Transcisco Common Stock) in
cash in exchange for all the issued and outstanding shares of Transcisco Common
Stock. After a review of this proposal by Transcisco and Schroder Wertheim,
and based on the analyses performed and the conclusions reached in evaluating
the Early 1995 Proposals, the Transcisco Board declined to pursue this
proposal.
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<PAGE> 34
In February and March of 1996, Transcisco began discussions with a number
of parties, including Trinity, regarding the potential acquisition of
Transcisco. At this time, Schroder Wertheim and Transcisco executed a new
engagement letter dated March 19, 1996 granting Schroder Wertheim the exclusive
right to serve as Transcisco's financial advisor in connection with any sale of
Transcisco and authorizing Schroder Wertheim to initiate contact with potential
acquirors. Schroder Wertheim and the management of Transcisco identified
twenty-two companies in the rail equipment manufacturing and transportation
equipment leasing industries, including Trinity, for whom Schroder Wertheim and
Transcisco management believed Transcisco might represent an attractive
acquisition candidate. The Transcisco Board placed no restrictions on Schroder
Wertheim or management concerning prospective acquirors or types of
transactions that might be reviewed.
Schroder Wertheim and/or Transcisco's management contacted each of the
twenty-two parties to assess their interest in a potential transaction
involving Transcisco. Prospective acquirors were advised that the Transcisco
Board had made no determination as to whether to proceed with such a
transaction. Five of the parties expressed an interest in a possible
transaction involving Transcisco. Each of these five companies executed a
confidentiality agreement pursuant to which each agreed to keep confidential
certain information concerning Transcisco. Following execution of the
confidentiality agreements in March and April 1996, each of the five parties
received a confidential offering memorandum regarding Transcisco, following
which they were invited to submit written, non-binding indications of interest
to acquire Transcisco.
On May 3, 1996, the Transcisco Board met with representatives of Schroder
Wertheim and Transcisco's legal advisors to review (i) the results of the
contacts with prospective acquirors discussed above and (ii) developments in
the negotiations with Trinity. At this meeting, the Transcisco Board
authorized management to undertake further negotiations with Trinity subject to
certain parameters.
During the weekend of May 4 and May 5, 1996, the managements of Transcisco
and Trinity held numerous meetings by telephone in which various terms of a
letter of intent were negotiated. On May 5, 1996, the Transcisco Board met by
telephone and authorized Transcisco's management to enter into a letter of
intent to merge Transcisco with Trinity in a stock-for-stock transaction in
which holders of Transcisco's common stock would receive 0.1884 of a share of
Trinity common stock for each share of Transcisco common stock held. This
fixed Exchange Ratio translated into the equivalent of $6.50 per Transcisco
share based on the closing market price of Trinity's common stock of $34.50 on
Friday, May 3, 1996. On May 6, 1996, Transcisco issued a press release
announcing its intent to merge with Trinity.
During the period from May 6 to June 17, 1996, Transcisco management and
its legal advisors held multiple meetings with Trinity management, in person
and by telephone, for the purposes of (i) conducting a due diligence review of
the business and financial affairs of Trinity, (ii) permitting Trinity to
conduct a due diligence review of the business and financial affairs of
Transcisco, and (iii) negotiating the terms of the Merger Agreement. On May 9,
1996, Transcisco's management and representatives of Schroder Wertheim met with
representatives of Trinity at Trinity's corporate headquarters for the purpose
of conducting a due diligence review of the business and financial affairs of
Trinity.
On June 7, 1996, the Transcisco Board met by telephone with its legal
advisors and representatives of Schroder Wertheim and reviewed the status of
the negotiations with Trinity with respect to the terms of the Merger
Agreement. During this meeting, Schroder Wertheim's representatives reviewed
the history of the proposed transaction, including the discussions with
potential acquirors and the indications of interest received therefrom and
responded to questions from members of the Transcisco Board. At the meeting,
Schroder Wertheim delivered a written opinion to the effect that, in its
opinion, as of June 7, 1996, the Exchange Ratio provided for by the Merger
Agreement was fair, from a financial point of view, to the stockholders of
Transcisco.
Negotiations with Trinity were largely completed by June 13, 1996, and on
such date the Transcisco Board met by telephone with its legal advisors and
representatives of Schroder Wertheim to again review the proposed transaction
with Trinity. Schroder Wertheim reiterated its opinion that the Exchange Ratio
provided for by the Merger Agreement was fair, from a financial point of view,
to the stockholders of Transcisco. Following this discussion, and after
concluding that Trinity's acquisition proposal was the most attractive of the
proposals it had received, given the proposed Exchange Ratio, Trinity's
financial condition, the transaction structure proposed by Trinity, the tax
consequences of such structure, and the compatibility of the business and
operating strategies of both companies, the Transcisco Board approved the
Merger Agreement.
The Merger Agreement was executed by Transcisco, Trinity, and Trinity Y on
June 17, 1996. Immediately following the execution of the Merger Agreement,
Transcisco and Trinity issued press releases announcing the execution of the
Merger Agreement.
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<PAGE> 35
RECOMMENDATION OF THE TRANSCISCO BOARD AND TRANSCISCO'S REASONS FOR THE MERGER
The Transcisco Board has determined that the Merger is fair to and in the
best interests of Transcisco and its stockholders. At a meeting held on June
13, 1996, the Transcisco Board unanimously approved the Merger Agreement and
resolved to recommend that the stockholders of Transcisco vote for approval and
adoption of the Merger Agreement.
In reaching its conclusion to approve the Merger Agreement and to
recommend that stockholders vote for approval and adoption of the Merger
Agreement, the Transcisco Board considered many factors including, but not
limited to, the following:
(i) the recognition by Transcisco's management of the difficulties and
risks inherent in attempting to enhance stockholder value over the long-term
through internal processes;
(ii) Trinity's business, assets, management, competitive position, and
prospects, which the Transcisco Board believes, on a combined basis with those
of Transcisco, would represent a good strategic fit between the two companies;
(iii) the financial condition and results of operations of each of
Transcisco and Trinity, on an historical basis, before giving effect to the
Merger;
(iv) historical market prices and trading information with respect to each
of Transcisco Common Stock and Trinity Common Stock;
(v) the treatment of the Merger as a "tax-free reorganization" for federal
income tax purposes (see "--Certain Federal Income Tax Consequences of the
Merger");
(vi) the potential synergies to be realized by the combined operations of
Transcisco and Trinity, which are expected to have a favorable result on the
long-term value of Trinity as well as enhance the competitive position of the
combined entity;
(vii) the regulatory approvals required to consummate the Merger (see
"--Regulatory Filings and Approvals") and the prospects for receiving all such
approvals;
(viii) the opinion and analysis of Schroder Wertheim described under
"--Opinion of Transcisco's Financial Advisor"; and
(ix) the compatibility of the business and operating strategies of both
companies.
These factors were considered collectively by the Transcisco Board,
without giving specific weight to any particular factor, in connection with its
assessment of the strategic and operational benefits and risks of the Merger as
well as the range of value of each of Transcisco and Trinity on a stand-alone
basis and the potential value of the combined entity. Based on this analysis,
the Transcisco Board concluded that (i) the Exchange Ratio was within the range
of fair value to holders of Transcisco Common Stock and (ii) the Merger would
result in an increase in long-term value for Transcisco's stockholders due to
the strategic and operational benefits and synergies described above.
The Transcisco Board recommends that Transcisco stockholders vote "FOR"
the approval and adoption of the Merger Agreement.
PROJECTED FINANCIAL INFORMATION FOR TRANSCISCO
In the course of its discussions with Schroder Wertheim and Trinity,
Transcisco provided Schroder Wertheim and Trinity with certain business and
financial information that Transcisco believes was not publicly available.
Such information included, among other things, certain financial projections
prepared by Transcisco's management for business planning and evaluation
purposes.
27
<PAGE> 36
Set forth below is a summary of such projections.
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
FISCAL YEARS ENDED MARCH 31,
---------------------------------------------------------------------------
1997 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C>
Revenue (1) . . . . . . . . . $ 45,594 49,611 54,582 59,845 65,400
Operating costs and
expenses . . . . . . . . . . $ 35,137 38,118 41,796 45,817 50,160
Selling, general,
and administrative expenses
(2) . . . . . . . . . . . . . $ 6,546 6,568 6,866 7,234 7,692
Operating income . . . . . . $ 3,911 4,925 5,920 6,794 7,548
Interest income (expense) (3) $ (307) (148) 109 424 808
Equity in earnings of SFAT $ 6,300 7,560 9,072 10,886 13,064
(4) . . . . . . . . . . . . .
Provision for income taxes $ 113 134 161 189 215
(5) . . . . . . . . . . . . .
Net income (6) . . . . . . . $ 9,791 12,203 14,940 17,915 21,205
Net income per share . . . . $ 1.47 1.84 2.25 2.70 3.19
</TABLE>
- --------------------------
(1) Assumes, among other things, that Transcisco's revenue base
will grow at a rate of 9% to 10% per year, that inflation will
remain within the range of 3% to 4% per year, that
Transcisco's growth will be internally generated, that
Transcisco Leasing Company will place 1,000 railcars per year
under long- term maintenance and management contracts, that
all maintenance and management contracts to which TLC is a
party will be renewed on comparable terms, and that capital
expenditures will be approximately $1 million per year.
(2) Assumes that Transcisco is not a party to any material
litigation, that the action brought against a former director
of Transcisco by Great American Insurance Company is settled
without any adverse consequences for Transcisco, and that
Transcisco does not become the subject of any governmental
action, which may have an adverse affect.
(3) Assumes no material changes in Transcisco's capital structure.
(4) Assumes that there are no unfavorable changes in Russia's
political or economic situation, that SFAT's earnings grow at
a rate of 20% per year, that Transcisco continues to be able
to recognize its earnings in SFAT under the equity accounting
method, that the licensing fee of $1.5 million per year from
SFAT will not be impaired, and that SFAT does not undertake a
public offering.
(5) Assumes that Transcisco is subject only to the alternative
minimum tax and does not pay taxes at the corporate rate.
(6) Assumes that Transcisco's management remains unchanged.
There can be no assurance that the foregoing assumptions will be realized.
The above projections are forward-looking statements within the meaning of
the Securities Litigation Reform Act of 1995. They were not prepared with a
view to public disclosure or compliance with the published guidelines of the
Commission or the guidelines established by the American Institute of Certified
Public Accountants for preparation and presentation of financial projections.
The projections were prepared exclusively for use by Transcisco's management.
They are included in this Proxy Statement/Prospectus only because they were
provided to Schroder Wertheim and, on a limited basis, to Trinity.
28
<PAGE> 37
Transcisco assumes no responsibility for the accuracy of the projections.
Projections of future performance are inherently subject to uncertainties and
contingencies, all of which are difficult to predict and many of which are
beyond the control of Transcisco or any other company preparing projections.
Transcisco's actual performance could differ materially from the projections
because of, among other things, (i) a change in general economic conditions,
(ii) a change in tax laws affecting the leasing of railcars, (iii) a change in
federal, state, or local environmental laws and regulations, (iv) a change in
Transcisco's competitive position, and (v) a change in Transcisco's management.
Transcisco does not anticipate that it will, and it disclaims any
obligation to, furnish updated projections, cause such information to be
included in documents required to be filed with the Commission, or otherwise
make such information public.
Ernst & Young LLP, Transcisco's independent auditors, and SFAT's
independent auditors did not examine, compile, or perform any procedures with
respect to the projections. Accordingly, each of Ernst & Young LLP and SFAT's
independent auditors makes no representations whatsoever regarding such
projections, expresses no opinion regarding such projections and assumes no
responsibility for such projections.
TRANSCISCO STOCKHOLDERS ARE CAUTIONED NOT TO RELY ON THE PROJECTIONS IN
DETERMINING WHETHER TO VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT.
OPINION OF TRANSCISCO'S FINANCIAL ADVISOR
Transcisco retained Schroder Wertheim to act as its exclusive financial
advisor and to provide certain investment banking advice and services in
connection with the Merger, including rendering its opinion as to whether the
Exchange Ratio to be received in the Merger by the holders of Transcisco's
common stock is fair, from a financial point of view, to such holders.
Transcisco retained Schroder Wertheim to act as Transcisco's financial advisor
in connection with the Merger and related matters based upon Schroder
Wertheim's expertise in mergers and acquisitions, knowledge of the rail
equipment and leasing industries, and familiarity with Transcisco.
At the June 7, 1996 meeting of the Transcisco Board, representatives of
Schroder Wertheim reviewed the proposed transaction with Trinity and rendered
its written opinion to the Transcisco Board that, as of such date, based upon
the facts and circumstances as they existed at the time, and subject to certain
assumptions, factors and limitations set forth in such opinion, the Exchange
Ratio provided for by the Merger Agreement was fair, from a financial point of
view, to Transcisco's stockholders.
At the June 13, 1996 meeting of the Transcisco Board, Schroder Wertheim
advised the Transcisco Board that nothing had come to Schroder Wertheim's
attention since June 7, 1996 that would cause it to believe that the Exchange
Ratio was not still fair, from a financial point of view, to Transcisco's
stockholders.
Schroder Wertheim also has delivered a written opinion, dated as of July
18, 1996, that based upon the facts and circumstances as they existed at the
time, and subject to assumptions, factors and limitations set forth in such
opinion, the Exchange Ratio to be received by the holders of Transcisco's
common stock pursuant to the Merger Agreement was fair, from a financial point
of view, to such holders. No limitations were imposed by the Transcisco Board
upon Schroder Wertheim with respect to the investigations made or procedures
followed by it in rendering its opinions. The procedures followed and the
analyses performed by Schroder Wertheim in connection with its opinion, dated
as of July 18, 1996, were substantially similar to those procedures followed
and analyses performed by Schroder Wertheim in connection with its opinion,
dated as of June 7, 1996, which are summarized below.
The full text of Schroder Wertheim's written opinion, dated as of July 18,
1996 (the "Schroder Wertheim Opinion"), which sets forth, among other things,
the assumptions made, matters considered and limitations on the review
undertaken, is attached as Annex B to this Proxy Statement/Prospectus and is
incorporated herein by reference. Transcisco stockholders are urged to read
the Schroder Wertheim Opinion in its entirety. Schroder Wertheim's June 7th
opinion was rendered to the Transcisco Board for its consideration in
determining whether to approve the Merger Agreement and stockholders should be
aware that the Schroder Wertheim Opinion does not constitute a recommendation
to Transcisco's shareholders to vote in favor of the Merger at the Meeting.
In arriving at this opinion, Schroder Wertheim (i) reviewed certain
publicly available business and financial information relating to Transcisco
and Trinity, (ii) reviewed certain other information, including
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financial forecasts provided to Schroder Wertheim by Transcisco, (iii) met with
the managements of Transcisco and Trinity to discuss the business, prospects,
and strategic and financial plans of Transcisco and Trinity, respectively, (iv)
compared certain financial and stock market information for Transcisco with
similar information for other publicly held companies in businesses similar to
those of Transcisco, (v) reviewed the financial terms of certain recent
business combinations which Schroder Wertheim deemed comparable in whole or in
part, and (vi) performed such other financial studies, analyses, inquiries and
investigations, and considered such other factors, including the terms of the
Merger Agreement, as it deemed appropriate.
In connection with its review, Schroder Wertheim did not independently
verify any of the foregoing information and relied on such information being
complete and accurate in all material respects. In addition, Schroder Wertheim
did not make an independent evaluation or appraisal of the assets of
Transcisco. In making its determination that the Exchange Ratio to be received
by the holders of Transcisco's common stock pursuant to the Merger Agreement
was fair, from a financial point of view, to such holders, Schroder Wertheim
was not asked to take into account any offers that might be made by third
parties to acquire Transcisco or any interest therein. With respect to
financial forecasts of Transcisco used for purposes of Schroder Wertheim's
analysis, Schroder Wertheim was advised by Transcisco's management that such
forecasts reflect the best currently available estimates and judgments of
Transcisco's management as to the future financial performance of Transcisco.
Schroder Wertheim also assumed that the strategic and financial plans of
Transcisco will be implemented as scheduled. The Schroder Wertheim opinion was
necessarily based on economic, market, and other conditions and the information
available to it as of the date hereof.
In arriving at its opinion, Schroder Wertheim performed a variety of
financial analyses. A summary of Schroder Wertheim's material analyses is set
forth below. Such summary does not purport to be a complete description of all
the analyses performed by Schroder Wertheim. The preparation of a fairness
opinion is a complex process that involves various determinations as to the
most appropriate and relevant methods of financial analysis and the application
of these methods to the particular circumstances, which is not necessarily
susceptible to partial analysis or summary description. Schroder Wertheim
believes that its analyses must be considered as a whole and that selecting
portions of its analyses or portions of the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
evaluation process underlying its opinion. In performing its analyses,
Schroder Wertheim made numerous assumptions with respect to industry
performance, general business, economic, market and financial conditions, and
other matters, many of which are beyond the control of Transcisco. Any
estimates contained in Schroder Wertheim's analyses are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses. Additionally, estimates of
the value of business and securities do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities may be sold.
Accordingly, such analyses and estimates are inherently subject to substantial
uncertainty.
ANALYSIS OF PURCHASE PRICE PREMIUMS TO MARKET PRICE
Schroder Wertheim compared the per share value represented by the Exchange
Ratio (equal to $6.50 per Transcisco share based on the $34.50 per share
closing price of Trinity stock on May 3, 1996, the business day prior to the
public announcement of the Merger and herein referred to as the "Merger Value")
to various market closing prices of Transcisco's common stock prior to the
announcement of the Merger. The Merger Value represents premiums of 30%, 37%,
28%, 63%, and 100% to the closing prices of Transcisco's common stock one day,
one week, one month, three months and six months prior to the announcement of
the Merger.
Schroder Wertheim also reviewed the premiums paid in friendly acquisitions
of U.S. public companies from 1992 to the date of this Proxy
Statement/Prospectus. In 212 friendly acquisitions of U.S. public
manufacturing companies during that period, the purchase prices paid
represented average premiums of 29%, 33% and 39% over the closing prices of the
acquired companies' common stock one day, one week and one month prior to the
announcement of the transactions. In 235 friendly acquisitions of U.S. public
companies during that period valued at between $20 million and $100 million,
the purchase prices paid represented average premiums of 38%, 42% and 48% over
the closing prices of the acquired companies' common stock one day, one week
and one month prior to the announcement of the transactions.
TRINITY COMMON STOCK PRICE ANALYSIS
Schroder Wertheim reviewed certain financial and non-financial information
and performed certain analyses relating to Trinity. These analyses included
(i) a review of Trinity's stock price and trading volume activity from January
1, 1991 through June 6, 1996, (ii) a review of Trinity's multiples of (a)
enterprise value to revenues, operating cash flow and operating income, and (b)
equity value to net income, using actual results for the fiscal year ended
March 31, 1996 and projected results for the fiscal year ending March 31, 1997,
based
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on brokerage firm equity research analyst's estimates, and (iii) the pro forma
effect of the Merger on Trinity's projected net income for fiscal 1997 and
1998. During the 52-week period ended June 6, 1996, Trinity's share price
ranged from a low of $28.25 to a high of $36.125, averaged $32.81, and closed
at $34.875 on June 6, 1996. In its review of Trinity's trading multiples,
Schroder Wertheim observed that the Trinity Common Stock traded at multiples of
(i) enterprise value to (a) fiscal 1996 revenue, operating cash flow and
operating income of 0.7x, 7.1x and 9.2x, respectively, and (b) fiscal 1997
projected revenue, operating cash flow and operating income of 0.7x, 6.0x and
7.5x, respectively, and (ii) equity value to (a) fiscal 1996 net income of
12.9x, and (b) fiscal 1997 projected net income of 11.4x. Schroder Wertheim
further noted that Trinity had a dividend yield of 1.9%.
VALUATION OF TRANSCISCO
Schroder Wertheim's valuation of Transcisco was based on a valuation of
its three subsidiaries: Transcisco Rail Services ("TRS"), Transcisco Leasing
Company ("TLC"), and Transcisco Trading Company ("TTC").
TRANSCISCO RAIL SERVICES
The valuation of TRS was based on three valuation methodologies: a
comparable companies analysis, a comparable acquisitions analysis, and a
discounted cash flow ("DCF") analysis. In performing the comparable companies
analysis, Schroder Wertheim examined the historical financial results and
market statistics (including multiples of sales, operating cash flow, operating
income and net income) of ABC Rail, Atchison Casting, Greenbrier, Harmon, JA,
Trinity, Union Switch & Signal, and Westinghouse Air Brake, all of which
Schroder Wertheim considered to be reasonably comparable to TRS. The
comparable companies analysis implied a pre-tax reference range of $9 million
to $11 million. In performing the comparable acquisitions analysis, Schroder
Wertheim reviewed certain operating statistics and purchase price information
(including multiples of sales, operating cash flow, operating income and net
income) for acquisitions of companies considered by Schroder Wertheim to be
reasonably comparable to TRS. Schroder Wertheim's comparable acquisitions
analysis implied a pre-tax reference range of $8.0 million to $10.0 million.
Schroder Wertheim's DCF analysis was based on forecasts provided by Transcisco
management. Schroder Wertheim was advised by Transcisco's management that such
forecasts reflect the best currently available estimates and judgments of the
management of Transcisco as to the future financial performance of TRS.
Schroder Wertheim estimated the present value of the future streams of
unleveraged after-tax cash flows that TRS could produce through the fiscal year
ending March 31, 2001. Schroder Wertheim estimated the terminal value for TRS
at the end of the five year forecast period by applying a multiple of 6.5x to
TRS's terminal year operating cash flow. The cash flow streams and the
terminal value were then discounted to present values using discount rates
ranging from 15% to 17%. These multiples and discount rates were based on the
manner in which comparable companies are valued and an estimated industry
weighted average cost of capital, adjusted for certain risk factors specific to
TRS, including (i) its recent operating difficulties, (ii) its limited size
relative to the comparable companies, (iii) the highly competitive nature of
its industry and the limited ability of TRS to differentiate itself, and (iv)
its low margins relative to the comparable companies. The DCF analysis implied
a pre-tax reference range of $12.8 million to $13.9 million. On the basis of
the valuation methodologies described above, Schroder Wertheim developed an
overall pre-tax reference range for TRS of $9.0 million to $11.0 million.
TRANSCISCO LEASING COMPANY
Schroder Wertheim's valuation of TLC was based on the same three valuation
methodologies described above. The comparable companies considered by Schroder
Wertheim were GATX, Interpool, Rollins Truck Leasing, Ryder Systems, and XTRA,
all of which Schroder Wertheim considered to be reasonably comparable to TLC.
The comparable companies analysis implied a pre-tax reference range of $18.5
million to $20.5 million. Schroder Wertheim's comparable acquisitions analysis
implied a pre-tax reference range of $13.5 million to $15.5 million. Schroder
Wertheim's DCF analysis was based on forecasts provided by Transcisco
management. Schroder Wertheim estimated the terminal value for TLC at the end
of the five year forecast period by applying a multiple of 5.25x to TLC's
terminal year operating cash flow. The cash flow streams and the terminal
value were then discounted to present values using discount rates ranging from
15% to 17%. These multiples and discount rates were based on the manner in
which comparable companies are valued and an estimated industry weighted
average cost of capital, adjusted for certain risk factors specific to TLC,
including (i) its early stage of development and the historical irregularity of
its profitability, (ii) its limited size relative to the comparable companies,
(iii) the risks inherent in a business that is highly dependent on one key
manager, (iv) its irregular revenue and earnings stream, the result of its
"one-off" transactions, (v) its low margins relative to the comparable
companies, and (vi) its deferred maintenance liability of $2.9 million of March
31, 1996, representing cash received by TLC for railcar maintenance not yet
performed. The
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DCF analysis implied a pre-tax reference range of $23.1 million to $24.7
million. On the basis of the valuation methodologies described above, Schroder
Wertheim developed an overall pre-tax reference range for TLC of $15.0 million
to $17.0 million.
TRANSCISCO TRADING COMPANY
Schroder Wertheim's valuation of TTC was based on the valuation of TTC's
two primary assets: (i) its 23.5% ownership interest in SFAT; and (ii) a
royalty and licensing fee stream of $1.5 million per year through 2001 relating
to a patented tank car heating technology, licensed primarily to SFAT.
Schroder Wertheim valued SFAT based on the valuation placed on SFAT by the
European Bank for Reconstruction and Development, which agreed to purchase 10%
of SFAT's outstanding shares for $12 million in April, 1996, implying a value
for all of SFAT's shares of $120 million. Schroder Wertheim discounted this
valuation by approximately 20% to 40%, based on (i) the lack of liquidity for
TTC's shares in SFAT; (ii) the near absence of current cash flow from TTC's
investment in SFAT; (iii) TTC's minority investor status in SFAT, resulting in
a lack of control over the management of SFAT; and (iv) the high degree of
ongoing political and economic uncertainty in Russia. This analysis implied a
pre-tax reference range of $15.0 million to $20.0 million for TTC's SFAT
shares. Schroder Wertheim's valuation of TTC's royalty and licensing fee
stream was based on revenues of $1.5 million per year, reduced by TTC's annual
general and administrative expenses. The resulting cash flows were then
discounted to present values using a discount rate of 20% to account for the
risk factors discussed above. This analysis implied a pre-tax valuation of
$2.5 million. On the basis of the valuation analyses described above, Schroder
Wertheim developed an overall pre-tax reference range for TTC of $17.5 million
to $22.5 million.
OTHER
Schroder Wertheim considered the following other factors in its valuation
of Transcisco. Transcisco had a net operating loss carryforward at March 31,
1996, preliminarily estimated by Transcisco to be approximately $17 million and
subsequently restated to approximately $11.3 million ("NOL"), which Schroder
Wertheim valued at $1.0 million due to limitations, arising under the Code, on
the use of the NOL following the Merger. The Code limits the use of the NOL in
any one year to an amount significantly less than its current balance.
However, these limitations would not be expected to preclude the full
utilization of the NOL prior to its expiration in years 2004 through 2008. In
addition, discussions with Transcisco's management indicated that approximately
$500,000 of Transcisco's current $1.6 million of annual corporate overhead
expenses would likely be ongoing costs following the Merger. Schroder Wertheim
subtracted $3.0 million ($500,000 per year capitalized at a multiple of 6.0x)
from its valuation of Transcisco to account for these corporate overhead
expenses for which no provision was made in the analysis of TRS, TLC, and TTC.
SUMMARY
Based on these segment valuations and after taking into account the other
factors discussed above, Schroder Wertheim estimated an overall pre-tax
enterprise reference range for Transcisco of $39.5 million to $48.5 million.
In order to calculate a pre-tax equity reference range for Transcisco, Schroder
Wertheim first subtracted from the pre-tax enterprise reference range
Transcisco's debt balance as of March 31, 1996 of $3.9 million, and then added
Transcisco's cash balance as of March 31, 1996 of $5.1 million, which includes
approximately $2.4 million from the exercise of options and warrants
representing approximately 1.6 million shares of Transcisco common stock
exercisable at an average price of $1.53 per share. These adjustments resulted
in a pre-tax equity reference range of $40.7 million to $49.7 million. This
equity reference range resulted in an implied reference range per share of
Transcisco common stock of approximately $5.95 to $7.25.
Schroder Wertheim is an internationally recognized investment banking firm
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions and for other purposes. Schroder Wertheim was
selected as financial advisor to the Transcisco Board based on such expertise
as well as its familiarity with Transcisco. Schroder Wertheim has provided
investment banking services to Transcisco in connection with the Early 1995
Proposals, and Transcisco's adoption of a stockholders' rights plan in
September 1995, for which it received customary fees.
Pursuant to the terms of the engagement letter, dated March 19, 1996,
between Transcisco and Schroder Wertheim, Transcisco agreed to pay Schroder
Wertheim a fee of $150,000 upon delivery of its initial opinion, which fee is
payable without regard to the conclusions set forth in such opinion. Schroder
Wertheim will not be paid additional fees in connection with any additional
opinions relating to the Merger. Transcisco also agreed to pay Schroder
Wertheim an additional fee of $950,000 upon consummation of the Merger as
compensation for financial advisory services. In addition, Transcisco has
agreed to reimburse Schroder
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Wertheim for its reasonable out-of-pocket expenses incurred in connection with
rendering financial and advisory services, including fees and disbursements of
its legal counsel. Transcisco also agreed to indemnify Schroder Wertheim
against certain liabilities relating to, or arising out of, its engagement.
TRINITY'S REASONS FOR THE MERGER
The Trinity Board has unanimously approved the Merger Agreement and the
transactions contemplated thereby. In reaching its conclusion to approve the
Merger Agreement, the Trinity Board determined that the Merger is consistent
with and in furtherance of the long-term business strategy of Trinity.
Transcisco Rail Services Company's ten railcar repair and maintenance
facilities make it one of the largest independent railcar maintenance
organizations in the United States. Trinity's existing fleet of railcars,
together with more than 15,000 privately owned railcars under maintenance
contracts with Transcisco Rail Services Company, and 11,283 railcars covered by
Transcisco Leasing Company contracts for maintenance, management and leasing
services strengthens Trinity's leadership position in the railcar industry in
this country. Also, through Transcisco Trading Company's 23.5% interest in
SFAT, Trinity will enter the Russian tankcar market as an owner of a full
service transportation management company that owns and manages more than 5,500
railroad tankcars used to export petroleum and petrochemicals. The Trinity
Board believes that the acquisition of Transcisco will be an excellent
strategic fit with Trinity's existing businesses. See "-Plans for Transcisco
After the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL
Certain directors and executive officers of Transcisco have interests in
the Merger that are in addition to the interests of Transcisco and its
stockholders generally. See "SECURITY OWNERSHIP--Security Ownership of Certain
Beneficial Owners, Directors and Management of Transcisco." The Transcisco
Board was aware of these interests and considered them, among other matters, in
approving the Merger Agreement.
INDEMNIFICATION OF TRANSCISCO'S DIRECTORS AND OFFICERS
The Merger Agreement provides that Transcisco, as the surviving
corporation (the "Surviving Corporation") in the Merger, will indemnify the
directors and officers of Transcisco, to the extent such indemnification was
available prior to the Merger pursuant to (i) the DGCL; (ii) the Transcisco
Certificate of Incorporation; (iii) the Transcisco Bylaws; (iv) similar
organizational documents of any of Transcisco's subsidiaries; or (v) pursuant
to the terms of any indemnification agreements entered into between Transcisco
and any of Transcisco's directors or officers with respect to matters occurring
prior to the Effective Time, and to continue for not less than six years from
the Effective Time the current directors' and officers' liability insurance
maintained by Transcisco, or the equivalent thereof, with respect to matters
occurring prior to the Effective Time.
EMPLOYMENT AGREEMENTS
Under the terms of an agreement, dated January 3, 1995, and amended as of
March 1, 1996 (the "Consulting Agreement"), by and among Mr. Steven L. Pease,
Transcisco and Deucalion Securities, Inc. (of which Mr. Pease is also the Chief
Executive Officer), upon a change in control of Transcisco, Mr. Pease would be
entitled to receive an immediate advance of one-year's base salary. The
balance of the payments due thereunder would be paid as earned. Additionally,
Mr. Pease's options would immediately vest. In connection with the Merger, Mr.
Pease has entered into an agreement with Transcisco, pursuant to which (i) the
Consulting Agreement would be terminated, (ii) Mr. Pease would receive on the
Closing Date one year's base salary and a bonus payment equal to $20,000 per
month from March 31, 1996 to the Closing Date, and (iii) Mr. Pease's options
would vest on the Closing Date.
Under the terms of an Employment Agreement, dated April 13, 1995, between
Mr. Robert A. Jahnke and Transcisco Rail Services Company, upon a change in
control of Transcisco, Mr. Jahnke would be entitled to receive a severance
payment equal to one year's salary. Additionally, his options would
immediately vest.
Additional information relating to executive compensation and various
benefit arrangements of Transcisco are set forth in, and incorporated by
reference to, Transcisco's Annual Report on Form 10-K (without exhibits
thereto), a copy of which is annexed hereto as Annex D.
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OTHER MATTERS
To provide an incentive for Transcisco employees to contribute to the
continued success of Transcisco during the period beginning on April 1, 1996
and ending on a date to be determined, which will be a reasonable period
following the Closing Date (the "Transition Period"), individual arrangements
have been made for payments to certain employees of Transcisco who remain in
Transcisco's employ during the Transition Period. The total of all such
payments is expected to be approximately $450,000 in the aggregate. Transcisco
also intends to distribute discretionary bonuses to selected employees who
remain in Transcisco's employ during the Transition Period, which payments are
expected to be approximately $190,000 in the aggregate, of which Transcisco
will provide $90,000. Mr. Pease has advised the Transcisco Board that he
intends to set aside up to $100,000 of his personal funds for the purpose of
funding such payments.
As noted earlier, Mr. Friedman, a director nominated for re-election at
the Meeting, is an executive vice president of Furman Selz LLC, which is an
affiliate of Furman Selz SBIC, L.P. Furman Selz SBIC, L.P. is a holder of
Transcisco's Series A Senior Subordinated Notes (the "Notes") in the principal
amount of $1,450,000. The Notes, which were issued in August 1995, mature in
2000 and bear interest at a rate of 10% through July 31, 1997 and 12%
thereafter. Trinity has advised Transcisco and Mr. Friedman that it intends to
cause Transcisco to prepay the entire principal amount of the Notes immediately
after the Effective Time.
PLANS FOR TRANSCISCO AFTER THE MERGER
Based on its current knowledge of Transcisco, Trinity has no present plans
or proposals which relate or would result in a sale or transfer to an
unaffiliated party of a material amount of assets involving Transcisco or any
of its subsidiaries. Trinity is continuing its review of Transcisco and its
assets, corporate structure, capitalization, operations, properties, policies,
management and personnel, and Trinity reserves the right, subject to the terms
and conditions of the Merger Agreement, to effect any such plans and proposals
in connection therewith.
THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement not summarized elsewhere in this Proxy Statement/Prospectus. A copy
of the Merger Agreement is attached as Annex A to this Proxy
Statement/Prospectus and is incorporated herein by reference. The following
summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement.
THE MERGER
The Merger Agreement provides that, as soon as practicable following the
approval of the Merger Agreement by Transcisco's stockholders and the
satisfaction or waiver of the other conditions to each party's obligation to
consummate the Merger, Trinity Y will be merged with and into Transcisco in
accordance with the DGCL, the separate corporate existence of Trinity Y will
cease, and Transcisco will continue as the Surviving Corporation in the Merger.
CONVERSION OF SHARES OF TRANSCISCO COMMON STOCK
Each share of Transcisco Common Stock outstanding prior to the Effective
Time will be converted into, exchanged for and represent the right to receive
0.1884 of a share of Trinity Common Stock. No fractional shares of Trinity
Common Stock will be issued in the merger, and each record holder of Transcisco
Common Stock who would otherwise be entitled to receive a fraction of a share
of Trinity Common Stock would be entitled to receive a cash payment in lieu
thereof. In the event that prior to the Effective Time, Trinity declares a
stock split (including a reverse split) of Trinity Common Stock, or a dividend
payable in Trinity Common Stock, or any other distribution of securities or
special cash dividends (other than Trinity's regular quarterly dividends) with
respect to Trinity Common Stock (including, without limitation, a
recapitalization, reclassification, merger, consideration, reorganization or
similar transaction) then the Merger Agreement provides that the Exchange Ratio
will be appropriately adjusted to reflect such stock split, dividend or other
distribution of securities.
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TREATMENT OF TRANSCISCO'S OPTIONS
The Merger Agreement provides that, at the Effective Time, each
outstanding option to purchase Transcisco Common Stock (a "Transcisco Stock
Option") granted under any Transcisco stock option plan (a "Transcisco Stock
Plan") or pursuant to certain stock option agreements, whether vested or
unvested, will be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such Transcisco Stock Option, the same
whole number of shares of Trinity Common Stock (being rounded upward to the
nearest whole share) as the holder of such Transcisco Stock Option would have
been entitled to receive pursuant to the Merger had such holder exercised such
option in full immediately prior to the Effective Time (not taking into account
whether or not such option was in fact exercisable), and shall have an exercise
price per share equal to such Transcisco Stock Option's exercise price per
share divided by the Exchange Ratio (the option price per share, as so
determined being rounded to the nearest full cent).
From and after the Effective Time, Trinity will honor all Transcisco Stock
Options and will comply with the terms of all Transcisco Stock Options.
DIRECTORS AND OFFICERS
Pursuant to the Merger Agreement, the directors and officers of Trinity Y
at the Effective Time will be the directors and officers, respectively, of the
Surviving Corporation following the Merger.
CHARTER AND BYLAWS
Pursuant to the Merger Agreement, the certificate of incorporation and
bylaws of Trinity Y in effect at the Effective Time will be the certificate of
incorporation and bylaws, respectively, of the Surviving Corporation following
the Merger until thereafter amended as provided by law and by the certificate
of incorporation of the Surviving Corporation.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties of each of Transcisco and Trinity as to (i) corporate status, (ii)
corporate authorization, (iii) governmental authorizations and consents, (iv)
no contraventions or defaults of charter documents or agreements, (v)
enforceability of the Merger Agreement, (vi) capitalization, (vii) financial
statements, (viii) the accuracy of documents and reports filed with the
Commission, (ix) the absence of certain changes, (x) the absence of litigation,
(xi) taxes, (xii) no brokers being entitled to fees in connection with the
Merger other than as disclosed, (xiii) the accuracy of the information provided
for inclusion in this Proxy Statement/Prospectus and the Registration
Statement, and (xiv) full disclosure.
Transcisco has also made representations and warranties as to (i) title to
property, (ii) retirement and other employee plans and matters relating to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (iii)
permits, (iv) patents and trademarks, (v) environmental matters, (vi) contracts
to which Transcisco or its subsidiaries is a party or by which any of them is
bound, and (vii) labor relations and other employee matters.
Trinity has also made representations and warranties as to (i) the absence
of ownership by Trinity of Transcisco Common Stock and (ii) its reliance upon
its independent investigation of Transcisco and the representations and
warranties contained in the Merger Agreement.
The respective representations and warranties of each of Transcisco and
Trinity will terminate at the Effective Time, other than the representation and
warranty of Trinity that it has conducted its own independent review of
Transcisco and has relied solely upon its own investigation and analysis and
the representations and warranties contained in the Merger Agreement.
COVENANTS OF TRANSCISCO, TRINITY, AND TRINITY Y
Pursuant to the Merger Agreement, Transcisco has agreed that it will (i)
carry on its businesses in the ordinary and customary course consistent with
past practice, use reasonable efforts to preserve intact its business,
properties, and assets, and use reasonable efforts to keep available the
services of its present employees and to preserve its relationships with
customers, suppliers, and others having business dealing with it; (ii) afford
reasonable access to Trinity and its representatives during the period prior to
the Closing Date or the earlier termination of the Merger Agreement; (iii)
promptly advise Trinity of any event that is or is
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reasonably likely to cause Transcisco to experience a material adverse effect
on Transcisco's business, results of operations, or financial condition; and
(iv) use all reasonable efforts to cause Ernst & Young LLP to deliver to
Trinity a comfort letter dated as of the date of this Proxy
Statement/Prospectus with respect to such financial data of Transcisco as is
contained herein. In addition, Transcisco has agreed that it will not (i)
adopt or propose any change in the Transcisco Certificate of Incorporation or
the Transcisco Bylaws, except a change that would not have an adverse effect on
the transactions contemplated by the Merger Agreement; (ii) merge or
consolidate with any person or acquire, except in the ordinary course of
business, a material amount of assets of any other person; (iii) issue any
shares of capital stock or other securities (except pursuant to warrants,
options and other rights outstanding on June 17, 1996) or any options, warrants
or other rights to acquire the same; (iv) redeem, purchase, or otherwise
acquire any of its capital stock; (v) declare, set aside, or pay any dividend
or make any other distribution with respect to any shares of its capital stock;
(vi) enter into any purchase order with affiliates of Transcisco or outside the
ordinary course of business; (vii) enter into any sales order with affiliates
of Transcisco or reasonably likely to create a loss to Transcisco in excess of
$100,000; or (viii) take, or omit to take, any action that would make any
representation or warranty of Transcisco inaccurate or would result in a
condition to the obligation of Transcisco to consummate the Merger to not be
satisfied. Transcisco has also agreed that it will not initiate, solicit, or
encourage any inquiries or the making or implementation of any Acquisition
Proposal or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. Notwithstanding the foregoing, the
Transcisco Board is not prohibited from (i) furnishing information to, or
entering into discussions or negotiations with, any person in connection with
an unsolicited bona fide proposal in writing by such person to acquire
Transcisco pursuant to a merger, consolidation, share exchange, business
combination, or other similar transaction, or to acquire a substantial portion
of the assets of Transcisco or any of Transcisco's subsidiaries, if, and only
to the extent that (a) the Transcisco Board, after consultation with and based
upon the advice of independent legal counsel, determines in good faith that
such action is necessary for the Transcisco Board to comply with its fiduciary
duties to the Transcisco's stockholders and (b) prior to furnishing such
information to, or entering into discussions or negotiations with, such person
or entity, Transcisco provides written notice to Trinity to the effect that it
is furnishing information to, or entering into discussions or negotiations
with, such person and (ii) complying with Rule 14e-2 of the Exchange Act with
regard to an Acquisition Proposal.
Pursuant to the Merger Agreement, Trinity and Trinity Y have agreed that
(i) Trinity will as promptly as practicable prepare and submit to the NYSE a
listing application covering the shares of Trinity Common Stock to be issued in
connection with the Merger and will use all reasonable efforts to obtain, prior
to the Effective Time, approval for this listing of such shares, subject to the
official notice of issuance; (ii) all rights to indemnification existing in
favor of the present or former directors, officers, employees, fiduciaries, and
agents of Transcisco or its subsidiaries (the "Indemnified Parties") as
provided in the Transcisco Certificate of Incorporation or the Transcisco
Bylaws or similar organizational documents of any of its subsidiaries as in
effect as of the date of the Merger Agreement or pursuant to any
indemnification agreements between any of the Indemnified Parties and
Transcisco with respect to matters occurring prior to the Effective Time will
survive the Merger and will continue in full force and effect for the maximum
term permitted by law, and will be enforceable by the Indemnified Parties
against the Surviving Corporation; (iii) Trinity will use reasonable efforts to
cause to be maintained in effect for not less than six years from the Effective
Time the current policies of directors' and officers' liability insurance
maintained by Transcisco (provided that Trinity may substitute therefor
policies of equivalent coverage) with respect to matters occurring prior to the
Effective Time; (iv) Trinity will promptly advise Transcisco of any event that
is or is reasonably likely to cause Trinity to experience a material adverse
effect on Trinity's business, results of operations, or financial condition;
and (v) Trinity will use all reasonable efforts to cause Ernst & Young LLP to
deliver to Transcisco a comfort letter dated as of the date of this Proxy
Statement/Prospectus with respect to such financial data of Trinity as is
contained herein. In addition, Trinity has agreed that it will not (i) adopt
or propose any change in the Trinity Certificate of Incorporation or the
Trinity Bylaws, except a change that would not have an adverse effect on the
transactions contemplated by the Merger Agreement; (ii) merge or consolidate
with any person or, except in the ordinary course of business, acquire a
material amount of assets of any other person, if such merger, consolidation or
acquisition could reasonably be expected to have a material adverse effect on
the ability of Trinity and Transcisco to consummate the transactions
contemplated by the Merger Agreement; (iii) issue any shares of Trinity Common
Stock in connection with any transaction requiring stockholder approval unless
Trinity first notifies Transcisco in writing of such transaction (upon receipt
of such notice Transcisco would have the right to abandon the Merger and
terminate the Merger Agreement at any time prior to 5:30 p.m. on the tenth
trading day following the receipt of Trinity's notice); (iv) purchase or
acquire any shares of Transcisco Common Stock; or (v) take, or omit to take,
any action that would make any representation or warranty of Trinity inaccurate
or would result in a condition to the obligation of Trinity to consummate the
Merger to not be satisfied.
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CONDITIONS TO THE MERGER
The Merger Agreement provides that the obligation of the parties to effect
the Merger is subject to the satisfaction or waiver on or prior to the
Effective Time of each of the following conditions: (i) the Merger Agreement
and the Merger shall have been approved and adopted by the requisite vote of
Transcisco stockholders, (ii) the waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have expired or been
terminated and no action shall have been taken by any Federal or State
governmental agency that would prohibit Trinity or the Surviving Corporation's
ownership of Transcisco's business assets, render Transcisco unable to
consummate the Merger or make such consummation illegal, (iii) no statute,
rule, regulation, executive order, decree, ruling or preliminary or permanent
injunction shall have been enacted, entered, promulgated, or enforced by any
federal or state court or governmental authority having jurisdiction that
prohibits, restrains, enjoins, or restricts the consummation of the Merger,
(iv) since June 17, 1996 there shall not have been any change nor any event
that has or is reasonably likely to have a material adverse effect on
Transcisco or Trinity (other than as a result of a change in conditions,
including economic or political developments, applicable to the industries in
which each operates), (v) the Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order, and (vi) the shares of Trinity
Common Stock issuable in the Merger shall have been authorized for listing on
the NYSE.
The obligation of Transcisco to effect the Merger is subject to the
satisfaction or waiver on or prior to the Effective Time of the following
additional conditions: (i) both Trinity and Trinity Y shall have performed all
obligations, covenants, and conditions contained in the Merger Agreement
required to be performed or complied with by them at or prior to the Effective
Time (in all material respects with regard to obligations, covenants, and
conditions that are not otherwise qualified with a materiality standard), (ii)
all representations and warranties of Trinity and Trinity Y contained in the
Merger Agreement shall be true and correct (in all material respects with
regard to representations and warranties that are not otherwise qualified with
a materiality standard), (iii) Transcisco shall have received a certificate
from the president or a vice president of each of Trinity and Trinity Y to the
effect that the conditions in clauses (i) and (ii) above have been satisfied,
(iv) Transcisco shall have received an opinion from Skadden, Arps, Slate,
Meagher & Flom, special counsel to Transcisco, to the effect that the Merger
will be treated for U.S. federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code, and (v) Transcisco shall have
received an opinion from Schroder Wertheim to the effect that the Exchange
ratio provided for in the Merger is fair to Transcisco's stockholders from a
financial point of view.
The obligations of Trinity and Trinity Y to effect the Merger are subject
to the satisfaction or waiver on or prior to the Effective Time of the
following additional conditions: (i) Transcisco shall have performed all
obligations, covenants, and conditions contained in the Merger Agreement
required to be performed or complied with by it at or prior to the Effective
Time (in all material respects with regard to obligations, covenants, and
conditions that are not otherwise qualified with a materiality standard), (ii)
all representations and warranties of Transcisco contained in the Merger
Agreement shall be true and correct (in all material respects with regard to
representations and warranties that are not otherwise qualified with a
materiality standard), (iii) Trinity and Trinity Y shall have received a
certificate from Transcisco signed by Transcisco's president and principal
financial officer to the effect that the conditions in clauses (i) and (ii)
above have been satisfied, and (iv) Transcisco's unaudited interim financial
statements at June 30, 1996 shall reflect stockholders' equity of at least
$25,600,000, provided that Transcisco's unaudited financial statements at July
30, 1996 shall be utilized for purposes of measuring stockholders' equity if
the Closing occurs after August 20, 1996.
By letter dated as of July 15, 1996, Trinity and Transcisco each agreed to
waive the covenant (and the condition that such covenant be performed at or
prior to the Effective Time) that required each to use reasonable efforts to
supply the other with a comfort letter with respect to the financial data
contained in this Proxy Statement/Prospectus.
TERMINATION
The Merger Agreement provides that it may be terminated and the Merger
abandoned at any time prior to the Effective Time, (i) by mutual consent of
Transcisco and Trinity; (ii) by Transcisco (a) if a condition to the
performance of the Merger Agreement by Transcisco is not fulfilled on or before
the time specified for the fulfillment thereof, (b) if any of the
representations and warranties of Trinity and Trinity Y that are qualified with
respect to materiality are not true and correct in all respects, and the breach
of the representation and warranty is not curable or, if curable, is not cured
within thirty days after written notice, (c) if any of the representations and
warranties of Trinity and Trinity Y that are not so qualified are not true
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and correct in all material respects, and the breach of the representation and
warranty is not curable or, if curable, is not cured within thirty days after
written notice, or (d) if there has been a material breach of any covenants or
agreements by Trinity or Trinity Y, and the breach is not curable or, if
curable, is not cured within thirty days after written notice, (e) if any suit,
action or other proceeding is pending or threatened that, in Transcisco's
reasonable opinion, materially and adversely affects the prospects of the
Merger, (f) if Trinity issues shares in a transaction requiring stockholder
approval, or (g) if the Transcisco Board withdraws, modifies, or changes, in a
manner adverse to Trinity, its approval or recommendation of the Merger
Agreement in order to approve and permit Transcisco to execute an agreement
relating to an Acquisition Proposal and determines, based on a written opinion
of Transcisco's legal counsel, that the failure to take such action would
result in a breach of the Transcisco Board's fiduciary duties; (iii) by Trinity
and Trinity Y (a) if a condition to the performance of the Merger Agreement by
Trinity and Trinity Y is not fulfilled on or before the time specified for the
fulfillment thereof, (b) if any of the representations and warranties of
Transcisco that are qualified with respect to materiality are not true and
correct in all respects, which breach is not curable or, if curable, is not
cured within thirty days after written notice, (c) if any of the
representations and warranties of Transcisco that are not so qualified are not
true and correct in all material respects, and the breach of the representation
and warranty is not curable or, if curable, is not cured within thirty days
after written notice, (d) if there has been a material breach of any covenants
or agreements by Transcisco, which breach is not curable or, if curable, is not
cured within thirty days after written notice, or (e) if any suit, action or
other proceeding is pending or threatened that, in Trinity's reasonable
opinion, materially and adversely affects the prospects of the Merger; or (iv)
by either Trinity or Transcisco if (a) the Merger shall not have been
consummated on or before September 16, 1996, provided that under certain
circumstances such date may be extended to October 15, 1996 or (b) if a court
of competent jurisdiction or agency or commission shall have issued an order,
decree, or ruling or taken any other action permanently restraining, enjoining,
or otherwise prohibiting the transactions contemplated by the Merger Agreement
and such order, decree, ruling or other action shall have become final and
non-appealable provided certain conditions are satisfied.
TERMINATION FEE
In the event that Transcisco terminates the Merger Agreement to accept a
competing Acquisition Proposal, Transcisco would be required to pay Trinity
$200,000 on the date of termination of the Merger Agreement. Upon the
consummation of the transaction contemplated by a competing Acquisition
Proposal, Transcisco would be required to make an additional payment to Trinity
of $2,028,081.
ACCOUNTING TREATMENT
The Merger will be accounted for under the purchase method of accounting
in accordance with generally accepted accounting principles, whereby the
purchase price will be allocated based on the fair value of the assets acquired
and the liabilities assumed. Such allocations will be based upon valuations
that have not been finalized. The excess, if any, of such purchase price over
the amounts so allocated will be allocated to goodwill.
REGULATORY FILINGS AND APPROVALS
The regulatory filings and approvals described below must be made before
the Merger can be effected and may take a significant period of time to obtain.
Although Transcisco and Trinity believe that such approvals will be obtained,
there can be no assurance that this will be the case or that such approvals
will be obtained in a timely manner or that such approvals will not be
conditioned temporarily or otherwise encumbered.
ANTITRUST
The Merger is subject to the expiration or termination of the 30-day
waiting period under the HSR Act and no action having been instituted by the
Department of Justice ("DOJ") or the Federal Trade Commission ("FTC") that is
not withdrawn or terminated prior to the Effective Time. The HSR Act, and the
rules and regulations thereunder, provide that certain merger transactions
(including the Merger) may not be consummated until required information and
materials have been furnished to the DOJ and the FTC and certain waiting
periods have expired or been terminated. Transcisco and Trinity made their
respective filings with the DOJ and the FTC on June 25, 1996, and received
notice of early termination of the waiting period on July 8, 1996.
The DOJ and the FTC frequently scrutinize the legality under the antitrust
laws of transactions such as the Merger. Notwithstanding the expiration of the
HSR waiting period, any time before or after the
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Effective Time, the FTC, the DOJ or others can take action under the antitrust
laws, including seeking to enjoin the consummation of the Merger or seeking the
divestiture by Trinity of all or any part of the stock or assets of Transcisco.
There can be no assurances that a challenge to the Merger on antitrust grounds
will not be made, or if such a challenge is made, that it would not be
successful.
STATE ANTI-TAKEOVER STATUTES
Section 203 of the DGCL prohibits business combination transactions
involving a Delaware corporation (such as Transcisco) and an "interested
stockholder" (defined generally as any person that directly or indirectly
beneficially owns 15% or more of the outstanding voting stock of the subject
corporation) for three years following the date such person became an
interested stockholder, unless special requirements are met or certain
exceptions apply, including that prior to such date the board of directors of
the subject corporation approved either the business combination or the
transactions that resulted in such person becoming an interested stockholder.
The Transcisco Board has approved the Merger Agreement for purposes of Section
203, and, accordingly, the provisions of Section 203 are not applicable to the
Merger. See "DESCRIPTION OF TRANSCISCO CAPITAL STOCK--Delaware Anti-Takeover
Law and Certain Charter Provisions."
Transcisco, directly or through subsidiaries, conducts business in a
number of other states throughout the United States, some of which have also
enacted anti-takeover laws. Transcisco and Trinity do not know whether any of
these laws, by their terms, apply to the Merger and have not attempted to
comply with any such laws. Should any person seek to apply any such state
anti-takeover laws, Transcisco and Trinity will take such action as then
appears appropriate, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the
event it is asserted that one or more state anti-takeover statutes is
applicable to the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Merger, Transcisco and Trinity might
be required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, Transcisco and Trinity
might be delayed in, or prevented from, consummating the Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the material federal income tax
consequences of the Merger under existing federal income tax law, which is
subject to change, possibly retroactively. This discussion assumes that
stockholders hold Transcisco Common Stock as capital assets as of the effective
date of the Merger. This discussion does not address all aspects of federal
income taxation that may be relevant to particular stockholders in light of
their personal circumstances, such as holders whose stock was acquired pursuant
to the exercise of an employee stock option or otherwise as compensation, and
to stockholders who are subject to special treatment under the federal income
tax laws (for example, financial institutions, insurance companies, tax-exempt
organizations, broker-dealers, and foreign persons). Further, it does not
discuss any aspects of state, local, foreign or other tax law.
The obligation of Transcisco to consummate the Merger is conditioned upon
the receipt by Transcisco of an opinion from Skadden, Arps, Slate, Meagher &
Flom, substantially to the effect that, on the basis of facts, representations
and assumptions at the Effective Time set forth in such opinion, the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, and Transcisco, Trinity and Trinity Y
will each be a "party to a reorganization" within the meaning of Section 368(b)
of the Code and, accordingly, (i) no gain or loss will be recognized by
Transcisco, Trinity or Trinity Y by reason of the Merger; (ii) a stockholder
who receives, pursuant to the Merger, Trinity Common Stock in exchange for
Transcisco Common Stock will not recognize gain or loss upon such exchange
(except to the extent cash is received in lieu of fractional shares); (iii) the
aggregate tax basis of the Trinity Common Stock received by the stockholder
will be the same as the aggregate tax basis of the Transcisco Common Stock
surrendered in exchange therefor pursuant to the Merger (adjusted with respect
to fractional shares); (iv) the holding period of the Trinity Common Stock will
include the holding period of the Transcisco Common Stock surrendered in
exchange therefor pursuant to the Merger; and (v) a stockholder who receives
cash in lieu of fractional shares will be treated as having received such
fractional shares pursuant to the Merger and then as having exchanged such
fractional shares for cash in a redemption by Trinity, and the amount of any
capital gain or loss attributable to such deemed redemption of fractional
shares will be equal to the difference between the cash received in lieu of
fractional shares and the ratable portion of the tax basis of the Transcisco
Common Stock surrendered that is allocated to such fractional shares.
Transcisco will not waive the condition requiring the receipt of such an
opinion from its counsel. See "--The Merger Agreement--Conditions to the
Merger."
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EACH STOCKHOLDER IS ENCOURAGED TO CONSULT HIS OR HER OWN TAX ADVISORS AS
TO PARTICULAR FACTS AND CIRCUMSTANCES THAT MAY BE UNIQUE TO SUCH STOCKHOLDER
AND ALSO AS TO ANY ESTATE, GIFT, STATE, LOCAL, OR FOREIGN TAX CONSEQUENCES
ARISING OUT OF THE MERGER.
RESTRICTIONS ON SALES OF SHARES BY AFFILIATES
The shares of Trinity Common Stock issuable in connection with the Merger
have been registered under the Securities Act. Such shares will be freely
transferable under the Securities Act, except for shares issued to any person
who may be deemed to be an affiliate, as such term is defined under the
Securities Act for purposes of Rule 145 (an "Affiliate"), of Transcisco or
Trinity at the time of the Meeting. Affiliates may not sell their shares of
Trinity Common Stock acquired in connection with the Merger except pursuant to
(i) an effective Registration Statement under the Securities Act covering such
shares, (ii) the conditions contemplated by paragraph (d) of Rule 145, or (iii)
any other applicable exemption from the registration requirements of the
Securities Act. Persons who may be deemed to be Affiliates of Transcisco or
Trinity generally include individuals or entities that may be deemed to
control, be controlled by or be under common control with Transcisco or
Trinity, and may include officers, directors and principal stockholders of
Transcisco or Trinity.
STOCK EXCHANGE LISTING
The obligations of the parties to the Merger Agreement to consummate the
Merger are subject to the shares of Trinity Common Stock to be issued in
connection with the Merger being authorized for listing on the NYSE. No
assurance can be given that such shares will in fact be so listed. See "--The
Merger Agreement--Conditions to the Merger."
DISSENTERS' RIGHTS
Under the DCGL, holders of Transcisco Common Stock do not have dissenters'
rights in connection with the Merger. See "The Meeting."
DESCRIPTION OF TRINITY CAPITAL STOCK
GENERAL
The authorized capital stock of Trinity consists of 100,000,000 shares of
Trinity Common Stock and 1,500,000 shares of preferred stock, par value $1.00
per share (the "Trinity Preferred Stock"). As of July 15, 1996, 41,625,217
shares of Trinity Common Stock and no shares of shares of Trinity Preferred
Stock were issued and outstanding.
The following summaries of the terms of Trinity Common Stock and Trinity
Preferred Stock do not purport to be complete and are qualified in their
entirety by reference to the Trinity Certificate of Incorporation, the Trinity
Bylaws, and the DGCL. Shares of Trinity Common Stock are fully-paid and
nonassessable. The holders of Trinity Common Stock have one vote per share with
respect to all matters submitted to a vote of the Trinity stockholders.
However, they do not have any cumulative voting, preemptive, or redemption
rights. Trinity Common Stock is listed and traded on the NYSE under the symbol
"TRN." For a discussion of the material differences between the rights of
holders of Transcisco Common Stock and the rights of holders of Trinity Common
Stock, see "COMPARISON OF STOCKHOLDER RIGHTS."
TRINITY COMMON STOCK
Subject to the prior rights and preferences of holders of Trinity
Preferred Stock, holders of Trinity Common Stock are entitled to receive
dividends when, as, and if declared by the Trinity Board out of any funds
legally available therefor.
In the event of any liquidation, dissolution, or winding up of the affairs
of Trinity, the holders of Trinity Common Stock will be entitled to share pro
rata in the assets, if any, of Trinity after payment has been made in full to
the holders of Trinity Preferred Stock.
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TRINITY PREFERRED STOCK
The Trinity Certificate of Incorporation authorizes the Trinity Board to
issue, from time to time and without further stockholder action, one or more
series of Trinity Preferred Stock and to fix the relative rights and
preferences of the shares, including dividend rights, liquidation preferences,
redemption rights, and conversion privileges. Because of its broad discretion
with respect to the creation and issuance of new series of Trinity Preferred
Stock without stockholder approval, the Trinity Board could adversely affect
the voting power of the holders of Trinity Common Stock. The holders of
Trinity Preferred Stock have the same voting rights as the holders of Trinity
Common Stock.
So long as any shares of Trinity Preferred Stock are outstanding, in no
event shall any dividend be paid or declared unless all dividends on the
Trinity Preferred Stock for all past dividend periods shall have been paid or
declared and a sum sufficient for the payment thereof set apart and the full
dividend thereon for the then current dividend period shall have been paid or
declared.
In the event of any liquidation, dissolution, or winding-up of the affairs
of Trinity, the holders of Trinity Preferred Stock are entitled to be paid
before any distribution or payment is made to the holders of Trinity Common
Stock.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of the DGCL, the Trinity Certificate of Incorporation,
the Trinity Bylaws, and the Trinity Rights Plans may have the effect of
delaying, making more difficult, or preventing a change in control or
acquisition of Trinity by means of a tender offer, a proxy contest, or
otherwise. These provisions, as summarized below, are expected to discourage
certain types of coercive takeover practices and inadequate takeover bids and
to encourage persons seeking to acquire control of Trinity first to negotiate
with Trinity. Trinity believes that the benefits derived from requiring the
proponent of an unfriendly or unsolicited proposal to negotiate with Trinity
outweigh the disadvantages of discouraging such proposals because, among other
things, negotiations with respect to such proposals could result in an
improvement of their terms.
TRINITY RIGHTS PLAN
Pursuant to the Trinity Rights Plan, Trinity paid a dividend distribution
of one purchase right for each outstanding share of Trinity Common Stock. Each
right entitles the stockholder to purchase from Trinity one one- hundredth of a
share of Series A Junior Participating Preferred Stock at an exercise price of
$175. The rights are not exercisable or detachable from Trinity Common Stock
until ten business days after a person acquires beneficial ownership of 20% or
more of Trinity Common Stock or unless a person or group commences a tender or
exchange offer upon consummation of which such person or group would
beneficially own 20% or more of Trinity Common Stock.
If any person becomes a beneficial owner of 20% or more of Trinity Common
Stock other than pursuant to an offer for all shares determined by certain
directors to be fair to Trinity stockholders and otherwise in the best
interests of both Trinity and its stockholders, each right not owned by that
person or related parties enables its holder to purchase, at the right's then
current exercise price, shares of Trinity Common Stock having a calculated
value of twice the right's exercise price.
The rights, which are subject to adjustment, may be redeemed by Trinity at
a price of one cent per right at any time prior to their expiration on April
27, 1999 or the time at which they become exercisable.
TRINITY PREFERRED STOCK
As described above, the Trinity Board is authorized to provide for the
issuance of shares of Trinity Preferred Stock in one or more series and to fix
the relative rights, and preferences of the shares, including dividend rights,
liquidation preferences, and redemption rights. Although the Trinity Board has
no present intention of doing so, it could issue a series of Trinity Preferred
Stock that could, depending on its terms, either impede or facilitate the
consummation of a merger, tender offer, or other takeover attempt.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS
The Trinity Bylaws provide that nominations of persons for election as
directors can be made only at an annual meeting (i) by or at the direction of
the Trinity Board, (ii) by a nominating committee or person
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appointed by the Trinity Board, or (iii) by a Trinity stockholder entitled to
vote for the election of directors at the meeting who has complied with the
advance notice procedures set forth in the Trinity Bylaws.
DELAWARE ANTI-TAKEOVER STATUTE
Section 203 of the DGCL prohibits business combination transactions
involving a Delaware corporation and an "interested stockholder" (defined
generally as any person that directly or indirectly beneficially owns 15
percent or more of the outstanding voting stock of the subject corporation) for
three years following the date such person became an interested stockholder,
unless certain requirements are met or certain exceptions apply, including that
prior to such date the board of directors of the subject corporation approved
either the business combination or the transactions that resulted in such
person becoming an interested stockholder.
TRANSFER AGENT AND REGISTRAR
The Bank of New York is the transfer agent, registrar, and dividend
disbursing agent for Trinity Common Stock. Its address is 10 Barclay Street,
New York, New York 10286, and its telephone number is (800) 524-4458.
DESCRIPTION OF TRANSCISCO CAPITAL STOCK
GENERAL
The following summaries of the terms of Transcisco Common Stock and
Transcisco Preferred Stock do not purport to be complete and are qualified in
their entirety by reference to the Transcisco Certificate of Incorporation, the
Transcisco Bylaws, and the DGCL. For information as to how to obtain the
Transcisco Certificate of Incorporation and the Transcisco Bylaws, see
"AVAILABLE INFORMATION."
Shares of Transcisco Common Stock are fully-paid and nonassessable. The
holders of Transcisco Common Stock do not have any cumulative voting,
pre-emptive, subscription, redemption or sinking fund rights. Transcisco Common
Stock is listed and traded on the AMEX under the symbol "TNI." For a discussion
of the material differences between the rights of holders of Transcisco Common
Stock and the rights of holders of Trinity Common Stock, see "COMPARISON OF
STOCKHOLDER RIGHTS."
The authorized capital stock of Transcisco presently consists of
15,000,000 shares of Transcisco Common Stock and 1,000,000 shares of preferred
stock, par value $0.01 per share (the "Transcisco Preferred Stock"). There were
5,412,725 shares of Transcisco Common Stock outstanding as of the Record Date.
No shares of Transcisco Preferred Stock were outstanding as of the Record Date.
TRANSCISCO COMMON STOCK
Subject to preferences that may be applicable to any then outstanding
Transcisco Preferred Stock, holders of Transcisco Common Stock are entitled to
receive ratably such cash dividends when, if, and as may be declared by the
Transcisco Board out of funds legally available therefor.
In the event of any liquidation, dissolution or winding-up of Transcisco,
the holders of Transcisco Common Stock will be entitled to share pro rata in
the net assets of Transcisco remaining, if any, after payment or provision for
payment in respect of the debts and other liabilities of Transcisco and subject
to liquidation preferences that may be applicable to any then outstanding
Transcisco Preferred Stock.
TRANSCISCO PREFERRED STOCK
The Transcisco Certificate of Incorporation authorizes the Transcisco
Board to issue, from time to time and without further stockholder action, one
or more series of Transcisco Preferred Stock and to fix the relative rights and
preferences of the shares, including voting powers, dividend rights,
liquidation preferences, redemption rights, and conversion privileges. Because
of its broad discretion with respect to the creation and issuance of new series
of Transcisco Preferred Stock without stockholder approval, the Transcisco
Board could adversely affect the voting power of the holders of Transcisco
Common Stock. Except with respect to the relative rights, preferences and
limitations that may be fixed by the Transcisco Board, pursuant to the
Transcisco Certificate of Incorporation, all shares of Transcisco Preferred
Stock are to be identical.
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Dividends on Transcisco Preferred Stock are to be declared and paid or set
apart for payment before any dividends can be declared and paid or set apart
for payment on Transcisco Common Stock with respect to the same period.
Dividends on Transcisco Preferred Stock are cumulative only if and to the
extent determined by the resolution of the Transcisco Board creating such
preferred stock.
In the event of any liquidation, dissolution, or winding-up of the affairs
of Transcisco, the holders of Transcisco Preferred Stock shall have preference
and priority over the holders of Transcisco Common Stock for the payment of the
amount to which each outstanding series of Transcisco Preferred Stock may be
entitled in accordance with the terms and rights thereof and each holder of
Transcisco Preferred Stock would be entitled to be paid in full such amount, or
have a sum sufficient for the payment in full set aside before any payments can
be made to the holders of Transcisco Common Stock.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of the DGCL, the Transcisco Certificate of
Incorporation, the Transcisco Bylaws, and the Transcisco Stockholder Rights
Plans (as defined herein) may have the effect of delaying, making more
difficult or preventing a change in control or acquisition of Transcisco by
means of a tender offer, a proxy contest, or otherwise. These provisions, as
summarized below, are expected to discourage certain types of coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of Transcisco first to negotiate with Transcisco. Transcisco
believes that the benefits derived from requiring the proponent of an
unfriendly or unsolicited proposal to negotiate with Transcisco outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiations with respect to such proposals could result in an improvement of
their terms.
TRANSCISCO STOCKHOLDER RIGHTS PLAN
On September 5, 1995, Transcisco adopted a stockholder rights plan (the
"Transcisco Rights Plan"), pursuant to which each holder of Transcisco Common
Stock was issued a right (the "Transcisco Rights") to purchase Series A Junior
Preferred Participating Stock (the "Transcisco Series A Preferred") at an
exercise price of $12.00 per share. In accordance with the Rights Agreement,
dated as of September 5, 1995 (the "Transcisco Rights Agreement"), by and among
Transcisco and First Interstate Bank of California (now known as Wells Fargo
National Bank), as Rights Agent, following public announcement that a person or
group has acquired Transcisco, or is making a tender or exchange offer for, 5%
of more of the outstanding shares of Transcisco Common Stock, the Transcisco
Rights would become exercisable to purchase the number of shares of Transcisco
Series A Preferred having a value equal to ten times the exercise price. In
the event that Transcisco engaged in a merger or business combination with the
acquiror or tender offeror, the Transcisco Rights would become exercisable for
shares of common stock in the acquiring entity having a value equal to ten
times the exercise price of the Transcisco Rights. On June 17, 1996, prior to
the execution of the Merger Agreement, the Transcisco Rights Agreement was
amended to provide, among other things, that the Merger would not be deemed a
"triggering event" as such term is defined in the Transcisco Rights Agreement.
Accordingly, no Transcisco Rights are exercisable as a result of the Merger
and, following the consummation of the Merger, the Transcisco Rights will
expire.
TRANSCISCO PREFERRED STOCK
As described above, the Transcisco Board is authorized to provide for the
issuance of shares of Transcisco Preferred Stock in one or more series and to
fix the relative rights, and preferences of the shares, including voting
powers, dividend rights, liquidation preferences, redemption rights, and
conversion privileges. Although the Transcisco Board has no present intention
of doing so, it could issue a series of Transcisco Preferred Stock that could,
depending on its terms, either impede or facilitate the consummation of a
merger, tender offer or other takeover attempt.
CLASSIFIED BOARD OF DIRECTORS
The Transcisco Bylaws provide for the classification of the Transcisco
Board into three classes serving staggered three-year terms.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS
The Transcisco Bylaws provide that with respect to annual meetings of
stockholders, nominations of persons for election to the Transcisco Board may
be made only by a nominating committee appointed by the
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Transcisco Board or by a stockholder entitled to vote in the election of
directors generally, who has complied with the advance notice procedures set
forth in the Transcisco Bylaws.
DELAWARE ANTI-TAKEOVER STATUTE
Section 203 of the DGCL prohibits business combination transactions
involving a Delaware corporation (such as Transcisco) and an "interested
stockholder" (defined generally as any person that directly or indirectly
beneficially owns 15% or more of the outstanding voting stock of the subject
corporation) for three years following the date such person became an
interested stockholder, unless special requirements are met or certain
exceptions apply, including that prior to such date the board of directors of
the subject corporation approved either the business combination or the
transactions which resulted in such person becoming an interested stockholder.
The Transcisco Board has approved the Merger Agreement for purposes of Section
203, and, accordingly, the provisions of Section 203 are not applicable to the
Merger.
TRANSFER AGENT AND REGISTRAR
Wells Fargo National Bank is the transfer agent and registrar for
Transcisco Common Stock. Its address is 345 California Street, Eighth Floor,
San Francisco, California, 94104, and its telephone number is (415) 773-7802.
COMPARISON OF STOCKHOLDER RIGHTS
Transcisco and Trinity are both organized under the laws of the State of
Delaware. Any differences, therefore, between the rights of the Transcisco
stockholders and the rights of the Trinity stockholders arise solely from
differences between each corporation's certificate of incorporation and bylaws.
The following summary sets forth certain material differences between the
rights of the Transcisco stockholders and the rights of the Trinity
stockholders. The summary does not purport to be a complete description of the
differences between the rights of the Transcisco stockholders and the rights of
the Trinity stockholders and is qualified in its entirety by reference to
Transcisco's Certificate of Incorporation, Bylaws, and Rights Plan and to
Trinity's Certificate of Incorporation, Bylaws, and Rights Plan. The Trinity
Certificate of Incorporation and the Trinity Bylaws are filed as exhibits to
the Registration Statement of which this Proxy Statement/Prospectus forms a
part.
AUTHORIZED CAPITAL STOCK
The authorized capital stock of Transcisco consists of 15,000,000 shares
of Transcisco Common Stock and 1,000,000 shares of Transcisco Preferred Stock.
As of July 15, 1996, there were 5,412,725 shares of Transcisco Common Stock and
no shares of Transcisco Preferred Stock issued and outstanding. The authorized
capital stock of Trinity consists of 100,000,000 shares of Trinity Common Stock
and 1,500,000 shares of Trinity Preferred Stock. As of July 15, 1996, there
were 41,625,217 shares of Trinity Common Stock and no shares of Trinity
Preferred Stock issued and outstanding.
VOTING RIGHTS
The holders of Transcisco Common Stock have one vote per share with
respect to all matters submitted to a vote of the Transcisco stockholders.
Likewise, the holders of Trinity Common Stock have one vote per share with
respect to all matters submitted to a vote of the Trinity stockholders.
AMENDMENTS TO CHARTER AND BYLAWS
Any alteration, amendment, or repeal of the Transcisco Certificate of
Incorporation must be approved by the affirmative vote of the holders of
66-2/3% of the outstanding shares of Transcisco Common Stock. Any alteration,
amendment, or repeal of the Transcisco Bylaws must be approved by either the
affirmative vote of the holders of 66-2/3% of the outstanding shares of
Transcisco Common Stock or a majority of the Transcisco Board, including a
majority of the independent directors on the Transcisco Board. Neither the
Trinity Certificate of Incorporation nor the Trinity Bylaws specifies the
approvals necessary for amending Trinity's Certificate of Incorporation.
Therefore, under the DGCL, any amendment to the Trinity Certificate of
Incorporation must be approved by a majority of the outstanding shares of
Trinity Common Stock. Any alteration, amendment or repeal of the Trinity
Bylaws must be approved by the affirmative vote of a majority of the Trinity
Board or by a unanimous written consent of the Trinity Board.
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PREEMPTIVE RIGHTS; CUMULATIVE VOTING
Neither the Transcisco stockholders nor the Trinity stockholders have
preemptive rights with respect to unissued shares of capital stock. Moreover,
cumulative voting is not authorized under either the Transcisco Certificate of
Incorporation or the Trinity Certificate of Incorporation.
BOARD OF DIRECTORS
The Transcisco Board is divided into three classes and consists of five
directors who serve for three-year terms. The number of directors on the
Transcisco Board is subject to change by action of the Transcisco Board but
cannot be less than five nor more than nine. The Trinity Board is not
classified and consists of nine directors who serve for one-year terms. The
number of directors on the Trinity Board is subject to change by action of the
Trinity Board but cannot be less than five nor more than twelve.
REMOVAL OF DIRECTORS
The Transcisco Certificate of Incorporation does not specify the
circumstances under which a director may be removed from the Transcisco Board.
Therefore, under the DGCL, directors of Transcisco may be removed only for
cause and then only by the holders majority of the outstanding shares of
Transcisco Common Stock. Under the Trinity Bylaws, any director may be removed
at any time, with or without cause, by the holders of a majority of the shares
entitled to vote at any meeting of stockholders called for the purpose of
removing any such director.
NEWLY-CREATED DIRECTORSHIPS AND VACANCIES
Under the Transcisco Bylaws, vacancies and newly-created directorships are
required to be filled by the Transcisco Board acting through a nominating
committee. Under the Trinity Bylaws, any vacancy occurring on the Trinity
Board may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum; newly-created directorships are required
to be filled by the affirmative vote of a majority of the directors though less
than a quorum.
NOMINATION OF DIRECTORS
The Transcisco Bylaws provide that nominations for the election of
directors shall be made by a nominating committee appointed by the Transcisco
Board or by a stockholder entitled to vote in the election of directors
generally who delivers written notice of such nomination to the secretary of
Transcisco not later than (i) with respect to an election to be held at an
annual meeting, sixty days in advance of the proxy statement released to
stockholders in connection with the previous year's annual meeting and (ii)
with respect to an election to be held at a special meeting, at least fifteen
days before the date that the proxy statement in connection with such meeting
is to be mailed. The proposing stockholder's notice shall set forth, among
other things, (i) the name and address of the proposing stockholder and of the
person to be nominated and (ii) a representation that the stockholder is a
holder of record and intends to appear in person or by proxy at the meeting to
nominate the person specified in the notice. Under the Trinity Bylaws,
nominations of persons for election as directors of the corporation must be
made at an annual meeting (i) by or at the direction of the Trinity Board, (ii)
by a nominating committee or person appointed by the Trinity Board, or (iii) by
a Trinity stockholder entitled to vote for the election of directors at the
meeting who delivers notice of such nomination to the secretary of Trinity not
less than fifty days nor more than seventy-five days before the date of the
meeting, provided, however, that in the event that less than sixty-five days'
notice of the date of the meeting is given, notice by the stockholder to be
timely must be received not later than the close of business on the fifteenth
day following the day on which such notice of the date of the meeting was made.
STOCKHOLDER PROPOSALS
The Transcisco Bylaws contain no advance notice requirements relating to
stockholder proposals for business to be conducted at a stockholders' meeting.
Under the Trinity Bylaws, in order for a Trinity stockholder to have a proposal
considered at an annual meeting of stockholders, the stockholder must deliver
notice of such proposal to the secretary of Trinity not less than fifty days
nor more than seventy-five days before the date of the meeting, provided,
however, that in the event that less than sixty-five days' notice of the date
of the meeting is given, notice by the stockholder to be timely must be
received not later than the close of business on the fifteenth day following
the day on which such notice of the date of the meeting was made. The
proposing stockholder's notice shall set forth with respect to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual
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meeting and the reasons for conducting such business at the annual meeting,
(ii) the name and record address of the stockholder proposing such business,
(iii) the class and number of shares of the corporation that are beneficially
owned by the stockholder, and (iv) any material interest of the stockholder in
such business.
SPECIAL MEETINGS OF THE STOCKHOLDERS
Under the Transcisco Bylaws, a special meeting of the stockholders may be
called by either (i) the Transcisco Board or (ii) any two of the following
individuals: the chairman, the president, any vice president, and the
secretary. Under the Trinity Bylaws, a special meeting of the stockholders may
be called by the chief executive officer or the Trinity Board.
STOCKHOLDER ACTION BY WRITTEN CONSENT
Under the Transcisco Bylaws, no action required or permitted to be taken
at any annual or special meeting of stockholders may be taken without a
meeting. The Trinity Certificate of Incorporation does not state whether
stockholder action may be taken without a meeting. Therefore, under the DGCL,
any action that may be taken at a meeting of Trinity stockholders may be taken
without a meeting of stockholders if a written consent setting forth the action
to be taken is signed by the holders of not less than the minimum number of
votes that would be necessary to take such action at a meeting of stockholders.
LIMITATION ON DIRECTOR'S LIABILITY
Both the Transcisco Certificate of Incorporation and the Trinity
Certificate of Incorporation provide that a director has no liability for
breach of a fiduciary duty, except for liability (i) for any breach of the duty
of loyalty, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of the law, (iii) for any
transaction from which the director derived an improper personal benefit, or
(iv) under Section 174 of the DGCL, which concerns unlawful dividend payments
and unlawful stock purchases and redemptions.
INDEMNIFICATION
The Transcisco Bylaws provide that Transcisco will indemnify to the
fullest extent authorized by Delaware law any person who was or is made a party
to, or is threatened to be made a party to, any action, suit, or proceeding
(whether civil, criminal, administrative, or investigative) by reason of the
fact that he or she is or was a director, officer, or employee of Transcisco or
is or was serving at the request of Transcisco as a director, officer, or
employee of another corporation, whether the basis of such action, suit, or
proceeding is alleged action in an official capacity as a director, officer, or
employee or in any other capacity while serving as a director, officer, or
employee, against all expenses, liabilities, and losses reasonably incurred or
suffered by such person. Under the DGCL, Transcisco is permitted to indemnify
a person only if the person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of
Transcisco, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
The Trinity Bylaws provide that Trinity will indemnify any person who was
or is a party to, or is threatened to be made a party to, any action, suit, or
proceeding (whether civil, criminal, administrative, or investigative) by
reason of the fact that he or she is or was a director, officer, employee, or
agent of Trinity or is or was serving at the request of Trinity as a director,
officer, employee, or agent of another corporation, or by reason of any action
alleged to have been taken or omitted in such capacity, against all costs,
charges, expenses, judgments, and amounts paid in settlement actually and
reasonably incurred by such person or on such person's behalf if such person
acted in good faith and in a manner reasonably believed by such person to be in
or not opposed to the best interests of Trinity, and with respect to any
criminal action or proceeding, had no reasonable cause to believe that the
conduct was unlawful.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
At the Meeting, the stockholders of Transcisco will elect two Class I
directors to hold office until the consummation of the Merger, or if the Merger
is not consummated, until such directors' successors are duly elected and
qualified. The Transcisco Board is divided into three classes serving
staggered three-year terms; the term of one class of directors expires each
year. The term of the Class I directors expires at the Meeting. The nominees
of the Transcisco Board for election as Class I directors are Brian P. Friedman
and Ottokarl
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F. Finsterwalder, who are currently Class I directors. The election of these
two directors will require the affirmative vote of the holders of a plurality
of the shares of Transcisco Common Stock present at the Meeting, in person or
by proxy, and entitled to vote. Unless contrary instructions are given, the
shares represented by the enclosed proxy will be voted FOR the election of
Brian P. Friedman and Ottokarl F. Finsterwalder. If any nominee at the time of
election is unable or unwilling to serve or is otherwise unavailable for
election, and as a result, another person is nominated, the person named in the
enclosed proxy or their substitutes will have discretion and authority to vote
for or refrain from voting for the other nominees in accordance with their best
judgment. It is not expected that any nominee will be unable or will decline
to serve.
The Merger Agreement provides that immediately after the Effective Time,
the Board of Directors of Transcisco, the surviving corporation in the Merger,
will consist solely of the directors of Trinity Y immediately prior to the
Effective Time.
BACKGROUND OF NOMINEES
Brian P. Friedman was appointed to the Transcisco Board on August 31,
1995. Mr. Friedman is President of Furman Selz Investments LLC and has been an
Executive Vice President of Furman Selz LLC for more than the past five years.
Mr. Friedman serves on the board of directors of the Coast Distribution System
and a number of private companies.
Pursuant to a Note and Warrant Purchase Agreement between Transcisco,
certain of its subsidiaries, Furman Selz SBIC, L.P. (an affiliate of Furman
Selz Investments LLC and Furman Selz LLC) and James Dowling, dated as of August
1, 1995 (the "Note and Warrant Purchase Agreement"), Furman Selz SBIC, L.P. has
the right to appoint one director to the Transcisco Board during such time as
amounts remain outstanding under the Note and Warrant Purchase Agreement. Mr.
Friedman has been nominated pursuant to this provision.
Ottokarl F. Finsterwalder was elected to the Transcisco Board in September
1990. Mr. Finsterwalder was an attorney with Shearman & Sterling until 1970.
From 1970-1975, he was a director of Hill, Samuel & Co. Ltd., a merchant bank
located in London. Since 1975, Mr. Finsterwalder has served as executive vice
president in charge of international operations for Creditanstalt-Bankverein in
Vienna. In July 1985, he was appointed to the board of managing directors of
Creditanstalt-Bankverein. Mr. Finsterwalder is also a director of several
organizations, including, Banco Interfinanzas S.A., Buenos Aires, Eckes AG
Frankfurt, Global Bond Plus Ltd., London, Banco BBA-Creditanstalt S.A., Sao
Paulo, and Energy International, London.
BOARD MEETINGS AND COMMITTEES
The Transcisco Board held eight meetings during fiscal 1996.
The Audit Committee consists of Messrs. Greenwood and Finsterwalder. The
Audit Committee held three meetings during fiscal 1996. The Audit Committee
reviews the financial statements and the internal financial reporting system
and controls of Transcisco with Transcisco's management and independent
auditors, recommends resolutions for any dispute between Transcisco's
management and its auditors, and reviews other matters relating to the
relationship of Transcisco with its auditors.
The Compensation Committee consists of Messrs. Armstrong and
Finsterwalder. The Compensation Committee held three meetings during fiscal
1996. The Compensation Committee makes recommendations to the Transcisco Board
regarding Transcisco's executive compensation policies.
The Independent Committee, consisting of Messrs. Friedman and Greenwood,
was formed to administer the Amended and Restated (1994) Stock Option Plan as
well as special compensation matters for directors. The Independent Committee
held one meeting in fiscal 1996, during which it granted 25,000 options to Mr.
Finsterwalder in recognition of his efforts regarding a $42 million financing
package for SFAT, a Russian rail transportation company in which Transcisco
holds a 23.5% ownership interest.
The Nominating Committee consists of Messrs. Armstrong and Finsterwalder.
This committee reviews potential candidates for nomination to the board. The
Nominating Committee held two meetings during fiscal 1996. The Nominating
Committee will consider nominees to the Board of Directors recommended by
security holders upon submission of the names of such nominees and such other
information as requested by the Nominating Committee in accordance with the
Transcisco Bylaws.
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RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Transcisco Board has selected Ernst & Young LLP to act as independent
auditors for Transcisco and to audit the financial statements of Transcisco for
the fiscal year ending March 31, 1997. Ernst & Young LLP has been Transcisco's
independent auditors for more than ten years and has advised Transcisco that
Ernst & Young LLP does not have any direct or indirect financial interest in
Transcisco or any of its subsidiaries, nor has such firm had any such interest
in connection with Transcisco during the past five years other than in its
capacity as Transcisco's auditors. A representative of Ernst and Young LLP is
expected to be present at the Meeting and will have an opportunity to make a
statement if he desires to do so and will be available to respond to
appropriate questions from Transcisco's stockholders. The Transcisco Board
recommends that Transcisco's stockholders vote FOR ratification of the
selection of Ernst & Young LLP to serve as Transcisco's independent auditors
for the fiscal year ending March 31, 1997.
APPROVAL TO INCREASE THE NUMBER OF SHARES ISSUABLE
UNDER THE AMENDED AND RESTATED (1994) STOCK OPTION PLAN
GENERAL
Transcisco's Amended and Restated (1994) Stock Option Plan was adopted in
its original form in 1983, and was subsequently amended by stockholder approval
in 1989 and 1995. The Transcisco Board has determined that it is advisable to
amend and restate Transcisco's Amended and Restated (1994) Stock Option Plan
such that it (i) provides for the issuance of up to an additional 1,000,000
shares of Transcisco Common Stock if the Merger is not approved at the Meeting
and up to an additional 220,000 shares in the event that the Merger is approved
at the Meeting, and (ii) increases the number of options issuable to any single
employee in any 36-month period from 400,000 to 450,000. As amended and
restated, the name of Transcisco's Amended and Restated (1994) Stock Option
Plan will be changed to the Amended and Restated (1996) Stock Option Plan. As
of July 15, 1996, the market value of Transcisco Common Stock subject to
options under the Amended and Restated (1994) Stock Option Plan, as measured by
the closing price of Transcisco Common Stock reported by the AMEX Composite
Tape, was $5.750 per share.
The proposed increase in the number of shares of Transcisco Common Stock
issuable under the Amended and Restated (1994) Stock Option Plan is designed to
attract, retain and reward qualified employees, and to provide incentives to
such employees by offering them an opportunity to obtain a proprietary interest
in Transcisco. The Amended and Restated (1994) Stock Option Plan provides for
grants of options to purchase shares of Transcisco Common Stock.
ADMINISTRATION OF THE PLAN
The Amended and Restated (1994) Stock Option Plan, as amended, is
administered by an independent committee of the Transcisco Board (the
"Independent Committee"), which consists of two non-employee directors
appointed (and removable) from time to time by the Transcisco Board. No person
is eligible to serve on the Independent Committee unless he is then a
"disinterested person" within the meaning of paragraph (d)(3) of Rule 16b-3
under the Exchange Act ("Rule 16b-3"). Options may not be granted pursuant to
the Amended and Restated (1994) Stock Option Plan, as amended, to any member of
the Independent Committee during the term of his membership on the Independent
Committee.
The Independent Committee is responsible for deciding option awards issued
under the Amended and Restated (1994) Stock Option Plan and adopting such rules
for the administration and interpretation of the Amended and Restated (1994)
Stock Option Plan as are consistent therewith and may interpret, amend, or
revoke any such rules. The Transcisco Board may at any time exercise any and
all rights and duties of the Independent Committee under the Amended and
Restated (1994) Stock Option Plan except with respect to matters which under
Rule 16b-3 or Section 162(m) (or any regulations or rules issued thereunder)
are required to be determined in the absolute discretion of the Independent
Committee.
Any employee of Transcisco, any parent corporation of Transcisco, or any
subsidiary is eligible to be granted options under the Amended and Restated
(1994) Stock Option Plan. Awards may be granted under the Amended and Restated
(1994) Stock Option Plan through December 31, 2004, unless it is earlier
terminated by the Transcisco Board. There are approximately 35 employees who
currently participate in the Amended and Restated (1994) Stock Option Plan.
The Independent Committee has the absolute discretion to determine (i) which
employees should be granted awards under the Amended and Restated (1994) Stock
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Option Plan, (ii) subject to the limits set forth in the 1994 Stock Option
Plan, the number of shares to be subject to such awards, and whether options
are to be incentive stock options or nonstatutory options; and (iii) the terms
and conditions of such awards. Subject to Section 162(m) of the Code and Rule
16b-3, the Independent Committee may delegate certain powers relating to the
granting of awards as it deems appropriate to executive officers of Transcisco.
As amended, the Amended and Restated (1994) Stock Option Plan prohibits the
issuance thereunder of options to purchase more than 450,000 shares of
Transcisco to any single employee in a 36-month period.
OPTIONS
The Amended and Restated (1994) Stock Option Plan allows for the grant of
incentive and nonstatutory options. Options granted before termination of the
Amended and Restated (1994) Stock Option Plan will remain outstanding in
accordance with their respective terms after termination of the Amended and
Restated (1994) Stock Option Plan.
Because grants under the Amended and Restated (1994) Stock Option Plan are
made in the sole discretion of the Independent Committee, except as set forth
below, it is not possible to determine the number of options that will be
granted this year or that would have been granted last year had the Amended and
Restated (1994) Stock Option Plan then been amended and restated to increase
the number of shares of Transcisco Common Stock issuable thereunder. The
following table shows options previously granted that will be deemed granted
under the Amended and Restated (1994) Stock Option Plan if the amendment
pursuant to this proposal is adopted.
<TABLE>
<CAPTION>
Name and Position Dollar Value No. of Options
- ----------------- ------------ --------------
<S> <C> <C>
Non-Executive Director Group $0 6,000
Non-Executive Employee Group $0 65,000
</TABLE>
Options under the Amended and Restated (1994) Stock Option Plan are
exercisable in installments in such amounts (which may be cumulative) as the
Independent Committee shall provide in the terms of each stock option
agreement. The exercisability of options may be accelerated in the event of a
change of control of Transcisco. Subject to the following, the expiration
date, maximum number of shares purchasable, conditions to exercise and other
provisions of individual stock option agreements are established by the
Independent Committee at the time of grant. The term of any incentive stock
option may not exceed ten years. No portion of an option which is
unexercisable upon the termination of employment for any reason may thereafter
become exercisable. Generally, options which are exercisable at the time an
optionee's employment with Transcisco or its subsidiaries is terminated expire
ninety days following such termination. However, options may be exercised
until the expiration of one year after termination of employment due to an
optionee's death, disability or retirement.
The exercise prices of options are fixed by the Independent Committee, but
with respect to incentive stock options may not be less than 100% of the fair
market value of Transcisco Common Stock on the date of grant. To exercise an
option, the optionee must deliver to Transcisco a written notice of exercise
and full payment for the shares. The consideration to be paid for the shares
of Transcisco Common Stock to be issued upon exercise of an option, including
the method of payment, shall be determined by the Independent Committee (and,
in the case of an Incentive Stock option, shall be determined at the time of
grant) and may consist entirely of any of the following: (i) cash, (ii)
certified or cashier's check, (iii) promissory note, (iv) subject to certain
limitations, other shares of Transcisco Common Stock.
Options may be transferred only by will or by the laws of descent and
distribution and during a participant's lifetime are exercisable only by the
participant.
ADJUSTMENTS UPON CHANGE IN CAPITALIZATION
In the event that there is any change in the number of outstanding shares
of Transcisco Common Stock or of the capital structure of Transcisco by reason
of a recapitalization, reclassification, reorganization, stock split, reverse
stock split, combination of shares, stock dividend or similar transaction, the
number of shares available under the Amended and Restated (1994) Stock Option
Plan decreased proportionately, as the case may be, and the number of shares of
Transcisco Common Stock deliverable in connection with any option granted will
be increased or decreased proportionately, as the case may be, without change
in the aggregate
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purchase price (where applicable). If Transcisco is merged or consolidated
with another corporation and Transcisco is not the surviving corporation, or in
case the property or stock of Transcisco is acquired by another corporation, or
upon separation, reorganization, or liquidation of Transcisco, the Transcisco
Board or the board of directors of any corporation assuming the obligations of
Transcisco hereunder, will, as to outstanding options, either (a) make
appropriate provisions for the protection of any such outstanding options by
the assumption or substitution on an equitable basis of appropriate stock of
Transcisco or of the merged, consolidated, or otherwise reorganized corporation
which will be issuable in respect to the shares of Transcisco Common Stock,
provided that in the case of Incentive Stock Options, such assumption or
substitution will comply with Section 424(a) of the Code, or (b) upon written
notice to the participant, provide that the option must be exercised within
thirty (30) days of the date of such notice or it will be terminated. In any
such case, the Independent Committee may, in its discretion, advance the lapse
of vesting periods, waiting periods, and exercise dates.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of the material U.S. Federal
income tax consequences to U.S. participants in the Amended and Restated
(1994) Stock Option Plan. The discussion is based on the Code, regulations
thereunder and rulings and decisions now in effect, all of which are subject to
change. The summary does not discuss all aspects of federal income taxation
that may be relevant to a particular participant in light of such participant's
personal investment circumstances.
NONSTATUTORY STOCK OPTIONS
Holders of nonstatutory options do not realize income as a result of the
grant of the options, but normally realize ordinary income upon exercise of the
option to the extent that the fair market value of the shares on the date of
exercise of the option exceed the aggregate option exercise price paid.
Subject to Section 162(m) of the Code, Transcisco (or other employer
corporation) is entitled to a deduction in the same amount at the time of
exercise of the option. Transcisco (or other employer corporation) is
generally required to withhold taxes on the ordinary income realized by an
optionee upon the exercise of a nonstatutory option. An optionee's basis for
the stock for the purposes of determining the optionee's gain or loss on
subsequent disposition of the shares generally will be the fair market value of
the stock on the date of exercise of the option.
INCENTIVE STOCK OPTIONS
Holders of Incentive Stock Options will not recognize taxable income upon
either the grant of the option or its exercise; however, generally the amount
by which the fair market value of the shares at the time of exercise exceeds
the option price will be included in the holder's alternative minimum taxable
income upon exercise unless the stock acquired is not transferable or is
subject to a substantial risk of forfeiture, in which case no amount is
included in alternative minimum taxable income until the stock is transferable
or there is no longer a substantial risk of forfeiture. If an incentive stock
option is disposed of in the same year it is exercised, and the amount realized
is less than the stock's fair market value at the time of exercise, the amount
includable in alternative minimum taxable income does not exceed the amount
realized on the sale or exchange of the stock, less the taxpayer's basis in
such stock. Upon the sale or other taxable disposition of the shares, the
holder will recognize the difference between the amount realized and the option
exercise price if disposition of the shares takes place after at least (i) two
years from the date of grant of the option and (ii) one year from the date of
transfer of the shares to the optionee upon exercise. If the shares are sold
or otherwise disposed of before the end of the one-year or two-year periods,
the difference between the option exercise price and the fair market value of
the shares on the date on which the option is exercised will be taxed as
ordinary income. The balance of the gain, if any, will be taxable as capital
gain. If the shares are disposed of before the expiration of the one-year or
two-year periods and the amount realized is less than the fair market value of
the shares at the date of exercise, the employee's ordinary income is limited
to the amount realized less the option exercise price paid. Subject to Section
162(m) of the Code, Transcisco (or other employer corporation) will be entitled
to a tax deduction in regard to an incentive stock option only to the extent
the optionee has ordinary income upon sale or other disposition of the shares
received upon exercise of the option.
The tax consequences resulting from the exercise of an option through
delivery of already-owned shares of Transcisco Common Stock are not completely
certain. In published rulings, the Internal Revenue Service has taken the
position that (i) to the extent an equivalent value of shares is acquired upon
such exercise, an optionee will recognize no gain and the optionee's basis in
the shares acquired upon such exercise will be equal to the optionee's basis in
the surrendered shares, and (ii) that any additional shares acquired
50
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upon such exercise will be compensation to the optionee taxable under the rules
described above (as if no amount had been paid for such shares) and that the
optionee's basis in any such additional shares will be their then fair market
value.
The Transcisco Board recommends that stockholders vote FOR the increase in
the number of shares of Transcisco Common Stock issuable under the Amended and
Restated (1994) Stock Option Plan.
LEGAL MATTERS
The legality of the Trinity Common Stock to be issued in the Merger will
be passed upon for Trinity by Locke Purnell Rain Harrell (A Professional
Corporation), counsel to Trinity. Skadden, Arps, Slate, Meagher & Flom,
special counsel to Transcisco, will render an opinion with respect to certain
federal income tax consequences of the Merger. See "THE PROPOSED
MERGER--Certain Federal Income Tax Consequences of the Merger."
EXPERTS
The consolidated financial statements of Transcisco and its subsidiaries,
appearing in Transcisco's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their reports thereon incorporated herein by reference
elsewhere herein which, as to the fiscal years ended March 31, 1996 and 1995,
are based insofar as it relates to data included for SFAT (a Russian joint
stock company in which Transcisco has a 23.5% ownership interest), on the
reports of KPMG Moscow, Russia, independent auditors whose reports for SFAT's
years ended December 31, 1995 and 1994 have been furnished to Ernst & Young LLP.
The consolidated financial statements of SFAT for the fiscal years ended
December 31, 1995 and 1994, prepared in accordance with International
Accounting Standards, were audited by KPMG Moscow, Russia, independent
auditors, as set forth in their report thereon incorporated herein by reference.
The consolidated financial statements referred to above are incorporated
by reference herein in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing. Representatives of Ernst &
Young LLP are expected to be present at the Meeting, where they will have the
opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions.
The consolidated financial statements and schedule of Trinity and its
subsidiaries, appearing in or incorporated by reference in Trinity's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996 have been audited
by Ernst & Young LLP, independent auditors, as set forth in their reports
thereon incorporated by reference elsewhere herein. Such consolidated financial
statements and schedule are incorporated by reference herein in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing.
STOCKHOLDER PROPOSALS
Proposals by Transcisco stockholders which such stockholders intend to
present at Transcisco's 1997 (which will be held in fiscal year 1997) Annual
Meeting of Stockholders (which will not be eligible for presentation if the
Merger has been consummated) must be received by Transcisco no later than March
21, 1997 so that they may be considered for inclusion in the proxy statement
and form of proxy relating to that meeting.
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ANNEX A
[CONFORMED COPY]
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
TRINITY INDUSTRIES, INC.,
TRINITY Y, INC.
AND
TRANSCISCO INDUSTRIES, INC.
dated as of June 17, 1996
================================================================================
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TABLE OF CONTENTS
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ARTICLE 1
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Conversion of Shares of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.3 Payment and Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2
THE SURVIVING CORPORATION
SECTION 2.1 Name and Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.2 Corporate Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.3 Governmental Authorization; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.4 Non-contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.6 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.8 Company SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.9 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.14 Permits; Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.15 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.16 Patents, Trademarks, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.18 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.19 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.21 Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.22 Unfilled Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.23 Unfilled Sales Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.24 Registration Statement; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.25 Accuracy and Completeness of Representations and Warranties; Incorporation by Reference . . 14
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TRINITY AND SUBSIDIARY
SECTION 4.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.2 Corporate Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.3 Governmental Authorization; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.4 Non-contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.6 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.7 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.8 Registration Statement; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.9 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.10 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.12 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.14 Accuracy and Completeness of Representations and Warranties . . . . . . . . . . . . . . . . 17
SECTION 4.15 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.16 Investigation by Trinity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5
COVENANTS OF THE COMPANY, TRINITY AND SUBSIDIARY
SECTION 5.1 Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.2 Covenants of Trinity and Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.3 Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 6
CONDITIONS TO CLOSING
SECTION 6.1 Conditions to Obligations of Trinity and Subsidiary to Proceed with the Merger . . . . . . 25
SECTION 6.2 Conditions to Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 7
TERMINATION
SECTION 7.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.2 Termination by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.3 Termination by Trinity and Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.4 Termination by Either Trinity or the Company . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.5 Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.6 Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.5 Counterparts: Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.6 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.7 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.8 Nonsurvival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.11 Severability; Validity; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.12 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.13 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EXHIBIT A Form of Company's Tax Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Trinity's Tax Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Form of Affiliate Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, is entered into this 17th day of
June, 1996, among TRANSCISCO INDUSTRIES, INC., a Delaware corporation (the
"Company"), TRINITY INDUSTRIES, INC., a Delaware corporation ("Trinity"), and
TRINITY Y, INC., a Delaware corporation and a wholly-owned subsidiary of
Trinity ("Subsidiary").
WITNESSETH:
WHEREAS, the Boards of Directors of the Company, Subsidiary and
Trinity have determined that it is in their respective best interests for
Subsidiary to merge with and into the Company upon the terms and subject to the
conditions set forth herein in order for the Company to become a wholly-owned
subsidiary of Trinity.
WHEREAS, in furtherance of such acquisition, the Boards of Directors
of the Company, Subsidiary and Trinity have approved the merger of Subsidiary
with and into the Company in accordance with Delaware law and upon the terms
and subject to the conditions set forth herein.
WHEREAS, it is the intention of the parties that this transaction
qualify as a tax-free reorganization pursuant to Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), so that the shares of common
stock of Trinity received by the Stockholders (as hereinafter defined) shall
not be immediately taxable to the Stockholders upon receipt.
WHEREAS, it is the intent of the parties that there shall be a
continuity of interest and a continuity of business enterprise with respect to
the acquisition by Trinity of the Company in the subject merger transaction.
NOW, THEREFORE, the parties hereto agree as follows:
1. THE MERGER
1.1 The Merger.
(a) Subject to the terms and conditions of this
Agreement, on the Closing Date (as defined in Section 1.4 hereof),
Subsidiary shall be merged (the "Merger") with and into the Company in
accordance with Delaware law, whereupon the separate existence of
Subsidiary shall cease and the Company shall continue as the surviving
corporation (the Company thus being sometimes hereinafter referred to
as the "Surviving Corporation") under the name of Transcisco
Industries, Inc. as set forth in Section 2 hereof.
(b) On the Closing Date, the parties hereto shall cause
the Merger to be consummated by filing a certificate of merger
("Certificate of Merger") with the Secretary of State of the State of
Delaware in such form as required by, and executed in accordance with
the relevant provisions of, Delaware law, and the parties hereto shall
make all other filings or recordings required by any applicable law in
connection with the Merger. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware (the "Effective Time").
(c) At the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of Delaware law.
Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the property, rights, privileges, powers
and franchises of Subsidiary shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Subsidiary shall become the
debts, liabilities and duties of the Surviving Corporation.
1.2 Conversion of Shares of Stock. The manner and basis of
converting each share of Subsidiary common stock into a share of the Surviving
Corporation's common stock and of converting each issued and
<PAGE> 65
outstanding share of common stock, $.01 par value, of the Company (the "Company
Stock") into a right to receive shares of voting common stock, $1.00 par value,
of Trinity (the "Trinity Stock") shall be as follows:
(a) Each share of Subsidiary common stock which is issued
and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any act on the part of the holder
thereof, be converted into one (1) fully paid and nonassessable share
of voting common stock of the Surviving Corporation.
(b) Each share of Company Stock which is issued and
outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of any of the
Company's stockholders (individually, a "Stockholder", and,
collectively, the "Stockholders"), be converted into and become a
right to receive eighteen hundred and eighty-four ten-thousandths
(.1884) (the "Exchange Ratio") of one (1) share of Trinity Stock (with
cash paid to any Stockholder entitled to a fractional share of Trinity
Stock), all of which shall be issued and distributed in accordance
with Section 1.3 hereof. In the event that subsequent to the date of
this Agreement but prior to the Effective Time, Trinity shall have
declared a stock split (including a reverse split) of Trinity Stock or
a dividend payable in Trinity Stock, or any other distribution of
securities or special cash dividends (which specifically excludes
Trinity's regular quarterly dividends) with respect to Trinity Stock
(including, without limitation, such a distribution made in connection
with a recapitalization, reclassification, merger, consolidation,
reorganization or similar transaction) then the Exchange Ratio shall
be appropriately adjusted to reflect such stock split, dividend or
other distribution of securities.
(c) (i) At the Effective Time, each outstanding option to
purchase Company Stock (a "Stock Option") granted under any Company
stock option plan (a "Company Stock Plan") or pursuant to an agreement
identified on Schedule 3.6 of the Disclosure Schedule (as defined in
Section 3.1 hereof), whether vested or unvested, shall be deemed to
constitute an option to acquire, on the same terms and conditions as
were applicable under such Stock Option, the same whole number of
shares of Trinity Stock (being rounded upward to the nearest whole
share) as the holder of such Stock Option would have been entitled to
receive pursuant to the Merger had such holder exercised such option
in full immediately prior to the Effective Time (not taking into
account whether or not such option was in fact exercisable), and shall
have an exercise price per share equal to such Stock Option's exercise
price per share divided by the Exchange Ratio (the option price per
share, as so determined, being rounded to the nearest full cent). In
the case of any Stock Option to which Section 421 of the Code applies
by reason of its qualification under any of Sections 422-423 of the
Code ("Qualified Stock Options"), the option price, the number of
shares purchasable pursuant to such option and the terms and
conditions of such option shall comply with Section 424(a) of the
Code.
(ii) As soon as practicable after the Effective
Time, Trinity shall deliver to each holder of an outstanding Stock
Option an appropriate notice setting forth such holder's rights
pursuant hereto and such Stock Option shall continue in effect on the
same terms and conditions (including further antidilution provisions
and subject to the adjustments required by this Section 1.2(c) after
giving effect to the Merger). Trinity shall comply with the terms of
all such Stock Options and ensure, to the extent required by, and
subject to the provisions of, any such Company Stock Plan, that Stock
Options which qualified as Qualified Stock Options prior to the
Effective Time continue to qualify as Qualified Stock Options after
the Effective Time. Trinity shall take all corporate actions
necessary to reserve for issuance a sufficient number of shares of
Trinity Stock for delivery pursuant to the terms set forth in this
Section 1.2(c).
1.3 Payment and Arrangements.
(a) In accordance with Section 1.2(b) above and as soon
as practicable following the mailing of the Proxy Statement (as
defined in Section 3.24 hereof), but in no event later than ten (10)
business days prior to the meeting of the Stockholders required by
Section 5.3(b) hereof, The Bank of New York, or the entity then
serving as Registrar and Transfer Agent of Trinity's common stock, as
the exchange agent for
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the Merger (the "Exchange Agent"), shall mail or otherwise provide to
each Stockholder a notice and transmittal form for effecting an
exchange of such Stockholder's Company stock certificates (the
"Company Certificates") for certificates representing Trinity Stock.
Upon surrender to the Exchange Agent of (A) his or her Company
Certificates (in compliance with applicable instructions), and (B) a
duly executed transmittal form, each holder of such Company
Certificates shall be entitled to receive in exchange therefor a
certificate or certificates representing such Stockholder's Trinity
Stock. Company Certificates so surrendered shall be canceled and,
until satisfaction of (A) and (B) above, risk of loss and title to any
Company Certificate shall not pass to the Exchange Agent. In the
event of any transfer of Company Stock that is not registered on the
stock transfer records of the Company, certificates representing
Trinity Stock shall be issued, substantially as provided above but to
the transferee, if all documents required to evidence and effect such
transfer are also presented to the Exchange Agent, and by payment of
all applicable stock transfer taxes. Trinity Stock into which Company
Stock shall be converted in the Merger shall be deemed to have been
issued as of the Effective Time. Until surrendered and exchanged,
each outstanding Company Certificate shall be deemed for all corporate
purposes (subject to the dividend, distribution and transfer
limitations provided for in Section 1.3(b), 1.3(c) and 1.3(d) below),
to represent the number of shares of Trinity Stock for which such
Company Certificate shall have been converted.
(b) No dividends or other distributions, if any, payable
to holders of record of Trinity Stock after the Effective Time shall
be distributed to Stockholders holding outstanding Company
Certificates; provided, however, that, upon surrender and exchange of
such outstanding Company Certificates, such surrendering Stockholder
shall be entitled to receive from Trinity, without interest thereon,
any dividends or distributions which shall have become payable or
distributable with respect to such Trinity Stock between the Effective
Time and the time of the surrender of the Company Certificate.
(c) With respect to each outstanding Company Certificate
not surrendered and exchanged for Trinity Stock certificates, the
holder of such Company Certificate shall look as a general creditor
only to Trinity for payment and delivery of dividends or
distributions, as the case may be, withheld pursuant to Section 1.3(b)
above. Notwithstanding the foregoing, none of Trinity, Subsidiary,
the Company, the Surviving Corporation, the Exchange Agent or any
other party shall be liable to any Stockholder or any other person or
entity for any Trinity Stock or dividends or distributions thereon
delivered to a public official pursuant to escheat laws, if
applicable.
(d) Except as provided expressly in Section 1.3(a) above,
after the Effective Time, no transfer of Company Stock outstanding
prior to the Effective Time shall be made on the stock transfer books
of the Surviving Corporation and no sale or transfer of Trinity Stock
shall be made or recognized by the Exchange Agent with respect to any
shares of Trinity Stock held for a Stockholder who has failed to
surrender and exchange his or her Company Certificate. With respect
to Company Certificates surrendered for exchange by any person
constituting an Affiliate (as defined in Section 5.3(d) hereof),
Trinity reserves the right to affix the following legend on the
Trinity Stock certificate issued to any Affiliate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
BY A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW
TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT
BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
(e) No fractional shares of Trinity Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional share of
Trinity Stock pursuant to Section 1.2(b), cash adjustments will be
paid to holders in respect of any fractional share of Trinity Stock
that would otherwise be issuable, and the amount of such
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cash adjustment shall be equal to such fractional proportion of the
"Average Price" of a share of Trinity Stock. The "Average Price" of a
share of Trinity Stock shall be the average of the closing sales
prices thereof as reported on the NYSE (as defined in Section 3.3(a)
hereof) Composite Tape (as reported by The Wall Street Journal or, if
not reported thereby, by another authoritative source) over the ten
(10) trading days including and ending on the second trading day
preceding the Closing Date.
(f) All Trinity Stock issued upon and in accordance with
the surrender and exchange provisions hereinabove shall be deemed to
have been issued in full satisfaction of all rights pertaining to such
exchanged Company Stock.
1.4 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated herein (the "Closing")
shall occur as soon as practicable, at a mutually agreeable time and date not
later than five (5) business days after the later of the date of the meeting of
the Stockholders as required by Section 5.3(b) hereof and the satisfaction or
waiver of the conditions to the parties' obligation to effect the Merger at the
offices of Trinity Industries, Inc., 2525 Stemmons Freeway, Dallas, Texas, or
such other time, date or place as the parties may otherwise agree (the "Closing
Date"). At or prior to the Closing:
(a) The Company will deliver to Trinity and Subsidiary:
(i) a copy of the corporate actions taken by the
Company with respect to the authorization, execution, delivery
and performance of this Agreement and the consummation of the
Merger, each duly certified as of the Closing Date by the
Secretary or an Assistant Secretary of the Company;
(ii) a duplicate original of the Certificate of
Merger to be filed with the Secretary of State of the State of
Delaware in connection with the transaction as executed by the
Company; and
(iii) executed originals or copies of any and all
consents, approvals, waivers and/or acknowledgments required
in order (a) for the Company to consummate the Merger or (b)
to permit the Surviving Corporation to continue to carry on
the business of the Company substantially in the manner now
conducted.
(b) Trinity and Subsidiary will deliver to the Company:
(i) a duplicate original of the Certificate of Merger
to be filed with the Secretary of State of the State of
Delaware in connection with the transaction as executed by
Subsidiary; and
(ii) a copy of the corporate actions taken by Trinity
and Subsidiary with respect to the authorization, execution,
delivery and performance of this Agreement and the
consummation of the Merger, each duly certified as of the
Closing Date by the Secretary or an Assistant Secretary of
Trinity or Subsidiary, as appropriate.
Trinity shall cause to be filed with the Secretary of State of the State of
Delaware a fully executed duplicate original of the Certificate of Merger as
promptly as practical after the Closing and the Merger shall be effective upon
such filing.
2. THE SURVIVING CORPORATION
2.1 Name and Certificate of Incorporation. The corporation
surviving the Merger shall be the Company, and the certificate of incorporation
of Subsidiary in effect on the Closing Date shall be the certificate of
incorporation of the Surviving Corporation.
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2.2 Bylaws. The Bylaws of Subsidiary in effect on the Closing
Date shall be the Bylaws of the Surviving Corporation.
2.3 Directors and Officers. From and after the Closing Date,
until successors are duly elected or appointed in accordance with applicable
law, the directors of Subsidiary on the Closing Date shall be the directors of
the Surviving Corporation and the officers of Subsidiary on the Closing Date
shall be the officers of the Surviving Corporation.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Trinity and Subsidiary that:
3.1 Corporate Status. The Company and each of its subsidiaries is
a corporation organized, validly existing and in good standing under the laws
of the state of its incorporation and has all corporate powers required to
carry on its business as now conducted. The Company and each of its
subsidiaries is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the character of the property owned
or leased by it or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not individually
or in the aggregate have a material adverse effect on the business, assets,
liabilities, results of operations or financial condition of the Company and
its subsidiaries, taken as a whole ("Company Material Adverse Effect"). The
Company has heretofore made available or delivered to Trinity true and complete
copies of the Certificate or Articles of Incorporation and Bylaws for the
Company and each of its subsidiaries, as currently in effect. The Company and
each of its subsidiaries is not in violation or breach of, or default under
(and no event has occurred which with notice or the lapse of time or both would
constitute a violation or breach of, or default under) any term, condition or
provision of its Certificate or Articles of Incorporation, as the case may be,
or Bylaws, which such violation, breach or default creates a Company Material
Adverse Effect. Except as disclosed in Schedule 3.1 of the schedules delivered
by the Company to Trinity and Subsidiary (all schedules referred to in, or
delivered pursuant to, this Agreement shall be collectively referred to as the
"Disclosure Schedule"), the Company has no subsidiaries and does not, directly
or indirectly, own or have the power to vote, or to exercise a controlling
influence with respect to, any securities of any class of any person, the
holders of which class are entitled to vote for the election of directors (or
persons serving similar functions) of such person.
3.2 Corporate Authorization. The Company has full corporate power
and authority to execute and deliver this Agreement and, subject to the
approval of this Agreement by the Stockholders, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Company's Board of Directors and no other corporate
proceedings (other than the approval of this Agreement by the Stockholders as
contemplated by Section 5.3(b) hereof) on the part of the Company are necessary
to authorize the execution and delivery of this Agreement or the consummation
of the transactions contemplated herein.
3.3 Governmental Authorization; Consents.
(a) The execution, delivery and performance by the
Company of this Agreement and the consummation of the Merger by the
Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority except for filings
with or approvals by (i) the Securities and Exchange Commission (the
"Commission"), (ii) the New York Stock Exchange ("NYSE") and the
American Stock Exchange ("AMEX"), (iii) the Federal Trade Commission
("FTC"), (iv) the United States Department of Justice ("DOJ"), (v)
appropriate state officials in jurisdictions where blue sky or similar
securities law clearance is required, and (vi) the Secretary of State
of the State of Delaware, and except where the lack of such action or
filing would not individually or in the aggregate have a Company
Material Adverse Effect.
(b) Except as disclosed in Schedule 3.3 of the Disclosure
Schedule and except for the approval of the Stockholders, no consent,
approval, waiver or other action by any person not a party to
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this Agreement under any material contract, agreement, indenture,
lease, instrument or other document to which the Company or any of its
subsidiaries is a party or by which any of them are bound is required
or necessary for the execution, delivery and performance of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby.
3.4 Non-contravention. Except as disclosed in Schedule 3.4 of the
Disclosure Schedule and except in the case of clauses (ii) and (iii) for
contraventions, defaults, terminations, cancellations, accelerations, creations
or impositions that would not individually or in the aggregate have a Company
Material Adverse Effect, the execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated hereby do not and will not (i) materially contravene or constitute
a material default under the Certificate of Incorporation or Bylaws of the
Company, (ii) contravene or constitute a default under or give rise to a right
of termination, cancellation or acceleration of any right or obligation of the
Company or any of its subsidiaries or to a loss of any benefit to which the
Company or any of its subsidiaries are entitled, or (iii) result in the
creation or imposition of any Lien on any asset of the Company or any of its
subsidiaries. For purposes of this Agreement, "Lien" means, with respect to
any asset, any mortgage, lien, pledge, charge, security interest, restriction
on transfer or encumbrance of any kind in respect of such asset.
3.5 Binding Effect. Assuming the due execution and delivery of
this Agreement by Trinity and Subsidiary but subject to its approval by the
Stockholders as contemplated by Section 5.3(b) hereof and the filings with or
approvals by the governmental bodies, agencies, officials or authorities
described in Section 3.3 hereof, this Agreement constitutes a legal, valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by principles
of equity regarding the availability of remedies.
3.6 Capitalization. The authorized capital stock of the Company
consists of (i) fifteen million (15,000,000) common shares, $.01 par value, of
which five million two hundred sixty-nine thousand six hundred fourteen
(5,269,614) shares were issued and outstanding on June 1, 1996 and (ii) one
million (1,000,000) preferred shares, $.01 par value, of which none are issued
and outstanding on the date hereof. The Company owns all of the issued and
outstanding shares of capital stock of each of its subsidiaries. All
outstanding shares of capital stock of the Company and each of its subsidiaries
have been duly authorized and validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3.6 of the Disclosure Schedule,
there are no plans, agreements or other arrangements pursuant to which any
options, warrants or other rights to acquire shares of capital stock from the
Company or any of its subsidiaries are outstanding. Except as disclosed in
Schedule 3.6 of the Disclosure Schedule, other than the shares of capital stock
of the Company described above and the shares of capital stock of the Company's
subsidiaries owned by the Company, there are outstanding (i) no shares of
capital stock or other voting securities of the Company or any of its
subsidiaries, (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company or
any of its subsidiaries, and (iii) no phantom stock, options or other rights to
acquire from the Company or any of its subsidiaries, and no obligation of the
Company or any of its subsidiaries to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company or any of its subsidiaries.
3.7 Financial Statements. The Company has delivered to Trinity
the Company's audited financial statements for the years ended December 31,
1992 and 1993, the three-month period ended March 31, 1994, and the years ended
March 31, 1995 and 1996 (the "Financial Statements"). The Financial Statements
have been prepared from the books and records of the Company in accordance with
generally accepted accounting principles consistently applied (except as may be
indicated therein or in the notes thereto), and fairly present in all material
respects the financial condition of the Company as at their respective dates
and the results of its operations for the periods covered thereby.
3.8 Company SEC Reports. The Company has delivered or made
available to Trinity true and complete copies of each registration statement,
report and proxy or information statement (including exhibits and any
amendments thereto) filed by the Company with the Commission since January 1,
1993 through the date hereof (collectively, the "Company SEC Reports"). As of
the respective dates the Company SEC Reports were filed or,
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if any such Company SEC Reports were amended, as of the date such amendment was
filed, each of the Company SEC Reports (i) complied in all material respects
with all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder and (ii)
did not 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, in light of the circumstances under which they were made,
not misleading.
3.9 Absence of Certain Changes. Except as disclosed in Schedule
3.9 of the Disclosure Schedule, or as otherwise set forth in the Financial
Statements, the Company SEC Reports or as contemplated by this Agreement, since
March 31, 1996, the Company and each of its subsidiaries has not:
(a) incurred any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, except
(i) obligations and liabilities incurred in the ordinary course of
business and consistent with its prior practice, (ii) obligations or
liabilities, in any one case or in the aggregate, which have not had a
Company Material Adverse Effect and (iii) obligations and liabilities
incurred pursuant to, or contemplated by, this Agreement;
(b) mortgaged or pledged any of its property, business or
assets, tangible or intangible;
(c) sold, transferred, leased to others or otherwise
disposed of any of its assets, except for transactions in the ordinary
course of business and transactions not individually in excess of One
Hundred Thousand Dollars ($100,000), or canceled or compromised any
debt or Claim (as defined in Section 3.11 hereof) (other than accounts
receivable compromised in the ordinary course of business consistent
with its prior practice and debts or Claims not individually in excess
of One Hundred Thousand Dollars ($100,000)), or waived or released any
right, except for such rights the loss of which, in any one case or
the aggregate, have not had, or are not reasonably likely to have, a
Company Material Adverse Effect;
(d) received any notice or threat of termination of any
contract, lease or other agreement or suffered any damage, destruction
or loss (not covered by insurance) which, in any case or in the
aggregate, has had, or is reasonably likely to have, a Company
Material Adverse Effect;
(e) paid any dividends, paid any compensation other than
in the ordinary course of the Company's business, or made any change
in the rate of compensation, commission, bonus or other direct or
indirect remuneration payable, or paid or agreed or orally promised to
pay, conditionally or otherwise, any bonus, extra compensation,
pension or severance or vacation pay, to any current or former
stockholder, director, officer, employee, salesman, distributor or
agent, except for (i) increases in the ordinary course of business
consistent with past practice in the compensation of employees who are
not directors or officers, (ii) bonuses and other remuneration accrued
as of or prior to March 31, 1996 and (iii) payments pursuant to an
agreement identified on Schedule 3.9 of the Disclosure Schedule;
(f) suffered any change, event or condition which, in any
case or in the aggregate, has had, or is reasonably likely to have, a
Company Material Adverse Effect (other than as a result of change in
conditions, including economic or political developments, applicable
to the industries in which the Company operates) (for purposes of this
Agreement, the results of any elections in Russia or in any country
formerly part of the Soviet Union shall not be considered in
determining whether there has been, or is reasonably likely to be, a
Company Material Adverse Effect);
(g) issued any shares of capital stock or voting
securities of the Company, any phantom stock, options or other rights
to acquire from the Company any capital stock, voting securities
convertible into or exchangeable for capital stock or voting
securities of the Company (except pursuant to warrants, options and
other rights outstanding on the date hereof in accordance with the
terms of such agreements as of the date hereof); or
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(h) entered into any agreement or made any commitment to
take any of the types of action described in subparagraphs (a)-(g)
above.
3.10 Properties. Except as disclosed in the Company SEC Reports or
the Financial Statements, the Company or a subsidiary of the Company owns all
of the tangible assets, real and personal, reflected in the Financial
Statements as being owned by the Company or a subsidiary (except such property
as has been disposed of in the ordinary course of business) free and clear of
any Liens (as defined in Section 3.4 hereof) except for Liens that do not
individually exceed One Hundred Thousand Dollars ($100,000), and the Company or
a subsidiary of the Company has good and marketable title to, or in the case of
leased property has valid leasehold interests in, all such properties and
assets. Each of the Company and its subsidiaries owns, has valid leasehold
interests in or valid contractual rights to use, all of the material tangible
assets used by, or necessary for the conduct of, its business.
3.11 Litigation. Except as set forth in Schedule 3.11 of the
Disclosure Schedule, the Financial Statements or the Company SEC Reports (and
except as provided in Section 3.17, which shall govern environmental matters
exclusively), (i) there is no claim, action, suit, investigation, inquiry,
review or proceeding ("Claim") pending, or, to the best knowledge of the
Company, threatened against the Company, any of its subsidiaries or any of
their properties or assets involving a Claim in excess of One Hundred Thousand
Dollars ($100,000) not covered by insurance and (ii) the Company does not know
of any unasserted Claims involving a Claim in excess of One Hundred Thousand
Dollars ($100,000). Except as set forth in Schedule 3.11 of the Disclosure
Schedule, the Company does not know of any pending or current judgment, order,
writ, injunction or decree of any governmental, administrative or judicial
authority in which the Company or any of its subsidiaries is a named party
involving in excess of One Hundred Thousand Dollars ($100,000).
3.12 Taxes. Each of the Company and its subsidiaries (i) has
timely filed all tax returns, reports and declarations (for purposes of this
Section 3.12, "returns") required to be filed by such Company or subsidiary
under applicable federal, state, local or foreign tax laws, for tax years ended
prior to the date of this Agreement or requests for extensions have been timely
filed, except where the failure to file such returns or requests would not be
reasonably likely to have a Company Material Adverse Effect, and any such
request shall have been granted and not expired and, except as disclosed in
Section 3.12 of the Disclosure Schedule, all such returns are complete and
accurate in all material respects and (ii) has paid all taxes and governmental
charges (including, without limitation, any interest and penalties
(hereinafter, collectively "taxes") shown to be due and payable on such returns
other than such taxes as are being contested in good faith, except where the
failure to so pay such taxes would not have a Company Material Adverse Effect.
Except as set forth in Schedule 3.12 of the Disclosure Schedule, (i) neither
the Company nor any of its subsidiaries have been notified that any returns are
currently under audit by the Internal Revenue Service or any foreign, state or
local tax agency, (ii) neither the Company nor any of its subsidiaries have
made any agreements for the extension or waiver of the statute of limitations
for the assessment or payment of any federal, foreign, state or local taxes,
(iii) no deficiency, assessment or other formal claim for any material taxes
has been asserted or made against the Company or its subsidiaries that has not
been fully paid or finally settled, except where such claim would not have a
Company Material Adverse Effect and (iv) no action or proceeding for the
assessment or collection of any taxes are pending against the Company or its
subsidiaries. All taxes and other assessments which the Company or its
subsidiaries is or has been required by law to withhold or to collect have been
duly withheld or collected, and have been timely paid over to the proper
governmental authority or are properly held by the Company or its subsidiaries
for such payment, except where failure to so withhold or to collect would not
have a Company Material Adverse Effect. Except as set forth in Schedule 3.12
of the Disclosure Schedule, the Company does not have knowledge of any fact or
issue of law that is likely to result in a payment by the Company of federal
income taxes, penalties and interest in excess of Two Hundred Fifty Thousand
Dollars ($250,000) for the tax year ended December 31, 1985.
3.13 ERISA.
(a) Schedule 3.13 of the Disclosure Schedule sets forth
(i) the name of each Plan (as defined in paragraph (l) of this Section
3.13) and indicates any Plan that is a "multiemployer plan," as
defined in ERISA Section 4001, (ii) the name of any other employee
benefit plan as defined in Section 3(3) of ERISA with respect to which
the Company or any Group Member (as defined in such paragraph (l)) is
a "Party
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in Interest," as defined in Section 3(14) of ERISA, and (iii) the name
of any other Employee Benefit Arrangement (as defined in such
paragraph (l)).
(b) Each of the Company, each Group Member, and each Plan
is in compliance in all material respects with the provisions of ERISA
and the Code insofar as ERISA and the Code are applicable to such
Plans. Each Plan intended to be qualified under Section 401(a) of the
Code has been determined to be so qualified by the IRS and nothing has
occurred since the date of the last such determination which resulted
or is likely to result in the revocation of such determination.
(c) Except as disclosed in Schedule 3.13, there has not
occurred with respect to any Plan any "Prohibited Transaction," as
defined in either Section 406 of ERISA or Section 4975 of the Code,
which has had, or may reasonably be expected to have, a material
adverse effect on the business, operations, properties, condition
(financial or otherwise), assets, liabilities, or prospects of the
Company or of any Group Member.
(d) Except as disclosed in Schedule 3.13, there has not
occurred with respect to any Plan any "Reportable Event," as defined
in Section 4043 of ERISA, for which the thirty-day notice requirements
has not been waived under applicable PBGC requirements and which has
had, or may reasonably be expected to have, a material adverse effect
on the business, operations, properties, condition (financial or
otherwise), assets, liabilities, or prospects of the Company or of any
Group Member. No Plan has applied for or obtained a waiver from the
IRS of any minimum funding requirement under Section 412 of the Code.
(e) (i) No Plan has been terminated, and no withdrawal
from any "multiemployer plan," as defined in Section 4001 of ERISA,
has occurred since the inception of any Plan under circumstances that
have given rise to, or would give rise to, any actual or potential
liability to the PBGC or any other person (excluding liabilities to
participants for benefits payable in the normal course of events
pursuant to any such termination or withdrawal); (ii) no event or
condition exists which presents a meaningful risk of termination of
any Plan by the PBGC; and (iii) there is no actual or potential
liability to the PBGC or any other person (other than any liability
for unpaid benefits) reasonably expected by the Company or any Group
Member to be incurred with respect to any Plan, including, but not
limited to, any liability for premium payments, for any accumulated
funding deficiency as defined in Section 302 of ERISA or for any
minimum funding contribution under Section 302 of ERISA.
(f) As of March 31, 1996 the then current value of the
assets of any Plan which is a defined benefit pension plan maintained
by the Company was at least equal to the then current value (as
defined in Section 4062(b)(1)(A) of ERISA) of all accrued benefits (as
defined in Section 3 of ERISA) under such Plan. As of the date of
this Agreement, there has been no material change in either the value
of such assets or the value of such benefits (except for increases in
such benefits attributable to new Plan participants and regular salary
increases).
(g) Except as disclosed in Schedule 3.13, no Lien imposed
under Section 412(n) of the Code exists in favor of any Plan upon any
property belonging to a Group Member.
(h) The Company has previously delivered or made
available to Trinity true and correct copies of each Plan and each
Employee Benefit Arrangement, together with, if applicable, true and
correct copies of the annual reports and actuarial reports for the
preceding two plan years filed with respect to each such Plan and
Employee Benefit Arrangement, summary plan descriptions and other
communications to employees relating to each such Plan and Employee
Benefit Arrangement, any related trust or third-party funding vehicle
documents and related financial statements, and all letters from the
IRS, if any, confirming the tax-exempt status or qualification under
Section 401(a) of the Code of any Plan. There are no Plans or
Employee Benefit Arrangements other than those listed in the
Disclosure Schedule.
(i) Neither (a) the Company, or any director, officer,
employee, or agent of the Company or its subsidiaries, has, with
respect to any Plan, nor (b) any Plan or trust created thereunder or
trustee
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or administrator thereof has, engaged in any conduct that would result
in any penalties under Section 502(i) of ERISA or any liability under
Section 409 of ERISA for breach of fiduciary duty which has had, or is
reasonably likely to have, a Company Material Adverse Effect. Except
as disclosed in Schedule 3.13, no material civil or criminal action or
Claim (other than uncontested Claims for benefits) is pending or, to
the Company's knowledge, threatened with respect to any Plan.
(j) Each Plan or Employee Benefit Arrangement maintained
by the Company specifically provides that it may be terminated at any
time by its sponsoring employer (subject, in the case of any Plan
which is subject to Title IV of ERISA, to the provisions of Section
4041 of ERISA), and there are no circumstances or conditions that
exist prior to the Merger that would prevent the applicability of
those provisions. Each Plan or Employee Benefit Arrangement can be
terminated or amended unilaterally by the Company on not more than 90
days' notice, and none of the Company, any Group Member, or any
director, officer, or employee of any of the foregoing has taken any
action that would commit the Company to continue any Plan or Employee
Benefit Arrangement or any benefit thereunder for any present or
former employee of the Company or that would prevent the Company from
changing or terminating any such benefit or Plan.
(k) The Company does not now have in effect, and has not
previously had in effect, any welfare benefit plan, commitment,
understanding, or arrangement providing for medical or death benefits
(whether insured or uninsured) with respect to current or former
employees beyond their date of retirement or other termination of
service (other than coverage mandated by Section 4980B of the Code and
Section 601 of ERISA, the cost of which is fully paid by the former
employee or his or her dependents).
(l) For purposes of this Section 3.13, the following
terms used herein shall have the meanings set forth below:
(i) "Code" means the Internal Revenue Code of
1986, as amended, and regulations promulgated thereunder.
(ii) "Employee Benefit Arrangement" means any
plan, agreement, or arrangement which is not an employee
benefit plan within the meaning of Section 3(3) of ERISA but
which provides benefits to one or more of the officers or
other employees of the Company, such as a bonus, incentive,
stock purchase, or stock appreciation rights plan, or any
employment or consulting agreement.
(iii) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(iv) "Group Member" means any member of any
"affiliated service group," as defined in Section 414(m) of
the Code, that includes any of the Company, any member of any
"controlled group of corporations," as defined by Section 1563
of the Code, that includes the Company, or any member of any
group of "trades or businesses under common control," as
defined in Section 414(c) of the Code, that includes the
Company.
(v) "IRS" means the Internal Revenue Service.
(vi) "PBGC" means the Pension Benefit Guaranty
Corporation.
(vii) "Plan" means at any time any employee benefit
plan as defined in Section 3(3) of ERISA (i) which is either
(1) maintained by the Company or any Group Member or (2)
maintained pursuant to a collective bargaining agreement or
any other arrangement under which more than one employer makes
contributions and (ii) to which any of the Company or any
Group Member is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions.
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3.14 Permits; Compliance With Laws. Except as provided in Section
3.17, which shall govern environmental matters exclusively, the Company and
each subsidiary has obtained all permits, licenses, operating certificates,
orders or approvals of any federal, state, local or foreign governmental or
regulatory agency which are material to the conduct of the business of the
Company and its subsidiaries as presently conducted (hereinafter collectively,
"Permits"), all of which permits are in full force and effect. No material
violations have been recorded in respect of the Permits, nor has any threat of
revocation been received with respect thereto. Except as provided in Section
3.17, which shall govern environmental matters exclusively, the business of the
Company and each of its subsidiaries has been and is being conducted in
compliance in all material respects with all applicable statutes, codes,
ordinances, orders, rules and regulations relating to its properties, assets
and business and the operation and conduct thereof (including, without
limitation, all laws and regulations relating to compensation, employment and
occupational safety) except where such noncompliance would not have a Company
Material Adverse Effect and no assertion of a material violation of any such
statute, code, ordinance, order, rule or regulation which is reasonably likely
to involve a payment, in any one case, by the Company or any of its
subsidiaries in excess of One Hundred Thousand Dollars ($100,000) has been
received or, to the best knowledge of the Company, is threatened, and no
reasonable basis for any such assertion exists to the best knowledge of the
Company. To the best knowledge of the Company, the consummation of this
Agreement will not require the transfer, modification or amendment of any such
Permits.
3.15 Finders' Fees. Except for Schroder Wertheim & Co.
Incorporated, the arrangements with which have been disclosed in writing to
Trinity prior to the date hereof, there is no investment banker, broker, finder
or other similar intermediary which has been retained by or is authorized to
act on behalf of, the Company who might be entitled to any fee or commission
from the Company upon consummation of the transactions contemplated by this
Agreement.
3.16 Patents, Trademarks, Etc. Schedule 3.16 of the Disclosure
Schedule sets forth a complete and accurate list of all trademarks, patents,
copyrights, service marks, applications therefor, logos, trade names and
software owned or utilized by the Company or any of its subsidiaries and
material to the business of the Company and its subsidiaries taken as a whole
(the "Technology", which such term includes, without limitation, all rights of
any of the Company and its subsidiaries in and to any intellectual property
relating in any way to the use, manufacture or marketing of goods or services
embodying the Uni-Temp heating technology). Except as set forth in Schedule
3.16 of the Disclosure Schedule, the Company or a subsidiary owns, or has
valid, binding and enforceable rights to use, all of the Technology in each
case free and clear of any material Lien and subject to no known interference
and without any known conflict with the rights of others which materially and
adversely affects the operations of the Company and its subsidiaries as
presently conducted. Except as set forth in Schedule 3.16 of the Disclosure
Schedule, the Technology owned by or licensed to the Company or a subsidiary,
and any licenses or other agreements relating thereto, is sufficient to carry
on the operation of the business of the Company and its subsidiaries
substantially in the manner presently conducted. The Company and each of its
subsidiaries has not infringed, misappropriated, misused or been charged with,
or, to the best knowledge of the Company and each of its subsidiaries, been
threatened or charged with, and the Company and each of its subsidiaries has
not received any notice with respect to, any material infringement,
misappropriation or misuse of any Technology owned or claimed by another.
Except as disclosed in Schedule 3.16 of the Disclosure Schedule, the Company
and each of its subsidiaries have not granted any outstanding licenses or other
rights to such Technology, or obligated itself to grant licenses or such other
rights, and the parties to any such license or other arrangements described in
Schedule 3.16 are no more than Three Hundred Thousand Dollars ($300,000) in
arrears on all payments thereunder.
3.17 Environmental Matters. Except as set forth in Schedule 3.17
of the Disclosure Schedule, to the knowledge of the Company:
(a) the Company and each of its subsidiaries is in
compliance with all federal, state, and local laws governing pollution
or the protection of human health or the environment ("Environmental
Laws"), except in each case where noncompliance with Environmental
Laws would not reasonably be expected to have a Company Material
Adverse Effect;
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(b) none of the Company's or its subsidiaries' properties
or facilities that are used for the business of the Company or any of
the subsidiaries is a treatment, storage or disposal ("TSD") facility,
as defined in and regulated under the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901 et seq.;
(c) neither the Company nor any of the subsidiaries has
received any written notice, pursuant to which it is reasonably likely
that the Company or any subsidiary would have to pay an amount in
excess of One Hundred Thousand Dollars ($100,000), that remains
pending or outstanding with respect to the business of, or any
property now or formerly owned or leased by, the Company or any
subsidiary from any governmental entity or third party alleging that
the Company or any subsidiary is not in material compliance with any
Environmental Law;
(d) there has been no release of a Hazardous Substance,
as that term is defined in the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Sections 9601 et seq., or
petroleum products (except with respect to any such release which
would not reasonably be expected to have a Company Material Adverse
Effect), in excess of a reportable quantity on any real property now
or formerly owned or leased by the Company or any subsidiary during
such time, with respect to the Company's or any subsidiary's formerly
owned or leased properties, used for the business of the Company or
any subsidiary, and neither the Company nor any subsidiary has
received any notice of actual or potential liability for any such
release, which would reasonably be expected to have a Company Material
Adverse Effect, pursuant to applicable Environmental Laws for
Hazardous Substances sent to off-site locations from any real property
now or formerly owned or leased by the Company or any subsidiary
during such time as such property was used for the business of the
Company or any subsidiary;
(e) there is no response or remediation or other similar
corrective action, or related investigation, by the Company or any
subsidiary pursuant to any Environmental Law or under the direction of
any governmental authority currently being performed or that has been
performed at any real property now or formerly owned or leased by the
Company or any subsidiary for the business of the Company during the
last three (3) years in connection with Hazardous Substances that
would reasonably be expected to have a Company Material Adverse
Effect; and
(f) there are no underground storage tanks at any real
property owned or leased by the Company or any subsidiary that is used
for the business of the Company or any subsidiary.
3.18 Contracts. Schedule 3.18 of the Disclosure Schedule sets
forth all of the following contracts, arrangements and other agreements (for
purposes of this Section 3.18 "contracts") on the date hereof to which the
Company or any of its subsidiaries is a party or by which the Company, any of
its subsidiaries or their assets or properties are bound or subject:
(a) contracts not otherwise set forth in the Disclosure
Schedule for which the aggregate amount or value of services to be
performed for or by, or funds or other property transferred or to be
transferred to or by, a party to such contract exceeds One Hundred
Thousand Dollars ($100,000);
(b) contracts involving either (i) an indemnification by
the Company or any of its subsidiaries that could result in payments
in excess of One Hundred Thousand Dollars ($100,000) or (ii) a
guarantee of the performance of a third party by the Company or any of
its subsidiaries that could result in payments in excess of One
Hundred Thousand Dollars ($100,000); and
(c) contracts involving ownership of an interest in a
general partnership, joint venture, limited liability partnership,
limited partnership, limited liability corporation, business trust or
other non- corporate entity.
There have been delivered or made available to Trinity true and complete copies
of all such contracts set forth in Schedule 3.18 of the Disclosure Schedule.
All of such contracts are in full force and effect and the Company and each of
its subsidiaries is not in material default under any of them, nor is, to the
best knowledge of the Company,
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any other party to any such contract in material default thereunder, nor does,
to the best knowledge of the Company, any condition exist that with notice or
lapse of time or both would constitute a material default thereunder by the
Company or any of its subsidiaries. Except as disclosed in Schedule 3.18 of
the Disclosure Schedule, no approval or consent of any person is needed in
order that any material contracts to which the Company is a party or by or to
which the Company, any of its subsidiaries or their assets or properties are
bound or subject shall continue in full force and effect following the
consummation of the Merger.
3.19 Liabilities. To the best knowledge of the Company (and except
as provided in Section 3.17, which shall govern environmental matters
exclusively), the Company and each of its subsidiaries does not have and is not
subject to any direct or indirect indebtedness, liability, Claim, loss, damage,
deficiency, obligation or responsibility, accrued, absolute, contingent or
otherwise, whether or not of a kind required by generally accepted accounting
principles to be set forth in a financial statement (for purposes of this
Section 3.19, "Liabilities") , which arose, existed or was incurred on or prior
to the Closing Date, other than (i) Liabilities fully and adequately reflected,
disclosed or reserved against in the Financial Statements or the Unaudited
Interim Financial Statements (as defined in Section 5.1(m) hereof), (ii)
Liabilities disclosed in the Disclosure Schedule, (iii) Liabilities disclosed
in the Company SEC Reports and (iv) Liabilities that individually or in the
aggregate are not reasonably likely to result in a Company Material Adverse
Effect. To the best of the knowledge of the Company, there is no
intercorporate indebtedness existing between Trinity and the Company or between
Subsidiary and the Company that was issued or acquired at a discount or that
will be settled at a discount.
3.20 Insurance. The Company and each of its subsidiaries carries
insurance with respect to its properties, assets and business as is appropriate
in the Company's reasonable business judgment considering the character and
nature of the business of the Company or such subsidiary or as may be required
pursuant to any material franchise, license, agreement or permit to which the
Company or such subsidiary is a party. Schedule 3.20 of the Disclosure
Schedule lists each such policy in full force and effect on the date hereof and
with respect to which the Company and each of its subsidiaries has not received
notice of cancellation by policy number, policy issuer, type of coverage,
policy limits and deductible amounts, if any. To the best knowledge of Steven
L. Pease and Gregory S. Saunders, no insurance policy providing coverage in
excess of One Hundred Thousand Dollars ($100,000) has been cancelled by the
insurer during the three (3) year period ending on the date of this Agreement.
3.21 Employee Relations. Except as set forth in Schedule 3.21 of
the Disclosure Schedule, no employee of the Company or any of its subsidiaries
is represented by any union or other collective bargaining unit; no petition
for an election as to representation of any group of employees by a union or
other collective bargaining unit has been filed and remains pending with
respect to the Company or any subsidiary thereof; and there is no collective
bargaining agreement between the Company or any of its subsidiaries and any of
their employees or any representatives of any of their employees. In addition,
except as disclosed in Schedule 3.21 of the Disclosure Schedule, there are
currently no disputes, grievances, charges, complaints or proceedings involving
the employees of the Company, any of its subsidiaries or its collective
bargaining representatives (excluding matters encountered in the day-to-day
administration of any collective bargaining agreement) that are reasonably
likely to have a Company Material Adverse Effect and at no time during the past
five (5) years has the Company or any of its subsidiaries suffered any strikes
(including wildcat strikes), lockouts or general work stoppages which have
caused a cessation of operations nor has the Company or any of its
subsidiaries, during such five (5) year period, been the subject of any orders
to show cause or notices barring any of its employment practices.
3.22 Unfilled Purchase Orders. As of the date hereof, no unfilled
purchase orders of the Company and each of its subsidiaries (i) are with
persons, corporations or other entities that are affiliates of the Company, a
subsidiary of the Company or with any organization or entity in which any
Stockholder owns an interest in the profits or capital of five percent (5%) or
more and (ii) are entered into outside the ordinary course of the business of
the Company and its subsidiaries as currently conducted.
3.23 Unfilled Sales Orders. Except as set forth in Schedule 3.23
of the Disclosure Schedule, as of the date hereof, no unfilled sales orders of
the Company and its subsidiaries are (i) with persons, corporations or other
entities that are affiliates of the Company or any of its subsidiaries, or with
any organization or entity of which any Stockholder owns an interest in the
profits or capital of five percent (5%) or more and (ii) to the best knowledge
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of the Company reasonably likely to create, in any one case, a loss (calculated
as aggregate direct costs associated with the performance of the unfilled sales
order in excess of aggregate revenues associated with such unfilled sales order
as determined from the books and records of the Company consistent with past
practice) in excess of One Hundred Thousand Dollars ($100,000).
3.24 Registration Statement; Proxy Statement. None of the
information supplied by the Company for inclusion in (i) the S-4 Registration
Statement (as defined in Section 5.3(a) hereof) or (ii) the proxy statement to
be distributed in connection with the meeting of the Stockholders to vote upon
this Agreement and the Merger (the "Proxy Statement") will, in the case of the
Proxy Statement or any amendments thereof or supplements thereto, at the time
of such meeting of the Stockholders, or, in the case of the S-4 Registration
Statement, at the time it becomes effective and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.25 Accuracy and Completeness of Representations and Warranties;
Incorporation by Reference. No representation or warranty made by the Company
in this Agreement, in any exhibit referenced herein or in any schedule
referenced herein, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not misleading. There is no
fact known to the Company which could reasonably be expected to have a Company
Material Adverse Effect which has not been set forth in the Company SEC
Reports, in this Agreement, in the Disclosure Schedule or in any exhibit
referenced herein. For purposes of this Agreement, the Disclosure Schedule
shall include and be deemed to incorporate any amendment or supplement thereto
as provided for in Section 5.1(f) hereof. Each schedule referenced herein and
contained in the Disclosure Schedule is incorporated herein by reference to the
same extent and as fully as copied herein in full.
4. REPRESENTATIONS AND WARRANTIES OF TRINITY AND SUBSIDIARY
Trinity and Subsidiary, jointly and severally, represent and warrant
to the Company that:
4.1 Corporate Status.
(a) Each of Trinity and Subsidiary is a corporation
organized, validly existing and in good standing under the laws of the
State of Delaware, and each has all corporate powers required to carry
on its business as now conducted and to execute and deliver this
Agreement. Each of Trinity and Subsidiary is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not individually or
in the aggregate have a material adverse effect on the business,
assets, liabilities, results of operations or financial condition of
Trinity and Subsidiary, taken as a whole ("Trinity Material Adverse
Effect"). Trinity has heretofore delivered to the Company true and
complete copies of the Certificate of Incorporation and Bylaws, as
currently in effect, of each of Trinity and Subsidiary.
(b) Each subsidiary of Trinity, other than Subsidiary
(collectively, the "Trinity Subsidiaries"), is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and
authority and all necessary government approvals to own, lease and
operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and
in good standing or to have such power and authority or necessary
governmental approvals would not individually or in the aggregate have
a Trinity Material Adverse Effect. Each Trinity subsidiary is duly
qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to
be so duly qualified or licensed and in good standing would not
individually or in the aggregate have a Trinity Material Adverse
Effect.
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4.2 Corporate Authorization. Each of Trinity and Subsidiary has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Trinity and Subsidiary
and by Trinity as the sole stockholder of Subsidiary, and no other corporate
proceedings on the part of Trinity and Subsidiary or their respective
stockholders are necessary to authorize the execution and delivery of this
Agreement or to consummate the transactions contemplated herein.
4.3 Governmental Authorization; Consents.
(a) The execution, delivery and performance by Trinity
and Subsidiary of this Agreement and the consummation by Trinity and
Subsidiary of the Merger require no action by or in respect of, or
filing with, any governmental body, agency, official or authority,
except for filings with or approvals by (i) the Commission, (ii) the
NYSE and the AMEX, (iii) the FTC, (iv) the DOJ, (v) appropriate state
officials in jurisdictions where blue sky or similar securities law
clearance is required, and (vi) the Secretary of State of the State of
Delaware, and except where the lack of such action or filing would not
individually or in the aggregate have a Trinity Material Adverse
Effect.
(b) No consent, approval, waiver or other action by any
person not a party to this Agreement under any contract, agreement,
indenture, lease, instrument or other document to which Trinity or
Subsidiary is a party or by which they are bound is required or
necessary for the execution, delivery and performance of this
Agreement by Trinity or Subsidiary or the consummation by Trinity or
Subsidiary of the transactions contemplated hereby, except where the
failure to obtain such consent, approval, waiver or other action would
not individually or in the aggregate have a Trinity Material Adverse
Effect.
4.4 Non-contravention. The execution, delivery and performance by
Trinity and Subsidiary of this Agreement and the consummation by Trinity and
Subsidiary of the transactions contemplated hereby do not and will not (i)
materially contravene or constitute a material default under the Certificate of
Incorporation or Bylaws of Trinity or Subsidiary, (ii) contravene or constitute
a default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of Trinity or any subsidiary or to a
loss of any benefit to which Trinity or any subsidiary is entitled, or (iii)
result in the creation or imposition of any Lien on any asset of Trinity or any
subsidiary, except in the case of clauses (ii) and (iii) for contraventions,
defaults, terminations, cancellations, accelerations, creations or impositions
which would not individually or in the aggregate have a Trinity Material
Adverse Effect.
4.5 Binding Effect. Assuming the due execution and delivery of
this Agreement by the Company but subject to its approval by the Stockholders
as contemplated by Section 5.3(b) hereof and the filings with or approvals by
the governmental bodies, agencies, officials or authorities described in
Section 4.3 hereof, this Agreement constitutes a legal, valid and binding
agreement of each of Trinity and Subsidiary enforceable against Trinity and
Subsidiary in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by principles of equity regarding the availability of
remedies.
4.6 Reports and Financial Statements. Trinity has previously
furnished the Company with true and complete copies of Trinity's (i) Annual
Reports on Form 10-K for each of its three (3) fiscal years ending March 31,
1993, 1994 and 1995, respectively, as filed with the Commission, (ii) Trinity's
Quarterly Reports on Form 10-Q for each of the first three (3) quarters ending
December 31, 1995, as filed with the Commission, (iii) Trinity's most current
reports on Form 8-K, as filed with the Commission, and (iv) any other relevant
public information reasonably requested by the Company prior to the date
hereof. Trinity agrees to continue to provide the Company with any such public
information filed with the Commission or reasonably requested by the Company
subsequent to the date hereof and prior to the Closing Date. As of their
respective dates, such reports and statements (i) complied in all material
respects with all applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder and (ii) did
not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial
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statements of Trinity included in such reports and separately furnished to the
Company by Trinity were prepared in accordance with generally accepted
accounting principles consistently applied (except as may be indicated therein
or in the notes thereto), and fairly present in all material respects the
financial condition of Trinity as of their respective dates and the results of
its operations for the periods covered thereby.
4.7 Finders' Fees. There is no investment banker, broker, finder
or other similar intermediary which has been retained by, or is authorized to
act on behalf of, Trinity or Subsidiary who might be entitled to any fee or
commission from Trinity, Subsidiary or the Company upon consummation of the
transactions contemplated by this Agreement.
4.8 Registration Statement; Proxy Statement. On the date that the
S-4 Registration Statement is declared effective by the Commission, and on the
date any post-effective amendment to the S-4 Registration Statement shall
become effective, the S-4 Registration Statement and any amendment thereto will
comply, in all material respects, with any applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder, except with regard to statements of fact, and omissions
thereof, made by the Company and the financial information of the Company.
None of the information supplied by Trinity or Subsidiary for inclusion in (i)
the S-4 Registration Statement or (ii) the Proxy Statement will, in the case of
the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the meeting of the Stockholders to be held in connection with this
Agreement and the Merger, or, in the case of the S-4 Registration Statement, at
the time it becomes effective and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4.9 Capitalization.
(a) The authorized capital stock of Trinity consists of
(i) one hundred million (100,000,000) common shares, $1.00 par value,
of which forty-one million six hundred twelve thousand sixty-two
(41,612,062) shares of Trinity Stock were issued and outstanding on
June 1, 1996 and (ii) one million five hundred thousand (1,500,000)
preferred shares, no par value, of which none are issued and
outstanding on the date hereof. All of the issued and outstanding
shares of capital stock of Trinity are validly issued, fully paid and
nonassessable and free of preemptive rights. At the Effective Time,
Trinity will have a sufficient number of authorized but unissued
and/or treasury shares of Trinity Stock available for issuance to the
Stockholders in accordance with this Agreement. The shares of Trinity
Stock to be issued pursuant to this Agreement will, when so delivered,
be (i) duly and validly issued, fully paid and nonassessable, (ii)
issued pursuant to an effective registration statement under the
Securities Act and (iii) authorized for listing on the NYSE upon
official notice of issuance. Except for Trinity's stock option and
employee stock purchase plans (the "Trinity Stock Option Plans") and
the rights attributable to Trinity's Stockholder's Rights Plan (as
described in the annual financial statements of Trinity), as of the
date hereof, there are no plans, agreements or other arrangements
pursuant to which any options, warrants or other rights to acquire
shares of capital stock from Trinity are outstanding that would
materially affect the capitalization of Trinity or the ability of
Trinity to consummate the transactions contemplated by this Agreement.
Except for the Trinity Stock Option Plans, the shares of Trinity
described above and other shares, securities, options or rights that
would not materially affect the capitalization of Trinity, there are
outstanding (i) no shares of capital stock or other voting securities
of Trinity, (ii) no securities of Trinity convertible into or
exchangeable for shares of capital stock or voting securities of
Trinity, and (iii) no phantom stock, options or other rights to
acquire from Trinity, and no obligation of Trinity to issue, any
capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Trinity.
(b) The authorized capital stock of Subsidiary consists
of ten thousand (10,000) shares of common stock, $1.00 par value
("Subsidiary Common Stock"). As of the date hereof, one thousand
(1,000) shares of Subsidiary Common Stock are validly issued and
outstanding, fully paid and nonassessable, free and clear of all
Liens. Trinity owns, beneficially and of record, all the issued and
outstanding shares of Subsidiary Common Stock. Trinity has taken all
actions as may be required in its capacity as the sole stockholder of
Subsidiary to approve the Merger.
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4.10 Absence of Certain Changes. Except as disclosed in Trinity's
filings with the Commission prior to the date of this Agreement or as
contemplated by this Agreement, since March 31, 1996, there has not been any
Trinity Material Adverse Effect (other than as a result of changes in
conditions, including economic or political developments, applicable to the
industries in which Trinity operates) and Trinity has in all material respects
conducted its business in the ordinary course except as disclosed in a June 7,
1996 press release of Trinity.
4.11 Litigation. Except as disclosed in Trinity's filings with the
Commission, there is no suit, action, proceeding or investigation (whether at
law or equity, before or by any federal, state or foreign court, tribunal,
commission, board, agency or instrumentality, or before any arbitrator) pending
or, to the best knowledge of Trinity, threatened against Trinity which is
required to be disclosed in accordance with the Securities Act or the Exchange
Act or the rules and regulations promulgated thereunder, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against Trinity which is required to be disclosed in accordance with the
Securities Act or the Exchange Act or the rules and regulations promulgated
thereunder.
4.12 No Default. Trinity is not in violation or breach of, or
default under (and no event has occurred which with notice or the lapse of time
or both would constitute a violation or breach of, or default under) any term,
condition or provision of (a) its Certificate of Incorporation, as the case may
be, or Bylaws, which such violation, breach or default creates a Trinity
Material Adverse Effect, (b) any note, bond, mortgage, deed of trust, security
interest, indenture, license, agreement, plan, contract, lease, commitment or
other instrument or obligation to which Trinity is a party or by which it or
any of its properties or assets may be bound or affected, (c) any order, writ,
injunction, decree, statute, rule or regulation applicable to Trinity or any of
its properties or assets, or (d) any permit, license, governmental
authorization, consent or approval necessary for Trinity to conduct its
businesses as currently conducted, except in the case of clauses (b), (c) and
(d) above for violations, breaches or defaults which would not individually or
in the aggregate have a Trinity Material Adverse Effect.
4.13 Taxes. Trinity (i) has timely filed all federal, state, local
and foreign tax returns, reports and declarations required to be filed by it
for tax years ended prior to the date of this Agreement or requests for
extensions have been timely filed, except where the failure to file such
returns or requests would not be reasonably likely to have a Trinity Material
Adverse Effect, and any such request shall have been granted and not expired
and all such returns are complete in all material respects, (ii) has paid all
taxes shown to be due and payable on such returns other than such taxes as are
being contested by Trinity in good faith, except where the failure to so pay
such taxes would not have a Trinity Material Adverse Effect, (iii) has properly
accrued in all material respects all taxes for such periods subsequent to the
periods covered by such returns and (iv) has not received notice, oral or
written, that a deficiency, assessment or other formal claim for any taxes has
been asserted or made against Trinity that has not been fully paid or finally
settled except for claims which would not reasonably be expected to have a
Trinity Material Adverse Effect.
4.14 Accuracy and Completeness of Representations and Warranties.
No representation or warranty made by Trinity or Subsidiary in this Agreement
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements contained therein, in the light of the
circumstances in which they are made, not misleading. There is no fact known
to Trinity which is likely to have a Trinity Material Adverse Effect which has
not been set forth in Trinity's filings with the Commission or in this
Agreement or in any exhibit referenced herein.
4.15 Ownership. Trinity does not own, nor has it owned during the
past five years, any of the stock of the Company.
4.16 Investigation by Trinity. Trinity has conducted its own
independent review and analysis of the businesses, assets, condition,
operations and prospects of the Company and acknowledges that Trinity has been
provided access to the properties, premises and records of the Company for this
purpose. In entering into this Agreement, Trinity has relied solely upon its
own investigation and analysis, and the specific representations, warranties
and covenants and conditions contained herein, and Trinity acknowledges that
none of the Company's directors, officers, employees, affiliates, agents or
representatives makes any representation or warranty, either
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express or implied, as to the accuracy or completeness of any of the
information provided or made available to Trinity or its agents or
representatives prior to the execution of this Agreement.
5. COVENANTS OF THE COMPANY, TRINITY AND SUBSIDIARY
5.1 Covenants of the Company. From the date hereof and continuing
until the Closing, the Company agrees, except as otherwise set forth in this
Agreement or to the extent that Trinity shall otherwise consent in writing,
that:
(a) the Company and each of its subsidiaries will carry
on its businesses in the ordinary and customary course, consistent
with past practice, will make reasonable efforts to preserve and
protect its business, properties and assets and will make reasonable
efforts to preserve intact its present business organization, keep
available the services of its present employees and preserve its
relationships with customers, suppliers and others having business
dealings with it in order to preserve its goodwill and business;
(b) the Company and each of its subsidiaries will make
reasonable efforts to comply promptly with all requirements that
federal or state law may impose on it with respect to the Merger and
promptly cooperate with and furnish information to Trinity in
connection with any such requirements imposed upon Trinity or on
Subsidiary in connection with the Merger;
(c) the Company and each of its subsidiaries will make
reasonable efforts to obtain (and cooperate with Trinity in preparing,
filing and obtaining), at the earliest practicable date and prior to
the Closing Date, any consent, authorization or approval of, or any
exemption by, any governmental authority or agency, or other third
party, required to be obtained or made by the Company or a subsidiary
(or by Trinity) in connection with the Merger or the taking of any
action necessary to the transactions contemplated hereby or thereby;
(d) subject to the terms of Section 5.3(g) hereof, the
Company will afford to Trinity and to Trinity's accountants, counsel
and other representatives, reasonable access, during normal business
hours during the period prior to the Closing Date or the earlier
termination of this Agreement, to all of the business, operations,
facilities, personnel, properties, books, contracts, commitments and
records of the Company and each subsidiary and, during such period,
the Company shall furnish as promptly as practicable to Trinity all
other information concerning the business, properties and personnel of
the Company and each subsidiary as Trinity may reasonably request,
provided that no investigation pursuant to this Section 5.1(d) shall
affect any representations or warranties made herein by the Company or
the conditions to the obligations of the Company to consummate the
Merger;
(e) the Company will (i) promptly advise Trinity orally
and in writing of any change in the business, results of operations,
financial condition, assets, liabilities or prospects of the Company
or a subsidiary that is or is reasonably likely to cause a Company
Material Adverse Effect and (ii) promptly advise Trinity if, at any
time before the S-4 Registration Statement becomes effective, the S-4
Registration Statement, as it relates to the Company or a subsidiary,
contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under
which they were made, not misleading, and, in such event, the Company
will promptly provide Trinity with the information needed to correct
such misstatement or omission;
(f) the Company, acting reasonably and in good faith,
will supplement or amend the Disclosure Schedule hereto to reflect
changes in facts occurring after the date hereof which, if existing on
the date of this Agreement, would have been required to be set forth
or described in the Disclosure Schedule;
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(g) promptly after its filing with the Commission, the
Company shall furnish Trinity with a true and complete copy of the
Company's Annual Report on Form 10-K for its fiscal year ending March
31, 1996, as filed with the Commission, along with a copy of the most
recent audited financial statements referenced therein;
(h) subject to the confidentiality provisions of this
Agreement, (i) the Company shall make available to Trinity access to
all records and information in the Company's possession concerning
Hazardous Substances currently used, stored, generated, treated, or
disposed of by the Company or any subsidiary, all environmental or
safety studies conducted by or on behalf of the Company and all
reports, correspondence, or filings to governmental environmental
agencies with jurisdiction over the Company or any subsidiary
concerning the compliance of the Company's or any subsidiary's
properties that are used for the business of the Company or any
subsidiary or the operation of such properties, to the extent such
properties are currently owned or operated by the Company or any
subsidiary, with applicable Environmental Laws, and (ii) Trinity may
undertake at its sole cost and expense any environmental
investigations of the properties or businesses of the Company or any
subsidiary, provided however, that Trinity shall confer with the
Company regarding the nature, scope and scheduling of any such
investigations, shall comply with any and all conditions as the
Company may reasonably impose thereon, and shall not contact any
governmental authorities or agencies, or conduct any subsurface,
sampling or other intrusive or invasive testing or investigation,
without the prior written consent of the Company, which consent shall
not be unreasonably withheld for any such matter requested by Trinity
that could reasonably result in a Company Material Adverse Effect.
Trinity shall promptly provide the Company with copies of any report
(draft or final), study, test data or other documentation, other than
working notes, prepared in connection with Trinity's investigation
and, in the event that this Agreement terminates prior to the Closing,
Trinity shall promptly deliver to the Company all originals and copies
of any and all documents, other than working notes, prepared,
generated or received in connection with or pursuant to the
investigation, and all associated materials, including but not limited
to reports (draft or final), data, analyses and findings concerning
the investigation, compliance or condition of or relating to the
properties or business of the Company or any subsidiary, and Trinity
shall destroy any working notes not provided pursuant to this
provision. Trinity shall keep, and shall cause its agents,
representatives and any consultants to keep, confidential all
information and materials provided or made available to, or generated
by or on behalf of, Trinity pursuant to this provision;
(i) the Company agrees to take all steps or cooperate
with Trinity, as appropriate, in taking all steps reasonably necessary
to (a) transfer, amend, or modify at Closing all Permits required for
the property of the Company or any subsidiary that are used for the
business of the Company or any subsidiary under applicable
Environmental Laws, and (b) make or facilitate the filing and, as
appropriate, obtain approval of the submissions to any governmental
authority regarding the environmental condition, investigation,
remediation or cleanup of any of the Company's properties that are
used for the business of the Company or any subsidiary required under
any applicable state law in order to transfer such properties under
this Agreement or consummate this Agreement;
(j) the Company shall use all reasonable efforts to cause
Ernst & Young LLP, the Company's independent accountants, to deliver
to Trinity a letter dated as of the date of the Proxy Statement and
addressed to Trinity, in form and substance reasonably satisfactory to
Trinity, in connection with the procedures undertaken by them with
respect to the financial statements and other financial information of
the Company and any subsidiary of the Company contained in the S-4
Registration Statement and the other matters contemplated by AICPA
Statement No. 72 and customarily included in comfort letters relating
to transactions similar to the Merger;
(k) the Company shall not, and shall not permit any
subsidiary of the Company to:
(i) adopt or propose any change in its
Certificate of Incorporation or Bylaws, except a change that
would not have any adverse effect on the transactions
contemplated by this Agreement;
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(ii) merge or consolidate with any other person or
acquire, except in the ordinary course of business, a material
amount of assets of any other person;
(iii) issue any shares of capital stock or other
securities (except pursuant to warrants, options and other
rights outstanding on the date hereof in accordance with the
terms of such agreements as of the date hereof) or any
options, warrants or other rights to acquire the same;
(iv) redeem, purchase or otherwise acquire, or
propose to redeem, purchase or acquire, any of its capital
stock or other ownership interests;
(v) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any
shares of its capital stock or other ownership interests;
(vi) enter into any purchase order (a) with
persons, corporations or other entities that are affiliates of
the Company, a subsidiary of the Company or with any
organization or entity in which any Stockholder owns an
interest in the profits or capital of five percent (5%) or
more or (b) outside the ordinary course of the business of the
Company and its subsidiaries as currently conducted;
(vii) enter into any sales order (a) with persons,
corporations or other entities that are affiliates of the
Company, a subsidiary of the Company or with any organization
or entity in which any Stockholder owns an interest in the
profits or capital of five percent (5%) or more or (b)
reasonably likely to create, in any one case, a loss
(calculated as aggregate direct costs associated with the
performance of the unfilled sales order in excess of aggregate
revenues associated with such unfilled sales order as
determined from the books and records of the Company
consistent with past practice) in excess of One Hundred
Thousand Dollars ($100,000);
(viii) except to the extent necessary to comply with
the requirements of applicable laws and regulations (a) take,
or agree to commit to take, any action that would make any
representation and warranty of the Company hereunder
inaccurate, in any material respect, at, or as of any time
prior to, the Effective Time, (b) omit, or agree or commit to
omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate, in any
material respect, at any such time, provided however that the
Company shall be permitted to take or omit to take such action
which (without any uncertainty) can be cured, and in fact is
cured, at or prior to the Effective Time, or (c) take, or
agree to commit to take, any action that would result in, or
is reasonably likely to result in, any of the conditions of
the Merger set forth in Section 6 hereof not being satisfied;
(l) the Company shall (i) not, and it shall direct and use its
reasonable efforts to cause its officers, directors, employees, agents
and representatives (including, without limitation, any investment
banker, attorney or accountant retained by it or any of its
subsidiaries) to not, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any
Acquisition Proposal (as defined in Section 7.2 hereof) or engage in
any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to
make or implement an Acquisition Proposal, (ii) immediately cease and
cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
of the foregoing, and take the necessary steps to inform the
individuals or entities referred to above of the obligations
undertaken in this Section 5.1(l) and (iii) notify Trinity immediately
if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, it; provided, however,
that nothing contained in this Section 5.1(l) shall prohibit the Board
of Directors of the Company from (a) furnishing information to or
entering into discussions or negotiations with, any person or entity
that makes an unsolicited bona fide proposal to acquire the Company
pursuant to a merger, consolidation, share exchange, purchase of a
substantial portion of assets, business combination or other similar
transaction, if, and only to the extent that, (1) the Board of
Directors of the Company determines in good faith that such action is
required for
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<PAGE> 84
the Board of Directors to comply with its fiduciary duties to
stockholders imposed by law, (2) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or
entity, the Company provides written notice to Trinity to the effect
that it is furnishing information to, or entering into discussions or
negotiations with, such person or entity, and (3) subject to any
confidentiality agreement with such person or entity (which the
Company determined in good faith was required to be executed in order
for its Board of Directors to comply with fiduciary duties to
stockholders imposed by law), the Company keeps Trinity informed of
the status (not the terms) of any such discussions or negotiations;
and (b) to the extent applicable, complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition
Proposal; provided that nothing in this Section 5.1(l) shall (1)
permit the Company to terminate this Agreement (except as specifically
provided in Section 7 hereof), (2) permit the Company to enter into
any agreement with respect to an Acquisition Proposal during the term
of this Agreement (it being agreed that during the term of this
Agreement, the Company shall not enter into any agreement with any
person that provides for, or in any way facilitates, an Acquisition
Proposal (other than a confidentiality agreement in customary form)),
or (3) affect any other obligation of the Company under this
Agreement; and
(m) the Company shall deliver to Trinity all subsequent
unaudited interim quarterly and monthly financial statements of the
Company from March 31, 1996 through and including the Closing Date
(the "Unaudited Interim Financial Statement") (the quarterly Unaudited
Interim Financial Statements shall be prepared from the books and
records of the Company in accordance with generally accepted
accounting principles consistently applied, except as may be indicated
therein or in the notes thereto, and fairly present in all material
respects the financial condition of the Company as of their respective
dates and the results of its operation for the periods covered
thereby, subject to normal year-end audit adjustments which are not
expected to be material in amount or effect; and the monthly Unaudited
Interim Financial Statements shall be prepared from the books and
records of the Company consistent with past practices).
5.2 Covenants of Trinity and Subsidiary. From the date hereof and
continuing until the Closing Date, Trinity and Subsidiary each agree, except as
otherwise set forth in this Agreement or to the extent that the Company shall
otherwise consent in writing, that:
(a) Trinity and Subsidiary will use their respective
reasonable efforts to comply promptly with all requirements which
federal or state law may impose on them with respect to the Merger and
will promptly cooperate with and furnish information to the Company in
connection with any such requirements imposed upon the Company in
connection with the Merger;
(b) Trinity and Subsidiary will use their respective
reasonable efforts to obtain (and to cooperate with the Company in
preparing, filing and obtaining) at the earliest practicable date and
prior to the Closing Date, any consent, authorization or approval of,
or any exemption by, any governmental authority or agency, or other
third party, required to be obtained or made by Trinity or Subsidiary
(or by the Company) in connection with the Merger or the taking of any
action necessary to the transactions contemplated hereby or thereby;
(c) Trinity will (i) promptly advise the Company of any
news release prepared by it or Form 8-K actually filed and will cause
to be filed any required Form 8-K with the Commission in respect of
the business, results of operations, financial condition, assets,
liabilities or prospects of Trinity and (ii) promptly advise the
Company if, at any time before the S-4 Registration Statement becomes
effective or at any time prior to the Company's distribution of the
Proxy Statement, either the S-4 Registration Statement or the Proxy
Statement, as the same relates to Trinity and Subsidiary, contains an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading, and, in such event or in the event Trinity
receives supplemental information from the Company pursuant to Section
5.1(e) hereof, Trinity will prepare a supplement or amendment to the
S-4 Registration Statement which corrects any misstatements or
omissions contained therein and furnish to the Company such number of
copies of such supplements or amendments as may be required for
distribution to the Stockholders;
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<PAGE> 85
(d) Trinity agrees that it will not discuss the
transaction contemplated herein with any customer, supplier or
creditor of the Company without first consulting with the Company and
obtaining the consent of the Company;
(e) promptly after its filing with the Commission,
Trinity shall furnish the Company with a true and complete copy of
Trinity's Annual Report on Form 10-K for its fiscal year ending March
31, 1996, as filed with the Commission, along with a copy of the most
recent audited financial statements referenced therein;
(f) Trinity shall as promptly as practicable prepare and
submit to the NYSE a listing application covering the shares of
Trinity Stock to be issued in connection with the Merger and this
Agreement, and shall use all reasonable efforts to obtain, prior to
the Effective Time, approval for the listing of such shares, subject
to official notice of issuance;
(g) Trinity agrees that all rights to indemnification
existing in favor of the present or former directors, officers,
employees, fiduciaries and agents of the Company or any of the
subsidiaries of the Company (collectively, the "Indemnified Parties")
as provided in the Company's Certificate of Incorporation or Bylaws or
the certificate or articles of incorporation, bylaws or similar
organizational documents of any of the subsidiaries of the Company as
in effect as of the date hereof or pursuant to the terms of any
indemnification agreements entered into between the Company and any of
the Indemnified Parties with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full
force and effect (without modification or amendment, except as
required by applicable law or except to make changes permitted by law
that would enlarge the Indemnified Parties' right of indemnification)
to the fullest extent permitted therein and for the maximum term
permitted by law, and shall be enforceable by the Indemnified Parties
against the Surviving Corporation or subsidiary thereof, as
appropriate. At the Closing, the Surviving Corporation shall
expressly assume by written instrument such obligations as are set
forth in the Company's Certificate of Incorporation or Bylaws that
require assumption by virtue of the Surviving Corporation having a
Certificate of Incorporation and Bylaws different from that of the
Company. Trinity shall use its best efforts to cause to be maintained
in effect for not less than six years from the Effective Time the
current policies of the directors' and officers' liability insurance
maintained by the Company (provided that Trinity may substitute
therefor policies of at least equivalent coverage containing terms and
conditions which are no less advantageous) with respect to matters
occurring prior to the Effective Time (the provisions of this Section
5.2(g) shall survive the consummation of the Merger and expressly are
intended to benefit each of the Indemnified Parties);
(h) Trinity shall use all reasonable efforts to cause
Ernst & Young LLP, Trinity's independent accountants, to deliver to
the Company a letter dated as of the date of the Proxy Statement and
addressed to the Company, in form and substance reasonably
satisfactory to the Company, in connection with the procedures
undertaken by them with respect to the financial statements and other
financial information of Trinity contained in the S-4 Registration
Statement and the other matters contemplated by AICPA Statement No. 72
and customarily included in comfort letters relating to transactions
similar to the Merger;
(i) Trinity shall not, and shall not permit any
subsidiary of Trinity to:
(i) adopt or propose any change in its
Certificate of Incorporation or Bylaws that would have any
adverse effect on the transactions contemplated by this
Agreement or that would amend or modify the terms or
provisions of the capital stock of Trinity;
(ii) merge or consolidate with any other person or
(except in the ordinary course of business) acquire a material
amount of assets of any other person, if such merger,
consolidation or acquisition could reasonably be expected to
have a material adverse effect on the ability of Trinity or
the Company to consummate the transactions contemplated by
this Agreement;
(iii) issue any shares of Trinity Stock in connection
with any transaction requiring stockholder approval unless
Trinity first notifies the Company in writing (an "Issuance
Notice")
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<PAGE> 86
of such transaction and provides the Company with the same
information as provided to the stockholders of Trinity;
thereafter, the Company shall have the right, by giving
written notice to Trinity at any time prior to 5:30 p.m., New
York City time, on the tenth trading day following receipt of
the Issuance Notice, to abandon the Merger and terminate this
Agreement;
(iv) purchase or otherwise acquire any shares of
Company Stock; and
(v) except to the extent necessary to comply with
the requirements of applicable laws and regulations (a) take,
or agree or commit to take, any action that would make any
representation and warranty of Trinity hereunder inaccurate,
in any material respect, at, or as of any time prior to, the
Effective Time, (b) omit, or agree or commit to omit, to take
any action necessary to prevent any such representation or
warranty from being inaccurate, in any material respect, at
any such time, provided however that Trinity shall be
permitted to take or omit to take such action which (without
any uncertainty) can be cured, and in fact is cured, at or
prior to the Effective Time or (c) take, or agree or commit to
take, any action that would result in, or is reasonably likely
to result in, any of the conditions of the Merger set forth in
Section 6 hereof not being satisfied; and
(j) Trinity will promptly advise the Company orally and
in writing of any change in the business, results of operations,
financial condition, assets, liabilities or prospects of Trinity or
any subsidiary that is, or is reasonably likely to cause, a Trinity
Material Adverse Effect.
5.3 Additional Covenants.
(a) Registration Statement. Trinity shall prepare and
file at the appropriate time with the Commission a Registration
Statement on Form S-4 with respect to the Trinity Stock issuable
pursuant to the Merger (the "S-4 Registration Statement"), which S-4
Registration Statement shall include the Proxy Statement, and shall
use all reasonable efforts to have the S-4 Registration Statement
declared effective and to maintain such effectiveness until all of the
shares covered by the S-4 Registration Statement have been
distributed. Trinity shall promptly amend or supplement the S-4
Registration Statement to the extent necessary in order to make the
statements therein not misleading or to correct any misstatements
which have become false or misleading. Trinity shall cooperate with
the Company to have the Proxy Statement approved by the Commission
under the Exchange Act. If at any time prior to the Effective Time,
Trinity becomes knowledgeable of any event or circumstance relating to
Trinity or its officers or directors which should be set forth in an
amendment to the S-4 Registration Statement or a supplement to the
Proxy Statement, Trinity shall promptly inform the Company and shall
promptly file such amendment to the S-4 Registration Statement. If at
any time prior to the Effective Time, the Company becomes
knowledgeable of any event or circumstance relating to the Company or
its officers or directors which should be set forth in an amendment to
the S-4 Registration Statement or a supplement to the Proxy Statement,
the Company shall promptly inform Trinity. All documents that Trinity
is responsible for filing with the Commission in connection with the
transactions contemplated hereby will comply as to form and substance
in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations
thereunder. All documents that the Company is responsible for filing
with the Commission in connection with the transactions contemplated
hereby will comply as to form and substance in all material respects
with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations thereunder. Trinity shall
also take any reasonable action required to be taken under any
applicable state blue sky or securities laws in connection with the
issuance of the Trinity Stock to be issued as set forth in this
Agreement, and the Company shall furnish all information concerning
the Company and the Stockholders as may be requested in connection
with the issuance of the Trinity Stock to be issued as set forth in
this Agreement and shall cooperate with Trinity in the preparation and
filing of the S-4 Registration Statement. The Company authorizes
Trinity to utilize in the S-4 Registration Statement the information
relating to the Company contained in the Proxy Statement.
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<PAGE> 87
(b) Approval of the Stockholders. The Company shall
cause a meeting of the Stockholders to be duly called and held as soon
as practicable following effectiveness of the S-4 Registration
Statement (and allowing a reasonable period of time to solicit proxies
for the purpose of approving the Merger, this Agreement and all
actions contemplated hereby which require the approval of the
Stockholders). The Company will, through its Board of Directors,
recommend to the Stockholders, to the extent that such recommendation
is consistent with its fiduciary duties, approval of the transactions
contemplated by this Agreement. In connection with the meeting of the
Stockholders, the Company and Trinity will cooperate in the
preparation of a Proxy Statement relating to the transactions covered
by this Agreement. The Company will advise Trinity at least 24 hours
prior to the mailing of the Proxy Statement to the Stockholders.
(c) Tax Treatment of Merger. It is the intent of the
parties to this Agreement that the Merger be treated for federal
income tax purposes as a tax-free reorganization pursuant to Section
368(a) of the Code and this Agreement shall constitute a "Plan of
Reorganization" for purposes of the Code, and the parties agree (i)
not to take any actions which would prevent the Merger from qualifying
as such a reorganization, (ii) to report the transactions under this
Agreement consistent with such treatment and (iii) to take no
positions that are contrary thereto unless otherwise required by law.
(d) Agreements by Affiliates. The Company shall deliver
to Trinity a letter identifying all persons who are, at the time the
Merger is submitted to a vote of the Stockholders, affiliates of the
Company for purposes of Rule 145 of the Securities Act ("Affiliates").
Trinity agrees that at all times relevant to a possible sale of shares
of the Trinity Stock by an Affiliate that it will satisfy the current
public information requirements set forth in paragraph (c) of Rule 144
under the Securities Act (or any rule or regulation promulgated in
substitution or replacement of said paragraph (c)). The Company shall
use reasonable efforts to cause each person who is identified above as
an Affiliate to deliver to Trinity on or prior to the Closing Date an
Affiliate Letter substantially in the form attached hereto as Exhibit
C.
(e) Additional Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective
the transactions contemplated by the Merger and this Agreement,
including using all reasonable efforts to obtain all necessary
waivers, consents and approvals and effecting all necessary
registrations and filings. Specifically, the Company and Trinity will
cooperate with each other in preparing and filing the S-4 Registration
Statement and the Proxy Statement and in responding to any comments of
the staff of the Commission thereon, and will furnish to the other for
inclusion therein all such information relating to it as the other
party or its counsel shall reasonably request.
(f) Closing Conditions. The Company, Trinity and
Subsidiary will use their respective reasonable efforts to cause the
conditions set forth in Section 6 hereof to occur on or before the
Closing Date.
(g) Confidentiality. In recognition of the confidential
nature of certain of the information that will be provided by the
Company to Trinity, and by Trinity to the Company, each of the
Company, Trinity and Subsidiary agrees to retain in confidence, and to
require its respective directors, officers, employees, consultants,
professional representatives and agents (collectively, its
"Representatives") to retain in confidence, all information
transmitted or disclosed to it in connection with the Merger, and
further agrees that it will not use for its own benefit and will not
use or disclose to any third party, or permit the use or disclosure to
any third party of, any information so obtained or revealed, except
that a party hereto may disclose such information to those of its
Representatives who need such information for the proper performance
of their assigned duties with respect to the consummation of the
transactions contemplated hereby. In making such information
available to its Representatives, the applicable party shall take any
and all precautions reasonably necessary to ensure that its
Representatives use the information only as permitted hereby.
Notwithstanding anything to the contrary in the foregoing provisions,
such information may be disclosed (a) in the S-4 Registration
Statement and the Proxy Statement, provided that the party
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<PAGE> 88
that is the source of the information consents, which consent shall
not be unreasonably withheld, (b) where it is necessary by applicable
law to be disclosed to any regulatory authorities or governmental
agencies (including, but not limited to, the Commission), (c) if it is
required by court order or decree, (d) if it is ascertainable or
obtained from public or published information, (e) if it is received
from a third party not known to the recipient to be under an
obligation to keep such information confidential, or (f) if the
recipient can demonstrate by written documents that such information
was in its possession prior to disclosure thereof in connection with
this Agreement. If a party shall be required to make disclosure of
any such information by operation of law, such party shall use all
reasonable efforts to give the other parties prior notice of the
making of such disclosure. In the event that the Merger shall not
occur, each party shall immediately deliver, or cause to be delivered,
to the party providing such information (without retaining any copies
thereof) any and all documents, work papers and other materials
obtained from the Company, Trinity or Subsidiary, as the case may be,
that contain or are derived from confidential information of the
Company, Trinity or Subsidiary.
6. CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Trinity and Subsidiary to Proceed
with the Merger. Notwithstanding any other provision of this Agreement, each
of the following shall be a condition to the obligation of Trinity and
Subsidiary to consummate the Merger:
(a) Continued Accuracy of Representations and Warranties.
All representations and warranties of the Company contained herein
(supplemented or amended as provided in Section 5.1(f) hereof) shall
be true and correct at and as of the Closing Date (in all material
respects with regard to representations and warranties that are not
otherwise qualified with a materiality standard) with the same effect
as though such representations and warranties were made at and as of
such time, except that insofar as any of such representations and
warranties relate solely to a particular date or period, in which case
they shall be true and correct in all respects on the Closing Date (in
all material respects with regard to representations and warranties
that are not otherwise qualified with a materiality standard) with
respect to such date or period; and the Company shall have performed
and complied with all obligations, covenants and conditions required
by this Agreement to have been performed or complied with by it prior
to or on the Closing Date (in all material respects with regard to
obligations, covenants and conditions that are not otherwise qualified
with a materiality standard).
(b) Certificate. Trinity shall have received a
certificate from the Company dated as of the Closing Date and signed
by its President and its principal financial officer certifying as to
the fulfillment of the conditions set forth in the preceding paragraph
(a) insofar as such conditions relate to the representations,
warranties, obligations, covenants and conditions applicable to the
Company.
(c) Litigation. No preliminary or permanent injunction
or other order by any federal or state court which prevents the
consummation of the Merger shall have been issued and shall remain in
effect and there shall not have been instituted or be pending any
action or proceeding by any United States federal or state government
or governmental agency or instrumentality (i) challenging or seeking
to restrain or prohibit the consummation of the Merger or seeking
material damages in connection with the Merger or (ii) seeking to
prohibit Trinity's or the Surviving Corporation's ownership or
operation of all or a material portion of Trinity's or the Company's
business or assets.
(d) Governmental Action. There shall not have been any
action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any United
States federal or state government or governmental agency or
instrumentality or court which would (i) prohibit Trinity's or the
Surviving Corporation's ownership or operation of all or a material
portion of the Company's business or assets, (ii) render Trinity or
Subsidiary unable to consummate the Merger, or (iii) make such
consummation illegal.
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<PAGE> 89
(e) Material Adverse Change. Since the date hereof,
there shall not have been any change (including any change disclosed
in any supplement or amendment to any Schedule as provided for in
Section 5.1(f) hereof) nor any event which has resulted or would
result, so far as can be reasonably foreseen, in a change that has or
is reasonably likely to have a Company Material Adverse Effect (other
than as a result of change in conditions, including economic or
political developments, applicable to the industries in which the
Company operates).
(f) Stockholder Approval. The Merger and this Agreement
shall have been validly approved by the requisite vote of the
Stockholders.
(g) Certificate of Merger. The Delaware Certificate of
Merger shall have been executed by the duly authorized officer(s) of
the Company.
(h) S-4 Registration Statement. The S-4 Registration
Statement shall have become effective and no stop order suspending
such effectiveness or proceedings for that purpose shall have been
issued and remain in effect.
(i) The Company's Documents. Trinity shall have received
the following documents from the Company, all of which shall be in
form and substance reasonably acceptable to Trinity:
(i) certificate of the Secretary of State of the
State of Delaware certifying the Certificate of Incorporation
of the Company and all amendments thereof, dated not more than
ten (10) days prior to the Closing Date;
(ii) certificate of the Secretary or an Assistant
Secretary of the Company dated as of the Closing Date
certifying the Bylaws of the Company as then in effect;
(iii) certificate of incumbency dated as of the
Closing Date executed by the Secretary or an Assistant
Secretary of the Company indicating the current officers and
directors of the Company;
(iv) certificate of good standing of the Company
dated not more than ten (10) days prior to the Closing Date
from the Secretary of State of the State of Delaware and a
certificate of good standing as a foreign corporation dated
not more than thirty (30) days prior to the Closing Date from
the Secretary of State of each other state where the character
of the property owned or leased by the Company or the nature
of its activities makes such qualification necessary, except
where the failure to be so qualified would not individually or
in the aggregate have a Company Material Adverse Effect; and
(v) certificate executed by the President and
Chief Financial Officer of the Company substantially in the
form attached hereto as Exhibit A.
(j) Consents. Trinity shall have received copies of
consents of all third parties necessary for the Company to execute,
deliver and perform this Agreement and consummate the Merger.
(k) HSR Filing. All applicable waiting periods under the
HSR Act shall have expired.
(l) Stock Options, etc. Trinity shall have received a
certificate from the Company, dated as of the Closing Date, signed by
its President and its principal financial officer certifying that, at
and after the Closing Date, except for Stock Options granted under a
Company Stock Plan or pursuant to an agreement identified on Schedule
3.6 of the Disclosure Schedule, there shall not exist any
subscriptions, options, warrants, calls, conversion rights or other
agreements, Claims or commitments of any nature whatsoever obligating
the Company or any subsidiary of the Company to issue, transfer,
deliver or sell, or to cause to be issued, transferred, delivered or
sold, any shares of the capital stock of the Company
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or any subsidiary of the Company or obligating the Company or any
subsidiary of the Company to grant, extend or enter into any of the
foregoing.
(m) Listing of Trinity Stock. The shares of Trinity
Stock issuable to the Stockholders pursuant to this Agreement shall
have been authorized for listing on the NYSE.
(n) Minimum Stockholders' Equity. The Unaudited Interim
Financial Statements of the Company at June 30, 1996 reflect
"Stockholders' Equity" of at least Twenty-five Million Six Hundred
Thousand Dollars ($25,600,000), provided that the Unaudited Interim
Financial Statements of the Company at July 31, 1996 shall be utilized
for purposes of the measurement of Stockholders' Equity if the Closing
occurs after August 20, 1996.
6.2 Conditions to Obligations of the Company. Notwithstanding any
other provisions of this Agreement, each of the following shall be a condition
to the obligation of the Company to consummate the Merger:
(a) Continued Accuracy of Representations and Warranties.
All representations and warranties of Trinity and Subsidiary contained
herein shall be true and correct at and as of the Closing Date (in all
material respects with regard to representations and warranties that
are not otherwise qualified with a materiality standard) with the same
effect as though such representations and warranties were made at and
as of such time, except that insofar as any of such representations
and warranties relate solely to a particular date or period, in which
case they shall be true and correct in all respects on the Closing
Date (in all material respects with regard to representations and
warranties that are not otherwise qualified with a materiality
standard) with respect to such date or period; and Trinity and
Subsidiary shall have performed and complied with all obligations,
covenants and conditions required by this Agreement to have been
performed or complied with by them prior to or on the Closing Date (in
all material respects with regard to obligations, covenants and
conditions that are not otherwise qualified with a materiality
standard).
(b) Certificate. Trinity and Subsidiary each shall have
delivered a certificate dated as of the Closing Date and signed by the
President or a Vice President of each of Trinity and Subsidiary
respectively certifying as to the fulfillment of the conditions set
forth in the preceding paragraph (a) insofar as such conditions relate
to the representations, warranties, obligations, covenants and
conditions applicable to Trinity or Subsidiary, as appropriate.
(c) Tax Opinion. The Company shall have received an
opinion from Skadden, Arps, Slate, Meagher & Flom, special counsel to
the Company, in form and substance reasonably satisfactory to the
Company, dated as of the Effective Time, substantially to the effect
that, on the basis of certain facts, representations, and assumptions
set forth in such opinion that are consistent with the state of facts
existing at the Effective Time, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code. In rendering the opinion described in the
preceding sentence, such counsel may require and rely upon
representations contained in certificates of officers of Trinity,
Subsidiary, the Company and others.
(d) Opinion of Financial Advisor. The Company shall have
received written opinions from Schroder Wertheim & Co. Incorporated,
dated on or about the date of the Proxy Statement and the Closing
Date, to the effect that the consideration to be received by the
Stockholders pursuant to the Merger is fair to such Stockholders from
a financial point of view.
(e) Litigation. No preliminary or permanent injunction
or other order by any federal or state court which prevents the
consummation of the Merger shall have been issued and shall remain in
effect and there shall not have been instituted or be pending any
action or proceeding by any United States federal or state government
or governmental agency or instrumentality (i) challenging or seeking
to restrain or prohibit the consummation of the Merger or seeking
material damages in connection with the Merger or (ii) seeking to
prohibit Trinity's or the Surviving Corporation's ownership or
operation of all or a material portion of Trinity's or the Company's
business or assets.
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(f) Governmental Action. There shall not have been any
action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any United
States federal or state government or governmental agency or
instrumentality or court which would (i) prohibit Trinity's or the
Surviving Corporation's ownership or operation of all or a material
portion of Trinity or the Company's business assets, (ii) render the
Company unable to consummate the Merger, or (iii) make such
consummation illegal.
(g) Stockholder Approval. The Merger and this Agreement
shall have been validly approved by the requisite vote of the
Stockholders.
(h) Certificate of Merger. The Delaware Certificate of
Merger shall have been executed by the duly authorized officer(s) of
Subsidiary.
(i) S-4 Registration Statement. The S-4 Registration
Statement shall have become effective and no stop order suspending
such effectiveness or proceedings for that purpose shall have been
issued and remain in effect.
(j) Trinity and Subsidiary Documents. The Company shall
have received the following documents from Trinity and Subsidiary, all
of which shall be in form and substance reasonably acceptable to the
Company:
(i) certificate of incumbency dated as of the Closing
Date executed by the Secretary or an Assistant Secretary of
Trinity indicating the current officers and directors of
Trinity and Subsidiary;
(ii) certificate of good standing for Trinity and
Subsidiary from the Secretary of State of the State of
Delaware, each dated not more than ten (10) days prior to the
Closing Date;
(iii) a copy of the effectiveness order with respect
to the S-4 Registration Statement as filed by Trinity;
(iv) a copy of the official notice from the NYSE
confirming that the shares of Trinity Stock issuable in the
Merger have been approved for listing on the NYSE;
(v) instrument of assumption from Subsidiary to
the extent required by the second sentence of Section 5.2(g)
of this Agreement; and
(vi) certificate executed by a Vice President of
Trinity substantially in the form attached hereto as Exhibit
B.
(k) HSR Filing. All applicable waiting periods under the
HSR Act shall have expired.
(l) Listing of Trinity Stock. The shares of Trinity
Stock issuable to the Stockholders pursuant to this Agreement shall
have been authorized for listing on the NYSE.
(m) Material Adverse Change. Since the date hereof,
there shall not have been any change nor any event which has resulted
or would result, so far as can be reasonably foreseen, in a change
that has or is reasonably likely to have a Trinity Material Adverse
Effect (other than as a result of changes in conditions, including
economic or political developments, applicable to the industries in
which Trinity operates).
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7. TERMINATION
7.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing Date, whether before or after
approval by the Stockholders, by mutual consent, in writing, of the Company and
Trinity.
7.2 Termination by the Company. The Company may terminate this
Agreement by written notice to Trinity and Subsidiary at any time prior to the
Closing Date, whether before or after approval by the Stockholders, if (i) a
condition to the performance of the Company under Section 6.2 hereof shall not
be fulfilled on or before the time specified for the fulfillment thereof, (ii)
the representations and warranties of Trinity and Subsidiary which are
qualified with respect to materiality are not true and correct in all respects,
or if the representations and warranties of Trinity and Subsidiary that are not
so qualified are not true and correct in all material respects, or there has
been a material breach of any of the covenants or agreements set forth in this
Agreement on the part of Trinity or Subsidiary, but only if such breach of
representation or warranty or breach of covenant is not curable or, if curable,
is not cured within thirty (30) days after written notice of such breach is
given by the Company to Trinity, (iii) any suit, action or other proceeding
shall be pending or threatened that, in the Company's reasonable opinion,
materially and adversely affects the prospects of the Merger, (iv) Trinity
issues shares in a transaction requiring stockholder approval or (v) the Board
of Directors of the Company has (a) withdrawn, or modified or changed in a
manner adverse to Trinity or Subsidiary its approval or recommendation of this
Agreement or the Merger in order to approve and permit the Company to execute a
definitive agreement relating to an Acquisition Proposal, and (b) determined,
based on a written opinion of outside legal counsel to the Company, that the
failure to take such action as set forth in the preceding clause would result
in a breach of the Board of Directors' fiduciary duties under applicable law,
provided, however, that the Board of Directors of the Company shall have been
advised in such written opinion of outside counsel that notwithstanding a
binding commitment to consummate an agreement of the nature of this Agreement
entered into in the proper exercise of their applicable fiduciary duties, such
fiduciary duties would also require the directors to terminate this Agreement
as a result of such Acquisition Proposal. The term "Acquisition Proposal" as
used herein means any proposal to purchase or acquire any equity securities or
(except in the ordinary course of business) assets of, or merge or combine
with, the Company or any of its subsidiaries.
7.3 Termination by Trinity and Subsidiary. Trinity and Subsidiary
may terminate this Agreement by written notice to the Company at any time prior
to the Closing Date if (i) a condition to the performance of Trinity and
Subsidiary under Section 6.1 hereof shall not be fulfilled on or before the
time specified for the fulfillment thereof, (ii) the representations and
warranties of the Company which are qualified with respect to materiality are
not true and correct in all respects, or if the representations and warranties
of the Company that are not so qualified are not true and correct in all
material respects, or there has been a material breach of any of the covenants
or agreements set forth in this Agreement on the part of the Company, but only
if such breach of representation or warranty or breach of covenant is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by either Trinity or Subsidiary to the Company,
or (iii) any suit, action or other proceeding shall be pending or threatened
that, in Trinity's reasonable opinion, materially and adversely affects the
prospects of the Merger.
7.4 Termination by Either Trinity or the Company. This Agreement
may be terminated and the Merger may be abandoned by either Trinity or the
Company if (a) the Merger shall not have been consummated before September 16,
1996; provided, however, that this Agreement may be extended by written notice
of either Trinity or the Company to a date not later than October 15, 1996, if
the Merger shall not have been consummated as a direct result of the conditions
in Section 6.1(c), 6.1(d), 6.1(k), 6.2(e), 6.2(f), 6.2(g) or 6.2(k) hereof not
having been satisfied by such date or (b) a United States federal or state
court of competent jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
non-appealable; provided, that the party seeking to terminate this Agreement
pursuant to clause (a) shall not be in material violation of any of its
representations, warranties or covenants set forth in this Agreement, and the
party
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seeking to terminate this Agreement pursuant to clause (b) shall have used all
reasonable efforts to remove such injunction, order or decree.
7.5 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to
this Section 7, written notice thereof shall as promptly as practicable be
given to the other parties to this Agreement and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein: (i) there shall be no liability or obligation on the part of
Trinity, any subsidiary of Trinity, the Company or any subsidiary of the
Company or their respective officers and directors, and all obligations of the
parties shall terminate, except for the obligations of the parties pursuant to
this Section 7.5, except for the provisions of Sections 3.15, 4.7, 5.3(g), 8.2,
8.3, 8.4, 8.6, 8.10 and 8.11 hereof and except that a party who is in material
breach of its representations, warranties, covenants or agreements set forth in
this Agreement shall be liable for damages occasioned by such breach,
including, without limitation, any expenses incurred by the other party in
connection with this Agreement and the transactions contemplated hereby, and
(ii) all filings, applications and other submissions made pursuant to the
transactions contemplated by this Agreement shall, to the extent practicable,
be withdrawn from the agency or person to which made. In the event that any
person shall have made an Acquisition Proposal for the Company and thereafter
this Agreement is terminated by the Company (other than pursuant to the breach
of this Agreement by Trinity), then the Company shall pay Trinity a fee equal
to Two Million Two Hundred Twenty-eight Thousand Eighty-one Dollars
($2,228,081), which amount shall be payable by wire transfer of same day funds
of Two Hundred Thousand Dollars ($200,000) on the date of such termination with
the balance due on the date that the transaction contemplated by an Acquisition
Proposal is consummated. The Company acknowledges that the agreements
contained in this Section 7.5 are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements, Trinity and
Subsidiary would not enter into this Agreement; accordingly, if the Company
fails to promptly pay the amount due pursuant to this Section 7.5, and, in
order to obtain such payment, Trinity or Subsidiary commences a suit which
results in a judgment against the Company for the fee set forth in this Section
7.5, the Company shall pay to Trinity its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest on the
amount of the fee at the rate of 12% per annum. In the event Trinity has
received the fee payable under Section 7.5 hereof, it shall not (i) assert or
pursue in any manner, directly or indirectly, any Claim or cause of action
based in whole or in part upon alleged tortious or other interference with
rights under this Agreement against any entity or person submitting an
Acquisition Proposal or (ii) assert or pursue in any manner, directly or
indirectly, any Claim or cause of action against the Company or any of its
officers or directors based in whole or in part upon its or their receipt,
consideration, recommendation, or approval of an Acquisition Proposal or the
Company's exercise of its right of termination.
7.6 Extension. At any time prior to the Closing Date, the parties
hereto (Trinity and Subsidiary being considered one party for purposes of this
Section 7.6) may (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant hereto, or
(iii) waive compliance by the other party with any of the representations,
warranties, covenants and conditions contained herein. Any agreement on the
part of any party hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed on behalf of such party.
8. MISCELLANEOUS
8.1 Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given,
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<PAGE> 94
(a) if to Trinity or Subsidiary, to:
Trinity Industries, Inc.
2525 Stemmons Freeway
Dallas, Texas 75207
Attention: Mr. F. Dean Phelps, Vice President
Fax: (214) 589-8824
with a copy to:
Charles C. Reeder, Esq.
Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Fax: (214) 740-8800
(b) if to the Company, to:
Transcisco Industries, Inc.
601 California Street, Suite 1301
San Francisco, California 94108
Attention: Steven L. Pease, Chief Executive Officer
Fax: (415) 788-0583
with a copy to:
Theodore J. Kozloff, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Fax: (212) 735-2000
or such other address as such party may hereafter specify for the purpose by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective if given by any other means, when delivered or
transmitted via confirmed fax to the address specified in this Section.
8.2 Expenses. Except as set forth in Section 7.5 hereof, all
costs and expenses related to the preparation, negotiation and performance of
this Agreement (i) incurred by Trinity or Subsidiary shall be paid by Trinity,
and (ii) incurred by the Company shall be paid by the Company. In no event
will Trinity or Subsidiary pay any expenses of any Stockholder.
8.3 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, provided that neither the Company,
Subsidiary nor Trinity may assign, delegate or otherwise transfer any of its
respective rights or obligations under this Agreement without the written
consent of the others.
8.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to the rules of conflict of laws of such or any other jurisdiction. Each of
the Company, Trinity and Subsidiary hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
Delaware and the United States of America located in the State of Delaware (the
"Delaware Courts") for any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and agreed not to commence
any litigation relating thereto except in such courts), waives any
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<PAGE> 95
objection to the laying of venue of any such litigation in the Delaware Courts
and agreed not to plead or claim that such litigation brought in any Delaware
Court has been brought in an inconvenient forum.
8.5 Counterparts: Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
8.6 Integration. This Agreement and those agreements referred to
herein embody the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, representations, warranties, covenants, or undertakings other than
those expressly set forth or referred to herein or therein. This Agreement and
those agreements referred to herein supersede all prior agreements and the
understandings between the parties with respect to such subject matter.
8.7 Amendment; Waiver. No waiver and no modification or amendment
of any provision of this Agreement shall be effective unless specifically made
in writing and duly signed by the parties to be bound thereby. Waiver by the
party of any breach of or failure to comply with any of the provisions of this
Agreement by any other party shall not be construed as, or constitute, a
continuing waiver of, or a waiver of any other breach of, or failure to comply
with, any other provision of this Agreement.
8.8 Nonsurvival of Representations and Warranties. No
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement, other than the representation and warranty
contained in Section 4.16 hereof, shall survive beyond the Effective Time.
This Section 8.8 shall not limit any covenant or agreement after the Effective
Time.
8.9 Further Assurances. The parties hereto agree that each will
execute and deliver to the other any and all documents in addition to those
expressly provided for herein that may be necessary to carry out the provisions
of this Agreement, whether before, at or after the Closing.
8.10 Publicity. Each of the parties hereto agrees that it will not
issue any press release or otherwise make any public statement or respond to
any press inquiry with respect to this Agreement or the transactions
contemplated hereby without the prior approval of the other party (which
approval will not be unreasonably withheld), except as may be required by
applicable law. If a public statement is required by law, the disclosing party
will use all reasonable efforts to give other party prior written notice of the
disclosure to be made.
8.11 Severability; Validity; Parties in Interest. If any provision
of this Agreement, or the application thereof to any person or circumstance or
in any jurisdiction is held invalid or unenforceable, the remainder of this
Agreement, and the application of such provision to other persons or
circumstances or in any other jurisdictions, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable. Nothing
in this Agreement, express or implied, is intended to confer upon any person
not a party to this Agreement any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
8.12 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any Delaware
Court, this being in addition to any other remedy to which they may be entitled
at law or in equity.
8.13 Certain Definitions. "To the knowledge", "to the best
knowledge" or any similar phrase referring to the knowledge or awareness of a
party shall be deemed to refer to the knowledge of (i) with regard to the
Company and its subsidiaries, Steven L. Pease, Gregory S. Saunders, William F.
Bryant, George A. Tedesco or Robert A. Jahnke and (ii) with regard to Trinity
and Subsidiary, W. Ray Wallace, Timothy R. Wallace, John T. Sanford, F. Dean
Phelps or John M. Lee.
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<PAGE> 96
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
TRINITY INDUSTRIES, INC.
By: /s/ John T. Sanford
---------------------------------
John T. Sanford
Senior Vice President
TRINITY Y, INC.
By: /s/ John T. Sanford
---------------------------------
John T. Sanford
Senior Vice President
TRANSCISCO INDUSTRIES, INC.
By: /s/ Steven L. Pease
---------------------------------
Steven L. Pease
Chief Executive Officer
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<PAGE> 97
EXHIBIT A
[TRANSCISCO INDUSTRIES, INC. LETTERHEAD]
[CLOSING DATE]
Skadden, Arps, Slate
Meagher & Flom
919 Third Avenue
New York, New York 10022
Ladies and Gentlemen:
The undersigned, a duly authorized officer of Transcisco
Industries, Inc., a Delaware corporation (the "Company") and acting as such, in
connection with the opinion to be delivered by Skadden, Arps, Slate, Meagher &
Flom pursuant to Section 6.2(c) of the Agreement and Plan of Merger dated June
17, 1996 (the "Merger Agreement")1 among Trinity Industries, Inc., a Delaware
corporation ("Trinity"), Trinity Y, Inc., a Delaware corporation ("Subsidiary")
and a wholly-owned subsidiary of Trinity, and the Company, and recognizing that
you will rely on this certificate in delivering said opinion, and that Trinity
may rely on this certificate for the purpose of determining the treatment of
the contemplated merger (the "Merger") and filing returns required under
federal, state, local or foreign tax laws, hereby certifies that, to the best
knowledge and belief of the executive officers of the Company ("Company
Management"), after due inquiry and investigation, the facts relating to the
Merger of Subsidiary with and into the Company pursuant to the Merger
Agreement, which facts are described in the Proxy Statement relating to the
Merger and the S-4 Registration Statement relating to the Merger, insofar as
such facts pertain to the Company, are true, correct and complete in all
material respects and, insofar as such facts pertain to Trinity or Subsidiary,
Company Management has no reason to believe that such facts are not true,
correct and complete in all material respects. The undersigned further
certifies, to the best knowledge and belief of Company Management, after due
inquiry and investigation, as follows:
1. The ratio for the exchange of shares of Company Stock for
Trinity Stock in the Merger was negotiated through arm's length bargaining.
Schroder Wertheim & Co. Incorporated ("Schroder") delivered to the board of
directors of the Company its written opinion dated June 13, 1996 that as of
that date the Exchange Ratio was fair, from a financial point of view, to the
Stockholders. This written opinion was reaffirmed by Schroder in letters dated
[DATE] and [DATE]. Based on the arm's length negotiations and the fairness
opinion of Schroder, the Company believes the fair market value of the shares
of Trinity Stock to be received by each Stockholder (plus the cash, if any, to
be received by such Stockholder in lieu of a fractional share of Trinity Stock)
will be approximately equal to the fair market value of the Company Stock
surrendered by such Stockholder in exchange therefor pursuant to the Merger as
determined as of the date of the Merger Agreement.
2. Company Management knows of no plan or intention on the part
of the holders of Company Stock to sell, exchange or otherwise dispose of a
number of shares of Trinity stock received in the Merger, except for certain
dispositions of shares of Trinity Stock having a value, as of the Effective
Time, of no more than 20 percent of the value of all the Company Stock
outstanding immediately preceding the Effective Time. For purposes of this
representation, Company Stock to be exchanged for cash in lieu of fractional
shares of Trinity Stock will be treated
- ----------------------------------
1 Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings specified in the Merger Agreement.
A-1
<PAGE> 98
Skadden, Arps, Slate
Meagher & Flom
[CLOSING DATE]
Page 2
as outstanding immediately preceding the Effective Time. Moreover, Company
Stock and shares of Trinity Stock held by the Company Stockholders and sold,
redeemed or otherwise disposed of prior or subsequent to the Merger in
connection with any overall plan of which the Merger is a part have been
considered in making this representation.
3. Following the Merger, the Company will hold at least 90
percent of the fair market value of the net assets and at least 70 percent of
the fair market value of the gross assets held by it immediately prior to the
transfer. For purposes of this representation, amounts paid by the Company (a)
for reorganization expenses incurred in connection with or in contemplation of
the Merger, (b) as redemptions and distributions in anticipation of or as part
of the plan of reorganization of the Company, and (c) to repay indebtedness of
the Company or any of its subsidiaries (except to the extent that any such
repayment is funded through indebtedness incurred by the Company or any of its
subsidiaries) shall be treated as assets held by the Company immediately prior
to the Effective Time.
4. In the Merger, Company Stock representing control of the
Company, as defined in Section 368(c) of the Internal Revenue Code of 1986, as
amended (the "Code"), will be exchanged solely for shares of Trinity Stock. No
shares of Company Stock will be exchanged for cash or other property
originating with Trinity (except for cash, if any, paid in lieu of fractional
shares of Trinity Stock).
5. The Company and its Stockholders have paid, or will pay, only
their respective expenses incurred in connection with the Merger, except as
provided in Section 7.5 of the Merger Agreement with respect to amounts payable
on termination of the Merger Agreement and the abandonment of the Merger.
6. There is not, and has never been, any intercorporate
indebtedness existing between Trinity and any of its affiliates, on the one
hand, and the Company and any of its affiliates, on the other hand, or between
Subsidiary and any of its affiliates, on the one hand, and the Company and any
of its affiliates, on the other hand, that was issued, acquired or settled at a
discount.
7. The payment of cash in lieu of fractional shares of Trinity
Stock pursuant to the Merger will be solely for the purpose of avoiding the
expense and inconvenience to Trinity of issuing fractional shares and will not
represent separately bargained-for consideration.
8. The total cash consideration that will be paid in the Merger
to the holders of Company Stock in lieu of issuing fractional shares of Trinity
Stock will not exceed one percent of the total consideration that will be
delivered in the Merger to the holders of Company Stock in exchange for their
Company Stock.
9. The Company will not have outstanding any warrants, options,
convertible securities or any other type of right pursuant to which any person
could acquire shares of capital stock of the Company that, if exercised or
converted, would affect Trinity's acquisition or retention of control of the
Company within the meaning of Section 368(c) of the Code.
10. Following the Merger the Company will continue its "historic
business" or use a significant portion of its "historic business assets" in a
business (as such terms are used in Treas. Reg. Section 1.368-1(d)).
11. The Company is not under the jurisdiction of any court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
12. At the Effective Time, the fair market value of the assets of
the Company will exceed the sum of its liabilities, plus (without duplication)
the amount of liabilities, if any, to which the assets are subject.
A-2
<PAGE> 99
Skadden, Arps, Slate
Meagher & Flom
[CLOSING DATE]
Page 3
13. None of the compensation received by any Stockholder-employee
of the Company with respect to periods ending on or prior to the Effective Time
will be separate consideration for, or allocable to, any of their Company
Stock. Furthermore, none of the shares of Trinity Stock received by any
Stockholder-employee of the Company in exchange for Company Stock will be
separate consideration for, or allocable to, any employment or consulting
agreement or similar arrangement.
14. The compensation paid to any Stockholder-employee of the
Company with respect to periods ending on or prior to the Effective Time will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arms-length for similar services.
15. No liabilities of the Company guaranteed by Company
Stockholders or liabilities of the Company's Stockholders will be assumed by
Trinity, nor will any of the stock of the Surviving Corporation, immediately
after the Merger, be subject to any liabilities that may have encumbered
Company Stock immediately prior to the Merger.
16. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
We will promptly and timely notify Skadden, Arps, Slate, Meagher &
Flom if we believe or have reason to believe that (i) any of the facts
described herein or in the Proxy Statement and S-4 Registration Statement or
(ii) any of the representations, information or covenants contained in this
certificate, are untrue, incorrect or incomplete in any material respect.
TRANSCISCO INDUSTRIES, INC.
By: ______________________________
Print Name: ______________________________
Print Title:______________________________
A-3
<PAGE> 100
EXHIBIT B
[TRINITY INDUSTRIES, INC. LETTERHEAD]
[CLOSING DATE]
Skadden, Arps, Slate
Meagher & Flom
919 Third Avenue
New York, New York 10022
Ladies and Gentlemen:
The undersigned, a duly authorized officer of Trinity
Industries, Inc., a Delaware corporation ("Trinity") and acting as such, in
connection with the opinion to be delivered by Skadden, Arps, Slate, Meagher &
Flom pursuant to Section 6.2(c) of the Agreement and Plan of Merger dated June
17, 1996 (the "Merger Agreement")1 among Trinity, Trinity Y, Inc., a Delaware
corporation ("Subsidiary") and a wholly-owned subsidiary of Trinity, and
Transcisco Industries, Inc., a Delaware corporation (the "Company"), and
recognizing that you will rely on this certificate in delivering said opinion,
hereby certifies that, to the best knowledge and belief of the executive
officers of Trinity ("Trinity Management"), after due inquiry and
investigation, the facts relating to the Merger of Subsidiary with and into the
Company pursuant to the Merger Agreement, which facts are described in the
Proxy Statement relating to the Merger and the S-4 Registration Statement
relating to the Merger, insofar as such facts pertain to Trinity or Subsidiary,
are true, correct and complete in all material respects and, insofar as such
facts pertain to the Company, Trinity Management has no reason to believe that
such facts are not true, correct and complete in all material respects. The
undersigned further certifies, to the best knowledge and belief of Trinity
Management, after due inquiry and investigation, as follows:
1. The ratio for the exchange of shares of Company Stock for
Trinity Stock in the Merger was negotiated through arm's length bargaining.
Schroder Wertheim & Co. Incorporated ("Schroder") delivered to the board of
directors of the Company its written opinion dated June 13, 1996 that as of
that date the Exchange Ratio was fair, from a financial point of view, to the
Stockholders. This written opinion was reaffirmed by Schroder in letters dated
[DATE] and [DATE]. Based on the arm's length negotiations and the fairness
opinion of Schroder, Trinity believes the fair market value of the shares of
Trinity Stock to be received by each Stockholder (plus the cash, if any, to be
received by such Stockholder in lieu of a fractional share of Trinity Stock)
will be approximately equal to the fair market value of the Company Stock
surrendered by such Stockholder in exchange therefor pursuant to the Merger as
determined as of the date of the Merger Agreement.
2. Following the Merger, the Company will hold at least 90
percent of the fair market value of Subsidiary's net assets and at least 70
percent of the fair market value of Subsidiary's gross assets held immediately
prior to the Effective Time.
3. Immediately prior to the Merger, Trinity will be in control of
Subsidiary within the meaning of Section 368(c) of the Internal Revenue Code of
1986, as amended (the "Code").
- ----------------------------------
1 Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings specified in the Merger Agreement.
B-1
<PAGE> 101
Skadden, Arps, Slate
Meagher & Flom
[CLOSING DATE]
Page 2
4. Trinity has no plan or intention to cause the Company to issue
additional shares of its stock that would result in Trinity losing control of
the Company within the meaning of Section 368(c) of the Code.
5. Neither Trinity nor any of its affiliates (i) is under any
obligation to, or has entered into any agreement to make any extraordinary
distribution in respect of such shares of Trinity Stock or (ii) has any plan or
intention to reacquire any shares of Trinity Stock to be issued in the Merger.
Any open market purchases by Trinity of its stock will be motivated solely by
business considerations independent of the Merger transaction.
6. Neither Trinity, nor any corporation affiliated with Trinity,
has any plan or intention to liquidate the Company, to merge the Company or any
subsidiary of the Company with or into another entity, to sell or otherwise
dispose of any shares of capital stock of the Company or any subsidiary of the
Company (except for transfers described in Section 368(a)(2)(C) of the Code at
the time of transfer) or to cause the Company or any subsidiary of the Company
to sell or otherwise dispose of in any manner any of its assets held prior to
the Merger or any of the assets acquired from Subsidiary, except for
dispositions made in the ordinary course of business, transfers by the Company
or any of its subsidiaries of assets to a corporation controlled by the Company
or such subsidiary within the meaning of Section 368(c) of the Code at the time
of transfer or sales, mergers or other dispositions that would not,
individually or in the aggregate, cause the Company and its subsidiaries taken
as a whole, following the Merger, to fail to hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair market
value of its gross assets held immediately prior to the Effective Time
(determined by treating the items set forth in clauses (a), (b) and (c) of
paragraph 3 of the Company Tax Certificate as assets of the Company immediately
prior to the Effective Time).
7. Subsidiary has no liabilities to be assumed by the Company,
and will not transfer to the Company any assets subject to liabilities, in the
Merger.
8. Following the Merger, Trinity will cause the Company to
continue its "historic business" or to use a "significant portion" of its
"historic business assets" in a business (as such terms are used in Treas. Reg.
Section 1.368-1(d)).
9. Trinity has paid, or will pay, the expenses of only Trinity
and Subsidiary incurred in connection with the Merger, except as provided in
Section 7.5 of the Merger Agreement with respect to amounts payable on
termination of the Merger Agreement and the abandonment of the Merger.
10. There is not, and has never been, any indebtedness existing
between Trinity and any of its affiliates, on the one hand, and the Company and
any of its affiliates, on the other hand, or between Subsidiary and any of its
affiliates, on the one hand, and the Company and any of its affiliates, on the
other hand, that was issued, acquired or settled at a discount.
11. Neither Trinity nor any of its affiliates owns beneficially or
of record, nor has any of them have owned during the past five years, any
capital stock or securities of the Company or any options or instruments giving
the holder thereof the right to acquire any capital stock or securities of the
Company.
12. The payment of cash in lieu of fractional shares of Trinity
Stock pursuant to the Merger will be solely for the purpose of avoiding the
expense and inconvenience to Trinity of issuing fractional shares and will not
represent separately bargained-for consideration.
13. The total cash consideration that will be paid in the Merger
to the holders of Company Stock in lieu of issuing fractional shares of Trinity
Stock will not exceed one percent of the total consideration that will be
delivered in the Merger to the holders of Company Stock in exchange for their
Company Stock.
B-2
<PAGE> 102
Skadden, Arps, Slate
Meagher & Flom
[CLOSING DATE]
Page 3
14. None of the compensation to be received by any
Stockholder-employee of the Company with respect to periods beginning after the
Effective Time will be separate consideration for, or allocable to, any of his
Company Stock. Further, none of the shares of Trinity Stock to be received by
any Stockholder-employee of the Company in exchange for Company Stock will be
separate consideration for, or allocable to, any employment agreement or
arrangement.
15. The compensation paid to any Stockholder-employee of the
Company with respect to periods beginning after the Effective Time will be for
services actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services.
16. Trinity is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
17. Subsidiary ia a recently formed corporation having no assets
or liabilities other than assets transferred to it pursuant to the Merger, and
Subsidiary has been created and maintained solely for purposes of effecting the
Merger.
We will promptly and timely notify Skadden, Arps, Slate, Meagher &
Flom if we believe or have reason to believe that (i) any of the facts
described herein or in the Proxy Statement and S-4 Registration Statement or
(ii) any of the representations, information or covenants contained in this
certificate, are untrue, incorrect or incomplete in any material respect.
TRANSCISCO INDUSTRIES, INC.
By: ______________________________
Print Name: ______________________________
Print Title:______________________________
B-3
<PAGE> 103
EXHIBIT C
Trinity Industries, Inc.
2525 Stemmons Freeway
Dallas, Texas 75207-2401
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Transcisco Industries, Inc., a Delaware corporation
(the "Company"), as the term "affiliate" is defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"). Pursuant to the
terms of the Agreement and Plan of Merger, dated June 17, 1996 (the
"Agreement") , among the Company, Trinity Industries, Inc., a Delaware
corporation ("Trinity"), and Trinity Y, Inc., a Delaware corporation and a
wholly-owned subsidiary of Trinity ("Merger Sub"), Merger Sub will be merged
with and into the Company (the "Merger").
As a result of the Merger, I will receive shares of common stock, par
value $1.00 per share, of Trinity (the "Trinity Stock") in exchange for shares
owned by me of common stock, par value $.01 per share, of the Company.
I represent, warrant, and covenant to Trinity that in the event I
receive any Trinity Stock as a result of the Merger:
A. I shall not make any sale, transfer, or other disposition of
the Trinity Stock in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer, or otherwise dispose of the Trinity Stock to
the extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of the Trinity Stock to
me pursuant to the Merger has been registered with the Commission under the Act
on a Registration Statement on Form S-4. However, I have also been advised
that, since at the time the Merger was submitted for a vote of the stockholders
of the Company, I may be deemed to have been an affiliate of the Company and
the distribution by me of the Trinity Stock has not been registered under the
Act, I may not sell, transfer or otherwise dispose of the Trinity Stock issued
to me in the Merger unless (i) such sale, transfer, or other disposition has
been registered under the Act, (ii) such sale, transfer, or other disposition
is made in conformity with Rule 145 promulgated by the Commission under the
Act, or (iii) in the opinion of counsel reasonably acceptable to Trinity, or a
"no action" letter obtained by the undersigned from the staff of the
Commission, such sale, transfer, or other disposition is otherwise exempt from
registration under the Act.
D. I understand that Trinity is under no obligation to register
the sale, transfer, or other disposition of the Trinity Stock by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
E. I also understand that stop transfer instructions will be
given to Trinity's transfer agent with respect to the Trinity Stock and that
there will be placed on the certificates for the Trinity Stock issued to me, or
any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN
C-1
<PAGE> 104
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED [_____________]
BETWEEN THE REGISTERED HOLDER HEREOF AND TRINITY INDUSTRIES, INC., A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF TRINITY
INDUSTRIES, INC."
F. I also understand that unless the transfer by me of my Trinity
Stock has been registered under the Act or is a sale made in conformity with
the provisions of Rule 145, Trinity reserves the right to put the following
legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without
such legend if such legend is not required for purposes of the Act or the
Agreement. It is also understood and agreed that such legends and the stop
orders referred to above will be removed if (i) two years shall have elapsed
from the date the undersigned acquired the Trinity Stock received in the Merger
and the provisions of Rule 145(d) (2) are then available to the undersigned,
(ii) three years shall have elapsed from the date the undersigned acquired the
Trinity Stock received in the Merger and the provisions of Rule 145(d) (3) are
then applicable to the undersigned, or (iii) Trinity has received either an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to Trinity, or a "no action" letter obtained by the undersigned from the staff
of the Commission, to the effect that the restrictions imposed by Rule 145
under the Act no longer apply to the undersigned.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the first
paragraph of this letter or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
------------------------------------------
Name:
Accepted this day of
----
, 1996 by
- ---------------------------
Trinity Industries, Inc.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
C-2
<PAGE> 105
ANNEX B
OPINION OF TRANSCISCO'S FINANCIAL ADVISOR
July 18, 1996
The Board of Directors
Transcisco Industries, Inc.
601 California Street, Suite 1301
San Francisco, CA 94108
Members of the Board:
We understand that Transcisco Industries, Inc., a Delaware corporation
("Transcisco" or the "Company") is contemplating a merger with Trinity
Industries, Inc. ("Trinity") (the "Transaction") pursuant to which, among other
things, Transcisco's common stockholders would receive 0.1884 shares of Trinity
common stock for each of the issued and outstanding shares of common stock of
Transcisco (the "Exchange Ratio"). In connection with our review described
herein, the Company has furnished us with a draft Agreement and Plan of Merger
(the "Draft Merger Agreement") to be entered into by the Company, Trinity Y,
Inc. and Trinity setting forth the terms of the Transaction.
In accordance with the terms of the engagement letter dated as of March 19,
1996, you have requested that Schroder Wertheim & Co. Incorporated ("Schroder
Wertheim") render an opinion, as investment bankers, as to the fairness, form a
financial point of view, of the Exchange ratio to be received by the Company's
common stockholders in the Transaction (the "Opinion"). The Opinion shall be
used by the Company solely in connection with its Board of Director's
consideration of the Transaction. The Company will not furnish the Opinion or
any other material prepared by Schroder Wertheim to any other person or persons
or use or refer to the Opinion or this letter for any other purposes without
Schroder Wertheim's prior written approval; provided, however, that the Company
may publish the Opinion in its entirety in any proxy statement or similar
documents distributed to its stockholders in connection with the Transaction.
Schroder Wertheim, as part of its investment banking business, is
continually engaged in the valuation of business and their securities in
connection with mergers and acquisition, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Schroder Wertheim has
acted as financial advisor to the Company in its negotiations with Trinity and
will receive a fee for such services.
In connection with the Opinion set forth herein, we have, among other
things:
i. reviewed the Draft Merger Agreement;
ii. reviewed the recent published financial statements of the Company,
including those set forth in its Forms 10-K (for the fiscal years
ended December 31, 1993 and March 31, 1995 and 1996), Annual Reports
(1995 and 1996), and its filings on Form 8-K since June 30, 1994;
iii. reviewed the earnings release issued by Transcisco on July 17, 1996,
relating to Transcisco's performance in the quarter ended June 30,
1996;
iv. reviewed historical and interim financial results of the Company's
Transcisco Rail Services, Transcisco Leasing Company and Transcisco
Trading Company subsidiaries (together, the "Subsidiaries") as
prepared by the management of the Company and the Subsidiaries;
<PAGE> 106
The Board of Directors
Transcisco Industries, Inc.
July 18, 1996
Page 2
v. reviewed forecasts and projections of the Subsidiaries prepared by the
management of the Company and the Subsidiaries for the fiscal years
ending March 31, 1997 through 2001;
vi. had discussions with the management of the Company and the
Subsidiaries regarding the businesses, operations and prospects of the
Subsidiaries;
vii. reviewed the recent published financial statements of Trinity,
including those set forth in its Form 10-K (for fiscal years ended
March 31, 1995 and 1996), and Annual Reports (1995 and 1996);
viii. reviewed the earnings released issued by Trinity on July 15, 1996,
relating to Trinity's performance in the quarter ended June 30, 1996;
ix. had discussions with the management of Trinity regarding its
businesses, operations and prospects;
x. performed a relative contribution analysis;
xi. advised the Company regarding prior proposed transactions involving
the Company during the period from April 1995 to the date hereof; and
initiated contact with a significant number of potential acquirors as
to their interest in the company from March 19, 1996 to the date
hereof;
xii. reviewed news articles on the Company, the railcar equipment and
leasing industries and the Russian transportation industry;
xiii. reviewed Wall Street research reports and news articles relating to
Trinity;
xiv. performed various valuation analyses, as we deemed appropriate, of the
Company and the Subsidiaries using generally accepted analytical
methodologies, including (i) the application of the public trading
multiples of comparable companies to the financial results of the
Subsidiaries; (ii) the application of the comparative merger and
acquisition multiples to the financial results of the Subsidiaries;
and (iii) discounting the projected cash flows of the Company's
operations;
xv. reviewed the historical trading prices and volumes of the common stock
of Transcisco and Trinity; and
xvi. performed such other financial studies, analyses, inquiries and
investigations as we deemed appropriate.
In rendering the Opinion, we have relied upon the accuracy and completeness
of all information supplied or otherwise made available to us by the
managements of Transcisco, the Subsidiaries, and Trinity, or obtained by us
from other sources, and we have not assumed any responsibility for
independently verifying such information, undertaken an independent appraisal
of the assets or liabilities (contingent or otherwise) or Transcisco or
Trinity, or been furnished with any such appraisals. With respect to financial
forecasts for the Company and the Subsidiaries, we have been advised by the
management of the Company and the Subsidiaries, and we have assumed, without
independent investigation, that they have been reasonably prepared and reflect
the best currently available estimates and judgment as to the expected future
financial performance of the Company and the Subsidiaries.
Our opinion, as set forth herein, relates to the relative values of
Transcisco and Trinity. We are not expressing any opinion as to what the value
of the Trinity common stock actually will be when issued to Transcisco's common
stockholders pursuant to the
<PAGE> 107
The Board of Directors
Transcisco Industries, Inc.
July 18, 1996
Page 3
Transaction or the price at which Trinity common stock will trade or otherwise
be transferable subsequent to the Transaction.
The Opinion is necessarily based upon financial, economic, market and other
conditions as they exist, and the information made available to us, as of the
date hereof. We disclaim any undertaking or obligation to advise any person of
any change in any fact or matter affecting the Opinion which may come or be
brought to our attention after the date of the Opinion.
Our Opinion is directed to the Board of Directors of Transcisco and does not
constitute a recommendation to any Transcisco common stockholder as to how such
stockholders should vote regarding the Transaction. The Opinion relates solely
to the question of the fairness, from a financial point of view, to
Transcisco's common stockholders of the Exchange Ratio. Further, we express no
opinion herein as to the structure, terms or effect of any other aspect of the
Transaction.
Based upon and subject to the foregoing, we are of the opinion, as
investment bankers, that as of the date hereof, the Exchange Ratio is fair,
from a financial point of view, to the Company's common stockholders.
Very truly yours,
SCHRODER WERTHEIM & CO. INCORPORATED
<PAGE> 108
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-K
--------------------
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-6903
TRINITY INDUSTRIES, INC.
( Exact name of registrant as specified in its charter)
DELAWARE 75-0225040
( State of Incorporation) (I.R.S. Employer Identification No.)
2525 STEMMONS FREEWAY
DALLAS, TEXAS 75207-2401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 589-8592
Securities Registered Pursuant to Section 12(b) of the Act
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
------------------- -------------------
<S> <C>
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act:
None
--------------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
Yes [X] No [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANTS KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of the
Registrant is $1,413,996,430 as of May 31, 1996.
41,612,062
( Number of Shares of common stock outstanding as of May 31, 1996)
================================================================================
(Continued on reverse side)
<PAGE> 109
(Continued from cover page)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1996 Annual Report to Stockholders for
the fiscal year ended March 31, 1996 are incorporated by reference into Parts
I, II, and IV hereof and portions of the Registrant's definitive Proxy
Statement for the 1996 Annual Meeting of Stockholders to be held July 17, 1996
are incorporated by reference into Part III hereof.
<PAGE> 110
PART I
Item 1. Business
GENERAL DEVELOPMENT OF BUSINESS. Trinity Industries, Inc. (the
"Registrant") was originally incorporated under the laws of the State of Texas
in 1933. On March 27, 1987, Trinity became a Delaware corporation by merger
into a wholly-owned subsidiary of the same name.
NARRATIVE DESCRIPTION OF BUSINESS AND FINANCIAL INFORMATION ABOUT
INDUSTRY SEGMENTS. The Registrant is engaged in the manufacture, marketing, and
leasing of a wide variety of products consisting principally of (1) "Railcars"
(i.e. railroad freight cars), principally tank cars, hopper cars, gondola cars,
intermodal cars and miscellaneous other freight cars; (2) "Marine Products"
such as boats, barges and various offshore service vessels for ocean and inland
waterway service and military vessels for the United States Government and, to
a limited extent, various size vessels for international ocean transportation
companies; (3) "Construction Products" such as highway guardrail and highway
and railway bridges, power plants, mills, etc, highway safety products,
passenger loading bridges and conveyor systems for airports and other people
and baggage conveyance requirements, ready-mix concrete production and
aggregates including distribution, and providing raw material to owners,
contractors and sub-contractors for use in the building and foundation
industry; (4) "Containers" such as (a) extremely large, heavy pressure vessels
and other heavy welded products including industrial silencers, desalinators,
evaporators, and gas processing systems, (b) pressure and non-pressure
containers for the storage and transportation of liquefied gases, brewery
products and other liquid and dry products, and (c) heat transfer equipment for
the chemical, petroleum and petrochemical industries; (5) "Metal Components"
such as weld fittings (tees, elbows, reducers, caps, flanges, etc.) used in
pressure piping systems and container heads (the ends of pressure and
non-pressure containers) for use internally and by other manufacturers of
containers; and (6) "Leasing" of Registrant manufactured railcars and barges to
various industries.
Various financial information concerning the Registrant's
industry segments for each of the last three fiscal years is included in
the Registrant's 1996 Annual Report to Stockholders on page 22 under the
heading "Segment Information", and such section is incorporated herein by
reference.
RAILCARS. The Registrant manufactures railroad freight cars,
principally pressure and non-pressure tank cars, hopper cars, intermodal
cars and gondola cars used for transporting a wide variety of liquids,
gases and dry cargo. Tank cars transport products such as liquefied
petroleum gas, liquid fertilizer, sulfur, sulfuric acids and corn syrup.
Covered hopper cars carry cargo such as grain, dry fertilizer, plastic
pellets and cement. Open-top hoppers haul coal, and top-loading gondola
cars transport a variety of heavy bulk commodities such as scrap metals,
finished flat steel products, machinery and lumber. Intermodal cars
transport various products which have been loaded in containers to
minimize shipping costs.
MARINE PRODUCTS. The Registrant manufactures a variety of
marine products pursuant to customer orders. It produces various types
of vessels for offshore service including supply, crew, fishing and other
types of boats. The Registrant is currently constructing various
military vessels for both the United States Army and Navy. The Registrant
produces river hopper barges which are used to carry coal, grain and
miscellaneous commodities. The purchasers of the Registrant's marine
products include inland waterway marine operators, offshore oil and gas
drillers and operators, international ocean transportation companies,
barge transport companies and domestic and foreign governmental
authorities.
1
<PAGE> 111
CONSTRUCTION PRODUCTS. The construction products manufactured
by the Registrant include beams, girders, columns, highway guard rail and
highway safety devices and related barrier products, ready-mix concrete
and aggregates, passenger loading bridges, and baggage handling systems.
These products are used in the bridge, highway construction and building
industries and airports. Some of the sales of beams, girders and columns
are to general contractors and subcontractors on highway construction
projects. Generally, customers for highway guardrail and highway safety
devices are highway departments or subcontractors on highway projects.
Passenger loading bridges and conveyor systems are generally sold to
contractors, airports, or airlines as part of airport terminal
equipment. Ready-mix concrete and aggregates are used in the building
and foundation industry, and customers include primarily owners,
contractors and sub-contractors.
CONTAINERS. The Registrant is engaged in manufacturing metal
containers consisting of extremely large, heavy pressure vessels and
other heavy welded products, including industrial silencers,
desalinators, evaporators, and gas processing systems for the storage and
transportation of liquefied petroleum ("LP") gas and anhydrous ammonia
fertilizer. Pressure LP gas containers are utilized at industrial
plants, utilities, small businesses and in suburban and rural areas for
residential heating and cooking needs. Fertilizer containers are
manufactured for highway and rail transport, bulk storage, farm storage
and the application and distribution of anhydrous ammonia. The
Registrant also makes heat transfer equipment for the chemical, petroleum
and petrochemical industries and a complete line of custom vessels,
standard steam jacketed kettles, mix cookers, and custom-fabricated
cooking vessels for the food, meat, dairy, pharmaceutical, cosmetic and
chemical industries.
METAL COMPONENTS. The metal components manufactured by the
Registrant are made from ferrous and non-ferrous metals and their alloys
and consist principally of butt weld type fittings, flanges and pressure
and non-pressure container heads. The weld fittings include caps,
elbows, return bends, concentric and eccentric reducers, full and
reducing outlet tees, and a full line of pipe flanges, all of which are
pressure rated. The Registrant manufactures and stocks, in standard,
extra-heavy and double-extra-heavy weights and in various diameters, weld
caps, tees, reducers, elbows, return bends, flanges and also manufactures
to customer specifications. The basic raw materials for weld fittings
and flanges are carbon steel, stainless steel, aluminum, chrome-moly and
other metal tubing or seamless pipe and forgings. The Registrant sells
its weld fittings and flanges to distributors and to other manufacturers
of weld fittings.
Container heads manufactured by the Registrant are pressed metal
components used in the further manufacture of a finished product. Since
the manufacture of container heads requires a substantial investment in
heavy equipment and dies, many other manufacturers order container heads
from the Registrant. Container heads are manufactured in various shapes
and may be pressure rated or non-pressure, depending on the intended use
in further manufacture. Other pressed shapes are also hot-or
cold-formed to customer requirements.
LEASING. The company has one wholly-owned leasing subsidiary,
Trinity Industries Leasing Company ("TILC"), which was incorporated in
1979. TILC is engaged in leasing specialized types of railcars,
consisting of both tank cars and hopper cars, to industrial companies in
the petroleum, chemical, grain, food processing, fertilizer and other
industries which supply cars to the railroads. At March 31, 1996, TILC
had under lease 8,283 railcars. During fiscal year 1995, TILC divested
its inventory of river hopper barges previously held for lease. The
barges were operated under an agreement which provided for management of
the barges. The barges were generally used for movement of commodities
on the inland waterway system, primarily the Mississippi and Missouri
Rivers.
2
<PAGE> 112
Substantially all equipment leased by TILC was purchased from
the Registrant at prices comparable to the prices for equipment sold by
the Registrant to third parties. As of March 31, 1996, TILC had
equipment on lease or available for lease purchased from the Registrant
at a cost of $391.5 million. Generally, TILC purchases the equipment to
be leased only after a lessee has committed to lease such equipment.
The volume of equipment purchased and leased by TILC depends
upon a number of factors, including the demand for equipment manufactured
by the Registrant, the cost and availability of funds to finance the
purchase of equipment, the Registrant's decision to solicit orders for
the purchase or lease of equipment and factors which may affect the
decision of the Registrant's customers as to whether to purchase or lease
equipment.
Although the Registrant is not contractually obligated to offer
to TILC equipment proposed to be leased by the Registrant's customers, it
is the Registrant's intention to effect all such leasing transactions
through TILC. Similarly, while TILC is not contractually obligated to
purchase from the Registrant any equipment proposed to be leased, TILC
intends to purchase and lease all equipment which the Registrant's
customers desire to lease when the lease rentals and other terms of the
proposed lease are satisfactory to TILC, subject to the availability and
cost of funds to finance the acquisition of the equipment.
MARKETING, RAW MATERIALS, EMPLOYEES AND COMPETITION. As of
March 31, 1996, the Registrant operated in the continental United States
and Mexico. The Registrant sells substantially all of its products
through its own salesmen operating from offices in Montgomery, Alabama;
Elizabethtown and Paducah, Kentucky; Shreveport, Louisiana; Flint,
Michigan; St. Louis, Missouri; Gulfport, Mississippi; Asheville, North
Carolina; Cincinnati and Girard, Ohio; Beaumont, Dallas/Ft. Worth,
Houston and Navasota, Texas; Centerville, Utah; and Mexico. Independent
sales representatives are also used to a limited extent. The Registrant
markets railcars, containers and metal components throughout the United
States. Except in the case of weld fittings, guardrail, and standard
size LP gas containers, the Registrant's products are ordinarily
fabricated to the customer's specifications pursuant to a purchase order.
The principal materials used by the Registrant are steel plate,
structural steel shapes and steel forgings. There are numerous domestic
and foreign sources of such steel and most other materials used by the
Registrant.
The Registrant currently has approximately 16,300 employees, of
which approximately 15,000 are production employees and 1,300 are
administrative, sales, supervisory and office employees.
There are numerous companies located throughout the United
States that are engaged in the business of manufacturing various railcars
and containers of the types manufactured by the Registrant, and these
industries are highly competitive. Companies manufacturing products
which compete with the Registrant's construction products consist of
numerous other structural fabricators and ready-mix concrete producers,
most of which are smaller than the Registrant. Small shipyards located on
inland waterways and medium to large size shipyards located on or near
ports on navigable waterways produce marine products which compete with
those manufactured by the Registrant. Both domestic and foreign
manufacturers of metal components, some of which are larger than the
Registrant, compete with the Registrant. A number of well-established
companies actively compete with TILC in the business of owning and
leasing railcars, as well as banks, investment partnerships and other
financial and commercial institutions.
3
<PAGE> 113
RECENT DEVELOPMENTS. Information concerning the Registrant's
business acquisitions are included in the Registrant's 1996 Annual Report
to Stockholders under the heading "Business Acquisitions," (pages 23
through 24) and such section is incorporated herein by reference.
On June 25, 1996, the Board of Directors of the Registrant approved
an initial public offering of one hundred percent (100%) of the common stock
of a newly incorporated company which will acquire the assets and liabilities
of a portion of the Registrant's Marine Products segment. The newly formed
company will engage in the business of constructing and repairing ocean-going
marine vessels. Completion of the offering is subject to registration of the
offering with the Securities and Exchange Commission.
OTHER MATTERS. The Registrant is not materially affected by federal,
state and local provisions which have been enacted or adopted regulating the
discharge of materials into the environment or otherwise relating to the
protection of the environment. To date, the Registrant has not suffered any
material shortages with respect to obtaining sufficient energy supplies to
operate its various plant facilities or its transportation vehicles. Future
limitations on the availability or consumption of petroleum products
(particularly natural gas for plant operations and diesel fuel for vehicles)
could have an adverse effect upon the Registrant's ability to conduct its
business. The likelihood of such an occurrence or its duration, and its
ultimate effect on the Registrant's operations, cannot be reasonably predicted
at this time.
ITEM 2. PROPERTIES.
The Registrant's principal executive offices are located in a ten
story office building containing approximately 107,000 sq. ft. and a connected
adjacent building containing approximately 66,000 sq. ft., each owned by the
Registrant, in Dallas, Texas. The following table sets forth certain salient
facts with respect to each of the operating plant properties owned and/or
leased by the Registrant at March 31, 1996:
<TABLE>
<CAPTION>
Registrant's Uses of Approx.
Interest in Premises Bldg. Area Expiration Annual
Plant Location Property (1) (Sq Ft.) Date Rentals
-------------- ----------- -------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
Ackerman, MS Fee (e) 92,000 - -
Ashland City, TN Fee (b) 92,000 - -
Asheville, NC Lease (a) 94,000 06/30/99 $198,000
Beaumont, TX Fee (a) 431,000 - -
Belpre, OH Fee (c) 42,000 - -
Bessemer, AL Fee (a) 1,183,000 - -
Brusly, LA Fee (b) 148,000 - -
Butler, PA Fee (a) 386,000 - -
Butler, PA Lease (a) 30,000 12/31/02 $ 67,000
Caruthersville, MO Fee (b) 266,000 - -
Caruthersville, MO Fee (b) 40,000 03/01/99 $ 72,000
Cedartown, GA Fee (d) 143,000 - -
Centerville, UT Fee (c) 63,000 - -
Cincinnati, OH Fee (d,e) 203,000 - -
Dallas, TX
(2 plants) Fee (a) 447,000 - -
Denton, TX Fee (a) 117,000 - -
Elizabethtown, KY Fee (c) 40,000 - -
</TABLE>
4
<PAGE> 114
<TABLE>
<CAPTION>
Registrant's Uses of Approx.
Interest in Premises Bldg. Area Expiration Annual
Plant Location Property (1) (Sq Ft.) Date Rentals
-------------- ----------- -------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
Elkhart, IN Fee (e) 108,000 - -
Enid, OK Fee (e) 73,000 - -
Flat Rock, NC Lease (a) 8,000 01/31/98 $ 64,000
Ft. Worth, TX
(6 plants) Fee (a,c,d) 650,000 - -
Girard, OH
(2 plants) Fee (c) 326,000 - -
Greenville, PA Fee (a) 752,000 - -
Gulfport, MS Fee (b) 438,000 - -
Harvey, LA Lease (b) 34,000 03/26/01 $ 86,000
Houston, TX
(3 plants) Fee (b,c,d) 587,000 - -
Huehuetoca, MX Fee (a,d) 264,000 - -
Johnstown, PA Fee (a) 148,000 - -
Lima, OH Fee (c) 72,000 - -
Lockport, LA Fee (b) 43,000 - -
Longview, TX
(4 plants) Fee (a,d) 631,000 - -
Longview, TX Lease (a) 57,000 10/31/00 $ 35,000
Madisonville, LA Fee (b) 137,000 - -
McKees Rocks, PA Fee (a) 462,000 - -
Monclova, MX Fee (a,d) 81,000 - -
Montgomery, AL Fee (c) 310,000 - -
Moss Point, MS
(2 plants) Fee (b) 73,000 - -
Mt. Orab, OH Fee (a) 183,000 - -
Nashville, TN Fee (b) 261,000 - -
Navasota, TX Fee (e) 170,000 - -
New Orleans, LA Lease (2) (b) 254,000 12/31/16 $ 42,000
New Orleans, LA Lease (b) 94,000 12/31/16 $ 53,000
Oklahoma City, OK Fee (a,d) 260,000 - -
Orange, TX Fee (d) 735,000 - -
Paducah, KY Fee (b) 49,000 - -
Panama City, FL Fee (b) 41,000 - -
Paris, TN Fee (a) 21,000 - -
Pascagoula, MS Fee (b) 40,000 - -
Pine Bluff, AR Fee (d) 56,000 - -
Quincy, IL Fee (d) 95,000 - -
Rocky Mount, NC Fee (d) 53,000 - -
Saginaw, TX
(2 plants) Fee (a) 291,000 - -
San Antonio, TX Fee (c) 224,000 - -
Sand Springs, OK Fee (e) 184,000 - -
Shreveport, LA Lease (a,d) 691,000 11/30/42 $ 12,000
Tulsa, OK Fee (a,d) 121,000 - -
Vallejo, MX Fee (d) 54,000 - -
Vidor, TX Fee (a) 126,000 - -
West Memphis, AR Fee (e) 77,000 - -
</TABLE>
(1) (a) Manufacture of Railcars
(b) Manufacture of Marine Products
(c) Manufacture of Construction Products
(d) Manufacture of Containers
(e) Manufacture of Metal Components
(2) The lease may be canceled by either party after 12/31/96.
5
<PAGE> 115
All machinery and equipment and the buildings occupied by the
Registrant are maintained in good condition. The Registrant estimates
that its plant facilities were utilized during the fiscal year at an
average of approximately 70 percent of present productive capacity for
railcars, 65 percent for Marine Products, 75 percent for Construction
Products, 65 percent for Containers, and 80 percent for Metal Components.
ITEM 3. LEGAL PROCEEDINGS.
See page 28 of the Registrant's 1996 Annual Report to Stockholders
which is incorporated herein by reference for a discussion of legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders
during the fourth quarter of fiscal year
1996.
___________________
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
Market for the Registrant's common stock and related stockholder
matters are incorporated herein by reference from the information
contained on page 3 under the caption "Corporate Profile" and on page 15
under the caption "Financial Summary" of the Registrant's 1996 Annual
Report to Stockholders.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data is incorporated herein by reference from
the information contained on page 15 under the caption "Financial
Summary" of the Registrant's 1996 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Management's discussion and analysis of financial condition and
results of operations are incorporated herein by reference from the
Registrant's 1996 Annual Report to Stockholders, pages 16 through 17.
Other persons, who are not executive officers of the Registrant,
are listed on page 30 under the caption "Division Officers" of the Annual
Report to Stockholders, and such caption is hereby incorporated by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements of the Registrant at March 31, 1996 and
1995 and for each of the three years in the period ended March 31, 1996
and the auditor's report thereon, and the Registrant's unaudited
quarterly financial data for the two year period ended March 31, 1996,
are incorporated by reference from the Registrant's 1996 Annual Report to
Stockholders, pages 18 through 29.
6
<PAGE> 116
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
No disclosure required.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning the directors and executive officers of
the Registrant is incorporated herein by reference from the Registrant's
definitive proxy statement for the Annual Meeting of Stockholders on July
17, 1996, page 3, under the caption "Election of Directors".
EXECUTIVE OFFICERS OF THE REGISTRANT.*
The following table sets forth the names and ages of all executive
officers of the Registrant, the nature of any family relationship between them,
all positions and offices with the Registrant presently held by them, the year
each person first became an officer and the term of each person's office:
<TABLE>
<CAPTION>
Officer Term
Name(1)(2)(3) Age Office Since Expires(4)
- ------------------- --- ------------------------ ------- ----------
<S> <C> <C> <C> <C>
W. Ray Wallace 73 Chairman, President & 1958 July 1996
Chief Executive Officer
Ralph A. Banks, Jr. 72 Senior Vice President 1962 July 1996
Richard G. Brown 72 Senior Vice President 1979 July 1996
John T. Sanford 44 Senior Vice President 1993 July 1996
Timothy R. Wallace 42 Director & Group 1993 July 1996
Vice President
John Dane III 45 Group Vice President 1993 July 1996
Mark W. Stiles 47 Group Vice President 1993 July 1996
Jack L. Cunningham, Jr. 51 Vice President 1982 July 1996
John M. Lee 35 Vice President 1994 July 1996
R. A. Martin 61 Vice President 1974 July 1996
Tim L. Oglesby 38 Vice President 1995 July 1996
F. Dean Phelps, Jr. 52 Vice President 1979 July 1996
Joseph F. Piriano 59 Vice President 1992 July 1996
Linda S. Sickels 45 Vice President 1995 July 1996
Neil O. Shoop 52 Treasurer 1985 July 1996
William J. Goodwin 48 Controller 1986 July 1996
J.J. French, Jr. 65 Secretary 1970 July 1996
</TABLE>
* This data is furnished as additional information pursuant to instructions to
Item 401 to Regulation S-K and in lieu of inclusion in the Registrant's Proxy
Statement.
(1) W. Ray Wallace, Chairman, President & Chief Executive Officer, is
the father of Timothy R. Wallace, a Director and Group Vice President of
the Registrant.
(2) Mr. Stiles joined the Registrant in 1991 upon the acquisition by the
Registrant of Transit Mix Concrete Company. For at least five years
prior thereto, Mr. Stiles was Executive Vice President and General
Manager of Transit Mix. Mr. Piriano was Director of Purchasing for the
Registrant for
7
<PAGE> 117
at least the last five years. Mr. Lee joined the Registrant in 1994. For at
least five years prior thereto, Mr. Lee was a manager for a national public
accounting firm. Mr. Oglesby joined the Registrant in 1993. For at least five
years prior thereto, Mr. Oglesby was a software manager for a national defense
contractor. Ms. Sickels joined the Registrant in 1992. Prior to that, Ms.
Sickels was in government relations for a state utility company. All of the
other above-mentioned executive officers, except Mr. French, have been in the
full-time employ of the Registrant or its subsidiaries for more than five
years. Although the titles of certain such officers have changed during the
past five years, all have performed essentially the same duties during such
period of time.
(3) Mr. French, an attorney, is President of Joe French & Associates, a
Professional Corporation, since April, 1993. For at least five years prior
thereto, Mr. French was employed by Locke Purnell Rain Harrell, a Professional
Corporation.
(4) It is anticipated that all of such officers will be reelected at the Annual
Meeting of the Board of Directors to be held on July 17, 1996.
ITEM 11. EXECUTIVE COMPENSATION.
Information on executive compensation is incorporated herein by
reference from the Registrant's definitive proxy statement for the Annual
Meeting of Stockholders on July 17, 1996, page 6 under the caption
"Executive Compensation and Other Matters".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information concerning security ownership of certain beneficial
owners and management is incorporated herein by reference from the
Registrant's definitive proxy statement for the Annual Meeting of
Stockholders on July 17, 1996, page 2, under the caption "Voting
Securities and Stockholders", and page 3, under the caption "Election of
Directors".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information concerning certain relationships and related
transactions is incorporated herein by reference from the Registrant's
definitive proxy statement for the Annual Meeting of Stockholders on July
17, 1996, pages 3 through 4, under the caption "Election of Directors".
8
<PAGE> 118
______________________
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1&2. Financial statements and financial statement schedules.
The financial statements and schedules listed in
the accompanying indices to financial statements
and financial statement schedules are filed as part
of this Annual Report Form 10-K.
3. Exhibits.
The exhibits listed on the accompanying index to
exhibits are filed as part of this Annual Report
Form 10-K.
(b) Reports on Form 8-K
No Form 8-K was filed during the fourth quarter
of fiscal 1996.
9
<PAGE> 119
TRINITY INDUSTRIES, INC.
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FOR INCLUSION IN ANNUAL REPORT FORM 10-K
YEAR ENDED MARCH 31, 1996
10
<PAGE> 120
Trinity Industries, Inc.
Index to Financial Statements
and Financial Statement Schedules
(Item 14 (a))
<TABLE>
<CAPTION>
REFERENCE
-------------------------
1996 Annual
Form Report to
10-K Stockholders
(Page) (Page)
------ ------------
<S> <C> <C>
Consolidated balance sheet at
March 31, 1996 and 1995 . . . . . . . . . . - 19
For each of the three years in the
period ended March 31, 1996:
Consolidated income statement . . . . . . - 18
Consolidated statement of cash flows. . . - 20
Consolidated statement of
stockholders' equity. . . . . . . . . . - 21
Notes to consolidated financial
statements. . . . . . . . . . . . . . . - 21
Supplemental information:
Supplementary unaudited quarterly data . . - 29
Consolidated financial statement schedule
for each of the three years in the
period ended March 31, 1996:
II - Allowance for doubtful accounts . 13 -
Other financial information:
Weighted average interest rate on
short-term borrowings . . . . . . . . . . 13 -
</TABLE>
All other schedules have been omitted since the required
information is not present or is not present in amounts sufficient to
require submission of the schedules, or because the information required
is included in the consolidated financial statements, including the notes
thereto.
The consolidated financial statements and supplementary
information listed in the above index which are included in the 1996
Annual Report to Stockholders are hereby incorporated by reference.
11
<PAGE> 121
EXHIBIT (23)
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Trinity Industries, Inc. of our report dated May 9,
1996, included in the 1996 Annual Report to Stockholders of Trinity
Industries, Inc.
Our audits also included the financial statement schedule of
Trinity Industries, Inc. listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial
statement schedule referred to above, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
We also consent to the incorporation by reference in
Post-Effective Amendment No. 3 to the Registration Statement (Form S-8,
No. 2-64813), Post-Effective amendment No. 1 to the Registration
Statement (Form S-8, No. 33-10937), Post-Effective Amendment No. 1 to the
Registration Statement (Form S-3, No. 33-12526), Amendment No. 1 to the
Registration Statement (Form S-3, No. 33-57338), Registration Statement
(Form S-8, No. 33-35514), Registration Statement (Form S-8, No.
33-73026), Post-Effective Amendment No. 1 to the Registration Statement
(Form S-4, No. 33-51709) of Trinity Industries, Inc. and in the related
Prospectuses of our report dated May 9, 1996, with respect to the
consolidated financial statements and schedules of Trinity Industries,
Inc. included or incorporated by reference in this Annual Report (Form
10-K) for the year ended March 31, 1996.
ERNST & YOUNG LLP
Dallas, Texas
June 25, 1996
12
<PAGE> 122
SCHEDULE II
Trinity Industries, Inc.
Allowance for Doubtful Accounts
Year Ended March 31, 1996, 1995 and 1994
(in millions)
<TABLE>
<CAPTION>
Additions
Balance at charged to Accounts Balance
beginning costs and charged at end
of year expenses off of year
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Year Ended March 31, 1996 $ 0.8 $ 0.8 $ 0.5 $ 1.1
====== ====== ====== ======
Year Ended March 31, 1995 $ 1.0 $ 0.3 $ 0.5 $ 0.8
====== ====== ====== ======
Year Ended March 31, 1994 $ 1.2 $ 0.3 $ 0.5 $ 1.0
====== ====== ====== ======
</TABLE>
___________________________
Trinity Industries, Inc.
Other Financial Information
Short-Term Borrowings
The weighted average interest rate on short-term borrowings outstanding as of
March 31, 1996, 1995, and 1994 is 6.04%, 5.28%, and 3.57%, respectively.
13
<PAGE> 123
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Trinity Industries, Inc. By /s/ F. Dean Phelps, Jr.
- ------------------------ -------------------------------
Registrant F. Dean Phelps, Jr.
Vice President
June 26, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons of the Registrant and in
the capacities and on the dates indicated:
Directors: Principal Executive Officer:
/s/ David W. Biegler /s/ W. Ray Wallace
- ------------------------- ------------------------------
David W. Biegler W. Ray Wallace
Director President and Chairman
June 26, 1996 June 26, 1996
- -------------------------
Barry J. Galt Principal Financial Officer:
Director /s/ John T. Sanford
June 26, 1996 ------------------------------
John T. Sanford
Senior Vice President
/s/ Clifford J. Grum June 26, 1996
- -------------------------
Clifford J. Grum
Director
June 26, 1996 Principal Accounting Officer:
/s/ F. Dean Phelps, Jr.
/s/ Dean P. Guerin ------------------------------
- ------------------------- F. Dean Phelps, Jr.
Dean P. Guerin Vice President
Director June 26, 1996
June 26, 1996
/s/ Jess T. Hay
- -------------------------
Jess T. Hay
Director
June 26, 1996
/s/ Edmund M. Hoffman
- -------------------------
Edmund M. Hoffman
Director
June 26, 1996
/s/ Ray J. Pulley
- -------------------------
Ray J. Pulley
Director
June 26, 1996
- -------------------------
Timothy R. Wallace
Director
June 26, 1996
14
<PAGE> 124
Trinity Industries, Inc.
Index to Exhibits
(Item 14(a))
<TABLE>
<CAPTION>
NO. DESCRIPTION PAGE
- ----- ----------------------------------------------- ------
<S> <C> <C>
(3.1) Certificate of Incorporation of Registrant
(incorporated by reference to Exhibit 3.A to
Registration Statement No. 33-10937 filed
April 8, 1987). *
(3.2) By-Laws of Registrant (incorporated by
reference to Exhibit 3.2 to Form 10-K
filed June 16, 1992). *
(4.1) Specimen Common Stock Certificate of Registrant
(incorporated by reference to Exhibit 3B to
Registration Statement No. 33-10937 filed
April 8, 1987). *
(10.1) Fixed Charges Coverage Agreement dated as of
January 15, 1980, between Registrant and
Trinity Industries Leasing Company (incorporated by
reference to Exhibit 10.1 to Registration Statement
No. 2-70378 filed January 29, 1981). *
(10.2) Tax Allocation Agreement dated as of
January 22, 1980 between Registrant and its
subsidiaries (including Trinity Industries
Leasing Company) (incorporated by reference to
Exhibit 10.2 to Registration Statement
No. 2-70378 filed January 29, 1981). *
(10.3) Form of Executive Severance Agreement entered
into between the Registrant and all executive
officers of the Registrant (other than Mr. French)
(incorporated by reference to Exhibit 10.3 to Form
10-K filed June 19, 1989). *
(10.4) Trinity Industries, Inc., Stock Option Plan With
Stock Appreciation Rights (incorporated by
reference to Registration Statement No. 2-64813 filed
July 5, 1979, as amended by Post-Effective Amendment
No. 1 dated July 1, 1980, Post-Effective Amendment
No.2 dated August 31, 1984, and Post-Effective
Amendment No. 3 dated July 13, 1990). *
(10.5) Directors' Retirement Plan adopted December 11, 1986
( incorporated by reference to Exhibit 10.6 to Form
10-K filed June 14, 1990). *
(10.6) 1989 Stock Option Plan with Stock Appreciation Rights
(incorporated by reference to Registration Statement
No. 33-35514 filed June 20, 1990) *
(10.7) Supplemental Retirement Benefit Plan for
W. Ray Wallace, effective July 18, 1990
(incorporated by reference to Exhibit
10.8 to Form 10-K filed June 13, 1991). *
(10.8) 1993 Stock Option and Incentive Plan
(incorporated by reference to Registration
Statement No. 33-73026 filed December 15, 1993) *
</TABLE>
15
<PAGE> 125
Trinity Industries, Inc.
Index to Exhibits -- (Continued)
(Item 14(a))
<TABLE>
<CAPTION>
NO. DESCRIPTION PAGE
- ----- ----------------------------------------------- ------
<S> <C> <C>
(10.9) Pension Plan A for Salaried Employees of
Trinity Industries, Inc. and Certain Affiliates
dated August 20, 1985, as amended by Amendment
No. 1 dated May 27, 1986, Amendment No. 2 dated
December 30, 1986, Amendment No. 3 dated
December 12, 1986, Amendment No. 4 dated
March 31, 1987, Amendment No. 5 dated
March 31, 1987, Amendment No. 6 dated
December 4, 1987, Amendment No. 7 dated
July 26, 1988, Amendment No. 8 dated
July 28, 1988, Amendment No. 9 dated
March 15, 1989, Amendment No. 10 dated
March 31, 1989, and Amendment No. 11 dated
July 14, 1989 (incorporated by reference to
Exhibit 10.9 to Form 10-K filed June 13, 1991). *
(10.10) Supplemental Profit Sharing Plan for Employees
of Trinity Industries Inc. and Certain Affiliates
dated June 30, 1990, as amended by Amendment No. 1
dated June 13, 1991. Supplemental Profit Sharing
Trust for Employees of Trinity Industries, Inc. and
Certain Affiliates dated June 30, 1990, as amended
by Amendment No. 1 dated June 13, 1991 (incorporated
by reference to Exhibit 10.10 to Form 10-K filed
June 13, 1991). *
(13) Annual Report to Stockholders. *
(21) Listing of subsidiaries of the Registrant. 17
(23) Consent of Independent Auditors. 12
(27) Financial Data Schedules.
(99.1) Annual Report on Form 11-K for employee stock
purchase, savings and similar plans filed
pursuant to Rule 15d-21.
</TABLE>
NOTICE: Exhibits 13, 27, and 99.1 have been omitted from the reproduction of
this Form 10-K. A copy of the Exhibits will be furnished upon written request
to F. Dean Phelps, Vice President, Trinity Industries, Inc., P.O. Box 568887,
Dallas, Texas 75356-8887. The Registrant may impose a reasonable fee for its
expenses in connection with providing the above-referenced Exhibits.
--------------------
16
<PAGE> 126
EXHIBIT 21
Trinity Industries, Inc.
Listing of Subsidiaries of the Registrant
The Registrant has no parent.
At March 31, 1996, the operating subsidiaries of the Registrant were:
<TABLE>
<CAPTION>
Percentage of
Organized voting securities
under the owned by the
Name of subsidiary laws of Registrant
- ------------------------------------ ----------- -----------------
<S> <C> <C>
Beaird Industries, Inc. Delaware 100%
Beaird Industries, Inc. of Orange Delaware 100%
Flo-Bend, Inc. Delaware 100%
Gulf Coast Fabrication, Inc. Mississippi 100%
Helmsdale Limited Isle of Man 100%
Platzer Shipyard, Inc. Delaware 100%
Standard Forged Products, Inc. Delaware 100%
Stearns Airport Equipment Co., Inc. Delaware 100%
Syntechnics, Inc. Delaware 100%
Syro, Inc. Ohio 100%
Transit Mix Concrete & Materials
Company Delaware 100%
Transit Mix Concrete & Materials
Company of Louisiana Louisiana 100%
Trinity Casteel, Inc. Delaware 100%
Trinity Gulf Repair, Inc. Delaware 100%
Trinity Industries Leasing Company Delaware 100%
Trinity Industries Transportation, Inc. Texas 100%
Trinity Marine Baton Rouge, Inc. Delaware 100%
Trinity Marine Caruthersville, Inc. Delaware 100%
Trinity Marine Gulfport, Inc. Nevada 100%
Trinity Marine Nashville, Inc. Delaware 100%
Trinity Marine Panama City, Inc. Delaware 100%
Trinity Marine Pascagoula, Inc. Delaware 100%
Trinity Marine Port Allen, Inc. Delaware 100%
Trinity Materials, Inc. Delaware 100%
Trinity Mobile Railcar Repair, Inc. Delaware 100%
</TABLE>
17
<PAGE> 127
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended MARCH 31, 1996 Commission file number 1-9051
[LOGO]
TRANSCISCO INDUSTRIES, INC.
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2989345
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or Organization) Identification No.)
601 California Street, San Francisco, CA 94108
- ---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number: (415) 477-9700
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: Name of Each Exchange on which registered:
Common Stock American Stock Exchange
------------ -----------------------
Securities registered pursuant to Section 12(g) of the Act:
None
----
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X ; No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. / /
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
Aggregate market value of voting stock held by non-affiliates of the registrant,
based on the closing price reported by the American Stock Exchange Composite
Tape on June 24, 1996: $32,276,386
Number of common shares, $.01 par value, outstanding at June 24, 1996:
6,064,004, including 794,390 Treasury Shares.
Documents incorporated by reference: None
<PAGE> 128
PART I
ITEM 1. BUSINESS.
OVERVIEW.
Transcisco Industries, Inc. ("the Registrant" or "the Company") was
incorporated in California in 1972 under the name PLM Group. It was
reincorporated in Delaware in 1985 as PLM Companies, Inc. In 1988, its name was
changed to Transcisco Industries, Inc. The Company is an international rail
services firm whose primary lines of business include: (1) nationwide railcar
maintenance through Transcisco Rail Services; (2) specialty railcar leasing,
management, maintenance and intermediary services through Transcisco Leasing
Company; and, (3) Russian rail transportation services through Transcisco
Trading Company.
TRANSCISCO RAIL SERVICES COMPANY.
Transcisco Rail Services Company ("TRS") operates 10 railcar repair and
maintenance facilities from Georgia to Montana and is one of the largest
independent railcar maintenance organizations in the United States, with more
than 15,000 privately owned railcars under maintenance contracts. TRS's
full-service network of six major maintenance facilities are located at:
Alliance, Nebraska; Miles City, Montana; Waycross, Georgia; Sioux City, Iowa;
Bill, Wyoming; and Rock Springs, Wyoming. In addition, TRS operates four
"mobile" or "mini" shops, which perform repairs and maintenance, generally at
customers' plant sites. TRS's marketing offices are in Chicago and its
administrative offices are in San Francisco.
TRANSCISCO LEASING COMPANY.
Transcisco Leasing Company ("TLC"), formed in August 1990, acts as an
intermediary in the railcar leasing, management and maintenance market, drawing
on Transcisco's established leadership position in coal and other railcar
leasing and maintenance. TLC arranges large railcar transactions and manages
groups of railcars on a full-service basis, including fleet administration,
lease financing, marketing and maintenance. TLC's primary revenue base consists
of maintenance fees earned under long term railcar maintenance agreements with
major railroads and utilities.
TLC's objective is to expand the railcar fleet under its management
through further development of select railcar market niches. In seeking this
objective, TLC will continue its efforts to offer innovative products and
services to fulfill customer needs.
At March 31, 1996, TLC had 11,283 railcars covered by contracts for
maintenance, management and leasing services. The term of TLC's contracts range
from 1 to 20 years.
TRANSCISCO TRADING COMPANY.
Transcisco Trading Company ("TTC") was formed in 1989 to help organize
and serve as a shareholder in SFAT (formerly "SovFinAmTrans"), Russia's leading
private rail transportation firm. Initially Russia's first railcar leasing
company, SFAT has become a full service transportation management company which
owns and manages more than 5,500 railroad tankcars used to export petroleum and
petrochemicals.
SFAT's shareholders include the Russian Ministry of Rails (47.1%), the
former Russian Ministry of Petrochemicals (29.4%), and TTC (23.5%). In May 1996,
SFAT entered into a $42 million financing agreement with the European Bank for
Reconstruction and Development ("EBRD"). Under the terms of the financing,
EBRD will invest $12 million in cash in return for a 10% equity stake in SFAT.
In addition, EBRD has arranged for a syndicate of international financial
institutions to purchase $30 million of senior debt in SFAT. As of May 31, 1996,
the debt and equity funding was not complete. Closing of the financing will
occur upon completion of necessary government approvals, which is expected to
occur by early Fall. Upon closing of the equity funding, Transcisco's
2
<PAGE> 129
ownership interest will drop to approximately 21%. The proceeds of the $42
million financing will be used by SFAT to fund the construction of 1,500 new
tank cars. All of the new cars will be equipped with Transcisco's proprietary
Uni-Temp heating system, a patented technology which significantly expedites the
unloading of liquid commodities, hence increasing the utilization rate of the
tank cars. The Uni-Temp system is already in use on 1,500 of SFAT's 5,500 tank
car fleet. TTC earns Uni-Temp license and servicing fees from SFAT at the rate
of approximately $1.5 million per year.
Since its creation in 1989, SFAT's profits have increased each year.
For SFAT's fiscal year ended December 1995, the company reported revenues of
approximately $82 million and net income of approximately $26.6 million.
SFAT's customer base includes major Russian oil refineries and
petrochemical companies, as well as western petroleum and petrochemical trading
companies. SFAT's full service transportation services include freight
forwarding, computerized tracking, railcar maintenance, assembly and inland
waterway movement. In addition, SFAT manages the billing and collection of
certain railroad freight tariffs for the Russian Ministry of Railways. SFAT has
operations in Finland, Estonia, Russia, Cyprus and Gibraltar.
MARKETING, CUSTOMERS AND COMPETITION.
TRS performs maintenance on all types of railcars. The majority of this
business is with long-standing customers, primarily Fortune 500 companies.
Competition within the railcar maintenance industry varies by region and by type
of railcar. About 250 repair and maintenance facilities are owned by about 130
companies. Location, price, quality, turnaround time, and service levels are
primary competitive factors. TRS believes it is one of the largest independent
companies offering maintenance, repair, and cleaning services for
privately-owned railcars.
TLC's services include fleet administration, railcar marketing, lease
financing, and maintenance. TLC sells primarily to utilities, major railroads,
other shippers, and financial institutions. Currently, TLC has management
contracts and leases with approximately 20 companies, covering approximately
11,000 railcars. Although various other companies offer elements of TLC's line
of services, the Company believes TLC's combination of services and expertise is
unique within the railroad industry. Fleet management expertise, equipment
knowledge, market intelligence and price are important factors in the
development and continuing profitability of TLC's business.
TTC believes that its proprietary Uni-Temp railcar heating technology
has substantial operating advantages over competing alternatives. Among its
principal applications is in tankcars hauling petroleum and petrochemicals in
Russia. SFAT utilizes the technology to enable customers faster delivery of
petroleum products.
EMPLOYEES.
At March 31, 1996, the Company had 323 full-time and part-time
employees. None of the employees are subject to collective bargaining
arrangements. The Company believes employee relations are good, and it has never
experienced a work stoppage.
RECENT DEVELOPMENTS.
On June 17, 1996, the Company entered into an Agreement and Plan of
Merger (the "Agreement") with Trinity Industries, Inc. ("Trinity"). Under terms
of the Agreement, and subject to certain approvals, a wholly-owned subsidiary of
Trinity will merge with Transcisco through the exchange of shares of common
stock of Trinity for 100 percent of the issued and outstanding shares of common
stock of Transcisco. The Agreement provides that each share of Transcisco's
outstanding common stock will be exchanged on a tax free basis for .1884 of a
share of Trinity's common stock. Based on the June 14, 1996 closing price of $35
per share of Trinity's stock, the transaction would have a value of
approximately $47.6 million. The stock exchange ratio is fixed. The consummation
of the proposed merger is subject, among other conditions, to registration with
the Securities and Exchange Commission of the stock of Trinity to be issued in
the transaction, approval of the definitive agreement by the shareholders of
Transcisco, expiration of the waiting period prescribed under the
Hart-Scott-Rodino Antitrust Improvements Act, and all necessary regulatory
approvals.
3
<PAGE> 130
ITEM 2. PROPERTY.
The Company's executive offices are located in a 7,000 square foot
leased premises at 601 California Street in San Francisco, California. The
Company operates railcar repair facilities throughout the United States as
described in Item 1, and believes its facilities are adequate for its present
level of business. Of the six facilities described in Item 1, two are subject to
a land lease (Bill, Wyoming and Sioux City, Iowa).
ITEM 3. LEGAL PROCEEDINGS.
On or about September 15, 1995, Great American Insurance Company
("Great American") filed an action (the "Action") in the Superior Court of the
State of California in and for the County of Marin against Mark Hungerford, a
former Chairman, Director, and Chief Executive Officer of the Company. The
action purports to set forth three causes of action for declaratory relief, and
prays for judgment in the amount of $2,675,000 (plus interest as provided by
law) against Mr. Hungerford. According to the complaint, the Action purports to
arise out of a certain payment made by Great American on behalf of Mr.
Hungerford in connection with the partial settlement of certain litigation,
captioned Daniels v. PLM International, Inc., et al., to which Mr. Hungerford,
and others including the Company, previously were parties. The Daniels
litigation has been settled, and the state and federal complaints have been
dismissed with prejudice. The complaint in the Action also seeks a declaration
that two endorsements each barred coverage under a Directors' and Officers'
Policy issued by Great American to the directors and officers of the Company.
The complaint in the Action also seeks a declaration that no coverage is
afforded under that policy for the director and officer defendants in the
Daniels litigation in their capacities as directors or officers of PLM
International, Inc. Prior to the commencement of the Action in the Marin County
Superior Court, the United States District Court for the Northern District of
California ruled, on a summary judgment motion in a declaratory relief action,
that neither of the endorsements relied upon by Great American precluded
coverage under the particular Directors' and Officers' Policy issued by Great
American. The Court of Appeals for the Ninth Circuit reversed and remanded that
decision, directing that it be dismissed on grounds which did not address the
coverage issues under the two endorsements. Great American thereafter filed the
Action in Marin County Superior Court. Mr. Hungerford may attempt to seek
reimbursement from the Company for any sums paid in connection with defense or
settlement of the claim, subject to certain terms and conditions in an
indemnification agreement with the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is currently traded on the American Stock
Exchange ("AMEX") under the symbol TNI. The following table sets forth the high
and low closing sales prices per share of the Common Stock as reported on the
AMEX for the periods indicated. No dividends have been paid since 1990. The
Company's senior loan agreement prohibits payment of dividends without the
consent of its senior lenders. The Company has made no determination whether to
declare dividends in the foreseeable future.
The closing price of the Company's Common Stock, on June 24, 1996, as
reported in the Wall Street Journal was $6.125 per share. As of June 24, 1996,
there were approximately 1,200 record holders of the Company's Common Stock.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
QUARTER OF FISCAL YEAR QUARTER OF FISCAL YEAR
1996 1995
----------------------------- ------------------------------
Market Prices for 4th 3rd 2nd 1st 4th 3rd 2nd 1st
Common Stock: Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common Stock
High $5.750 $3.500 $3.688 $1.875 $1.750 $1.500 $1.500 $2.250
Low $3.000 $2.625 $1.438 $1.000 $1.063 $1.000 $0.938 $1.063
- ------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 131
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
(In thousands, except ratio and per share amounts)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
THREE MONTH
FISCAL YEARS ENDED PERIOD ENDED
MARCH 31 MARCH 31, CALENDAR YEARS ENDED DECEMBER 31
1996 1995 1994 1993 1992 1991
-------- ------- -------- -------- -------- --------
(restated)
<S> <C> <C> <C> <C> <C> <C>
Results of Operations:
Revenues $ 42,630 $34,579 $ 7,221 $ 32,513 $ 31,833 $ 29,715
Income (loss) from
continuing operations before
reorganization items, income tax
equity in earnings of affiliated
companies, asset write-down,
extraordinary gain and cumula-
tive effect of accounting change 3,874 571 (341) 674 1,622 (3,975)
Equity in earnings (loss) of
affiliated companies 5,975 2,019 -- -- (3,641) 1,823
Asset write-down (3,000) -- -- -- -- --
(Loss) income from
continuing operations 6,651 2,590 (341) (3,412) (4,632) (6,301)
Discontinued operations,
net of income tax -- -- -- (1,381) (4,146) (16,518)
Net gain (loss) before
extraordinary gain and
accounting change 6,651 2,590 (341) (4,793) (8,778) (22,819)
Extraordinary gain 6,058 -- -- 13,929 -- --
Cumulative effect of change to the
equity method of accounting -- 7,590 -- -- -- --
-------- ------- -------- -------- -------- --------
Net income (loss) $ 12,709 $10,180 $ (341) $ 9,136 $ (8,778) $(22,819)
======== ======= ======== ======== ======== ========
Per common Share:
Primary
Net (loss) income -
continuing operations $ 1.09 $ 0.49 $ (0.06) $ (0.73) $ (1.05) $ (1.43)
Net loss -
discontinued operations -- -- -- (0.29) (0.94) (3.75)
Extraordinary gain 1.00 -- -- 2.97 -- --
Accounting change -- 1.44 -- -- -- --
-------- ------- -------- -------- -------- --------
Net income (loss) per share $ 2.09 $ 1.93 $ (0.06) $ 1.95 $ (1.99) $ (5.18)
======== ======= ======== ======== ======== ========
Financial Position:
Current assets $ 12,147 $11,471 $ 8,993 $ 8,919 $ 14,319 $ 18,002
Total assets $ 44,046 $40,137 $ 30,499 $ 30,564 $ 45,693 $ 54,170
Long-term debt $ 3,561 $13,415 $ 17,998 $ 18,683 $ 36 $ 72
Shareholders' equity (deficit) $ 25,760 $12,844 $ 2,649 $ 2,916 $ (6,810) $ 1,968
Ratio of current assets
to current liabilities 1.35 1.16 1.00 1.05 1.50 2.20
Debt to equity ratio 0.14 1.04 7.24 6.71 -- 18.10
- --------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 132
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
On April 14, 1994, the Board of Directors voted to change the Company's
fiscal year end from December 31, to March 31. In the following discussion,
"1996" refers to the Company's fiscal 1996 year, (the twelve months ending March
31, 1996); "1995" refers to the Company's fiscal 1995 year, (the twelve months
ending March 31, 1995) "1993" refers to the fiscal (and calendar year) ending
December 31, 1993. For the three month period, January 1 to March 31, 1994,
results of operations are presented where appropriate. For a discussion and
comparison of this three-month period in relation to the same period of 1993,
the reader is referred to the Company's Form 10-Q for the quarterly period ended
March 31, 1994.
COMPARISON OF THE COMPANY'S OPERATING RESULTS
FOR THE YEARS ENDED MARCH 31, 1996 AND 1995
REVENUES.
Revenue for the Company during the fiscal year ended March 31, 1996
increased to $42.6 million from $34.6 million in fiscal 1995. The increase in
revenue was primarily a result of growth in TLC's railcar fleet under
management, which grew to 11,283 railcars from 6,182 railcars at March 31, 1995.
The Company's revenue growth was also the result of the purchase and resale of
1,036 railcars, which contributed $3.1 million in revenues. TLC's growth in
revenue was offset by lower revenues at TRS, which declined as a result of lower
program repair work and the closure of two of its six mobile repair operations.
OPERATIONS AND SUPPORT EXPENSES.
For the fiscal year ended March 31, 1996, operations and support
expenses increased to $31.7 million from $27.7 million in fiscal 1995. This
increase was primarily a result of higher maintenance expenses arising from
growth in TLC's managed railcar fleet.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
For the fiscal year ended March 31, 1996, selling, general and
administrative expenses increased to $6.1 million from $4.8 million in the same
period of 1995. This increase was caused by higher personnel and marketing costs
incurred to facilitate growth in revenue, primarily at TLC.
ASSET WRITE-DOWN.
In 1995, the Financial Accounting Standards Board issued a Statement of
Financial Accounting Standards, No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long-Lived Assets for Long-Lived Assets to be Disposed of." SFAS
121 requires recognition of impairment of long-lived assets in the event the net
book value of such assets exceeds the undiscounted cash flows attributed to such
assets. The Company adopted the provisions of SFAS 121 as of October 1, 1995.
In connection with the refinancing of the Company's debt, the Company
evaluated the ongoing value of its property and equipment. Based on this
evaluation, the Company determined in December 1995 that assets at one facility
with a carrying value of approximately $5.5 million were impaired and such
assets were written down by $3 million to their fair value. Fair value was
estimated based upon property and equipment appraisals.
EQUITY IN THE EARNINGS OF SFAT.
Equity in earnings of SFAT represents the Company's share of earnings
in SFAT, of which Transcisco Trading Company (a wholly owned subsidiary of the
Company) had a 23.5% ownership interest as of March 31, 1996. For the year ended
March 31, 1996, equity in earnings of SFAT were $5.98 million, versus $2 million
for the same period of 1995. The increase in earnings is attributable to growth
in the volume of goods transported by SFAT, as well
6
<PAGE> 133
as expanded volumes of collection of certain transportation tariffs by SFAT on
behalf of the Russian Ministry of Railways. Please refer to note 1 to the
Consolidated Financial Statements for a further description of the Company's
equity in the earnings of SFAT.
NET INCOME.
Net income for the fiscal year ended March 31, 1996 was $12.7 million,
or $2.09 per share. Approximately $6.1 million, or $1.00 per share, of net
income was a result of an extraordinary gain on the debt refinancing completed
in August 1995. In fiscal 1996, income before the extraordinary gain was
approximately $6.7 million or $1.09 per share. In fiscal 1995, net earnings were
$10.2 million, or $1.93 per share. Fiscal 1995 net earnings reflect a $7.6
million cumulative effect from the Company's change to the equity method of
accounting for SFAT. In addition, the 1995 earnings were restated to reflect $2
million of equity in SFAT's fiscal 1994 net income (see note 1 to the
Consolidated Financial Statements).
The $4.2 million increase in fiscal 1996 income (before the
extraordinary gain) was a result of several factors. First, TLC's purchase and
resale of 1,036 railcars increased net earnings by $2.7 million. Second, growth
in TLC's managed railcar fleet boosted sales and earnings. Third, the Company's
share of SFAT's income increased approximately $4 million over 1995 as a result
of SFAT's continued success providing Russian rail transportation services. The
increase in income was offset by a $3 million asset write-down (see note 3 of
the Consolidated Financial Statements) and a $400,000 charge related to
operating changes made at TRS to more efficiently manage small dollar value
inventory.
COMPARISON OF THE COMPANY'S OPERATING RESULTS FOR THE YEARS
ENDED MARCH 31, 1995 AND DECEMBER 31, 1993
REVENUES.
Revenue for the Company during the fiscal year ended March 31, 1995
increased to $34.6 million from $32.5 million in fiscal 1993. The increase in
revenue was primarily a result of growth in TLC's railcar fleet under
management, which grew to 6,182 railcars from 2,544 railcars at December 31,
1993.
OPERATIONS AND SUPPORT EXPENSES.
For the fiscal year ended March 31, 1995, operations and support
expenses increased to $27.7 million from $27 million in fiscal 1993. This
increase was primarily a result of higher maintenance expenses arising from
growth in TLC's managed railcar fleet.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
For the fiscal year ended March 31, 1995, selling, general and
administrative expenses decreased to $4.8 million from $4.9 million in 1993.
This decrease was a result of the Company's cost cutting measures implemented
during its Chapter 11 proceedings. Such cost cutting measures included
consolidation of offices and of employee job functions.
EQUITY IN THE EARNINGS OF SFAT.
Equity in earnings of SFAT represents the Company's share of earnings
in SFAT, of which Transcisco Trading Company (a wholly owned subsidiary of the
Company) had a 23.5% ownership interest as of March 31, 1995, and a 20%
ownership as of December 31, 1993. Equity in the earnings of SFAT for the year
ended March 31, 1995 were $2 million. As of April 1, 1994, the Company recorded
a cumulative effect of the resumption of equity accounting of $7.6 million. The
Company is unable to determine comparable data for the year ended December 31,
7
<PAGE> 134
1993. Refer to note 1 to the Consolidated Financial Statements for a further
description of the Company's equity in the earnings of SFAT.
NET INCOME.
Net income for the fiscal year ended March 31, 1995 was $10.2 million,
or $1.93 per share. Approximately $7.6 million, or $1.44 per share, of net
income was attributable to a cumulative effect from the change in accounting for
SFAT. In addition, approximately $2 million, or $0.38 per share, of net income
was a result of the Company's equity in the fiscal 1994 earnings of SFAT. In
fiscal 1993, net earnings were $9.1 million, or $1.95 per share. Net income in
1993 included approximately $14 million, or $2.97 per share, from an
extraordinary gain recognized in connection with forgiveness of debt in the
Company's Chapter 11 proceedings.
Excluding equity in the earnings of SFAT and the cumulative effect of
the change in accounting, the Company's net income was $571,000 in 1995. In 1993
- -- excluding the extraordinary gain -- the Company recorded losses of $4.8
million. Fiscal 1995's $5.4 million increase in net income before equity in the
earnings of SFAT, the cumulative accounting change, and extraordinary items was
primarily a result of certain charges taken in 1993. These charges included $5.6
million in bankruptcy-related costs and adjustments to claims.
LIQUIDITY AND CAPITAL RESOURCES
On August 1, 1995, the Company refinanced substantially all of its
long-term debt. Financing for the transaction was provided by Transamerica
Business Credit Corporation, ("Transamerica") and Furman Selz SBIC, L.P.
("Furman Selz"). Transamerica provided a $10 million asset-based credit
facility, while Furman Selz purchased a $3 million subordinated note (Furman
Selz also purchased warrants to acquire 1 million shares of the Company's common
stock at $1.50 per share). The proceeds from these loans and approximately $3
million of the Company's available cash were used to repurchase approximately
$15 million of the Company's Class F debt (including accrued interest) for a
cash payment of $8.4 million and other consideration, resulting in an
approximate $6 million extraordinary gain. The Company also used $1.7 million of
proceeds from the refinancing to retire all of its short-term revolving line of
credit held by Congress Financial Corporation.
The ratio of current assets to current liabilities was 1.35 to 1.0 at
March 31, 1996 compared to 1.16 to 1.00 at March 31, 1995. Working capital
increased by $1.5 million as a result of cash flow from operations. This
increase was also due to the refinancing.
The Company's cash flow from operations was $9,465,000 for the year
ended March 31, 1996, compared to $367,000 for the year ended March 31, 1995.
The growth in operating cash flow resulted from higher earnings and increases in
certain liabilities, including increases in the Company's deferred maintenance
liability due to the timing of customer prepayments and actual maintenance
costs. Cash flow from financing activities was a deficit of $6,942,000 for the
year ended March 31, 1996, compared to a positive cash flow of $1,094,000 for
the year ended March 31, 1995. The reduction in cash flow from financing
activities was due to the Company's refinancing.
The Company's cash requirements were satisfied primarily through cash on
hand, operating earnings and revolving loans (in addition to a term loan and
subordinated note used to fund the refinancing). There were no outstanding
borrowings under the Company's revolving loan at March 31, 1996. Based upon the
Company's level of inventory and accounts receivable, coupled with the revolving
loan's eligibility requirements, the net availability of funds under the
facility increased to approximately $1.5 million as of March 31, 1996.
Management believes its present cash balance, availability of working capital
from the loan facility, and attainment of projected cash flow should be
sufficient to meet the Company's working capital requirements for at least the
next 12 months.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Item 14 for financial statement information.
8
<PAGE> 135
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
GENERAL.
The following table shows the directors and executive officers of the
Company, their respective ages, and their current positions:
<TABLE>
<CAPTION>
Term expires
Name Age in fiscal year Current Position
- ---- --- -------------- ----------------
<S> <C> <C> <C>
Eugene M. Armstrong 78 1997 Chairman of the Board
William F. Bryant 57 -- President, Transcisco Leasing Company
Brian J. Comstock 34 -- Vice President, Sales & Marketing, TRS
Ottokarl F. Finsterwalder 60 1996 Director
Brian P. Friedman 40 1996 Director
William E. Greenwood 58 1998 Director
Paul G. Hayes 58 -- Vice President, Engineering, TRS
Robert A. Jahnke 52 -- President, Transcisco Rail Services
Steven L. Pease 52 1997 President and CEO of the Company; Director
Gregory S. Saunders 33 -- Vice President, Controller of the Company
George A. Tedesco 73 1998 President, Transcisco Trading Company, Director
</TABLE>
Eugene M. Armstrong was elected to the Board of Directors in February
1985, and was appointed President and Chief Executive Officer of the Company in
July 1991. Mr. Armstrong resigned as President and became Chairman of the Board
in January 1993. From 1969 to his retirement in August 1983, Mr. Armstrong held
a number of executive positions with Morrison-Knudsen, Inc. (MK), a construction
company, including director of MK, President of two MK-owned short line
railroads and all of its railroad operations, and as President, Chairman of the
Board and director of H.K. Ferguson Co., director and Executive Vice President
of Industrial, Mining and Manufacturing Operations and Manager of the Missile
and Space Division of Morrison-Knudsen, Inc.
William F. Bryant was appointed President of Transcisco Leasing Company
in August, 1990 when the Board of Directors decided the Company should re-enter
the rail equipment leasing business. From 1985 to 1990, Mr. Bryant was Senior
Vice President, Marketing and Sales for U.S. Leasing International, Inc. Prior
to this, Mr. Bryant held senior marketing positions in the rail industry with
BRAE Corporation and PLM, Inc., where he was President of PLM Railcar Services,
Inc. from 1974 to 1979.
Brian J. Comstock became Vice President of Sales and Marketing of
Transcisco Rail Services Company, a subsidiary of the Company in February 1995.
From 1986 through 1995, Mr. Comstock served as Regional Director of Sales
overseeing Central and Northwestern U.S. markets. Previously, Mr. Comstock held
management positions in operations. Mr. Comstock is a member of the Association
of American Railroads and the Car Department Officers Association.
Ottokarl F. Finsterwalder was elected to the Board of Directors in
September, 1990. Mr. Finsterwalder was an attorney with Shearman & Sterling
until 1970. From 1970 to 1975, he was a director of Hill Samuel & Co., Ltd., a
merchant bank located in London. Since 1975, Mr. Finsterwalder has served as
Executive Vice President in charge of international operations of
Creditanstalt-Bankverein in Vienna. In July, 1985, he was appointed to the Board
of Managing Directors of Creditanstalt-Bankverein. Mr. Finsterwalder is also a
director of several companies, including Banco Interfinanzas S.A., Buenos Aires,
Eckes AG, Frankfurt, Global bond Plus, Ltd., London, Banco BBA-Crediantstalt
S.A., Sao Paulo, and Energy International, London.
9
<PAGE> 136
Brian P. Friedman was appointed to the Board of Directors on August 31,
1995, pursuant to the Note and Warrant Purchase Agreement dated August 1, 1995,
which provides Furman Selz SBIC, L.P. the right to designate one director to
serve on the Company's board of directors. Mr. Friedman is President of Furman
Selz Investments LLC and has been an Executive Vice President of Furman Selz LLC
for more than the past five years. Mr. Friedman serves on the board of directors
of the Coast Distribution System and on the board of a number of private
companies.
William E. Greenwood was elected to Board of Directors on January 20,
1995. Mr. Greenwood is currently president of the Zephyr Group, a Fort Worth,
Texas based company. For thirty years, Mr. Greenwood served in various
capacities at Burlington Northern Railroad Company (BN), one of the largest
railroads in the United States. Mr. Greenwood's most recent position was Chief
Operating Officer of BN (1990-1994). He resigned from that post in June, 1994.
Prior to this position, he served as Executive Vice President-Marketing & Sales
for BN (1985-1990) and Vice President-Intermodal Transportation (1981-1984).
Previously, he served in numerous executive positions with BN. Mr. Greenwood
serves on the boards of Mark VII, Inc. and Ameritruck Distribution System Corp.
Paul G. Hayes became Vice President, Engineering of Transcisco Rail
Services Company, a subsidiary of the Company, in November 1987. Mr. Hayes has
spent the past 28 years in the rail industry after 5 years in aerospace
engineering. Previous positions include Director of Engineering, Director
Research and Development, Director of Quality Control while at Richmond Tank Car
Company, and Chief Product Engineer at ACF Industries, Incorporated.
Robert A. Jahnke became President of Transcisco Rail Services Company,
a subsidiary of Company in April 1995. Mr. Jahnke was previously Senior Vice
President, Operations of Chicago and Northwestern Transportation Company, where
his entire career of 29 years resulted in major contributions in areas of
operations, equipment management, and finance.
Steven L. Pease, Chairman, Chief Executive Officer and President of
Deucalion Securities, Inc., became President and Chief Executive Officer of
Transcisco Industries, Inc. for the third time in his career in January of 1995.
Mr. Pease had earlier rejoined the Board of Directors in December 1992. Mr.
Pease brings with him considerable expertise in the rail services industry,
having served as the former President and Chief Executive Officer of PLM
Companies, Inc. (the predecessor company of Transcisco Industries and PLM
International) from 1981 through 1987, and having served on the Board of
Directors from 1981 through 1989. Mr. Pease was also a member of the PLM
International Inc., Board of Directors from 1988 through 1989. Mr. Pease served
as Chief Executive Officer of Transcisco Industries from January 1993 to March
1994, in the process leading the Company from its bankruptcy. Mr. Pease is a
graduate of the Harvard Business School.
Gregory S. Saunders became Vice President, Controller of the Company in
May 1995. Previously, Mr. Saunders was Manager of Business Development for the
Company from 1990 to 1995. In this position Mr. Saunders served in various
financial and project management capacities. From 1985 through 1988, Mr.
Saunders served in various financial management capacities for the Company's
predecessor (PLM Companies, Inc.), including the position of Manager of
Accounting of Financial Analysis. Prior to 1985, Mr. Saunders held finance and
system analytical positions at American Express Company and Control Data
Systems, Inc. Mr. Saunders is a graduate of the Harvard Business School.
George A. Tedesco has twenty-one years of continuous service with the
Company (including its predecessor companies) and was appointed president of TTC
in 1992. Prior to that, Mr. Tedesco was the senior vice president of marketing
and sales of the Company. Mr. Tedesco played a key role in creating the
Company's successful Russian affiliate, SFAT, and has extensive experience doing
business in Russia. Mr. Tedesco was elected to the Company's board of directors
in January 1995. Mr. Tedesco has been employed in various executive positions
since he joined the Company's predecessor in 1975.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership of Common
Stock with the SEC and the
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<PAGE> 137
American Stock Exchange using Form 3, 4, or 5. Officers, directors and
greater-than-ten-pecent holders are required to furnish the Company with copies
of all such forms which they file.
Except for one delinquent filing each of Form 4 by Messrs. Pease,
Jahnke and Saunders, the Company believes that during fiscal 1996 all filing
requirements applicable to the Company's officers, directors,
greater-than-ten-percent beneficial owners, and other persons subject to Section
16 of the Exchange Act were complied with based solely on the Company's review
of the filings by such persons and written representations from certain persons
that no filing on Form 4 or 5 was required.
ITEM 11. EXECUTIVE COMPENSATION.
GENERAL.
The following table sets forth, for each of the Company's last three
fiscal years, the compensation awarded to, earned by, or paid to the chief
executive officer and each of the four most highly compensated executive
officers of the Company other than the chief executive officer (together, the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------
Annual Compensation Restricted LTIP All other
Name & Principal Fiscal ---------------------- Stock Options Payouts Compen-
Position Year(1) Salary ($) Bonus($)(7) Awards(6) (# of Shares)* ($) sation ($)
-------- ------- ---------- ----------- --------- -------------- --- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STEVEN L. PEASE(2) 1996 226,667 330,000 -- 150,000 -- --
President & Chief 1995 87,521 -- -- 300,000 -- --
Executive Officer 1994 43,750 -- -- -- -- --
WILLIAM F. BRYANT 1996 172,802 447,000 -- -- -- 8,600(3)
President, 1995 172,308 135,500 -- -- -- 4,800
Transcisco Leasing Co. 1994 43,750 -- -- -- -- 4,800
GEORGE A. TEDESCO 1996 174,060 100,000 -- 170,000(4) -- -- (5)
President, 1995 148,260 -- -- -- -- --
Transcisco Trading Co. 1994 37,644 -- -- -- -- --
ROBERT A. JAHNKE 1996 175,000 -- -- 60,000 -- 62,500(8)
President, Transcisco 1995 -- -- -- -- -- --
Rail Services Co. 1994 -- -- -- -- -- --
PAUL G. HAYES 1996 103,500 4,500 -- -- -- 7,500
Vice President, Engineering 1995 102,896 6,000 -- -- -- 7,500
Transcisco Rail Services Co. 1994 23,160 -- -- -- -- 1,875(9)
</TABLE>
- --------------------------------------------------------------------------------
* No SARs were issued
(1) The fiscal period 1994 refers to the three month period ended March 31,
1994, pursuant to the Company's transition to a March 31 fiscal year
beginning with the twelve months ended March 31, 1995.
(2) Amounts paid to Deucalion Securities, an affiliate of Mr. Pease.
(3) Includes $3,800 in life insurance premiums paid by the Company and a $4,800
per annum automobile allowance. Years 1994-1995 include only the automobile
allowance.
(4) Mr. Tedesco was granted 170,000 options at $0.22 per share in partial
settlement of Mr. Tedesco's Class F deferred compensation claim.
(5) Mr. Tedesco was a Class F claimant in connection with a terminated deferred
compensation agreement and received common stock options, a note cash, and
the waiving of the exercise price and vesting period on 60,000 options in
consideration for his claim.
(6) None of the Named Executive Officers hold restricted stock pursuant to the
issuance of Restricted Stock Award(s).
(7) Bonus amounts reflect sums earned in each respective year, but paid in
following year.
(8) Amount reflects value of 250,000 stock purchase rights issued to Mr. Jahnke.
Value was calculated as difference between exercise price and market value
of common stock on the date the stock purchase agreement was signed.
(9) Amount reflects debt forgiveness on a loan of approximately $30,000 to Mr.
Hayes.
OPTIONS.
The following table sets forth certain information with respect to
stock options granted to the Named Executive Officers during the fiscal year
ended March 31, 1996, including hypothetical gains based on assumed rates of
annual compound stock price appreciation:
11
<PAGE> 138
STOCK OPTION GRANTS IN LAST FISCAL YEAR - INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Number of Stock Price Appreciation
Securities % of Total Exercise Expira- (through Expiration Date)(7)
Underlying Options Price tion ----------------------------
Name Options Granted Granted ($/sh) Date(6) 5% Per Year 10% Per Year
---- --------------- ------- ------ ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
William F. Bryant(1) -- -- $ 0.50 3-31-2003 $ 18,867 $ 47,812
Paul G. Hayes(2) -- -- $ 0.50 3-31-2003 $ 566 $ 1,434
Robert A. Jahnke(3) 60,000 14.2% $ 1.4375 4-15-2005 $160,368 $ 406,404
Steven L. Pease(4) 150,000 35.5% $ 4.50 2-1-2006 $405,637 $1,027,964
George A. Tedesco(5) 170,000 40.3% $ 0.22 7-31-2005 $ 54,242 $ 137,460
</TABLE>
- --------------------------------------------------------------------------------
(1) Mr. Bryant was not granted options in fiscal 1996. Exercise price,
expiration date, and realizable values refer to 60,000 options granted March
31, 1993.
(2) Mr. Hayes was not granted options in fiscal 1996. Exercise price, expiration
date, and realizable values refer to 1,800 options granted March 31, 1993.
(3) Options were granted effective April 1995 pursuant to the Company's Amended
and Restated (1994) Stock Option Plan (the "1994 Stock Option Plan"). Mr.
Jahnke's options vest over a three year period in even monthly amounts. The
1994 Stock Option plan is administered by the independent directors.
(4) Options were granted effective March 1996: (i) pursuant to the Company's
1994 Stock Option Plan, if the amendment to such plan is adopted by the
stockholders of the Company at the 1996 annual meeting, or (ii) outside of
such plan if the amendment is not adopted. Mr. Pease's options vest over a
five year period in even monthly amounts.
(5) Options were granted effective July 1995 as partial compensation for a
deferred compensation Class F bankruptcy claim.
(6) Subject to earlier termination in certain events related to termination of
employment.
(7) Represents assumed rates of stock price appreciation in accordance with the
Commission's rules. Actual gains, if any, on stock options exercises are
dependent on the future market price of the Company's Common Stock.
Computation based on actual option term and annual compounding, computed as
the product of: (a) the difference between: (i) the product of the per share
market price at the effective date of grant and the sum of 1 plus the
adjusted stock price appreciation rate (5% - 62.8%, 10% - 159.4%) and (ii)
the per share exercise price of the option and (b) the number of securities
underlying the grant at fiscal year end.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-money
Options at Options
Fiscal Year End at Fiscal Year-End
Shares Value (#) end ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
- ---- ------------ --- ------------- -------------
<S> <C> <C> <C> <C>
William F. Bryant -- -- 48,771/11,229 219,470/50,531
Paul G. Hayes 2,600 5,217 425/1,375 1,913/6,188
Robert A. Jahnke -- -- 19,180/40,820 68,329/145,421
Steven L. Pease -- -- 121,585/328,415 432,843/1,169,157
George A. Tedesco -- -- 170,000/0 812,600/0
</TABLE>
- --------------------------------------------------------------------------------
DIRECTOR COMPENSATION.
Each non-employee director of the Company receives a fee of $2,000 per
month. In addition, directors are reimbursed reasonable and customary expenses
incurred for attendance at meetings, including, but not limited to, air fare and
hotel accommodations. Directors are also awarded additional compensation in
connection with extraordinary contributions to the Company. During fiscal 1996,
Mr. Finsterwalder was awarded special compensation in the form of options to
purchase 25,000 shares of Common Stock, which will be issuable under the
Company's Stock Purchase Plan, as amended.. The options carry an exercise price
of $4.50 per share and are exercisable immediately.
EMPLOYMENT CONTRACTS.
In January 1995, the Company entered into a consulting agreement (the
"Consulting Agreement") with Deucalion Securities, of which Mr. Pease is CEO.
The Consulting Agreement was amended in March 1996. The Agreement is identical
to an earlier agreement executed between the Company and its former CEO, Mr.
Phil Kantz. The Agreement, as amended, terminates on March 31, 1998, through
which period of time Mr. Pease is to receive his base salary, which was
increased to $240,000 per year in accordance with the Consulting Agreement (such
increase occurring upon the refinancing of the Company on August 1, 1995). The
Consulting Agreement also establishes
12
<PAGE> 139
incentive compensation for Mr. Pease in terms of performance of the Company
relative to its goals outlined in the Company's Chapter 11 bankruptcy plan,
including a bonus for exceeding earnings and cash flow projections. In addition,
the Agreement grants to Mr. Pease 300,000 options pursuant to the Company's
Amended and Restated (1994) Stock Option Plan. The exercise price of the options
was set at the market price of the stock on the day of granting, which was
$1.4375 per share. The options vest over a three year term, ending January 1998.
The Agreement states that, upon a change of control (as defined in the
Consulting Agreement), Mr. Pease's options will immediately vest. The Consulting
Agreement was amended to include a 1996 bonus award of $330,000 in cash and
options to purchase 150,000 shares of the Company's Commons Stock at $4.50 per
share. The bonus was awarded as a result of Mr. Pease's achievement of specific
earnings and cash flow targets as outlined in the Consulting Agreement.
In 1993, the Company entered into an employment agreement (the "1993
Bryant Agreement") with Mr. William F. Bryant, President of Transcisco Leasing
Company (TLC). The 1993 Bryant Agreement supersedes the previous employment
agreement with Mr. Bryant dated July 9, 1990. The term of the 1993 Bryant
Agreement is five years ending June 30, 1998. Pursuant to the 1993 Bryant
Agreement, Mr. Bryant's employment may be terminated for cause only. Mr.
Bryant's base salary was set at $175,000 per annum; the board of directors of
TLC may increase the base salary if it determines an adjustment is equitable and
in the best interests of the Company. The 1993 Bryant Agreement includes
incentive compensation, allowing Mr. Bryant and the management employees of TLC
to share up to 10% of the pretax earnings of Transcisco Leasing Company. The
1993 Bryant Agreement also includes customary healthcare and other benefits. In
the event of a merger, acquisition, or change of control of TLC, the 1993 Bryant
Agreement shall become binding on the successor entity or the controlling
person.
In 1995 the Company signed a letter agreement (the "Jahnke Letter")
with Mr. Robert A. Jahnke, President of Transcisco Rail Services Company (TRS).
Pursuant to the Jahnke Letter, Mr. Jahnke's employment may be terminated for
cause only. Mr. Jahnke's base salary was set at $175,000 per annum; the board of
directors of TRS may increase the base salary if it determines an adjustment is
equitable and in the best interests of the Company. The Jahnke Letter includes
incentive compensation, allowing Mr. Jahnke to receive a bonus up to 100% of his
base salary for exceeding certain financial targets. In addition, the Jahnke
Letter provided for the grant of 60,000 options, vesting over three years and
exercisable at $1.4375 per share. The options vest immediately upon a change in
control. The Jahnke Letter also awarded 250,000 stock purchase rights (the
"Purchase Rights") issuable under the Company's Stock Purchase Plan. The
Purchase Rights carried an exercise price of $1.00 per share and were
exercisable immediately.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
During the period ended March 31, 1996, no executive officer of the
Company served (i) as a member of the compensation committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another entity, one of whose
executive officers served on the Company's compensation committee (the "Company
Compensation Committee"); (ii) as a director of another entity, one of whose
executive officers served on the Company Compensation Committee; or (iii) as a
member of the compensation committee (or other board committee performing
equivalent functions, or in the absence of any such committee, the entire board
of directors) of another entity, one of whose executive officers served on the
Company's board of directors.
No member of the Company Compensation Committee (i) was, during the
period ended March 31, 1996, an officer or employee of the Company or any of its
subsidiaries; (ii) was formerly an officer of the Company or any of its
subsidiaries; or (iii) had any relationship requiring disclosure by the Company
under any paragraph of Item 404 of Regulation S-K.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
For the fiscal year 1996, the Company Compensation Committee consisted
of Messrs. Armstrong and Finsterwalder, neither of whom currently is an employee
of the Company. As part of its duties, the Company Compensation Committee
reviews compensation levels of executive officers, evaluates performance of
management
13
<PAGE> 140
and administers the 1994 Stock Option Plan. The Company Compensation Committee
is assisted by the Company's human resources personnel and the Company's
independent auditor, Ernst & Young LLP, which supplies the Company Compensation
Committee with statistical data and other executive compensation information to
permit the Company Compensation Committee to compare the Company's compensation
policies against compensation levels nationwide and against programs of other
companies of similar size in the Company's industry and geographic area. The
companies included in the salary comparisons are generally not the same as the
companies included in the index in the stock performance graph included
hereafter. The Company Compensation Committee believes that the Company's most
direct competitors for executive talent in the San Francisco Bay Area are not
necessarily the same companies to which the Company would be compared for stock
performance purposes.
The Company's executive compensation programs are designed to attract
and retain executives who will contribute to the Company's long-term success, to
reward executives for achieving the Company's short- and long-term strategic
goals, to link executive compensation and shareholder interest through
equity-based plans, and to recognize individual contributions to the Company's
performance.
It is the Company Compensation Committee's belief that none of the
Company's executive officers will be affected by the provisions of Section
162(m) of the Internal Revenue Code of 1986, as amended, which limits the
deductibility of certain executive compensation during fiscal 1996. Therefore,
the Committee has not adopted a policy as to compliance with the requirements of
Section 162(m).
The Company Compensation Committee has established Mr. Pease's base
salary in reference to that provided to Mr. Pease's predecessor and in reference
to mean total compensation for area companies. Base salaries for executive
officers other than the Company's chief executive officer are set at
approximately the mean total cash compensation level of referenced surveys.
For the executive officers of the Company, compensation consists of
three principal elements: base salary, annual bonus, and stock options.
Base Salary. The base salaries of executive officers are initially
determined by evaluating the responsibilities of the position held and the
experience and performance of the individual, with reference to the competitive
marketplace for executive talent, including a comparison to base salaries for
comparable positions based on data contained in the surveys discussed above.
Executive officer base salaries are targeted toward the mean total compensation
established by such surveys in order to attract and retain executives who, in
the Company's belief, are best able to meet the unique challenges facing the
Company. The Company Compensation Committee reviews executive salaries annually
and adjusts them as appropriate to reflect changes in market conditions and
individual performance and responsibilities.
Bonus Program. The bonus program emphasizes the Company's belief that
executive compensation should be closely tied to the Company's profitability.
The Company's bonus program also acknowledges company and, indirectly,
individual performance. Bonuses can be paid only if the Company exceeds specific
goals established for the fiscal year. The bonus program is intended to bring
the executives' base salary plus bonus compensation above the mean total
compensation levels established by referenced surveys when all company and
individual performance criteria are met.
Stock Options. Under the 1994 Stock Option Plan, stock options may be
granted to executive officers and other key employees of the Company. Upon
joining the Company, an individual's initial option grant is based on the
individual's responsibilities and position and upon information provided in
referenced surveys. The size of any annual stock option awards thereafter is
based primarily on a qualitative assessment of an individual's performance and
the individual's responsibilities and position with the Company, as well as on
the individual's present outstanding options. Options are designed to align the
interests of executive officers with those of the Company's shareholders. All
incentive stock options are granted with an exercise price equal to the fair
market value of the Company Common Stock on the date of grant and generally vest
over four years. This approach is designed to encourage the creation of
shareholder value over the long term since no benefit is realized from the stock
option grant unless the price of the Company Common Stock rises over a number of
years.
14
<PAGE> 141
Other elements of executive compensation include participation in a
company-wide medical and insurance benefits plan and the ability to defer
compensation pursuant to a 401(k) plan. The Company makes 50% matching
contributions to the 401(k) plan, up to $1,000 per employee per year.
The Company Compensation Committee established the salary and bonus
compensation levels for Mr. Pease, President and CEO of the Company, in
reference to a Consulting Agreement (the "Consulting Agreement") between the
Company, Mr. Pease and Deucalion Securities, a firm of which Mr. Pease is CEO.
The Consulting Agreement was amended March 1, 1996 and is substantially the same
agreement executed with the Company's predecessor President and CEO. The salary
and bonus levels specified in the Consulting Agreement were established based
upon reference to compensation surveys of area companies of similar size. The
Consulting Agreement, as amended, provides for Mr. Pease to be paid a salary of
$240,000 per year through the expiration date of the Consulting Agreement, which
is March 31, 1998.. The Consulting Agreement also provides for a fiscal 1996
bonus of $330,000 in cash and 150,000 options. The options were issued on March
1, 1996, carry an exercise price of $4.50 per share, and vest immediately upon a
change in control, as defined in the Consulting Agreement). The 1996 fiscal year
bonus was based upon a formula outlined in the Consulting Agreement which
provides for a bonus of up to two times Mr. Pease's salary in the event the
Company meets or exceeds certain cash flow and earnings targets. The Company
exceeded the specified targets.
PERFORMANCE GRAPH
The following graph sets forth the Company's total five (5) year
cumulative shareholder return as compared to the Russell 2000 index ("Russell
2000"), the Standard & Poors Mid-Capitalization Index ("S&P Mid-Cap"), and the
S&P Transportation Index ("S&P Transportation"). The Company believes the
Russell 2000, which encompasses the shareholder returns of small public
companies, is the most representative index for purposes of comparing the
Company's total shareholder return.
Total shareholder return assumes $100 invested at the beginning of the
period in the common stock of the Company and the stocks represented in the S&P
Mid-Cap, S&P Transportation, and Russell 2000 indices. Total return also assumes
reinvestment of dividends; the Company has paid no dividends on the Company's
Common Stock since 1990.
Historical stock price performance should not be relied upon as
indicative of future stock price performance.
[GRAPHIC]
15
<PAGE> 142
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following tables sets forth, as of June 1, 1996, the most recent
practicable date, for purposes of Item 12, prior to the filing of this report on
Form 10-K, certain information with respect to (i) persons who, to the best
knowledge of the Company, was the beneficial owner of more than five percent of
the outstanding shares of Company Common Stock, the Company's only class of
voting security, and (ii) the number of shares of Company Common Stock
beneficially owned by each current director, the Named Executive Officers, and
by all current directors and executive officers as a group:
(A) Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
Number of Percent
Name Shares(2) of Total(3)
---- --------- -----------
<S> <C> <C>
Brian P. Friedman(1) 972,667 14.3%
Steve L. Pease 383,975 5.7%
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes 6,000 shares issuable upon exercise of options and 966,667 shares
issuable upon exercise of a warrant purchased by Furman Selz SBIC, L.P., of
which Mr. Friedman is an officer of the general partner.
(2) Shares include 978,667 and 186,940 shares issuable upon exercise of warrants
or options within 60 days of the date of this proxy to Furman Selz and Mr.
Pease, respectively. Amount does not include 263,060 of additional shares
issuable pursuant to options upon a change in control of the Company.
(3) Based upon 5,269,614 shares outstanding plus 1,530,241 shares issuable
within 60 days from the date of this Annual Report on Form 10-K to
directors, officers and employees under option and warrant agreements.
Amount does not include an additional 295,492 shares issuable pursuant to
options upon change in control of the Company.
(B) Security Ownership of Directors and Management
<TABLE>
<CAPTION>
Number of Percent
Name Shares of Total(1)
---- ------ -----------
<S> <C> <C>
Eugene M. Armstrong 80,500 1.2%
William F. Bryant(2) 89,232 1.3%
Dr. Ottokarl F. Finsterwalder(3) 40,000 **
Brian F. Friedman(4) 972,667 14.3%
William E. Greenwood(5) 6,000 **
Paul G. Hayes(6) 998 **
Robert A. Jahnke(7) 277,568 4.1%
Steven L. Pease(8) 383,975 5.7%
George A. Tedesco(9) 265,834 3.9%
All directors & officers
as a group (9 persons)(10) 2,116,774 31.1%
</TABLE>
- --------------------------------------------------------------------------------
(1) Based upon 5,269,614 shares outstanding plus 1,530,241 shares issuable
within 60 days from the date of this Annual Report on Form 10-K to
directors, officers and employees under option and warrant agreements.
(2) Includes 53,482 shares of the Company Common Stock which may be purchased
by Mr. Bryant upon exercise of options over the sixty days following the
date of this Annual Report on Form 10-K.
(3) Includes 25,000 shares of the Company Common Stock which may be purchased
by Mr. Finsterwalder upon exercise of options over the sixty days following
the date of this Annual Report on Form 10-K.
(4) Includes 6,000 shares issuable exercise of options and 1,000,000 shares
issuable upon exercise of warrants issued to Furman Selz SBIC, L.P., of
which Mr. Friedman is an officer of the general partner.
(5) Includes 6,000 shares of the Company Common Stock which may be purchased by
Mr. Greenwood upon exercise of options over the sixty days following the
date of this Annual Report on Form 10-K.
(6) Includes 998 shares of the Company Common Stock which may be purchased by
Mr. Hayes upon exercise of options over the sixty days following the date
of this Annual Report on Form 10-K.
(7) Includes 27,568 shares of the Company Common Stock which may be purchased
by Mr. Jahnke upon exercise of options over the sixty days following the
date of this Annual Report on Form 10-K.
(8) Includes 176,107 shares of the Company Common Stock which may be purchased
by Mr. Pease upon exercise of options over the sixty days following the
date of this Annual Report on Form 10-K.
(9) Includes 170,000 shares of the Company Common Stock which may be purchased
by Mr. Tedesco upon exercise of options over the sixty days following the
date of this Annual Report on Form 10-K.
(10) Includes 1,431,822 shares of the Company Common Stock which may be
purchased by the directors and Named Executive Officers upon exercise of
options over the sixty days following the date of this Annual Report on
Form 10-K
** = Less than 1%
16
<PAGE> 143
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Brian P. Friedman, a director nominated for re-election at the upcoming
1996 Annual Meeting of Stockholders, is an executive vice president of Furman
Selz LLC, an affiliate of Furman Selz SBIC, L.P., to which the Company is
indebted in the amount of $1,450,000, pursuant to that certain Note and Warrant
Purchase Agreement, dated as of August 1, 1995, among the Company, TRS, TLC,
TTC, Furman Selz SBIC, L.P., and James Dowling.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) FINANCIAL STATEMENTS AND EXHIBITS:
(1) Transcisco Industries, Inc. Consolidated Financial Statements
and Report of Independent Auditors: see the Index on page 12
of this Report.
(2) Exhibits:
3.1 Joint Plan of Reorganization, incorporated by reference to
Form 8-A filed by the Company on August 12, 1993.
3.2 Amended and Restated Certificate of Incorporation of
Transcisco Industries, Inc., incorporated by reference to Form
8-A by the Company on August 12, 1993.
3.3 Amended and Restated By-Laws, incorporated by reference to
Form 8-A filed by the Company on August 12, 1993.
4.1 Form of Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock of Transcisco
Industries, Inc.
10.1 Lease agreement for 601 California Street, incorporated herein
by reference to Company's filing of Form 10-K for December 31,
1988, filed with the Securities and Exchange Commission.
* 10.2 Transcisco Industries, Inc. Amended and Restated (1994) Stock
Option Plan (including implementing agreement: Transcisco
Industries, Inc., Stock Option Agreement) incorporated herein
by reference to Form S-8 filed April 13, 1995 with the
Securities and Exchange Commission.
10.3 Plan and Agreement of Reorganization, incorporated by
reference to the Company's Registration Statement on Form S-4
(Reg. No. 33-2236) dated December 23, 1985, filed with the
Securities and Exchange Commission.
* 10.4 Employment Agreement between TRS and Mr. Robert A. Jahnke,
dated April 13, 1995, incorporated herein by reference to the
Company's Form 10-K for the fiscal year ended March 31, 1995.
* 10.6 Transcisco Industries, Inc. Directors' (1994) Stock Option
Plan, incorporated by reference to the Company's Form S-8
filed April 8, 1995 with the Securities and Exchange
Commission.
* 10.7 Employment Agreement as amended, dated May 1, 1995 between Mr.
William F. Bryant and Transcisco Leasing Company, a subsidiary
of Company, incorporated herein by reference to the Company's
Form 10-K for the fiscal year ended March 31, 1995.
* 10.8 Agreement between Deucalion Securities, Inc., and Steven L.
Pease and the Company dated January 3, 1995, incorporated
herein by reference to the Company's Form 10-K for the fiscal
year ended March 31, 1995.
17
<PAGE> 144
* 10.9 Amendment dated March 1, 1996 to the Agreement between
Deucalion Securities, Inc., and Steven L. Pease and the
Company dated January 3, 1995.
10.10 The Note and Warrant Purchase Agreement Among the Company,
Transcisco Rail Services Company, Transcisco Leasing Company,
and Transcisco Trading Company and Furman Selz S.B.I.C., L.P.
and James Dowling dated as of August 1, 1995 is incorporated
herein by reference to the Company's Form 8-K filed on October
6, 1995.
10.11 The Registration Rights Agreement by and between the Company,
Furman Selz S.B.I.C., L.P., and James Dowling dated August 1,
1995 is incorporated herein by reference to the Company's Form
8-K filed on October 6, 1995.
10.12 The Loan and Security Agreement between the Company,
Transcisco Rail Services Company, Transcisco Leasing Company,
Transcisco Trading Company, and Transamerica Business Credit
Corporation, dated as of July 31, 1995 is incorporated herein
by reference to the Company's Form 8-K filed on October 6,
1995.
10.13 The Shareholder Rights Plan by and between the Company and
First Interstate Bank of California, as rights agent, dated
September 5, 1995, is incorporated herein by reference to the
Company's Form 8-A filed on September 15, 1995.
10.14 Letter Agreement by and between the Company and Mark C.
Hungerford dated July 1, 1995, incorporated herein by
reference to the Form S-3 dated February 7, 1996.
10.15 Agreement and Plan of Merger dated June 17, 1996 among Trinity
Industries, Inc., Trinity Y, Inc., and the Company.
* 10.17 The Company's Stock Purchase Plan incorporated by reference to
the Company's Form S-8 filed April 8, 1995 with the Securities
and Exchange Commission.
10.18 Amendment dated June 17, 1996 to the Rights Agreement by and
between the Company and Wells Fargo Bank National Association
(formerly First Interstate Bank of California), dated
September 5, 1995.
21.1 List of subsidiaries of the Company, incorporated herein by
reference to the Company's Form 10-K for the fiscal year ended
December 31, 1993.
23.1 Consent of Independent Auditors regarding the Company's
consolidated financial statements filed as part of this Annual
Report on Form 10-K.
27.0 Financial data schedule.
99.1 JSC SFAT Consolidated Financial Statements for the years ended
December 31, 1995 and 1994 with Independent Auditors' Report
thereon.
* Compensatory plans or arrangements required to be filed
pursuant to item 14(c) of Form 10-K.
(b) REPORT ON FORM 8-K FOR LAST QUARTER OF 1996:
No reports on Form 8-K were filed during the last quarter of
fiscal 1996.
18
<PAGE> 145
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: June 24, 1996 Transcisco Industries, Inc.
By: /s/ Gregory S. Saunders
------------------------------------
Gregory S. Saunders, Vice President,
Controller
Know all persons by these presents, that each person whose signature
appears below constitutes and appoints Steven L. Pease, and each of them, his
attorney-in-fact, with full power of substitution, to sign any and all
amendments to this Annual Report on Form 10-K, and to file the same with
exhibits thereto and other documents in connection therewith, with the
Securities Exchange Commission, hereby satisfying and confirming all that such
attorneys-in-fact may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report had been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Steven L. Pease President and June 24, 1996
- ----------------------------------- Chief Executive Officer
(Steven L. Pease)
/s/ Eugene M. Armstrong Chairman of the Board June 24, 1996
- -----------------------------------
(Eugene M. Armstrong)
/s/ Dr. Ottokarl F. Finsterwalder Director June 22, 1996
- -----------------------------------
(Dr. Ottokarl F. Finsterwalder)
/s/ Brian P. Friedman Director June 24, 1996
- -----------------------------------
(Brian P. Friedman)
/s/ William E. Greenwood Director June 25, 1996
- -----------------------------------
(William E. Greenwood)
/s/ Gregory S. Saunders Vice President, Controller June 24, 1996
- ----------------------------------- (principal financial and
(Gregory S. Saunders) accounting officer)
/s/ George A. Tedesco Director June 26, 1996
- -----------------------------------
(George A. Tedesco)
19
<PAGE> 146
TRANSCISCO INDUSTRIES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(ITEM 14 (a) (1) AND (2))
<TABLE>
<CAPTION>
DESCRIPTION PAGE NO.
----------- --------
<S> <C>
Report of Independent Auditors. 22
Consolidated Balance Sheets at March 31, 1996 and 1995. 23
Consolidated Statements of Operations for the years ended March 31, 1996
and 1995, the three month period ended March 31,
1994, and the year ended December 31, 1993. 24
Consolidated Statements of Shareholders' Equity (net capital deficiency)
for the years ended March 31, 1996 and 1995, the three month period
ended March 31, 1994, and the year ended December 31, 1993. 25
Consolidated Statements of Cash Flows for the years ended March 31, 1996
and 1995, the three month period ended March 31, 1994, and
the year ended December 31, 1993. 26
Notes to Consolidated Financial Statements. 28
</TABLE>
All schedules are omitted since the required information is not present or is
not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the consolidated financial
statements and notes thereto.
20
<PAGE> 147
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Transcisco Industries, Inc.
We have audited the accompanying consolidated balance sheets of Transcisco
Industries, Inc. (the "Company") as of March 31, 1996 and 1995, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the years ended March 31, 1996 and 1995, the three month period ended March 31,
1994, and the year ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
consolidated financial statements of SFAT (a Russian joint stock corporation in
which the Company has a 23.5% ownership interest) for SFAT's fiscal years ended
December 31, 1995 and 1994, or for any prior periods. Those statements were
audited by other auditors whose report has been furnished to us and, our
opinion, insofar as it relates to data included for SFAT, is based solely on the
report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based upon our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Transcisco Industries,
Inc. at March 31, 1996 and 1995, and the consolidated results of its operations
and its cash flows for the years ended March 31, 1996 and 1995, the three month
period ended March 31, 1994 and for the year ended December 31, 1993, in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, as of April 1,
1994, the Company changed its method of accounting for its equity investment in
SFAT.
ERNST & YOUNG LLP
San Francisco, California
May 10, 1996, except note 11 as to which the date is
June 17, 1996
21
<PAGE> 148
TRANSCISCO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED MARCH 31
1996 1995
-------- --------
(restated)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 2,695 $ 1,371
Receivables 6,377 6,221
Inventories 2,501 3,460
Other current assets 574 419
-------- --------
Total current assets 12,147 11,471
Property and equipment, net 14,606 17,561
Investment in SFAT 17,214 11,024
Other 79 81
-------- --------
$ 44,046 $ 40,137
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts payable $ 3,743 $ 2,744
Accrued compensation and benefits 1,968 1,202
Unearned revenue 1,505 265
Other current liabilities 1,394 2,351
Borrowings under bank line of credit -- 1,722
Current portion of long-term debt 382 1,563
-------- --------
Total current liabilities 8,992 9,847
Long-term debt 3,561 13,415
Other long-term liabilities 2,861 2,923
Deferred maintenance liability 2,872 1,108
Commitments and contingencies
Shareholders' Equity:
Preferred Stock, no par value, 1,000,000 shares authorized,
none issued -- --
Common Stock, $.01 par value, 15,000,000 shares authorized,
issued and outstanding 6,064,004 shares in 1996, and
5,609,961 shares in 1995 53 51
Paid-in capital in excess of par 17,747 17,022
Retained earnings (accumulated deficit) 11,474 (1,235)
Less cost of Common shares in Treasury;
794,390 in 1996 and 478,726 in 1995 (3,514) (2,994)
-------- --------
Total Shareholders' Equity 25,760 12,844
-------- --------
$ 44,046 $ 40,137
======== ========
- -------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 149
TRANSCISCO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
THREE MONTH
FISCAL YEAR ENDED MARCH 31 PERIOD ENDED YEAR ENDED
1996 1995 MARCH 31, 1994 DEC. 31, 1993
----------- ----------- -------------- -------------
(restated)
<S> <C> <C> <C> <C>
Revenues (primarily maintenance & repair) $ 42,630 $ 34,579 $ 7,221 $ 32,513
Costs and expenses:
Operations and support 31,718 27,717 6,087 26,989
General and administrative 6,169 4,792 1,153 4,903
Interest income (85) (189) (78) (383)
Interest expense 954 1,688 400 330
----------- ----------- ----------- -----------
Total costs and expenses 38,756 34,008 7,562 31,839
Income (loss) from continuing operations, before
tax, reorganization items, asset write-
down, equity in earnings of SFAT, extra-
ordinary gain, and cumulative effect of a
change in accounting principle 3,874 571 (341) 674
Reorganization items:
Bankruptcy administrative costs -- -- -- (2,386)
Adjustment to estimated allowed claims -- -- -- (1,700)
Asset write-down (3,000) -- -- --
Equity in earnings of SFAT 5,975 2,019 -- --
----------- ----------- ----------- -----------
Income (loss) from continuing operations before tax 6,849 2,590 (341) (3,412)
Provision for income tax (198) -- -- --
----------- ----------- ----------- -----------
Income (loss) from continuing operations 6,651 2,590 (341) (3,412)
Discontinued operations:
Loss from discontinued operations -- -- -- (23)
Gain (loss) on close-down and disposal
of business segment -- -- -- 142
Adjustment to estimated allowed claims -- -- -- (1,500)
----------- ----------- ----------- -----------
Loss from discontinued operations -- -- -- (1,381)
Income (loss) before extraordinary gain
and cumulative effect of a change
in accounting principle 6,651 2,590 (341) (4,793)
Extraordinary gain 6,058 -- -- 13,929
Cumulative effect as of April 1, 1994, of changing
to the equity method of accounting -- 7,590 -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 12,709 $ 10,180 $ (341) $ 9,136
=========== =========== =========== ===========
Per share amounts:
Continuing operations $ 1.09 $ 0.49 $ (0.06) $ (0.73)
Discontinued operations -- -- -- (0.29)
Extraordinary gain 1.00 -- -- 2.97
Cumulative effect of accounting change -- 1.44 -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 2.09 $ 1.93 $ (0.06) $ 1.95
=========== =========== =========== ===========
Weighted average number of shares 6,085,381 5,283,926 5,422,935 4,689,530
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 150
TRANSCISCO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Fiscal Years Ended March 31, 1996 and 1995, the Three Month Period Ended March
31, 1994 and the Year Ended December 31, 1993
(in thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
TOTAL SHARE-
HOLDERS'
COMMON STOCK RETAINED EQUITY
AND PAID-IN EARNINGS/ (NET
CAPITAL IN (ACCUMULATED TREASURY CAPITAL
EXCESS OF PAR DEFICIT) SHARES DEFICIENCY)
------------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1992 $16,394 $(20,210) $(2,994) $ (6,810)
Net income -- 9,136 -- 9,136
Issuance of common stock 590 -- -- 590
------- -------- ------- --------
Balance at December 31, 1993 16,984 (11,074) (2,994) 2,916
Net loss -- (341) -- (341)
Issuance of common stock 74 -- -- 74
------- -------- ------- --------
Balance at March 31, 1994 17,058 (11,415) (2,994) 2,649
Net income -- 10,180 -- 10,180
Issuance of common stock 15 -- -- 15
------- -------- ------- --------
Balance at March 31, 1995 (restated) 17,073 (1,235) (2,994) 12,844
Net income -- 12,709 -- 12,709
Issuance of common stock 727 -- -- 727
Treasury shares released from escrow -- -- (520) (520)
------- -------- ------- --------
Balance at March 31, 1996 (restated) $17,800 $ 11,474 $(3,514) $ 25,760
======= ======== ======= ========
- -------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 151
TRANSCISCO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
THREE MONTH
FISCAL YEAR ENDED MARCH 31 PERIOD ENDED YEAR ENDED
1996 1995 MAR. 31, 1994 DEC. 31, 1993
------- ------- ------------- -------------
(RESTATED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations
before extraordinary gain and cumulative $ 6,651 $ 2,590 $(341) $(3,412)
effect of change in accounting principle
Adjustments to reconcile loss to net cash
(used in) provided by continuing operations:
Equity in (earnings) of SFAT, net of dividends (5,915) (2,019) -- --
Reorganization items not requiring cash -- -- 130 1,332
Loss on fixed asset write-downs 3,000 -- -- --
Depreciation and amortization 1,154 1,186 287 1,127
Common stock issued for services 450 15 74 67
Changes in operating assets and liabilities:
Accounts receivable (156) (870) (680) 1,909
Inventories 959 (1,059) 22 414
Other current assets (155) 97 82 409
Other assets 2 78 (28) 55
Accounts payable 999 (895) (804) 546
Accrued compensation and benefits 766 370 (139) (348)
Deferred maintenance liability 1,764 1,042 (17) (520)
Unearned revenue 1,240 -- -- --
Other current liabilities (1,232) (596) 616 (434)
Other long-term liabilities (62) 428 -- (299)
------- -------- ---- -------
Net cash (used in) provided by
continuing operations 9,465 367 (798) 846
------- -------- ---- -------
Loss from discontinued operations -- -- -- (1,381)
Adjustments to reconcile loss to
net cash used in discontinued operations:
Accrual for loss on disposal of
business segment -- -- -- (150)
Liabilities subject to compromise -- -- -- (658)
Other, net -- -- -- (586)
------- -------- ---- -------
Net cash used in discontinued operations -- -- -- (2,775)
------- -------- ---- -------
Net cash (used in) provided by operating activities 9,465 367 (798) (1,929)
------- -------- ---- -------
</TABLE>
-Continued -
<PAGE> 152
(continued from previous page)
TRANSCISCO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
THREE MONTH
FISCAL YEAR ENDED MARCH 31 PERIOD ENDED YEAR ENDED
1996 1995 MAR. 31, 1994 DEC. 31, 1993
-------- ------- ------------- -------------
(RESTATED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (1,199) (815) (120) (339)
Restricted cash -- -- 124 123
Discontinued operations:
Capital expenditures, net -- -- -- --
Disposal of equipment -- -- -- 1,580
Restricted cash -- -- -- 600
-------- ------- ------- -------
Net cash provided by (used in)
investing activities (1,199) (815) 4 1,964
-------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on Class F and other senior debt (11,929) (2,452) (109) (386)
Redemption of note receivable -- 2,000 -- --
Borrowings under long-term debt 6,709 341 -- --
Short-term borrowings (repayment) (1,722) 1,205 525 --
-------- ------- ------- -------
Net cash (used in) provided by
financing activities (6,942) 1,094 416 (386)
-------- ------- ------- -------
Net increase (decrease) in cash and cash equivalents 1,324 646 (378) (351)
-------- ------- ------- -------
Cash and cash equivalents at beginning of year 1,371 725 1,103 1,454
-------- ------- ------- -------
Cash and cash equivalents at end of year $ 2,695 $ 1,371 $ 725 $ 1,103
======== ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Treasury shares released from escrow
in connection with the debt refinancing $ (520) $ -- $ -- $ --
======== ======= ======= =======
Common stock issued in connection
with the debt refinancing $ 277 $ -- $ -- $ --
======== ======= ======= =======
</TABLE>
26
<PAGE> 153
TRANSCISCO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
BASIS OF PRESENTATION.
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
CONCENTRATION OF CREDIT RISK.
The Company markets its services throughout the United States. The
Company performs ongoing credit evaluations of its customers and generally does
not require collateral. The Company maintains reserves for potential credit
losses and such losses have been within management's expectations. Reserves for
doubtful accounts were approximately $97,000 at March 31, 1996 and $48,000 at
March 31, 1995.
INVENTORIES.
Inventories, consisting of rail parts, supplies and work in process,
are stated at the lower of cost or market. Cost is determined by the last-in,
first out (LIFO) method for substantially all inventories.
PROPERTY AND EQUIPMENT.
Property and equipment are stated at cost. Depreciation of property and
equipment is computed primarily using the straight-line method based on the
estimated useful lives of the assets. Estimated useful lives used in computing
depreciation provisions are as follows:
<TABLE>
<S> <C>
Buildings and improvements 17 to 40 years
Equipment and track 3 to 40 years
Rolling stock 15 to 20 years
Other 3 to 10 years
</TABLE>
When properties are retired, or otherwise disposed of, the asset cost
and accumulated depreciation are removed from the accounts, and the resulting
gain or loss is credited or charged to operations. Normal recurring maintenance
and repair costs are expensed as incurred. Major repairs or betterments are
capitalized and depreciated over the remaining useful lives of the related
assets.
PER SHARE DATA.
Net income per share data is computed using the weighted average number
of shares of outstanding common stock and diluted common stock equivalents from
the assumed exercise of stock options and warrants. Net loss per share data is
computed using the weighted average number of shares of outstanding common stock
and excludes common stock equivalents as their effect would be anti-dilutive.
STATEMENTS OF CASH FLOWS.
For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents. For the years ended March 31, 1996 and
1995, the three month period ended March 31, 1994, and the year ended December
31, 1993, interest of $623,000, $906,000, $106,000, and $135,000 was paid. For
the years ended March 31, 1996 and 1995, the three month period ended March 31,
1994, and the year ended December 31, 1993, the Company paid $200,000, $51,000,
$17,000, and $36,000 in income taxes related to various federal and state
filings.
27
<PAGE> 154
INCOME TAXES.
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." This statement requires that deferred income taxes be determined using
the asset and liability method.
EQUITY IN EARNINGS OF SFAT.
Equity in earnings of SFAT represents the Company's share of earnings
in SFAT, of which Transcisco Trading Company (a wholly owned subsidiary of the
Company) has a 23.5% ownership interest as of March 31, 1996. The Company
believes SFAT is the largest privately owned railcar transportation company in
Russia. Effective April 1, 1994, the Company resumed the equity method of
accounting for its SFAT investment in December 1995. The resumption of equity
accounting was based upon a number of factors including the Company's continuing
ability to influence SFAT's operations and the availability of audited financial
data from SFAT.
The Company's equity in the earnings of SFAT is presented as a
cumulative effect as of April 1, 1994. Beginning with the Company's fiscal year
ended March 31, 1995, the Company's equity in earnings of SFAT were restated to
reflect the Company's equity in SFAT's earnings one quarter in arrears.
Accordingly, the Company's equity in the earnings of SFAT for the fiscal year
ended March 31, 1995 reflects SFAT's income through SFAT's fiscal year ended
December 31, 1994. Similarly, the Company's equity in the earnings of SFAT for
the fiscal year ended March 31, 1996 reflects SFAT's earnings for its fiscal
year ended December 31, 1995, net of certain costs incurred. The adoption of a
one quarter-in-arrears recognition of equity earnings resulted in the Company
not reporting any equity earnings for the three month period ended March 31,
1994.
The Company also earns licensing and service fees from SFAT which
amounted to (in thousands): $1,500, $1,200, $150, and $1,300 for the years ended
March 31, 1996 and 1995, the three month period ended March 31, 1994 and the
year ended December 31, 1993, respectively. These amounts are included in
revenues in the accompanying statement of operations. The Company also received
dividends from SFAT which amounted to (in thousands): $60,000, $51,000, $0, and
$43,500 for the years ended March 31, 1996 and 1995, the three month period
ended March 31, 1994 and the year ended December 31, 1993, respectively.
Summarized financial information from the audited financial statements
of SFAT is presented below (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994
---- ----
<S> <C> <C>
Current assets $ 57,073 $ 38,035
Total assets 136,597 103,448
Current liabilities 51,510 41,162
Total liabilities 52,560 45,262
Shareholders' equity 79,825 53,915
Total revenues 81,982 27,337
Operating income before interest and taxes 29,701 12,441
Net income 26,594 8,925
</TABLE>
REVENUE RECOGNITION.
The Company recognizes revenue from repair and maintenance services in
the period in which such services are performed. Performance of services is
deemed to have occurred when a railcar's repairs have been completed and the
railcar is made available for customer disposition. For maintenance fees earned
under long term contracts, revenues are recognized over the length of the
maintenance agreements in accordance with the terms of the agreements. Such
agreements generally require customers to pay fees monthly as consideration for
maintenance and management services as defined in the contracts. For railcar
leases, the Company recognizes revenues over the length of the leases in amounts
reflecting contractual lease payments due from lessees.
28
<PAGE> 155
USE OF ESTIMATES.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
STOCK OPTIONS.
The Company accounts for its stock option plan in accordance with
provisions of the Accounting Principles Board's Opinion No. 25 ("APB 25"),
"Accounting for Stock Issued to Employees." In 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock Based Compensation." SFAS 123 provides an
alternative to APB 25 and is effective for fiscal years beginning after December
15, 1995. The Company expects to continue to account for its employee stock
plans in accordance with the provisions of APB 25 with the disclosures required
by SFAS 123. Accordingly, the adoption of SFAS 123 is not expected to have any
impact on the Company's financial position or results of operations.
RECLASSIFICATIONS.
Certain prior year balances have been reclassified to conform to the
current year's presentation.
NOTE 2. PROPERTY AND EQUIPMENT.
Property and equipment at March 31, 1996 and 1995 were as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land $ 937 $ 1,078
Building and improvements 8,123 8,852
Rolling stock 677 682
Equipment and track 9,523 13,863
Other 1,112 1,044
------- -------
20,732 25,519
Less: Accumulated depreciation (5,766) (7,958)
------- -------
$14,606 $17,561
======= =======
</TABLE>
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
SFAS 121 requires recognition of impairment of long-lived assets in the event
the net book value of such assets exceeds the undiscounted cash flows attributed
to such assets. The Company adopted the provisions of SFAS 121 as of October 1,
1995.
In connection with the refinancing of the Company's debt, the Company
evaluated the ongoing value of its property and equipment. Based on this
evaluation, the Company determined that assets at one facility with a carrying
value of approximately $5,500,000 were impaired and such assets were written
down by $3,000,000 to their fair value. Fair value was estimated based upon
property and equipment appraisals.
NOTE 3. INCOME TAXES.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets are as follows
(in thousands):
(next page)
29
<PAGE> 156
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Deferred tax liability:
Non-current:
Book basis of fixed assets in excess of tax basis $ 3,426 $ (5,162)
------- --------
Total deferred tax liability 3,426 (5,162)
Deferred tax asset:
Current
Difference in reporting bad debt expense and
other current assets and liabilities for tax
purposes 260 624
Non-current:
Net operating loss carryforwards 4,208 11,190
Accrued interest 17 556
Other-net 1,470 682
------- --------
Total deferred tax asset 5,910 13,052
Net deferred tax asset 2,484 7,890
Valuation allowance (2,484) (7,890)
------- --------
Net deferred tax liability $ -- $ --
======= ========
</TABLE>
The net change in the valuation allowance for the year ended March 31,
1996 was an decrease of $5,406,000 due largely to a decrease in net operating
losses as well as other changes in the components of the deferred tax asset and
liability.
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
Fiscal Year Ended Fiscal Year Ended
March 31, 1996 March 31, 1995
----------------- -----------------
<S> <C> <C>
Current:
Federal $189,000 --
State 9,000 --
Total current 198,000 --
Deferred:
Federal -- --
State -- --
-------- ---
Total deferred -- --
-------- ---
$198,000 --
======== ===
</TABLE>
A reconciliation between income tax provisions computed at the U.S.
federal statutory rate and the effective rate is reflected in the statement of
operations:
<TABLE>
<CAPTION>
Fiscal Year Fiscal Year Three Month
Ended Ended Period Ended
March 31, 1996 March 31, 1995 March 31, 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Federal statutory rate 34% 34% 34%
State rate, net of federal benefit 7 7 7
Alternative minimum tax rate differential (14) -- --
Benefit from carryforward of net operating losses (27) (41) (41)
--- --- ---
Effective income tax rates -- -- --
=== === ===
</TABLE>
The balance sheets as of March 31, 1996 and 1995 reflect liabilities
for tax claims. The tax claims are the result of unresolved tax authority audits
pertaining to the years 1985 through 1989. The potential liability for the tax
30
<PAGE> 157
claims was approximately $200,000 and $660,000 at March 31, 1996 and 1995,
respectively. Tax account balances related to the tax claims total $2,040,000
and $2,235,000 as of March 31, 1996 and 1995, respectively, and are included in
other long-term liabilities in the accompanying balance sheet.
At March 31, 1996 and 1995, the Company had net operating loss
carryforwards for federal income tax purposes of approximately $11,600,000 and
$30,000,000, respectively. These net operating loss carryforwards expire from
2004 through 2008. The Company's ability to utilize the net operating loss
carryforwards may be limited in the event of a 50% or more ownership change
within any three year period.
No provision for income taxes on $16,703,000 of accumulated
undistributed earnings of the Company's investment in a foreign company has been
recorded since the earnings are intended to be indefinitely reinvested in that
company.
Cash paid for income taxes was $197,000 for the fiscal year ended March
31, 1996.
NOTE 4. BANK BORROWINGS AND LONG-TERM DEBT (IN THOUSANDS).
SUMMARY OF LONG-TERM DEBT.
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Secured revolving credit agreement: Transamerica $ -- $ --
Senior term loan: Transamerica 1,985 --
Series A subordinated debt: Furman Selz 1,500 --
Other long-term debt 458 458
Restructured Debt (Note 9) -- 14,520
------ ---------
3,943 14,978
Less current portion (382) (1,563)
------- ---------
LONG-TERM DEBT $3,561 $ 13,415
====== =========
</TABLE>
REFINANCING.
On August 1, 1995, the Company refinanced substantially all of its
long-term debt. Financing for the transaction was provided by Transamerica
Business Credit Corporation, ("Transamerica") and Furman Selz SBIC, L.P.
("Furman Selz"). Transamerica provided a $10 million asset-based credit
facility, while Furman Selz purchased a $3 million subordinated note (Furman
Selz also purchased warrants to acquire 1 million shares of the Company's common
stock at $1.50 per share). The proceeds from these loans and approximately $3
million of the Company's available cash were used to repurchase approximately
$15 million of the Company's Class F debt (including accrued interest) for a
cash payment of $8.4 million and other consideration, resulting in an
approximate $6 million extraordinary gain. The Company also used $1.7 million of
proceeds from the refinancing to retire all of its short-term revolving line of
credit held by Congress Financial Corporation.
SENIOR TERM LOAN.
Pursuant to a term loan with Transamerica, principal payments are due
in equal monthly installments of $26,000 for 59 months through June 30, 2000,
with the balance of the then outstanding principal due July 31, 2000; interest
is due monthly in arrears, computed at prime plus 2% (10.25% at March 31, 1996).
The loan is secured by substantially all of the Company's property and
equipment. The term loan note contains financial covenants, including certain
ratios that the Company must satisfy, and certain prepayment fees for payments
made before July 31, 1998.
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<PAGE> 158
REVOLVING CREDIT LINE.
This credit facility with Transamerica has a limit of $7,835,000,
subject to certain reserves and eligibility requirements (available credit
facility in March 31, 1996 was $1.5 million). The loan is collateralized by the
Company's accounts receivables and inventory (the "collateral base"). The
collateral base is computed on a daily basis. Interest is accrued daily based on
the amount of loan outstanding, at a rate of prime plus 1.75% (10% as of March
31, 1996), payable in arrears. A fee of 0.25% is assessed on any unused line of
credit. A fee of 0.25% of the daily average of loan outstanding during each
month is charged to the Company. The term of the credit line is five years
(expiring July 31, 2000), when all outstanding balances are due in full.
SECURED REAL ESTATE LOAN.
Collateral for this loan (through the Wyoming Community Development
Center) consists of the real estate, land and buildings of Transcisco Rail
Services' Rock Springs, Wyoming facility. The loan is payable in two remaining
installments: $100,000 in December 1997 and $200,000 in December 2000. Interest
is 6% and is due monthly.
SERIES A SENIOR SUBORDINATED NOTES.
The notes were issued to Furman Selz S.B.I.C., L.P. and James Dowling.
Principal is due in total in 2000. The note bears interest at an annual rate of
10% through July 31, 1997, and 12% thereafter. Interest is payable on July 31,
of 1996 and 1997, and January 31 and July 31 of each year thereafter (all
prepayments will first be applied to the Series A notes). Half of the interest
due on July 31, 1996 and July 31, 1997 is to be deferred and payable on July 31,
1998 and July 31, 1999, respectively. The subordinated debt may be prepaid
without penalty upon proper notice.
Principal payments on debt are approximately (in thousands): $382 in
1997; $450 in 1998; $338 in 1999; $2,024 in 2000, and $749 thereafter.
The Company believes that as of March 31, 1996, the fair value of its
long-term debt approximates the carrying value of those obligations. The fair
value of the Company's long-term debt is estimated based on quoted market prices
for similar issues with the same interest rates that would be available to the
Company for similar debt obligations.
NOTE 5. LONG-TERM MAINTENANCE, MANAGEMENT AND SUB-LEASE CONTRACTS.
The Company has long-term maintenance contracts, including certain
cost-per-mile maintenance contracts, with several major customers requiring the
Company to provide maintenance services on unit train coal cars, primarily over
one to fifteen year periods. Fees are based on a fixed price per railcar-mile
traveled, with provisions for adjustments based on a projected frequency of
repair and changes in costs of materials and industry labor rates. The Company
estimates the cost of providing maintenance under these contracts and accrues
these estimates as a Deferred Maintenance Liability and a current period
expense. These estimates may differ from actual results and such estimates could
be material to the financial statements. The actual amount of future maintenance
costs will vary depending on the actual lives of the maintenance components, the
proportion of repairs performed by outside railroad maintenance shops, inflation
and other factors. Actual costs are deducted from the Deferred Maintenance
Liability as incurred. Overhead costs are recognized as incurred.
NOTE 6. COMMITMENTS AND CONTINGENCIES.
LEASING ARRANGEMENTS.
Various production and office facilities and equipment are leased under
operating leases ranging from one to ten years, with options to renew at various
times. In addition, certain rolling stock is leased on a long-term basis. Rental
expenses for operating leases with non-cancelable terms in excess of one year
are (in thousands): $2,607 in
32
<PAGE> 159
1997; $2,628 in 1998; $2,340 in 1999; $2,414 in 2000, and $2,029 in 2001 and
beyond.
The Company has certain long-term non-cancelable management and
sub-lease agreements related to railcar leasing transactions between 1997 and
2006. Amounts receivable under the terms of these non-cancelable agreements with
terms in excess of one year are (in thousands): $2,931 in 1997; $2,935 in 1998;
$2,796 in 1999; $2,741 in 2000, and $2,707 in 2001 and beyond.
Rent expense during the year ended December 31, 1993, the three month
period ended March 31, 1994, the years ended March 31, 1995 and 1996 was (in
thousands): $1,998, $492, $1,699, and $3,085, respectively.
LITIGATION.
On or about September 15, 1995, Great American Insurance Company
("Great American") filed an action (the "Action") in the Superior Court of the
State of California in and for the County of Marin against Mark Hungerford, a
former Chairman, Director, and Chief Executive Officer of the Company. The
action purports to set forth three causes of action for declaratory relief, and
seeks judgment in the amount of $2,675,000 (plus interest as provided by law)
against Mr. Hungerford. According to the complaint, the Action purports to arise
out of a certain payment made by Great American on behalf of Mr. Hungerford in
connection with the partial settlement of certain litigation, captioned Daniels
v. PLM International, Inc., et al., to which Mr. Hungerford and others,
including the Company, previously were parties. The Daniels litigation has been
settled, and the state and federal complaints have been dismissed with
prejudice. The complaint in the Action also seeks a declaration that two
endorsements each barred coverage under a Directors' and Officers' Policy issued
by Great American to the directors and officers of the Company. The complaint in
the Action also seeks a declaration that no coverage is afforded under that
policy for the director and officer defendants in the Daniels litigation in
their capacities as directors or officers of PLM International, Inc. Prior to
the commencement of the Action in the Marin County Superior Court, the United
States District Court for the Northern District of California ruled, on a
summary judgment motion in a declaratory relief action, that neither of the
endorsements relied upon by Great American precluded coverage under the
particular Directors' and Officers' Policy issued by Great American. The Court
of Appeals for the Ninth Circuit reversed and remanded that decision, directing
that it be dismissed on grounds which did not address the coverage issues under
the two endorsements. Great American thereafter filed the Action in Marin County
Superior Court. Mr. Hungerford may attempt to seek reimbursement from the
Company for any sums paid in connection with defense or settlement of the claim,
subject to certain terms and conditions in an indemnification agreement with the
Company.
NOTE 7. SHAREHOLDERS' EQUITY.
COMMON STOCK.
On August 11, 1993, the Company filed an Amended and Restated
Certificate of Incorporation with the Secretary of State of Delaware. Upon the
effectiveness of the Amended and Restated Certificate of Incorporation the then
outstanding 3,188,369 shares of Class A Common Stock and 1,358,960 shares of
Class B Common Stock were converted into one form of stock designated Common
Stock. The Amended and Restated Certificate of Incorporation was filed by order
of the Bankruptcy Court pursuant to the Plan.
During fiscal years 1996, 1995 and 1993, the Company granted 25,000,
60,000 and 165,000 shares of common stock, valued at approximately $50,000,
$75,000 and $67,000, respectively, to members of the Board of Directors as
compensation for extraordinary services.
STOCK OPTIONS.
In January 1995, the Company's shareholders approved an Amended and
Restated (1994) Stock Option Plan (the "1994 Plan"). The prior stock option plan
was adopted in its original form and amended in 1989. The 1994 Plan reserves for
the issuance of 750,000 shares of common stock. There were no common shares
available for grant at March 31, 1996.
33
<PAGE> 160
In January 1995, the Company's Board of Directors also approved an
Amended and Restated Directors Stock Option Plan which reserves 100,000 shares
of common stock. Common shares available for grant were 88,000 at March 31,
1996.
Activity under these stock option plans for the years ended March 31,
1996 and 1995, the three month period ended March 31, 1994, and the year ended
December 31, 1993 was as follows:
<TABLE>
<CAPTION>
SHARES UNDER
OPTION EXERCISE
PLAN PER SHARE
------------ ---------
<S> <C> <C>
Outstanding, December 31, 1993 393,000 $0.50 to $3.75
Granted 310,000 $1.1875
Exercised (6,600) $0.50
Cancellations (21,500) $0.50 to $0.81
--------
Outstanding, March 31, 1994 674,900
Granted 353,500 $1.188 to $1.50
Exercised (29,875) $0.50 to $1.1875
Cancellations (318,792) $0.50 to $ 1.1875
--------
Outstanding, March 31, 1995 679,733
Granted 117,000 $1.44 to $5.563
Exercised (191,818) $0.50 to $1.1875
Cancellations (30,073) $0.50 to $1.50
--------
Outstanding, March 31, 1996 574,842
========
</TABLE>
STOCK WARRANTS.
In connection with the refinancing, Furman Selz purchased warrants to
acquire 1 million shares of the Company's common stock at an exercise price of
$1.50 per share. The agreement governing the warrants was reached in June 1995,
when the Company's stock price was approximately $1.50 per share. Furman Selz
paid $30,000 for the warrants, which expire in July 2005. The warrants are
subject to certain anti-dilution provisions and may be fully exercised at any
time. The warrants may be exercised for cash consideration only.
STOCK PURCHASE RIGHTS.
In 1995 the Board of Directors approved an employee stock purchase plan
(the "Purchase Plan"), which provides for the issuance of stock purchase rights
to key employees. The Company has reserved 510,000 shares for issuance under the
Purchase Plan. In fiscal 1996, employees were granted 260,000 stock purchase
rights under the plan.
SHAREHOLDER RIGHTS PLAN.
On September 5, 1995, the Company adopted a Shareholder Rights Plan
(the "Rights Plan"), pursuant to which each holder of the Company's Common Stock
was issued a currently unexercisable right ("Right") to purchase Series A Junior
Preferred Participating Stock (the "Preferred Stock") at an exercise price of
$12.00 per share. Following public announcement that a person or group has
acquired, or is making a tender offer for, 5% or more of the outstanding shares
of the Company's Common Stock, the Rights will become exercisable to purchase
the number of shares of Preferred Stock having a value equal to ten times the
exercise price. In the event that the Company engages in a merger or business
combination with the acquirer or tender offeror, the Rights will become
exercisable for shares of common stock in the acquiring entity having a value
equal to ten times the exercise price of the Right. The Rights would not become
exercisable, however, if the Company's Board of Directors approved the
acquisition of the common stock, the merger, or the business combination prior
to the occurrence thereof.
34
<PAGE> 161
NOTE 8. BENEFIT PLAN.
Substantially all employees are eligible to participate in the
Company's Profit Sharing and Tax Advantage Savings Plan. The Company makes
discretionary contributions to the Plan up to a maximum matching contribution of
$1,000 for each participant. Contributions charged to operations were $114,653
in the year ended March 31, 1996, $101,000 in the year ended March 31, 1995,
$22,000 in the three month period ended March 31, 1994, and $75,000 in the year
ended December 31, 1993.
NOTE 9. CHAPTER 11 REORGANIZATION PROCEEDINGS.
On July 1, 1991, certain holders of Transcisco Industries, Inc.'s (the
"Company's") 9% Convertible Senior Subordinated Notes due May 15, 1996, filed an
Involuntary Petition for Relief Under Chapter 7 of the United States Bankruptcy
Code against the Company in the United States Bankruptcy Court. The petition was
in response to the Company's previous announcement that it was delaying the May
15, 1991 interest payment on these Notes. On July 30, 1991, the Company filed a
motion (which was granted) to convert the case to voluntary Chapter 11 of the
United States Bankruptcy Code. In addition, one of its subsidiaries, Transcisco
Tours, Inc., filed a voluntary petition with the United States Bankruptcy Court
seeking protection under Chapter 11. The Chapter 11 proceedings did not include
any of the Company's other operating subsidiaries: Transcisco Rail Services
Company (TRS), Transcisco Leasing Company, Transcisco Trading Company or
Transcisco Texan Railway, Inc., (whose operations were subsequently
discontinued). The Chapter 11 cases were administered by the Bankruptcy Court,
with Transcisco Industries, Inc. and Transcisco Tours, Inc. (the Debtor
Companies) managing their businesses as debtors-in-possession subject to the
control and supervision of the Bankruptcy Court.
The primary cause of the Chapter 11 filings was the outlay required and
significant losses incurred in the construction and operation of a luxury
"cruise train" operating from the San Francisco Bay Area to Lake Tahoe/Reno,
Nevada by Transcisco Tours, Inc. The "cruise train" operated from December 7,
1990 to April 29, 1991. As a result of substantial losses, Union Bank terminated
the Company's line of credit, and the Company was unable to satisfy its then
current cash flow requirements, all of which prompted the two Chapter 11 cases.
Following a hearing on September 3, 1993, the Bankruptcy Court
announced its intention to confirm the Joint Plan of Reorganization ("Plan")
propounded by the Company, its Official Unsecured Creditors' Committee and its
Official Bondholders' Committee. The Findings of Fact and Conclusions of Law
Regarding the Joint Plan of Reorganization and the Order Confirming the Joint
Plan of Reorganization were entered by the Bankruptcy Court on October 21, 1993
and the Plan became effective on November 3, 1993. In September 1993, Transcisco
Tours filed a liquidating Plan of Reorganization. The Disclosure Statement
accompanying that Plan was approved by the Bankruptcy Court in October 1993 and
confirmed in December 1993. Accordingly, other than liabilities guaranteed by
the Company as part of the Plan, the accompanying financial statements do not
include the accounts of Transcisco Tours after September 1993. The Plan
generally provided that:
1. Tax claims of approximately $1,300,000 (applied against the previously
established deferred tax liability) were to be paid in full over a
six-year period including 7% interest.
2. The Company transferred 3,367,367 shares of PLM International ("PLMI")
common stock and 60% of a $5,000,000 subordinated PLMI promissory note
receivable to a court-appointed representative of the holders of the
Company's senior subordinated notes ("Bondholders") in full
satisfaction of the Bondholders' claims in the Chapter 11 case. The
Company retained a 40% interest in the principal and interest paid by
PLMI with respect to the foregoing $5 million note. That 40% interest
was redeemed by PLMI in October 1994, and the proceeds were paid to the
Class F Creditors.
3. In connection with the Plan, the Company had previously settled
litigation brought by Shirley B. Daniels against the Company, PLMI and
other defendants. Pursuant to the settlement in the Plan, the Company
paid the entire $750,000 in full satisfaction over a ten quarter period
ended December 31, 1995.
35
<PAGE> 162
4. In August 1993, in accordance with the Plan, the Company paid $1.5
million in cash to Amtrak in full satisfaction of its claim of
$10,206,000. Amtrak's claim was based upon the Company's alleged breach
of a five-year operating and management agreement with Amtrak to
operate the Transcisco Tours' cruise train.
5. Eighty percent (80%) of the claims of most remaining unsecured
creditors ("Class F" claims) plus monthly interest at prime plus
11/2%, were to be paid over a seven year period ending in December 31,
1999. The aggregate amount of unsecured claims allowed, after the 20%
reduction, was approximately $18,270,570. The Company retired all Class
F claims in connection with its August 1995 refinancing.
In addition, on November 4, 1993, the Company issued 489,976 shares of
its common stock (representing 10% of the Company's then outstanding
Common Stock) to a Collateral Agent acting on behalf of the unsecured
creditors. These shares were to be distributed over a three year
period. Upon completion of the refinancing, approximately 175,000
shares were distributed to the Class F claimants. The Company retained
approximately 315,000 of shares in treasury.
6. Upon the filing of the amended Certificate of Incorporation on August
11, 1993, each share of the Class A Common Stock (par value $0.01 per
share), of the Company and each share of the Class B Common Stock, (par
value $0.01 per share), of the Company, then issued and outstanding
immediately prior thereto was canceled and changed into one share of
the Common Stock, (par value $0.01 per share), of the Company.
In connection with the Company's emergence from bankruptcy, the Company
recognized a $13,929,000 extraordinary gain in the third quarter of 1993. The
gain on early extinguishment of debt is summarized as follows:
<TABLE>
<S> <C>
Extinguished of subordinated debentures $ 7,391,000
20% reduction unsecured creditor claims,
less value of 10% of the Company's Common
Stock issued ($523,000) 2,232,000
Transcisco Tours unsecured debt 4,306,000
-----------
$13,929,000
===========
</TABLE>
During 1993, the Company also recognized $1,700,000 and $1,500,000 in
increases in estimated allowed claims related to continuing and discontinued
operations, respectively.
The consolidated financial statements for the year ended December 31,
1993 reflect the financial reporting guidance for entities in reorganization as
prescribed by the American Institute of Certified Public Accountants' Statement
of Position 90-7 "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code." The Consolidated Statements of Operations separately disclose
reorganization expenses related to the Chapter 11 proceedings.
Interest expense related to pre-petition indebtedness of approximately
$3.1 million was not accrued in the financial statements for the year ended
December 31, 1993. Such interest was not be paid nor became a secured claim
since the Company was operating under Chapter 11 during most of 1993. Of the
unaccrued interest, approximately $604,000 from 1993 relates to discontinued
operations. From November 3, 1993, until the refinancing in August 1995,
interest was accrued on the Class F claims in accordance with generally accepted
accounting principles.
NOTE 10. SUBORDINATED NOTE RECEIVABLE FROM PLMI.
Until the Company's emergence from bankruptcy, the Company had a $5
million subordinated note from PLMI. The note bore interest at 14.75% with
interest payable semi-annually. Interest income of approximately $160,000,
$73,000, and $371,000 was recorded in the year ended March 31, 1995, the three
month period ended March 31, 1994, and the year ended December 31, 1993,
respectively. In October 1994, PLMI redeemed the note for
36
<PAGE> 163
90% of its face value. In accordance with the Plan of Reorganization, the $1.8
million in redemption proceeds due Transcisco was paid to its Class F Creditors.
NOTE 11. SUBSEQUENT EVENTS.
On June 17, 1996, the Company entered into an Agreement and Plan of
Merger (the "Agreement") with Trinity Industries, Inc. ("Trinity"). Under terms
of the Agreement, and subject to certain approvals, a wholly-owned subsidiary of
Trinity will merge with Transcisco through the exchange of shares of common
stock of Trinity for 100 percent of the issued and outstanding shares of common
stock of Transcisco.
The Agreement provides that each share of Transcisco's outstanding
common stock will be exchanged on a tax free basis for .1884 of a share of
Trinity's common stock. Based on the June 14, 1996 closing price of $35 per
share of Trinity's stock, the transaction would have a value of approximately
$47.6 million. The stock exchange ratio is fixed.
The consummation of the proposed merger is subject, among other
conditions, to registration with the Securities and Exchange Commission of the
stock of Trinity to be issued in the transaction, approval of the definitive
agreement by the shareholders of Transcisco, expiration of the waiting period
prescribed under the Hart-Scott-Rodino Antitrust Improvements Act, and all
necessary regulatory approvals.
37
<PAGE> 164
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnity directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative
(collectively, a "Proceeding"), and other than an action by or in the right of
the corporation (a "derivative action"), if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal Proceeding, had no reason
to believe that their conduct was unlawful. With respect to derivative
actions, a standard similar to the foregoing is applicable, except that
indemnification only extends to expenses (including attorneys' fees) actually
and reasonably incurred in connection with the defense or settlement of such
action or suit, and court approval is required before there can be any
indemnification where the person seeking indemnification has been found to be
liable to the corporation. The statute states that it is not to be deemed
exclusive of any other rights that may be granted under any bylaw, agreement.
vote of stockholders or disinterested directors or otherwise.
Under Article VI of the Registrant's Bylaws, the Registrant is to indemnify
each person who is or was or has agreed to become a director, officer, employee
or agent of the Registrant or is or was serving or has agreed to serve at the
request of the Registrant in a similar capacity for another corporation,
partnership, joint venture, trust or other enterprise, to the fullest extent
authorized or permitted (i) by the Delaware General Corporation Law or by any
other applicable law or any amendment thereof or (ii) by the Registrant's
Certificate of Incorporation. Article VI of the Registrant's Bylaws further
states that the Registrant will indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
Proceeding (other than an action by or in the right of the Registrant) by
reason of the fact that he is or was or has agreed to become a director,
officer, employee or agent of the Registrant, or is or was serving or has
agreed to serve at the request of the Registrant as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges, expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
and any appeal therefrom, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Registrant, and, with respect to any criminal Proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any Proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Registrant, and, with respect to
any criminal Proceeding, had reasonable cause to believe that his conduct was
unlawful.
The Registrant will indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Registrant to procure a judgment in its favor by
reason of the fact that he is or was or has agreed to become a director,
officer, employee or agent of the Registrant, or is or was serving or has
agreed to serve at the request of the Registrant as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection with the defense or settlement of such action or suit and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Registrant, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Registrant
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses that the Court of Chancery or
such other court shall deem proper.
The indemnification described above (unless ordered by a court) shall be
paid by the Registrant unless a determination is made (i) by the Registrant's
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such Proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
Registrant's stockholders, that indemnification of the director, officer,
employee or agent is not proper in the circumstances because he has not met the
applicable standard of conduct set forth above.
To the extent that a director, officer, employee or agent of the Registrant
has been successful on the merits or otherwise, including, without limitation,
the dismissal of an action, without prejudice, in defense of any Proceeding
described above, or in defense of any claim, issue or matter therein, he shall
be indemnified against all costs, charges and expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith.
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<PAGE> 165
Under the Registrant's Bylaws, the Registrant is to advance expenses to
indemnitees to the fullest extent authorized or permitted (i) by the Delaware
General Corporation Law or by any other applicable law or any amendment thereof
or (ii) by the Registrant's Certificate of Incorporation. Article VI of the
Registrant's Bylaws provides that costs, charges and expenses (including
attorneys' fees) incurred by a person seeking indemnification under Article VI
of the Registrant's Bylaws in defending a Proceeding shall be paid by the
Registrant in advance of the final disposition of such Proceeding; provided,
however, that the payment of such costs, charges and expenses incurred by a
director or officer in his capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person while a
director or officer) in advance of the final disposition of such Proceeding
shall be made only upon receipt of an undertaking by or on behalf of the
director or officer to repay all amounts so advanced in the event that it shall
ultimately be determined that such director or officer is not entitled to be
indemnified by the Registrant. Such costs, charges and expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate, The Board of Directors may,
upon approval of such director, officer, employee or agent of the Registrant,
authorize the Registrant's counsel to represent such person in any Proceeding,
whether or not the Registrant is a party to such Proceeding.
The indemnification and advancement of costs, charges and expenses provided
by the Registrant's Bylaws shall not be deemed exclusive of any other rights to
which a person seeking indemnification or advancement of costs, charges and
expenses may be entitled under any law (common or statutory), agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding office
or while employed by or acting as agent for the Registrant, and shall continue
as to a person who has ceased to be a director, officer, employee or agent as
to actions taken while he was such a director, officer, employee or agent, and
shall inure to the benefit of the estate, heirs, executors and administrators
of such person. Repeal or modification of Article VI of the Registrant's
Bylaws or any repeal or modification of relevant provisions of the Delaware
General Corporation Law or any other applicable laws shall not in any way
diminish any rights to indemnification of such director, officer, employee or
agent or the obligations of the corporation arising thereunder.
Section 102(b) (7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
but excludes specifically liability for any (i) breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) acts or omissions not
in good faith or involving intentional misconduct or a knowing violation of
law, (iii) payments of unlawful dividends or unlawful stock repurchases or
redemptions, or (iv) transactions from which the director derived an improper
personal benefits. The provision does not limit equitable remedies, such as
an injunction or rescission for breach of a director's fiduciary duty of care.
The Registrant's Certificate of Incorporation contains a provision
eliminating the personal liability of a director from breaches of fiduciary
duty, subject to the exceptions described above.
The Registrant has entered into Indemnity Agreements with all of its
officers and directors that establish contract rights to indemnification
substantially similar to the rights to indemnification provided for in the
Registrant's Bylaws.
The Registrant has in force an officers' and directors' liability insurance
policy insuring, up to specified amounts and with specified exceptions,
directors, and officers and former directors and officers of the Registrant and
its subsidiaries against damages, judgments, settlements and costs for which
they are not indemnified by the Registrant that any such persons may become
legally obligated to pay on account of claims made against them for any error,
misstatement or misleading statement, act or omission, or neglect or breach of
duty committed, attempted or allegedly committed or attempted by such persons
in the discharge of their duties to the Registrant in their capacities as
directors or officers, or any matter claimed against them solely by reason of
their serving in such capacities. The officers' and directors' liability
insurance policy also insures the Registrant, up to specified amounts and with
specified exceptions, against any indemnification payments made by the
Registrant to directors and officers and former directors and officers.
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<PAGE> 166
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
**2 Agreement and Plan of Merger, dated as of June 17, 1996, by and among the Registrant, Trinity Y, Inc. and
Transcisco Industries, Inc. (included as Annex A to the Proxy Statement/Prospectus in Part I of this
Registration Statement).
3(a) Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.A to Registration
Statement No. 33-10937 filed by the Registrant on April 8, 1987).
*3(b) Bylaws of the Registrant.
4(a) Specimen Stock Certificate for Trinity Common Stock (incorporated by reference to Exhibit 3B to Registrant's
Registration Statement No. 33-10937 filed with the Commission on April 8, 1987).
4(b) Rights Agreement, dated as of April 11, 1989, by and between the Registrant and NCNB Texas National Bank, as
Rights Agent (incorporated by reference to Exhibit 1 to the Registrant's Registration Statement on Form 8-A
filed with the Commission on May 2, 1989).
*5 Opinion and Consent of Locke Purnell Rain Harrell (A Professional Corporation) with respect to the legality of
securities to be issued in the Merger.
*8(a) Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to certain tax matters.
21 Listing of Subsidiaries of the registrant (incorporated by reference to Exhibit 21 in the Registrant's Annual
Report on Form 10-K for its fiscal year ended March 31, 1996).
*23(a) Consent of Locke Purnell Rain Harrell (A Professional Corporation) (contained in its opinion in Exhibit 5
above).
*23(b) Consent of Skadden, Arps, Slate, Meagher & Flom.
*23(c) Consent of Ernst & Young LLP.
*23(d) Consent of Schroder Wertheim & Co. Incorporated.
*23(e) Consent of KPMG Moscow, Russia.
*24 Powers of Attorney (included on the signature page of this Registration Statement).
*99(a) Form of Proxy of Transcisco Industries, Inc. (relating to the meeting of stockholders of Transcisco Industries,
Inc. described in the Proxy Statement/Prospectus in Part I of this Registration Statement).
*99(b) Letter of Transmittal.
</TABLE>
* Previously Filed
** Filed Herewith
In accordance with paragraph (b)(4)(iii) of Item 601 of Regulation S-K, the
Registrant is not filing herewith certain instruments defining the rights of
holders of long-term debt of the Registrant because the total amount of
securities authorized thereunder does not exceed 10 percent of the total assets
of the Registrant and its subsidiaries on a consolidated basis. The Registrant
hereby agrees to furnish a copy of such instruments to the Commission upon
request.
(B) FINANCIAL STATEMENT SCHEDULES
Not Applicable.
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<PAGE> 167
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post- effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) 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 that is incorporated by
reference in the Registration Statement 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.
(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form
with respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(6) That every prospectus (i) that is filed pursuant to the immediately
preceding paragraph or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act of
1933, each such post-effective amendment 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.
(7) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under Item 20 above 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 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 Act and will be governed by the final adjudication of such
issue.
(8) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the Registration Statement through the date of responding to the request.
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<PAGE> 168
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it
became effective.
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<PAGE> 169
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DALLAS,
STATE OF TEXAS, ON JULY 19, 1996.
TRINITY INDUSTRIES, INC.
By: /s/ F. DEAN PHELPS*
--------------------------------
F. Dean Phelps
Vice President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in their
capacities set forth below on July 19, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
(a) Principal Executive Officer
Chairman, President, Chief
/s/ W. RAY WALLACE* Executive Officer and Director
------------------------------
W. RAY WALLACE
(b) Principal Financial Officer
/s/ JOHN T. SANFORD* Senior Vice President
-----------------------------
JOHN T. SANFORD
(c) Principal Accounting Officer
/s/ F. DEAN PHELPS* Vice President
-----------------------------
F. DEAN PHELPS
</TABLE>
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<PAGE> 170
<TABLE>
<CAPTION>
SIGNATURE TITLE
---------------------------- -----
<S> <C>
(d) Other Directors
/s/ DAVID W. BIEGLER* Director
----------------------------
DAVID W. BIEGLER
/s/ BARRY J. GALT* Director
----------------------------
BARRY J. GALT
/s/ CLIFFORD J. GRUM* Director
----------------------------
CLIFFORD J. GRUM
/s/ DEAN P. GUERIN* Director
----------------------------
DEAN P. GUERIN
/s/ JESS T. HAY* Director
----------------------------
JESS T. HAY
/s/ EDMUND M. HOFFMAN* Director
----------------------------
EDMUND M. HOFFMAN
/s/ RAY J. PULLEY* Director
----------------------------
RAY J. PULLEY
/s/ TIMOTHY R. WALLACE* Director
----------------------------
TIMOTHY R. WALLACE
*By /s/ F. DEAN PHELPS
-------------------
F. DEAN PHELPS
Attorney-In-Fact
</TABLE>
II-7
