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Exhibit 2.3
AMENDED AND RESTATED
MOTIVEPOWER STOCK OPTION AGREEMENT
BETWEEN
WESTINGHOUSE AIR BRAKE COMPANY,
A DELAWARE CORPORATION,
AND
MOTIVEPOWER INDUSTRIES, INC.,
A PENNSYLVANIA CORPORATION
DATED AS OF SEPTEMBER 26, 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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AMENDED AND RESTATED MOTIVEPOWER STOCK OPTION AGREEMENT
AMENDED AND RESTATED STOCK OPTION AGREEMENT dated as of
September 26,1999 (the "Agreement") between MotivePower Industries, Inc., a
Pennsylvania corporation (the "Grantor") and Westinghouse Air Brake Company, a
Delaware corporation
(the "Grantee").
WHEREAS, the Grantor and the Grantee are parties to that
certain Agreement and Plan of Merger dated June 2, 1999, as amended as of July
19, 1999 (as so amended, the "Original Merger Agreement") and that certain
MotivePower Stock Option Agreement dated June 2, 1999 (the "Original MotivePower
Option Agreement");
WHEREAS, the Grantor and the Grantee are amending the Original
Merger Agreement as of the date hereof (as so amended, the "Merger Agreement")
to provide for the merger of Grantor with and into Grantee (the "Merger"); and
WHEREAS, in order to induce the Grantee to enter into the
Merger Agreement, the Grantor has agreed to amend and restate the Original
MotivePower Option Agreement as set forth herein.
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 5,133,655 shares of Common Stock (the "Shares") at a cash
purchase price equal to $13.12 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 Grantor (the "Cash Exercise
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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.
(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
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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)(ii) 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 the Merger; or (ii) the Merger Agreement is terminated pursuant to Section
7.1(e), 7.1(f) or 7.1(g) of the Merger Agreement.
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
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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 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.
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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.
(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
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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 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 Grantor, to:
Two Gateway Center
14th Floor
Pittsburgh, PA 15222
Attention: Chief Executive Officer
Facsimile No.: (412) 201-1116
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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
and
Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, IL 60603
Attention: Frederick C. Lowinger
Facsimile No.: (312) 853-7036
(b) if to the Grantee, 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
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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, including without
limitation the Original MotivePower Option Agreement, it being understood that
the Option (as defined in the Original MotivePower Option Agreement) is hereby
terminated and that as of the date hereof the Option referred to in Section 1
hereof is granted to the Grantee pursuant to this Agreement.
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 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,
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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 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), (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 $22.5 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 $22.5 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 $7.5 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 $7.5 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(d)(ii) and (e) (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.
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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. Grantor and Grantee 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 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.
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