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EXHIBIT 2.2
WABCO STOCK OPTION AGREEMENT
BETWEEN
WESTINGHOUSE AIR BRAKE COMPANY,
A DELAWARE CORPORATION,
AND
MOTIVEPOWER INDUSTRIES, INC.,
A PENNSYLVANIA CORPORATION
DATED AS OF JUNE 2, 1999
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TABLE OF CONTENTS
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PAGE
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1. The Option; Exercise; Payment of Spread.......................................................................1
2. Adjustments...................................................................................................2
3. Conditions to Delivery of Shares..............................................................................3
4. The Closing...................................................................................................4
5. Listing of Shares; Filings; Governmental Consents.............................................................4
6. Repurchase of Shares..........................................................................................4
7. Sale of Shares................................................................................................5
8. Registration Rights...........................................................................................5
9. Expenses......................................................................................................7
10. Specific Performance.........................................................................................7
11. Notice.......................................................................................................7
12. Interpretation...............................................................................................8
13. Entire Agreement.............................................................................................8
14. Amendment....................................................................................................8
15. Severability.................................................................................................8
16. Governing Law................................................................................................9
17. Counterparts.................................................................................................9
18. Parties in Interest..........................................................................................9
19. Corporate Authorization......................................................................................9
20. Assignment...................................................................................................9
21. Termination..................................................................................................9
22. Profit Limitation...........................................................................................10
23. Public Announcement.........................................................................................10
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WABCO STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of June 2, 1999 (the
"Agreement") between Westinghouse Air Brake Company, a Delaware corporation
(the "Grantor"), and MotivePower Industries, Inc., a Pennsylvania corporation
(the "Grantee").
WHEREAS, the Grantor and the Grantee are entering into an
Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the merger of Grantor with
and into Grantee (the "Merger");
WHEREAS, as a condition and inducement to Grantee's
willingness to enter into the Merger Agreement, the Grantee has requested that
the Grantor grant to the Grantee an option to purchase up to 6,453,710 shares
of Common Stock, par value $0.01 per share, of the Grantor (the "Common
Stock"), upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce the Grantee to enter into the
Merger Agreement, the Grantor is willing to grant the Grantee the requested
option.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties hereto agree as
follows:
1. The Option; Exercise; Payment of Spread. (a)
Contemporaneously herewith the Grantee and the Grantor are entering into the
Merger Agreement. Subject to the other terms and conditions set forth herein,
the Grantor hereby grants to the Grantee an irrevocable option (the "Option")
to purchase up to 6,453,710 shares of Common Stock (the "Shares") at a cash
purchase price equal to $21.6125 per share (the "Purchase Price"). The Option
may be exercised by the Grantee, in whole or in part, at any time, or from time
to time, following (but not prior to) the occurrence of one of the events set
forth in Section 3(c) hereof, and prior to the termination of the Option in
accordance with the terms of this Agreement.
(b) In the event the Grantee wishes to exercise the Option,
the Grantee shall send a written notice to the Grantor (the "Stock Exercise
Notice") specifying a date (subject to the HSR Act (as defined below) and any
other applicable regulatory approvals) not later than 10 business days and not
earlier than three business days following the date such notice is given for
the closing of such purchase.
(c) If at any time the Option is then exercisable pursuant to
the terms of Section 1(a) hereof, the Grantee may elect, in lieu of exercising
the Option to purchase Shares provided in Section 1(a) hereof, to send a
written notice to the
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Grantor (the "Cash Exercise Notice") specifying a date not later than 20
business days and not earlier than 10 business days following the date such
notice is given on which date the Grantor shall pay to the Grantee an amount in
cash equal to the Spread (as hereinafter defined) multiplied by all or such
portion of the Shares subject to the Option as Grantee shall specify. As used
herein, "Spread" shall mean the excess, if any, over the Purchase Price of the
higher (x) if applicable, the highest price per share of Common Stock
(including any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid or proposed to be paid by any person pursuant to any Takeover
Proposal (as defined in the Merger Agreement) (the "Alternative Purchase
Price") or (y) the closing price of the shares of Common Stock on the New York
Stock Exchange (the "NYSE") Composite Tape, the American Stock Exchange (the
"AMEX") or The Nasdaq National Market (the "Nasdaq"), as the case may be, on
the last trading day immediately prior to the date of the Cash Exercise Notice
(the "Closing Price"). If the Alternative Purchase Price includes any property
other than cash, the Alternative Purchase Price shall be the sum of (i) the
fixed cash amount, if any, included in the Alternative Purchase Price plus (ii)
the fair market value of such other property. If such other property consists
of securities with an existing public trading market, the average of the
closing prices (or the average of the closing bid and asked prices if closing
prices are unavailable) for such securities in their principal public trading
market on the five trading days ending five days prior to the date of the Cash
Exercise Notice shall be deemed to equal the fair market value of such
property. If such other property consists of something other than cash or
securities with an existing public trading market and, as of the payment date
for the Spread, agreement on the value of such other property has not been
reached, the Alternative Purchase Price shall be deemed to equal the Closing
Price. Upon exercise of its right to receive cash pursuant to this Section
1(c), the obligations of the Grantor to deliver Shares pursuant to Section 4
shall be terminated with respect to such number of Shares for which the Grantee
shall have elected to be paid the Spread.
2. Adjustments. (a) In the event of any change in the number
of issued and outstanding shares of Common Stock by reason of any stock
dividend, stock split, split-up, recapitalization, merger or other change in
the corporate or capital structure of the Grantor, the number of Shares subject
to this Option and the purchase price per Share shall be appropriately adjusted
to restore the Grantee to its rights hereunder, including its right to purchase
Shares representing 19% of the capital stock of the Grantor entitled to vote
generally for the election of the directors of Grantor which is issued and
outstanding immediately prior to the exercise of the Option.
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(b) Without limiting the parties' relative rights and
obligations under the Merger Agreement, in the event that Grantor enters into
an agreement (i) to consolidate with or merge into any person, other than
Grantee or one of its subsidiaries, and Grantor will not be the continuing or
surviving corporation in such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its subsidiaries, to merge into Grantor,
and Grantor will be the continuing or surviving corporation, but in connection
with such merger, the shares of Common Stock outstanding immediately prior to
the consummation of such merger will be changed into or exchanged for stock or
other securities of Grantor or any other person or cash or any other property,
or the shares of Common Stock outstanding immediately prior to the consummation
of such merger will, after such merger, represent less than 50% of the
outstanding voting securities of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction will make proper provision so that the
Option will, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
with identical terms appropriately adjusted to acquire the number and class of
shares or other securities or property that Grantee would have received in
respect to Common Stock if the Option had been exercised immediately prior to
such consolidation, merger, sale, or transfer, or the record date therefor, as
applicable and make any other necessary adjustments.
3. Conditions to Delivery of Shares. The Grantor's obligation
to deliver Shares upon exercise of the Option is subject only to the conditions
that:
(a) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the United
States prohibiting the delivery of the Shares shall be in effect; and
(b) Any applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall have
expired or been terminated; and
(c) (i) the Merger Agreement is terminated pursuant to
Section 7.1(d)(i) and either (I) a Takeover Proposal with respect to Grantor
shall have been made after the date of the Merger Agreement and prior to the
Grantor Stockholders Meeting (as defined in the Merger Agreement) or (II) the
Board of Directors of Grantor shall not have recommended or shall have modified
in a manner materially adverse to Grantee its recommendation of the Merger
Agreement and Merger; or (ii) the Merger Agreement is terminated pursuant to
Section 7.1(i), 7.1(j) or 7.1(k) of the Merger Agreement.
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4. The Closing. (a) Any closing hereunder shall take place on
the date specified by the Grantee in its Stock Exercise Notice or Cash Exercise
Notice, as the case may be, at 9:00 A.M., local time, at the offices of Doepken
Keevican & Weiss, 58th Floor, USX Tower, 600 Grant Street, Pittsburgh,
Pennsylvania, or, if the conditions set forth in Section 3(a), (b) or (c) have
not then been satisfied, on the second business day following the satisfaction
of such conditions, or at such other time and place as the parties hereto may
agree (the "Closing Date"). On the Closing Date, (i) in the event of a closing
pursuant to Section 1(b) hereof, the Grantor will deliver to the Grantee a
certificate or certificates representing the Shares in the denominations
designated by the Grantee in its Stock Exercise Notice and the Grantee will
purchase such Shares from the Grantor at the price per Share equal to the
Purchase Price or (ii) in the event of a closing pursuant to Section 1(c)
hereof, the Grantor will deliver to the Grantee cash in an amount determined
pursuant to Section 1(c) hereof. Any payment made pursuant to this Agreement
shall be made by certified or official bank check or by wire transfer of
federal funds to a bank designated by the party receiving such funds.
(b) The certificates representing the Shares shall bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
5. Listing of Shares; Filings; Governmental Consents. Subject
to applicable law and the rules and regulations of the NYSE, the AMEX or the
Nasdaq, as the case may be, after the Option becomes exercisable hereunder, the
Grantor will promptly file an application to list the Shares on the NYSE or the
AMEX or quote the Shares on Nasdaq, as the case may be, and will use its
reasonable best efforts to obtain approval of such listing and to effect all
necessary filings by the Grantor under the HSR Act and the applicable laws of
each state and foreign jurisdiction; provided, however, that if the Grantor is
unable to effect such listing by the Closing Date, the Grantor will
nevertheless be obligated to deliver the Shares upon the Closing Date. Each of
the parties hereto will use its reasonable best efforts to obtain consents of
all third parties and governmental authorities, if any, necessary to the
consummation of the transactions contemplated.
6. Repurchase of Shares. If by the date that is the first
anniversary of the date the Merger Agreement was terminated pursuant to the
terms thereof (the "Merger Termination Date"), neither the Grantee nor any
other Person has acquired more than fifty percent (excluding the Shares) of the
shares of outstanding Common Stock, then the Grantor has the right to purchase
(the "Repurchase Right") all, but not less than all, of the Shares acquired
upon exercise of this Option at the greater of (i) the Purchase Price or (ii)
the average of the last sales prices for
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shares of Common Stock on the five trading days ending five days prior to the
date the Grantor gives written notice of its intention to exercise the
Repurchase Right. If the Grantor does not exercise the Repurchase Right within
thirty days following the end of the one-year period after the Merger
Termination Date, the Repurchase Right lapses. In the event the Grantor wishes
to exercise the Repurchase Right, the Grantor shall send a written notice to
the Grantee specifying a date (not later than 20 business days and not earlier
than 10 business days following the date such notice is given) for the closing
of such purchase.
7. Sale of Shares. At any time prior to the first anniversary
of the Merger Termination Date, the Grantee shall have the right to sell (the
"Sale Right") to the Grantor all, but not less than all, of the Shares acquired
upon exercise of this Option at the greater of (i) the Purchase Price or (ii)
the average of the last sales prices for shares of Common Stock on the five
trading days ending five days prior to the date the Grantee gives written
notice of its intention to exercise the Sale Right. If the Grantee does not
exercise the Sale Right prior to the first anniversary of the Merger
Termination Date, the Sale Right terminates. In the event the Grantee wishes to
exercise the Sale Right, the Grantee shall send a written notice to the Grantor
specifying a date not later than 20 business days and not earlier than 10
business days following the date such notice is given for the closing of such
sale.
8. Registration Rights. (a) In the event that the Grantee
shall desire to sell any of the Shares within three years after the purchase of
such Shares pursuant hereto, and such sale requires, in the opinion of counsel
to the Grantee, which opinion shall be reasonably satisfactory to the Grantor
and its counsel, registration of such Shares under the Securities Act, the
Grantor will cooperate with the Grantee and any underwriters in registering
such Shares for resale, including, without limitation, promptly filing a
registration statement, including if requested by Grantee a "shelf"
registration statement under Rule 145 under the Securities Act or any successor
provision, which complies with the requirements of applicable federal and state
securities laws, and entering into an underwriting agreement with such
underwriters upon such terms and conditions as are customarily contained in
underwriting agreements with respect to secondary distributions; provided,
however, that the Grantor shall not be required to have declared effective more
than one registration statement hereunder and shall be entitled to delay the
filing or effectiveness of any registration statement for up to 180 days if the
offering would, in the judgment of the Board of Directors of the Grantor,
require premature disclosure of any material corporate development or material
transaction involving the Grantor or interfere with any previously planned
securities offering by the Grantor.
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(b) If the Common Stock is registered pursuant to the
provisions of this Section 8, the Grantor agrees (i) to furnish copies of the
registration statement and the prospectus relating to the Shares covered
thereby in such numbers as the Grantee may from time to time reasonably request
and (ii) if any event shall occur as a result of which it becomes necessary to
amend or supplement any registration statement or prospectus, to prepare and
file under the applicable securities laws such amendments and supplements as
may be necessary to keep available for at least 120 days a prospectus covering
the Common Stock meeting the requirements of such securities laws, and to
furnish the Grantee such numbers of copies of the registration statement and
prospectus as amended or supplemented as may reasonably be requested. The
Grantor shall bear the cost of the registration, including, but not limited to,
all registration and filing fees, printing expenses, and fees and disbursements
of counsel and accountants for the Grantor, except that the Grantee shall pay
the fees and disbursements of its counsel, and the underwriting fees and
selling commissions applicable to the shares of Common Stock sold by the
Grantee. The Grantor shall indemnify and hold harmless (i) Grantee, its
affiliates and its officers and directors and (ii) each underwriter and each
person who controls any underwriter within the meaning of the Securities Act or
the Securities Exchange Act of 1934, as amended (collectively, the
"Underwriters") ((i) and (ii) being referred to as "Indemnified Parties")
against any losses, claims, damages, liabilities or expenses, to which the
Indemnified Parties may become subject, insofar as such losses, claims,
damages, liabilities (or actions in respect thereof) and expenses arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained or incorporated by reference in any registration
statement filed pursuant to this paragraph, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Grantor will not be liable in any such case to the
extent that any such loss, liability, claim, damage or expense arises out of or
is based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any such documents in reliance upon and in conformity
with written information furnished to Grantor by the Indemnified Parties
expressly for use or incorporation by reference therein.
(c) The Grantee shall indemnify and hold harmless the
Grantor, its affiliates and its officers and directors against any losses,
claims, damages, liabilities or expenses to which the Grantor, its affiliates
and its officers and directors may become subject, insofar as such losses,
claims, damages, liabilities (or actions in respect thereof) and expenses arise
out of or are based upon any untrue statement of any material fact contained or
incorporated by reference in any registration statement filed pursuant to this
paragraph, or arise out of or are based upon the omission or alleged omission
to state therein a material fact
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required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Grantor by the Grantee specifically for use or incorporation by
reference therein.
9. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise specifically
provided herein.
10. Specific Performance. The Grantor acknowledges that if
the Grantor fails to perform any of its obligations under this Agreement
immediate and irreparable harm or injury would be caused to the Grantee for
which money damages would not be an adequate remedy. In such event, the Grantor
agrees that the Grantee shall have the right, in addition to any other rights
it may have, to specific performance of this Agreement. Accordingly, if the
Grantee should institute an action or proceeding seeking specific enforcement
of the provisions hereof, the Grantor hereby waives the claim or defense that
the Grantee has an adequate remedy at law and hereby agrees not to assert in
any such action or proceeding the claim or defense that such a remedy at law
exists. The Grantor further agrees to waive any requirements for the securing
or posting of any bond in connection with obtaining any such equitable relief.
11. Notice. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one
day after being delivered to a nationally recognized overnight courier or when
telecopied (with a confirmatory copy sent by such overnight courier) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to the Grantee, to:
Two Gateway Center
14th Floor
Pittsburgh, PA 15222
Attention: Chief Executive Officer
Facsimile No.: (412) 201-1116
with copies to:
Doepken Keevican & Weiss
58th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219-2703
Attention: Leo A. Keevican, Jr.
Facsimile No.: (412) 355-2609
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and
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Frederick C. Lowinger
Facsimile No.: (312) 853-7036
(b) if to the Grantor, to:
1001 Air Brake Avenue
Wilmerding, PA 15148
Attention: Chief Executive Officer
Facsimile No.: (412) 825-1156
with copies to:
Reed Smith Shaw McClay
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: David DeNinno
Facsimile No.: (412) 288-3218
and
Kirkland & Ellis
655 15th Street, N.W.
Washington, D.C. 20005
Attention: Jack Feder
Facsimile No.: (202) 879-5200
12. Interpretation. When a reference is made in this
Agreement to a section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation."
13. Entire Agreement. This Agreement (including the documents
and the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
14. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
15. Severability. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity
or enforceability of any other provision of
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this Agreement in such jurisdiction, or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
16. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Pennsylvania, regardless
of the laws that might otherwise govern under the applicable principles of
conflicts of laws thereof.
17. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
18. Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties named herein and their respective
successors and assigns; provided, however, that such successor in interest or
assigns shall agree to be bound by the provisions of this Agreement. Nothing in
this Agreement, express or implied, is intended to confer upon any person other
than the Grantor or the Grantee, or their successors or assigns, any rights or
remedies under or by reason of this Agreement.
19. Corporate Authorization. The Grantor agrees to take all
necessary corporate action to authorize and reserve the Shares issuable upon
exercise of the Option and to insure that, when issued and delivered by the
Grantor upon exercise of the Option and paid for by Grantee as contemplated
hereby, the Shares will be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights.
20. Assignment. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior written
consent of the other party hereto, except that the Grantee may assign its
rights and obligations hereunder to any of its direct or indirect wholly owned
subsidiaries, but no such transfer shall relieve the Grantee of its obligations
hereunder if such transferee does not perform such obligations.
21. Termination. The right to exercise the Option granted
pursuant to this Agreement shall terminate at the earliest of (i) the Effective
Time (as defined in the Merger Agreement), (ii) if the Option is not exercised
within 12 months days after first becoming exercisable and (iii) if not then
exercisable, thirty days after termination of the Merger Agreement in
accordance with its terms (the dates referred to in clause (ii) and (iii) being
hereinafter referred to as the "Termination Date"); provided, however, that if
the Option cannot be exercised or the Shares cannot be delivered to Grantee
upon such exercise because the conditions set forth in Section 3(a),
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(b) or (c) hereof have not yet been satisfied, the Termination Date shall be
extended until thirty days after such impediment to exercise or delivery has
been removed.
22. Profit Limitation. (a) Notwithstanding any other
provision of this Agreement or the Merger Agreement, in no event shall the
Grantee's Total Profit (as hereinafter defined) exceed $30 million and, if it
otherwise would exceed such amount, the Grantee shall repay such excess amount
to Grantor in cash (or the purchase price for purposes of Section 6 or 7, as
applicable, shall be reduced) so that Grantee's Total Profit shall not exceed
$30 million after taking into account the foregoing actions.
Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of Shares as would, as of the date of
the Stock Exercise Notice, result in a Notional Total Profit (as defined below)
of more than $15 million and, if exercise of the Option otherwise would exceed
such amount, the Grantee, at its discretion, may increase the Purchase Price
for that number of Shares set forth in the Stock Exercise Notice so that the
Notional Total Profit shall not exceed $15 million; provided, however, that
nothing in this sentence shall restrict any exercise of the Option permitted
hereby on any subsequent date at the Purchase Price set forth in Section 1(a)
hereof.
As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i)(x) the amount of cash
received by Grantee pursuant to Sections 7.3(b)(ii) and (c) (ii) of the Merger
Agreement and Section 1(c) hereof, less (y) any repayment of such cash to
Grantor, (ii)(x) the amount received by Grantee pursuant to the Grantor's
repurchase of Shares pursuant to Sections 6 or 7 hereof, less (y) the Grantee's
purchase price for such Shares, and (iii)(x) the net cash amounts received by
Grantee pursuant to the sale of Shares (or any other securities into or for
which such Shares are converted or exchanged) to any unaffiliated party, less
(y) the Grantee's purchase price for such Shares.
As used herein, the term "Notional Total Profit" with respect
to any number of Shares as to which Grantee may propose to exercise this Option
shall be the Total Profit determined as of the date of the Stock Exercise
Notice assuming that this Option was exercised on such date for such number of
Shares and assuming that such Shares, together with all Shares acquired upon
exercise of the Option and held by Grantee and its affiliates as of such date,
were sold for cash at the closing market price for the Common Stock as of the
close of business on the preceding trading day (less customary brokerage
commissions).
23. Public Announcement. Grantee and Grantor shall consult
with each other before issuing any press release or otherwise making any public
statement with respect to this Option and shall not issue any such press
release or make any such
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public statement prior to such consultation and the receipt of approval
therefor by the other party, which consent shall not be unreasonably withheld,
except as may be required by law, court process or by stock exchange rules.
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IN WITNESS WHEREOF, the Grantee and the Grantor have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
MOTIVEPOWER INDUSTRIES, INC.
By: /s/ John C. Pope
-------------------------------
Name: John C. Pope
Title: Chairman of the Board
WESTINGHOUSE AIR BRAKE COMPANY
By: /s/ William E. Kassling
-------------------------------
Name: William E. Kassling
Title: Chief Executive Officer
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