View:
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. )*
Westinghouse Air Brake Company
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
960386-10-0
------------------------------------------------
(CUSIP Number)
Kenneth A. Pereira
American Industrial Partners Capital Fund II, L.P.
One Maritime Plaza, Suite 2525
San Francisco, California 94111
(415) 788-7354
with a copy to
Mark A. Stegemoeller, Esq.
Latham & Watkins
233 South Wacker, Suite 5800
Chicago, Illinois 60606
(312) 876-7700
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
March 21, 1997
------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Exchange Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 29 Pages
SCHEDULE 13D
- ---------------------------------- ----------------------------------------
CUSIP No. 960386-10-0 Page 2 of 29 Pages
-------------- -------- ----------
- ---------------------------------- ----------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
American Industrial Partners Capital Fund II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |x|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
900,000
NUMBER OF
SHARES ----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
900,000
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
900,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |x|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
SCHEDULE 13D
- ----------------------------------- ----------------------------------------
CUSIP No. 960386-10-0 Page 3 of 29 Pages
----------------------- -------- ----------
- ----------------------------------- ----------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
American Industrial Partners II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |x|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
900,000
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 900,000
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
900,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |x|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
SCHEDULE 13D
- ----------------------------------- ----------------------------------------
CUSIP No. 960386-10-0 Page 4 of 29 Pages
----------------------- -------- -----------
- ----------------------------------- ----------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
American Industrial Partners Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)|_|
(b)|x|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
900,000
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 900,000
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
900,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |x|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
SCHEDULE 13D
- ---------------------------------- ----------------------------------------
CUSIP No. 960386-10-0 Page 5 of 29 Pages
----------------------- -------- -----------
- ---------------------------------- ----------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Theodore C. Rogers
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)|_|
(b)|x|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
900,000
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 900,000
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
900,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |x|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
SCHEDULE 13D
- ---------------------------------- ----------------------------------------
CUSIP No. 960386-10-0 Page 6 of 29 Pages
----------------------- -------- -----------
- ---------------------------------- ----------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
W. Richard Bingham
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |x|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
900,000
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 900,000
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
900,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |x|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
Page 7 of 29 Pages
Item 1. Security and Issuer.
This statement relates to the shares of Common Stock, par value $.01
per share (the "Common Stock"), of Westinghouse Air Brake Company, a Delaware
corporation (the "Issuer"). The principal executive offices of the Issuer are
located at 1001 Air Brake Avenue, Wilmerding, Pennsylvania 15148.
Item 2. Identity and Background.
This statement is being filed jointly by the following reporting
persons (hereinafter collectively referred to as the "Reporting Persons"):
(i) American Industrial Partners Capital Fund II, L.P., a Delaware
limited partnership ("AIP Capital");
(ii) American Industrial Partners II, L.P., a Delaware limited
partnership ("AIP II");
(iii) American Industrial Partners Corporation, a Delaware corporation
("AIP Corporation");
(iv) Theodore C. Rogers, an individual; and
(v) W. Richard Bingham, an individual.
The principal offices of the Reporting Persons (except for Mr. Rogers) are
located at One Maritime Plaza, Suite 2525, San Francisco, California 94111. The
principal offices of Mr. Rogers are located at 551 Fifth Avenue, New York, New
York 10176. AIP Capital, AIP II and AIP Corporation are principally engaged in
the business of investing in businesses. AIP II is the sole general partner of
AIP Capital and AIP Corporation is the sole general partner of AIP II. Mr.
Rogers and Mr. Bingham are, or may be considered to be, controlling stockholders
of AIP Corporation.
The executive officers of AIP Corporation are as follows: Mr. Rogers is the
Chairman of the Board and Secretary; Mr. Bingham is the President, Treasurer and
Assistant Secretary; Kenneth A. Pereira is the Controller; and Burnell R.
Roberts, Tom H. Barrett, Robert L. Purdum and Robert Cizik are Managing
Directors. Messrs. Rogers, Bingham, Roberts, Barrett, Cizik and Purdum are
members of the Board of Directors of AIP Corporation. The principal business
address for Messrs. Rogers and Purdum is 551 Fifth Avenue, New York, New York
10176. The principal
Page 8 of 29 Pages
business address for Messrs. Bingham and Pereira is One Maritime Plaza, Suite
2525, San Francisco, California 94111. The principal business address for Mr.
Roberts is c/o Pembroke Associates, Kettering Tower, Suite 2340, 2nd & Main
Streets, Dayton, Ohio 45423. The principal business address for Mr. Barrett is
c/o Goodyear Tire & Rubber Company, One Cascade Plaza, 21st Floor, Akron, Ohio
44308. The principal business address for Mr. Cizik is c/o Cizik Interests,
Texas Commerce Tower, 600 Travis, Suite 3628, Houston, Texas 77002. Messrs.
Bingham, Pereira, Rogers, Roberts, Barrett, Cizik and Purdum are citizens of the
United States of America. The present principal occupation or employment of each
of Messrs. Pereira, Roberts, Barrett, Cizik and Purdum is serving in his
position with AIP Corporation or one of its portfolio companies. The present
principal occupation or employment of Mr. Bingham is serving in his position
with AIP Corporation and as President, Secretary and a member of the Board of
Directors of AIP Management Corporation I, a Delaware corporation. The present
principal occupation or employment of Mr. Rogers is serving in his position with
AIP Corporation and as President, Secretary and a member of the Board of
Directors of AIP Management Corporation II, a Delaware corporation.
During the past five years, none of the Reporting Persons and, to the
best knowledge of the Reporting Persons, none of the other persons named in this
Item 2: (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Information with respect to each of the Reporting Persons is given
solely by such Reporting Person and no Reporting Person has responsibility for
the accuracy or completeness of information supplied by another Reporting
Person.
Page 9 of 29 Pages
Item 3. Source and Amount of Funds or Other Consideration.
The source of funds for AIP Capital's acquisition of 900,000 shares
of Common Stock pursuant to the Stock Purchase Agreement referred to below was
funds committed to AIP Capital by its partners pursuant to a partnership
agreement previously entered into with such partners. Pursuant to the Stock
Purchase Agreement, dated as of March 5, 1997 (the "Stock Purchase Agreement"),
by and among Scandinavian Incentive Holding B.V., a corporation organized under
the laws of the Netherlands ("SIH"), Incentive AB, a corporation organized under
the laws of the Kingdom of Sweden and the sole stockholder of SIH ("Incentive"),
Vestar Equity Partners, L.P., a Delaware limited partnership ("Vestar"), Harvard
Private Capital Holdings, Inc., a Massachusetts corporation ("Harvard"), AIP
Capital, and certain employees of the Issuer (the "Management Purchasers"), AIP
Capital paid a purchase price of $11.00 per share for 900,000 shares of Common
Stock, for an aggregate purchase price of $9,900,000.
Item 4. Purpose of Transaction.
The shares of Common Stock acquired by AIP Capital have been
acquired solely for the purpose of investment. AIP Capital's acquisition of such
shares was made as part of a transaction in which SIH sold all of its 10,000,000
shares of Common Stock pursuant to the Stock Purchase Agreement and the
Redemption Agreement, described below.
Pursuant to the Stock Purchase Agreement, on March 31, 1997, SIH
sold 6,000,000 shares of Common Stock, of which AIP Capital purchased 900,000
shares, Vestar purchased 2,400,000 shares, Harvard purchased 2,400,000 shares
and the Management Purchasers purchased an aggregate of 300,000 shares.
Concurrently with the execution and delivery of the Stock Purchase Agreement,
the Issuer entered into the Redemption Agreement, dated as of March 5, 1997 (the
"Redemption Agreement"), with SIH and Incentive. Pursuant to the Redemption
Agreement, on March 31, 1997, the Issuer purchased the remaining 4,000,000
shares of Common Stock owned by SIH (the "Redemption").
Page 10 of 29 Pages
In addition, in connection with the execution and delivery of the
Stock Purchase Agreement, AIP Capital entered into the Stockholders Agreement,
the Registration Rights Agreement, and the Buyers Letter Agreement and is a
beneficiary of the Management Purchasers Letter Agreements (each as described in
Item 6 below), which contain provisions regarding, among other things, the
acquisition, disposition and voting of shares of Common Stock by the parties to
such agreements, as well as certain provisions regarding the composition of the
Issuer's Board of Directors (the "Board").
The Reporting Persons may make additional purchases of Common Stock
either in the open market or in private transactions, depending on the Reporting
Persons' evaluation of the Issuer's business, prospects and financial condition,
the market for the securities of the Issuer, other opportunities available to
the Reporting Persons, general economic conditions, money and stock market
conditions, regulatory approvals and other future developments. Depending upon,
among other things, the factors set forth above, the Reporting Persons reserve
the right to dispose of all or part of their investment in the Common Stock,
subject to certain restrictions set forth in the Stockholders Agreement and the
Buyers Letter Agreement.
Except as described herein and in Item 6 below, neither the
Reporting Persons nor, to the best of their knowledge, any of the individuals
referred to in Item 2, has any present plan or proposal which relates to, or
could result in, any of the events referred to in paragraphs (a) through (j),
inclusive, of Item 4 of Schedule 13D. However, subject to the Reporting Persons'
obligations under the agreements referred to above, the Reporting Persons will
continue to review the business of the Issuer and, depending upon one or more of
the factors referred to in the proceeding paragraph, may in the future propose
that the Issuer take one or more of such actions.
Page 11 of 29 Pages
Item 5. Interest in Securities of Issuer.
(a) As a result of the various provisions in the Stock Purchase Agreement,
the Stockholders Agreement, the Buyers Letter Agreement and the Management
Purchasers Letter Agreements, the Reporting Persons may be deemed to be a
members of a group (the "Group"), within the meaning of Section 13(d)(3) of the
Exchange Act, comprised of the Reporting Persons, Harvard, Vestar, the
Management Purchasers (including each of the following executive officers of the
Issuer: William B. Kassling, Emilio A. Fernandez, Robert J. Brooks and John M.
Meister (collectively, the "Executive Officers")), Ofelia B. Fernandez,
Davideco, Inc., a Pennsylvanis business trust ("Davideco"), Suebro, Inc., a
Delaware holding company ("Suebro") and the voting trust (the "Voting Trust")
created under the Second Amended and Restated Voting Trust/Disposition
Agreement, dated as of December 13, 1995 (the "Voting Trust Agreement").
Collectively, the foregoing Group beneficially owns an aggregate 15,467,047
shares of Common Stock (excluding 9,336,000 shares of Common Stock which certain
Management Purchasers may be deemed to beneficially own, by reason of their
positions, under the Issuer's Employee Stock Ownership Plan (the "ESOP") and
otherwise, but as to which they disclaim beneficial ownership (the "Disclaimed
Shares")), representing 41.3% of the shares of Common Stock outstanding as of
March 14, 1997 (46.2% after giving effect to the Redemption). Each of the
Reporting Persons disclaims beneficial ownership of shares of Common Stock held
by members of the Group, other than shares held by such Reporting Person. (All
of the percentages and information regarding share ownership included in this
Statement are based on information provided to the Reporting Persons by the
Issuer).
AIP Capital owns 900,000 shares of Common Stock for its own account,
representing 2.4% of the total number of shares of Common Stock outstanding on
March 14, 1997 (2.7% after giving effect to the Redemption); AIP Capital is
controlled by its sole general partner, AIP II, and AIP II is controlled by its
sole general partner, AIP Corporation. Mr. Rogers and Mr. Bingham are, or may be
considered to be, controlling stockholders of AIP Corporation. As a result, AIP
II, AIP Corporation, Mr. Rogers and Mr. Bingham may be deemed to beneficially
own the shares of Common Stock owned by AIP Capital.
Page 12 of 29 Pages
In their positions as the executive officers and directors of AIP
Corporation, Messrs. Bingham, Asreira, Rogers, Roberts, Cizik, Barrett and
Purdum may be deemed to have shared voting and dispositive power for shares of
Common Stock beneficially owned by AIP Corporation and, therefore, may be deemed
to beneficially own such shares of Common Stock, but they disclaim any such
ownership.
Harvard owns 2,400,000 shares of Common Stock for its own account,
representing 6.4% of the total number of shares of Common Stock outstanding on
March 14, 1997 (7.2% after giving effect to the Redemption); Vestar owns
2,400,000 shares of Common Stock for its own account, representing 14.6% of the
total number of shares of Common Stock outstanding on March 14, 1997 (7.2% after
giving effect to the Redemption); the Voting Trust holds 5,488,260 shares of
Common Stock, representing 14.6% of the total number of shares of Common Stock
outstanding on March 14, 1997 (16.4% after giving effect to the Redemption); Mr.
Kassling beneficiall owns 41,500 shares of Common Stock (not including the 500
shares owned by Mr. Kassling's minor son, the shares owned by Davideco, of which
Mr. Kassling is the principal executive officer, or the 6,500 shares deposited
by Mr. Kassling in the Voting Trust), representing approximately .1% of the
Common Stock outstanding as of March 14, 1997 (approximately .1% after giving
effect to the Redemption); Mr. Fernandez beneficially owns 396,269 shares (not
including shares owned by Mrs. Fernandez and 12,421 shares owned by Mr.
Fernandez's son), representing 1.0% of the Common Stock outstanding on March 14,
1997 (approximately 1.2% after giving effect to the Redemption); Mrs. Fernandez
beneficially owns 257,175 shares of Common Stock, representing .7% of the Common
Stock outstanding as of March 14, 1997 (approximately .8% after giving effect to
the Redemption); Mr. Brooks beneficially owns 11,000 shares of Common Stock (not
including the 2,000 shares owned by Mr. Brooks' child, the 360,000 shares owned
by Suebro, of which Mr. Brooks is the principal executive officer, or the 96,300
shares deposited by Mr. Brooks in the Voting Trust), representing less than .1%
of the Common Stock outstanding as of March 14, 1997 and after giving effect to
the Redemption; Mr. Meister beneficially owns 4,000 shares of Common Stock (not
including 222,000 shares held in trust for Mr. Meister's children, as to which
trust Mr. Meister is trustee), representing approximately .7% of the Common
Stock outstanding as of March 14, 1997 and after giving effect to the
Redemption; Davideco beneficially owns 1,503,336 shares of Common Stock (all of
which are deposited in the Voting Trust), representing 4.0% of the Common Stock
outstanding as of March 14, 1997 (approximately 4.5% after giving effect to the
Redemption); and Suebro beneficially owns 360,000 shares of Common Stock (all of
which are deposited in the Voting Trust), representing 1.0% of the Common Stock
outstanding as of March 14, 1997 (approximately 1.2 after giving effect to the
Redemption).
(b) AIP Capital has sole voting and dispositive power for its
900,000 shares of Common Stock. As the sole general partners of AIP Capital and
AIP II, respectively, AIP II and AIP Corporation may be deemed to have sole
voting and dispositive power for AIP Capital's 900,000 shares of Common Stock.
As controlling stockholders of AIP Corporation, Mssrs. Rogers and Bingham may be
deemed to have sole voting and dispositive power for AIP Capital's 900,000
shares of Common Stock.
To the best knowledge of the Reporting Persons, each member of the
Group, other than the Reporting Persons, has sole voting and dispositive power
for such member's Common Stock.
(c) Except as stated in Item 4 above, there have not been any
transactions in the Common Stock effected by or for the account of any Reporting
Person or, to the best knowledge of the Reporting Persons, any of the
individuals referred to in Item 2, during the past 60 days.
Page 13 of 29 Pages
(d) To the best knowledge of the Reporting Persons, no person, other
than the Reporting Persons, has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, shares of Common
Stock owned by AIP Capital for its own account.
(e) Not applicable.
Item 6. Contracts, Arrangements, Undertakings or Relationships with Respect
to Securities of the Issuer. The following descriptions are qualified
in their entirety by reference to each of the Stock Purchase
Agreement, the Stockholders Agreement, the Registration Rights Agreement, the
Buyers Letter Agreement and the Management Purchasers Letter Agreements, each of
which is attached as an exhibit hereto and incorporated herein by reference.
STOCK PURCHASE AGREEMENT
The Stock Purchase Agreement provides for, among other things, (i)
the purchase by each of AIP Capital, Vestar, Harvard and the Management
Purchasers of shares of Common Stock from SIH in the amounts and for the
consideration described below, subject to Harvard's and Vestar's agreement to
purchase on a pro rata basis any or all of the shares of Common Stock to be
purchased by any of AIP Capital and the Management Purchasers which any of AIP
Capital and the Management Purchasers fails to purchase, and (ii) certain
post-closing purchase price adjustments.
Purchase Price. Pursuant to the Stock Purchase Agreement, AIP
Capital purchased 900,000 shares of Common Stock for an aggregate of $9,900,000,
Vestar purchased 2,400,000 shares of Common Stock for an aggregate of
$26,400,000, Harvard purchased 2,400,000 shares of Common Stock for an aggregate
of $26,400,000 and the Management Purchasers purchased an aggregate of 300,000
shares of Common Stock for an aggregate of $3,300,000.
Page 14 of 29 Pages
Purchase Price Adjustment. The $11.00 per share purchase price for
the Common Stock pursuant to the Stock Purchase Agreement (the "Purchase Price")
is subject to post-closing adjustment as follows: if (x) prior to December 31,
1997, any of AIP Capital, Vestar, Harvard or a Management Purchaser
(collectively, the "Buyer") sells or agrees to sell any shares of Common Stock
at a price in excess of the Purchase Price, which sale or agreement relates to
any proposal for the acquisition, merger, consolidation, liquidation or other
similar transaction involving the Issuer (other than certain proposals
previously identified to SIH and Incentive) made after October 30, 1996 and
prior to March 31, 1997, and (y) Buyer shall not have waived each of the
conditions precedent to the closing under the Stock Purchase Agreement that
relate to the absence of a material adverse effect for the Issuer or the market
in general, the seller of such shares will pay to SIH promptly thereafter an
amount, for each share sold by such seller (but not, in any event, in excess of
the number of shares acquired by such seller from SIH) in such subsequent sale,
equal to 55% of the excess of (i) the price received by such seller for such
share over (ii) the Purchase Price.
If the foregoing paragraph is not applicable and any shares of
Common Stock are subsequently sold by any of Harvard, Vestar, AIP Capital or a
Management Purchaser pursuant to any agreement entered into prior to December
31, 1997, the seller of such shares will pay to SIH promptly thereafter an
amount, for each share sold by such seller (but not, in any event, in excess of
the number of shares acquired by such seller from SIH) in such subsequent sale,
equal to 15% of the excess, if any, of (i) the price received by such seller for
such share over (ii) $12.958.
If, prior to December 31, 1997, any of Harvard, Vestar, AIP Capital
or a Management Purchaser agrees to purchase all of the outstanding shares of
Common Stock that it does not then own, such party will pay to SIH promptly
thereafter an amount, for each of the 10,000,000 shares of Common Stock
previously owned by SIH, equal to 15% of the excess, if any, of (i) the price
paid by such party in such subsequent purchase over (ii) $12.958.
Closing for the purchase by Buyer of the aggregate of the 6,000,000
shares of Common Stock owned by SIH pursuant to the Stock Purchase Agreement was
conditioned, among other things, upon the Issuer's concurrent
Page 15 of 29 Pages
redemption by the Issuer of the remaining 4,000,000 shares of Common Stock from
SIH pursuant to the Redemption Agreement.
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
The Amended and Restated Stockholders Agreement, dated as of March
5, 1997 (the "Stockholders Agreement"), among the Voting Trust, AIP Capital,
Vestar, Harvard and the Issuer, and joined for limited purposes by Vestar
Capital Partners, Inc., a Delaware corporation ("Vestar Capital") and the
Executive Officers, has a ten year term and provides, among other things, for
the following:
Amendments to By-Laws and Board Composition. The Stockholders
Agreement provides that the Issuer's By-laws be amended to reflect the following
changes to the composition of the Board. The Board shall maintain a committee
(the "Nominating Committee") which shall nominate persons for election to the
Board so that the Board shall be comprised of the following persons: (i) the
chief executive officer of the Issuer; (ii) another executive officer of the
Issuer; (iii) at least three individuals who are not employees of the Issuer or
any of its subsidiaries; (iv) one individual designated by Vestar (the "Vestar
Director") (so long as Vestar, its partners, Vestar Capital and its stockholders
and officers, and their respective affiliates collectively and beneficially own
at least 50% of the shares of Common Stock beneficially owned by Vestar and
Vestar Capital on the closing date under the Stock Purchase Agreement; (v) one
individual designated by Mr. Kassling (so long as Mr. Kassling and members of
his immediate family and their affiliates collectively and beneficially own at
least 50% of the shares of Common Stock beneficially owned by Mr. Kassling on
the closing date under the Stock Purchase Agreement; (vi) one individual
designated by Harvard (the "Harvard Director") (so long as Harvard and its
stockholders and officers and their respective affiliates collectively and
beneficially own at least 50% of the shares of Common Stock beneficially owned
by Harvard on the closing date under the Stock Purchase Agreement); and (vii)
Mr. Fernandez (so long as (x) Mr. Fernandez is able and willing to serve and (y)
Mr. Fernandez and his immediate family and their affiliates collectively and
beneficially own at
Page 16 of 29 Pages
least 50% of the Pulse Shares (as defined in the Stockholders Agreement)). So
long as Mr. Fernandez meets the qualifications set forth in the foregoing clause
(vii), the Chairman of the Board shall direct the Nominating Committee to
nominate Mr. Fernandez as a member of the Board.
Each committee of the Board shall include either the Vestar Director
or the Harvard Director (as determined by Harvard and Vestar) as one of its
members.
Voting Agreements. The Stockholders Agreement further provides that
any person designated by Vestar, Harvard, Mr. Kassling or, in the case of Mr.
Fernandez, the Chairman of the Board, shall be nominated by the Nominating
Committee to be elected to the Board at the related stockholders' meeting, or by
the directors already elected to the Board, as the case may be, voting in
conformity with such nomination. In furtherance thereof, each of the Voting
Trust, AIP Capital, Vestar, Harvard, Vestar Capital and each Executive Officer
has agreed to vote all of the shares of Common Stock and any other voting
securities of the Issuer from time to time held by it or him in favor of, and
each of the Voting Trust, AIP Capital, Vestar, Harvard, Vestar Capital and the
Executive Officers has agreed to cause any shares of Common Stock or other
voting securities of the Issuer as to which it or he from time to time has the
right to direct the vote, to be voted in favor of, and to take any other
appropriate steps to cause, the election to the Board of individuals designated
by Vestar, Harvard and/or Mr. Kassling and, in the case of Mr. Fernandez, the
Chairman of the Board, and nominated by the Nominating Committee in accordance
with the Stockholders Agreement; provided, that Mr. Kassling shall not be deemed
to control any shares of Common Stock held by the ESOP for purposes of the
Stockholders Agreement.
Stock Transfer Restrictions. The Stockholders Agreement also
contains restrictions on the ability of the parties thereto to transfer their
shares of Common Stock. Subject to certain exceptions described below, until
March 31, 2001, AIP Capital, Vestar, Vestar Capital, Harvard and the Voting
Trust shall not assign, mortgage, change, hypothecate, give away or otherwise
transfer (collectively, "transfer") any Common Stock owned or held by it or him.
The foregoing does not restrict (i) the transferability of interests in the
Voting Trust so long as any such transfer does not
Page 17 of 29 Pages
affect the underlying Common Stock and (ii) the ability of Vestar Capital to
pledge the 40,000 shares of Common Stock currently held by Vestar Capital.
Notwithstanding the restrictions contained in the Stockholders
Agreement, the following transfers are permitted:
On or prior to March 31, 1998, shares of Common Stock owned by AIP
Capital, Harvard and Vestar may be transferred (i) to affiliates or partners of
such transferor who agree in a writing, in form and substance reasonably
satisfactory to the Issuer, to be bound by and subject to the provisions of the
Stockholders Agreement, (ii) in connection with the exercise of "piggyback"
registration rights granted to such transferor by the Issuer, or (iii) in
connection with any merger, consolidation, reorganization, recapitalization or
similar transaction or any tender or exchange offer approved or recommended by
the Board. After March 31, 1998, shares of Common Stock owned by AIP Capital,
Harvard and Vestar may be transferred as permitted under the foregoing clauses
(i), (ii) and (iii), as well as: (w) in an underwritten public offering; (x) in
any disposition to a person which, to the best knowledge of AIP Capital, Harvard
or Vestar, as the case may be, after due inquiry, will not beneficially own,
together with such person's affiliates, a number of shares of Common Stock then
outstanding on a fully diluted basis which, when combined with the number of
shares of Common Stock owned by AIP Capital, Harvard or Vestar, as the case may
be, being disposed of in such disposition, would constitute more than 6% of the
shares of Common Stock on a fully diluted basis; (y) to or through any broker,
underwriter, placement agent or other financial intermediary, acting in such
capacity, which undertakes in a writing reasonably satisfactory to the Issuer to
effect any subsequent transfer by it of such shares of Common Stock owned by AIP
Capital, Harvard or Vestar, as the case may be, in an underwritten public
offering; or (z) to any person (other than any person which, to the best
knowledge of AIP Capital, Harvard or Vestar, as the case may be, after due
inquiry, is a competitor or customer of the Issuer or has, prior to such sale,
initiated or has been an active participant in an unsolicited change of control
transaction by tender offer, proxy contest, consent solicitation or otherwise
with respect to the Issuer), provided that the Issuer shall have a right of
first offer (as described below) with respect to any shares of
Page 18 of 29 Pages
Common Stock owned by AIP Capital, Harvard or Vestar, as the case may be,
proposed to be sold in accordance with this clause (z) unless the Issuer shall
have approved of such transfer in writing.
If either AIP Capital, Harvard or Vestar proposes to sell any shares
of Common Stock owned by AIP Capital, Harvard or Vestar, respectively, to a
third party pursuant to the exception described in clause (z) above, the selling
party shall not transfer such shares (the "Offered Shares") without first
offering the Offered Shares to the Issuer in accordance with the procedures set
forth in the Stockholders Agreement. The Issuer shall have the right to make an
offer for the Offered Shares by notifying the selling party (such notice being
referred to as an "Election Notice") at any time within 35 days of the Issuer's
receipt of a sale notice from such selling party, provided, that any such
Election Notice from the Issuer shall be irrevocable, shall contain all of the
material terms and conditions of the sale and shall be accompanied by a
commitment letter from a bank or other responsible source of financing for such
purchase, or by a certificate signed by the Chief Financial Officer of the
Issuer certifying that the Issuer has sufficient funds to purchase the Offered
Shares. If the Issuer fails to deliver an Election Notice within 35 days of
receipt by the Issuer of a selling party's sale notice or if the Issuer
otherwise advises the selling party in writing that the Issuer does not intend
to exercise its right to acquire the Offered Shares, such selling party shall be
entitled to sell the Offered Shares to any other person without any requirement
as to the terms and conditions of such sale; provided, that if such selling
party does not sell the Offered Shares by the earlier to occur of 180 days from
the expiration of the Issuer's right to deliver an Election Notice or 180 days
from written notice from the Issuer that it does not intend to exercise its
right to acquire the Offered Shares, the Issuer's right of first offer shall
again apply to the Offered Shares.
If the Issuer delivers its Election Notice for the Offered Shares
within 35 days of receipt by the Issuer of a selling party's sale notice, such
selling party shall be entitled to offer the Offered Shares to any person
pursuant to a third party sale at a price that is more favorable to such selling
party than the price set forth in the Issuer's Election Notice, provided that
any such sale must occur within 180 days of the date of delivery of such
Election Notice.
Page 19 of 29 Pages
Notwithstanding the foregoing, if the selling party's sale notice is
in connection with any tender offer or exchange offer for outstanding Common
Stock, the Issuer shall be required, to the extent the Issuer desires to
purchase the Offered Shares, to exercise its right to purchase, and to
consummate the purchase of, the Offered Shares by the date which is the earlier
of (i) 10 days following receipt of the related sale notice and (ii) the
business day prior to the expiration of such tender or exchange offer.
After March 31, 1998, AIP Capital, Harvard and Vestar shall be
permitted to sell shares of Common Stock pursuant to and subject to the
limitations set forth in Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act").
Notwithstanding any provision described herein to the contrary,
holders (other than the Executive Officers) of trust certificates issued by the
Voting Trust in exchange for shares of Common Stock are, to the extent permitted
by the Voting Trust Agreement, permitted to transfer shares of Common Stock held
by the Voting Trust, withdraw such shares from the Voting Trust, and/or sell or
otherwise dispose of Common Stock at any time. Upon expiration of the Voting
Trust, shares of Common Stock held by the Voting Trust may be distributed in
accordance with the terms thereof and such shares will no longer be subject to
the transfer restrictions set forth in the Stockholders Agreement.
The Stockholders Agreement further provides that, except as set
forth below, until March 31, 2001, none of the Executive Officers shall transfer
any shares of Common Stock beneficially owned by him or any of his interest in
the Voting Trust (treating any Common Stock held by the Voting Trust for the
account of any of the Executive Officers as Common Stock owned by such person);
provided that Executive Officers shall be permitted to transfer at any time
shares of Common Stock in the circumstances described in the first sentence of
the last paragraph on page 15 hereinabove.
Each of the Executive Officers shall be permitted to transfer shares
of Common Stock beneficially owned by him at any time in accordance with the
terms of the Voting Trust Agreement regardless of whether such
Page 20 of 29 Pages
person is a participant in the Voting Trust. Each of the Executive Officers who
is also a participant in the Voting Trust shall be permitted to withdraw shares
of Common Stock from the Voting Trust at any time in accordance with the terms
of the Voting Trust Agreement, as in effect on March 5, 1997.
So long as any of the Executive Officers continues to be an employee
of the Issuer or any of its subsidiaries, such person, together with his
permitted transferees, may transfer during each 12-month period following the
effective date of the Stockholders Agreement, in the aggregate, 5% of the shares
of Common Stock beneficially owned by such person on March 5, 1997.
In the event that the employment of any Executive Officer with the
Issuer and its subsidiaries is terminated for any reason, such person, together
with his permitted transferees, may transfer during each 12-month period
following the effective date of such termination, in the aggregate, 20% of the
shares of Common Stock beneficially owned by such person on the effective date
of such termination. This restriction may be waived by the Chairman of the Board
of the Issuer as to any Executive Officer if such person delivers to the
Chairman of the Board a request for waiver indicating that such waiver is
required in order to alleviate personal hardship. The decision as to whether and
to what extent to grant a waiver shall be in the sole discretion of the Chairman
of the Board.
Each of the Executive Officers agrees not to effect any public sale
or distribution of shares of Common stock owned by him or any similar security
of the Issuer, or any securities convertible into or exchangeable or exercisable
for such securities, or any securities into which such securities are
convertible or for which such securities are exchangeable or exercisable, during
the 10 days prior to, and during the 90-day period beginning on, the effective
date of any registration statement in which securityholders are participating in
connection with an underwritten public offering of shares of Common Stock
(except as part of such registration), if and to the extent reasonably requested
in writing (with reasonable prior notice) by the lead managing underwriter of
the underwritten public offering.
Each of the Executive Officers agrees that no shares of Common Stock
(or any interests in the Voting Trust) beneficially owned by him, his spouse or
his minor children will be transferred unless the transferee agrees in a
Page 21 of 29 Pages
writing, in form and substance reasonably satisfactory to the Issuer, to be
bound by and subject to the provisions described in the proceeding paragraphs.
Shares of Common Stock held by the ESOP are not deemed to be
beneficially owned by any of the Executive Officers for purposes of the
Stockholders Agreement. Shares of Common Stock held in the Voting Trust (other
than shares deposited by the Executive Officers in the Voting Trust) also are
not deemed to be beneficially owned by any of the Executive Officers for
purposes of the Stockholders Agreement.
COMMON STOCK REGISTRATION RIGHTS AGREEMENT
The Common Stock Registration Rights Agreement, dated as of March 5,
1997 (the "Registration Rights Agreement"), among the Issuer, AIP Capital,
Harvard, the Voting Trust, Vestar, Vestar Capital, Emilio A. Fernandez, and
Emilio A. Fernandez, Jr., as custodian for Eric A. Fernandez, and Ofelia B.
Fernandez (collectively, the "Pulse Shareholders"), provides for, among other
things, the registration of sales of shares of Common Stock under the Securities
Act, by Holders at the expense, subject to certain specified exceptions, of the
Issuer. A "Holder" is defined in the Registration Rights Agreement as each of
Harvard, Vestar, Vestar Capital, AIP Capital, the Voting Trust, the Pulse
Shareholders (so long as each is a holder of Common Stock that has not been
registered under the Securities Act, where the same is required for the sale of
such Common Stock to the public) and any transferee of the foregoing who agrees
in writing to be bound by the provisions of the Registration Rights Agreement.
Harvard has the right to make two requests to the Issuer for the
registration of Common Stock owned by Harvard. Harvard's first request (the
"First Harvard Demand") may be made at any time commencing after June 30, 1998.
Harvard's second request (the "Second Harvard Demand") may be made at any time
commencing one year after the consummation of any public offering of Common
Stock made in connection with the exercise of the First Harvard Demand. One or
both of the Harvard demands may be made by an affiliate of Harvard to which
Common Stock owned by Harvard has been transferred, but in no event shall
Harvard and such affiliate be permitted to make more
Page 22 of 29 Pages
than two demands in the aggregate. Harvard also is permitted (but not at the
Issuer's expense) to make an unlimited number of requests for registration on
Form S-3 when the Issuer is eligible to use such form.
The Voting Trust has the right to make two requests to the Issuer
for the registration of Common Stock held by the Voting Trust. The Voting
Trust's first and second requests may be made at any time that the First Harvard
Demand and the Second Harvard Demand, respectively, may be made. The Voting
Trust also is permitted (but not at the Issuer's expense) to make an unlimited
number of requests for registration on Form S-3 when the Issuer is eligible to
use such form.
Vestar has the right to make two requests to the Issuer for the
registration of Common Stock owned by Vestar or Vestar Capital. Vestar's first
and second requests may be made at any time that the First Harvard Demand and
the Second Harvard Demand, respectively, may be made. One or both of the Vestar
demands may be made by an affiliate of Vestar to which Common Stock owned by
Vestar has been transferred, but in no event shall Vestar and such affiliate be
permitted to make more than two demands in the aggregate. Vestar also is
permitted (but not at the Issuer's expense) to make an unlimited number of
requests for registration on Form S-3 when the Issuer is eligible to use such
form.
Following a demand by Harvard, the Voting Trust or Vestar, the
Issuer must promptly give written notice of such requested registration to the
other Holders of Common Stock. The Issuer must include in such registration all
Common Stock of any Holder with respect to which the Issuer has received written
requests for inclusion therein within 15 business days after the receipt by such
Holder of such notice.
If the Issuer at any time proposes to register any of its securities
under the Securities Act (other than pursuant to the exercise by Harvard, Vestar
or the Voting Trust of their demand registration rights) on any form other than
Form S-4 or S-8 (or any similar form then in effect) for sale for its own
account or otherwise, and if the registration form proposed to be used may be
used for the registration of Common Stock, the Issuer will each such time give
prompt written notice to all Holders of Common Stock of its intention to do so.
Upon the written request of any
Page 23 of 29 Pages
such Holder made within 30 days after the receipt of any such notice, the Issuer
will use its reasonable best efforts to cause the registration of all Common
Stock requested by such Holder to be registered.
The Issuer shall not be obligated to file a registration statement,
or to file any amendment or supplement thereto, if the Issuer reasonably
believes that such filing would adversely affect a pending or proposed public
offering of the Issuer's securities, a financing, acquisition, merger,
recapitalization or similar transaction, or would be seriously detrimental to
the Issuer and its stockholders. If the Issuer suspends the sellers' right to
make sales pursuant to an effective registration statement, the applicable
registration period shall be extended by the number of days of such suspension,
and if the Issuer delays the filing with the Securities and Exchange Commission
of a registration statement or any amendment or supplement thereto or the
effectiveness of such registration statement, Harvard, the Voting Trust or
Vestar, as the case may be, may withdraw its request and thereafter shall be
entitled to make one additional demand registration request in lieu of the
withdrawn request.
The Registration Rights Agreement provides that in an underwritten
offering the Issuer may reduce the number of shares to be registered by the
Issuer and the Holders, in accordance with the priority provisions set forth
therein, if the lead managing underwriter advises the Issuer that, in its
opinion, the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering within a price range
stated as being acceptable by the Holder requesting registration. In certain
circumstances where the number of shares of Common Stock to be registered has
been so reduced, Harvard, the Voting Trust and Vestar shall have the right to
make an additional demand for registration at the Issuer's expense.
The Issuer has agreed not to grant to any person registration rights
which (i) are exercisable prior to the time when registration rights under the
Registration Rights Agreement are first exercisable, (ii) would result in the
deferral of a demand registration which could otherwise be affected under the
Registration Rights Agreement, (iii) would operate to reduce the number of
shares of Common Stock which could be registered pursuant to a demand
registration under the Registration Rights Agreement by Harvard, Vestar or the
Voting Trust, (iv) except with respect to Common
Page 24 of 29 Pages
Stock issued by the Issuer in the future, would operate to reduce the number of
shares of Common Stock which could be registered in any other registration under
the Registration Rights Agreement or (v) would have priority for inclusion in
any registration under the Registration Rights Agreement or any Common Stock of
any Holder.
The Registration Rights Agreement also contains certain holdback,
indemnity and contribution provisions.
BUYERS LETTER AGREEMENT
The letter agreement, dated March 5, 1997 (the "Buyers Letter
Agreement"), among Vestar, Harvard and AIP Capital provides, among other things,
that neither Vestar, Harvard nor AIP Capital shall transfer any Common Stock
owned or held by it without the prior written consent of (i) Harvard, in the
case of any transfer by Vestar, (ii) Vestar, in the case of any transfer by
Harvard, and (iii) each of Vestar and Harvard, in the case of any transfer by
AIP Capital; provided that if any of such parties transfers a percentage of the
Common Stock owned or held by it, each of the other parties to the Buyers Letter
Agreement may transfer the same percentage of the Common Stock owned or held by
it in separate transactions or as provided in the Registration Rights Agreement.
Notwithstanding the provisions described in the preceding sentence (but in any
event subject to the transfer restrictions contained in the Stockholders
Agreement), each of Vestar, Harvard and AIP Capital are permitted to transfer
any Common Stock owned or held by it without any prior written consent if such
transfer is to any Affiliate (as defined in the Stockholders Agreement), other
than (i) in the case of Vestar or AIP Capital, an Affiliate that is a limited
partner of Vestar or AIP Capital, as the case may be, and (ii) in the case of
Harvard, an Affiliate that is a stockholder of Harvard that does not control or
whollyown Harvard, directly or indirectly.
The Buyers Letter Agreement also provides that if Vestar and Harvard
propose to transfer Common Stock owned or held by them pursuant to an exception
to the transfer restrictions provided for in the Stockholders Agreement (which
are described in clauses (x) or (z) on pages 15 and 16 hereof, and in the last
sentence of the
Page 25 of 29 Pages
preceding paragraph), then Vestar and Harvard shall have the obligation, and AIP
Capital shall have the right, to require the proposed transferee to purchase
from AIP Capital up to a number of shares of Common Stock equal to the product
of (i) the total number of shares of Common Stock beneficially owned by AIP
Capital and (ii) a fraction the numerator of which is the total number of shares
of Common Stock held by Vestar and Harvard which are actually included in the
contemplated transfer and the denominator of which is the aggregate number of
shares of Common Stock beneficially owned by Vestar and Harvard. Such purchase
shall be made at the same price per share of Common Stock and otherwise upon the
same terms and conditions applicable to Vestar and Harvard.
Additionally, if Vestar and Harvard receive an offer from a third
party which is not an affiliate of either Vestar or Harvard to purchase all of
the shares of Common Stock owned by Vestar and Harvard and such offer is
accepted by Vestar and Harvard, then AIP Capital, upon the written request of
Vestar and Harvard, will transfer all shares of Common Stock owned by it to such
purchaser on the same terms and subject to the same conditions that are
applicable to Vestar and Harvard.
If either Vestar or Harvard proposes to transfer Common Stock owned
or held by it in an underwritten offering or pursuant to Rule 144 of the
Securities Act, it shall give AIP Capital written notice of such proposed
transfer at the time Vestar or Harvard gives notice to the other of such
proposed transfer, and in any event at least three business days prior to the
consummation of such proposed transfer.
The foregoing provisions of the Buyers Letter Agreement expire on
March 31, 2001.
LETTER AGREEMENT OF MANAGEMENT PURCHASERS PARTY TO THE STOCKHOLDERS
AGREEMENT
In the letter, dated March 20, 1997 (the "Letter Agreement of
Management Purchasers Party to the Stockholders Agreement"), from each of the
Management Purchasers who is a party to the Stockholders Agreement to Vestar,
Harvard, AIP Capital and the Issuer, each of such Management Purchasers agreed
that prior to April 1, 1998,
Page 26 of 29 Pages
none of the shares of Common Stock acquired by such Management Purchaser
pursuant to the Stock Purchase Agreement (the "Acquired Shares") will be
transferred (as defined in the Stockholders Agreement), except in circumstances
described in the first sentence of the last paragraph on page 15 hereinabove.
Thereafter, transfer of the Acquired Shares by such Management Purchasers will
be governed by the Stockholders Agreement.
LETTER AGREEMENT OF MANAGEMENT PURCHASERS NOT PARTY TO THE STOCKHOLDERS
AGREEMENT
In the letter, dated March 20, 1997 (the "Letter Agreement of
Management Purchasers Not Party to the Stockholders Agreement" and, together
with the Letter Agreement of Management Purchasers Party to the Stockholders
Agreement, the "Management Purchasers Letter Agreements") from each of the
Management Purchasers who is not a party to the Stockholders Agreement to
Vestar, Harvard, AIP Capital and the Issuer, each of such Management Purchasers
agreed that prior to April 1, 1998 none of such Management Purchasers' Acquired
Shares will be transferred (as defined in the Stockholders Agreement), except as
provided in the first sentence of the last paragraph on page 15 hereinabove;
provided that such Acquired Shares may be pledged as collateral to a bona fide
financial institution to secure a loan obtained for the purpose of financing
such Management Purchaser's purchase of such Acquired Shares. Thereafter,
Acquired Shares owned by such Management Purchasers will not be transferred
except as follows: (i) to immediate family members, a corporation controlled by
such Management Purchaser or his immediate family, or grantor or other trusts or
other vehicles for tax, estate or financial planning purposes; (ii) as
collateral security for a loan or other credit; (iii) in the event of personal
hardship; (iv) up to one-third of the Acquired Shares can be transferred and/or
released from the Letter Agreement of Management Purchasers Not Party to the
Stockholders Agreement each calendar year, except that this exception is limited
to 5% of Acquired Shares each year for Management Purchasers who are also
corporate officers of the Issuer; and (v) following termination of employment of
such Management Purchaser by the Issuer.
Page 27 of 29 Pages
The provisions of the Letter Agreement of Management Purchasers Not
Party to the Stockholders Agreement will expire on the earlier of (x) March 31,
2001 and (y) the termination of the Stockholders Agreement.
Except as set forth herein, none of the Reporting Persons nor, to
the best knowledge of the Reporting Persons, any of the individuals referred to
in Item 2, have any contracts, arrangements, understandings or relationships
(legal or otherwise) with any person with respect to any securities or the
Issuer, including but not limited to any contracts, arrangements, understandings
or relationships concerning the transfer or voting of such securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or losses, or the giving or withholding of proxies.
Item 7. Material to Be Filed as Exhibits.
Exhibit 1. Joint Filing Agreement, dated as of March 31, 1997, among AIP
Capital, AIP II, AIP Corporation, Mr. Rogers and Mr. Bingham
relating to the filing of a joint statement on Schedule 13D.
Exhibit 2. Stock Purchase Agreement, dated as of March 5, 1997, among SIH,
Incentive, Vestar, Harvard, AIP Capital and the Management
Purchasers.
Exhibit 3. Amended and Restated Stockholders Agreement, dated as of March 5,
1997, by and among the Voting Trust, Vestar, Harvard, AIP Capital,
and the Issuer, and joined for certain purposes by Vestar Capital
and the Executive Officers.
Exhibit 4. Amendment No. 1 to the Amended and Restated Stockholders
Agreement, dated as of March 28, 1997, by and among the Voting
Trust, Vestar, Harvard, AIP Capital and the Issuer.
Exhibit 5. Common Stock Registration Rights Agreement, dated as of March 5,
1997, by and among the Issuer, Harvard, AIP Capital, the Voting
Trust, Vestar, Vestar Capital and the Pulse Shareholders.
Exhibit 6. Letter Agreement, dated March 5, 1997, among Vestar, Harvard and AIP
Capital.
Exhibit 7. Letter, dated March 20, 1997, from each of the Management
Purchasers who is a party to the Stockholders Agreement to Harvard,
Vestar, AIP Capital and the Issuer.
Exhibit 8. Letter, dated March 20, 1997, from each of the Management
Purchasers who is not a party to the Stockholders Agreement to
Harvard, Vestar, AIP Capital and the Issuer.
Page 28 of 29 Pages
SIGNATURES
After reasonable inquiry and to the best of its knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
By: /s/ Theodore C. Rogers
---------------------------------
Theodore C. Rogers
By: /s/ Richard Bingham
---------------------------------
W. Richard Bingham
AMERICAN INDUSTRIAL PARTNERS CAPITAL
FUND II, L.P.
By: American Industrial Partners II, L.P.
Its: General Partner
By: American Industrial Partners Corporation
Its: General Partner
By: /s/ Theodore C. Rogers
---------------------------------
Name: Theodore C. Rogers
Title: Chairman
AMERICAN INDUSTRIAL PARTNERS II, L.P.
By: American Industrial Partners Corporation
Its: General Partner
By: /s/ Theodore C. Rogers
---------------------------------
Name: Theodore C. Rogers
Title: Chairman
AMERICAN INDUSTRIAL PARTNERS
CORPORATION
By: /s/ Theodore C. Rogers
---------------------------------
Name: Theodore C. Rogers
Title: Chairman
Dated: March 31, 1997
Page 29 of 29 Pages
EXHIBIT INDEX
Exhibit 1. Joint Filing Agreement, dated as of March 31, 1997, among AIP
Capital, AIP II, AIP Corporation, Mr. Rogers and Mr. Bingham relating
to the filing of a joint statement on Schedule 13D.
Exhibit 2. Stock Purchase Agreement, dated as of March 5, 1997, among SIH,
Incentive, Vestar, Harvard, AIP Capital and the Management
Purchasers.
Exhibit 3. Amended and Restated Stockholders Agreement, dated as of March 5,
1997, by and among the Voting Trust, Vestar, Harvard, AIP Capital,
and the Issuer, and joined for certain purposes by Vestar Capital
and the Executive Officers.
Exhibit 4. Amendment No. 1 to the Amended and Restated Stockholders Agreement,
dated as of March 28, 1997, by and among the Voting Trust, Vestar,
Harvard, AIP Capital and the Issuer.
Exhibit 5. Common Stock Registration Rights Agreement, dated as of March 5,
1997, by and among the Issuer, Harvard, AIP Capital, the Voting
Trust, Vestar, Vestar Capital and the Pulse Shareholders.
Exhibit 6. Letter Agreement, dated March 5, 1997, among Vestar, Harvard and AIP
Capital.
Exhibit 7. Letter, dated March 20, 1997, from each of the Management
Purchasers who is a party to the Stockholders Agreement to Harvard,
Vestar, AIP Capital and the Issuer.
Exhibit 8. Letter, dated March 20, 1997, from each of the Management
Purchasers who is not a party to the Stockholders Agreement to
Harvard, Vestar, AIP Capital and the Issuer.
EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) of the Securities Exchange Act of
1934, as amended, the undersigned hereby agree to the joint filing on behalf of
each of us of a statement on Schedule 13D relating to the Common Stock, par
value $.01 per share, of Westinghouse Air Brake Company, a Delaware corporation,
and that any amendments thereto filed by any of us will be filed on behalf of
each of us. This Agreement may be included as an exhibit to such joint filing.
By: /s/ Theodore C. Rogers
--------------------------------------
Theodore C. Rogers
By: /s/ W. Richard Bingham
---------------------------------------
W. Richard Bingham
AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND II, L.P.
By: American Industrial Partners II, L.P.
Its: General Partner
By: American Industrial Partners Corporation
Its: General Partner
By: /s/ Theodore C. Rogers
---------------------------------------
Name: Theodore C. Rogers
Title: Chairman
AMERICAN INDUSTRIAL PARTNERS II, L.P.
By: American Industrial Partners Corporation
Its: General Partner
By: /s/ Theodore C. Rogers
---------------------------------------
Name: Theodore C. Rogers
Title: Chairman
AMERICAN INDUSTRIAL PARTNERS CORPORATION
By: /s/ Theodore C. Rogers
--------------------------------------
Name: Theodore C. Rogers
Title: Chairman
Dated: March 31, 1997
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March 5,
1997, among Scandinavian Incentive Holding B.V., a corporation organized under
the laws of the Netherlands ("SIH"), Incentive AB, a corporation organized under
the laws of the Kingdom of Sweden and the sole stockholder of SIH ("Incentive"),
Vestar Equity Partners, L.P., a Delaware limited partnership ("Vestar"), Harvard
Private Capital Holdings, Inc., a Massachusetts corporation ("Harvard"),
American Industrial Partners Capital Fund II, L.P., a Delaware limited
partnership ("AIP"), and the employees of WABCO (as defined below) who execute
signature pages hereto and become Management Purchasers hereunder (the
"Management Purchasers") prior to the Closing (Harvard, Vestar, AIP and the
Management Purchasers being collectively referred to herein as the "Buyer").
W I T N E S S E T H :
WHEREAS, SIH is the owner, beneficially and of record, of 10,000,000
shares (the "SIH Shares") of common stock, par value $0.01 per share (the
"Common Stock"), of Westinghouse Air Brake Company, a Delaware corporation
("WABCO");
WHEREAS, each of Vestar, Harvard, AIP and the Management Investors
desires to purchase from SIH the number of SIH Shares set forth opposite its or
his name on the signature pages hereto substantially simultaneously with the
purchase by WABCO of the remaining 4,000,000 SIH Shares pursuant to the SIH
Redemption (as defined below), SIH is willing to sell such SIH Shares to Buyer
upon the terms and subject to the conditions stated herein, and, if any or all
of AIP and the Management Purchasers fails to purchase SIH Shares hereunder at
Closing, Vestar and Harvard are willing, on a pro rata basis, to purchase,
simultaneously with their respective purchases of the number of SIH Shares set
forth opposite their respective names, any and all of such SIH Shares to have
been purchased by such other party or parties (the "SIH Purchase");
WHEREAS, substantially simultaneously with, and as a condition to,
the consummation of the SIH Purchase, WABCO is willing to purchase (at a price
equal to the purchase price paid by Buyer for each SIH Share purchased by Buyer
in the SIH Purchase) from SIH 4,000,000 SIH Shares (the "SIH Redemption"; and
such SIH Shares to be so purchased by WABCO, the "SIH Shares To Be Purchased By
WABCO") pursuant to the SIH Redemption Agreement, dated as of the date hereof,
among SIH, Incentive and WABCO (the "SIH Redemption Agreement"), a copy of which
is attached as Exhibit A hereto;
WHEREAS, each of WABCO, AIP, Harvard and Vestar have entered into,
and substantially simultaneously with, and as a condition to, the consummation
of the SIH Purchase each of the Voting Trust (as defined herein), Vestar Capital
Partners, Inc., William E. Kassling, Emilio A. Fernandez and certain other
2
parties named therein will enter into (in the case of certain parties, for
limited purposes), the Amended and Restated Stockholders Agreement, dated as of
the date hereof (the "Stockholders Agreement"), a copy of which is attached as
Exhibit B hereto;
WHEREAS, each of WABCO, AIP, Harvard and Vestar have entered into,
and substantially simultaneously with, and as a condition to, the consummation
of the SIH Purchase each of the Voting Trust, Vestar Capital Partners, Inc.
("Vestar Capital"), Emilio A. Fernandez, Jr., Emilio A. Fernandez, Jr. as
custodian for Eric A. Fernandez, Ofelia B. Fernandez, Emily A. Fernandez, Angel
P. Bezos, Rayssa C. Bezos, as custodian for Michelle R. Bezos and Jennifer A.
Bezos, David R. Bezos, the Estate of Jose M. Llosa and Ronald L. Woltz
(collectively, the "Pulse Shareholders") and certain other parties named therein
will enter into, the Common Stock Registration Rights Agreement, dated as of the
date hereof (the "Registration Rights Agreement"), a copy of which is attached
as Exhibit C hereto; and
WHEREAS, the respective Board of Directors of each of WABCO, SIH and
Incentive have approved the Transaction (as defined herein) and the execution,
delivery and performance of the Transaction Documents (as defined herein) to
which it is a party;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, SIH, Incentive and Buyer hereby agree as follows:
ARTICLE I
DEFINITIONS, ETC.
SECTION 1.1. Definitions. As used in this Agreement, terms defined
in the preamble and recitals to this Agreement shall have the meanings given to
them therein and the following capitalized terms shall have the following
respective meanings:
"Acquisition Proposal" shall have the meaning specified in Section
6.2.
"Average Share Price" shall mean $12.958.
"Business Day" shall mean any day other than a Saturday or Sunday or
a day on which banking institutions in Boston, Massachusetts, New York,
New York, Pittsburgh, Pennsylvania or Stockholm, Sweden are authorized or
required by law or executive order to remain closed.
"Closing" shall have the meaning specified in Section 3.1.
3
"Closing Date" shall have the meaning specified in Section 3.1.
"Existing Stockholders Agreement" shall mean the Stockholders
Agreement, dated as of January 31, 1995, by and among SIH, the Voting
Trust and WABCO, and joined for certain limited purposes by Vestar/WABCO
Investors, L.P., Vestar Capital Partners, Inc., William E. Kassling,
Emilio A. Fernandez and Incentive.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Purchase Price" shall have the meaning specified in Section 2.1.
"Representation Letter" shall mean the letter, dated the date
hereof, from WABCO to Harvard and AIP, a copy of which is attached as
Exhibit D hereto.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the United States Securities Act of
1933, as amended.
"SIH Shares To Be Purchased By Buyer" shall have the meaning
specified in Section 2.1.
"Transaction" shall mean the collective reference to the SIH
Purchase and the SIH Redemption.
"Transaction Documents" shall mean the collective reference to this
Agreement, the SIH Redemption Agreement, the Representation Letter, the
Stockholders Agreement and the Registration Rights Agreement.
"Voting Trust" shall mean the Voting Trust created pursuant to the
Voting Trust Agreement.
"Voting Trust Agreement" shall mean the Second Amended WABCO Voting
Trust/Disposition Agreement, dated as of December 13, 1995, by and among
the trustholders and the trustees parties thereto.
ARTICLE II
PURCHASE AND SALE
SECTION 2.1. Purchase and Sale of SIH Shares. Upon the terms and
subject to the conditions of this Agreement, SIH shall sell, transfer and
deliver to each of Vestar, Harvard, AIP and the Management Purchasers and each
of Vestar, Harvard, AIP and the Management Purchasers shall purchase from SIH,
the number
4
of SIH Shares set forth opposite its name on the signature pages hereto;
provided that if any or all of AIP and the Management Purchasers fails to
purchase SIH Shares hereunder, each of Vestar and Harvard shall purchase from
SIH, and SIH shall sell, transfer and deliver to each of Vestar and Harvard, 50%
of such SIH Shares to have been purchased by such other party or parties (such
6,000,000 shares, collectively, the "SIH Shares To Be Purchased By Buyer") at a
purchase price per share equal to $11.00 (the "Purchase Price"). The Purchase
Price shall be payable on the Closing Date in accordance with Section 3.2(b).
SECTION 2.2. Post-Closing Adjustments. (a) If (x) prior to December
31, 1997, any of Vestar, Harvard, AIP or a Management Purchaser sells or agrees
to sell any shares of Common Stock at a price in excess of the Purchase Price,
which sale or agreement relates to any Acquisition Proposal (other than an
Acquisition Proposal disclosed in the letter referred to in Section 5.9) made
after October 30, 1996 and prior to March 31, 1997, and (y) Buyer shall not have
waived each of the conditions precedent to the Closing set forth in Section
7.2(f) and 7.2(g), the seller of such shares will pay to SIH promptly thereafter
(by wire transfer of immediately available funds to an account designated by SIH
in writing) an amount, for each share sold by such seller (but not, in any
event, in excess of the number of SIH Shares acquired by such seller in the SIH
Purchase) in such subsequent sale, equal to 55% of the excess of (i) the price
received by such seller for such share over (ii) the Purchase Price. If the
price received by such seller is not paid entirely in cash, the amount of such
consideration received by such seller will be determined in accordance with the
last three sentences in Section 6.4.
(b) If Section 2.2(a) is not applicable and any shares of Common
Stock are subsequently sold by any of Harvard, Vestar, AIP or a Management
Purchaser pursuant to any agreement entered into prior to December 31, 1997, the
seller of such shares will pay to SIH promptly thereafter (by wire transfer of
immediately available funds to an account designated by SIH in writing) an
amount, for each share sold by such seller (but not, in any event, in excess of
the number of SIH Shares acquired by such seller in the SIH Purchase) in such
subsequent sale, equal to 15% of the excess, if any, of (i) the price received
by such seller for such share over (ii) the Average Share Price. If the price
received by such seller is not paid entirely in cash, the amount of such
consideration received by such seller will be determined in accordance with the
last three sentences of Section 6.4.
(c) If, prior to December 31, 1997, any of Harvard, Vestar, AIP or a
Management Purchaser agrees to purchase all of the outstanding shares of Common
Stock that it does not then own, such party will pay to SIH promptly thereafter
(by wire transfer of immediately available funds to an account designated by SIH
in writing) an amount, for each SIH Share purchased by Buyer and WABCO in the
Transaction, equal to 15% of the excess, if any, of (i) the price paid by such
party in such subsequent purchase over
5
(ii) the Average Share Price. If the price paid by such party is not paid
entirely in cash, the amount of such consideration paid by such party will be
determined in accordance with the last three sentences of Section 6.4.
ARTICLE III
THE CLOSING
SECTION 3.1. Closing Date. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.1 hereof, the closing of the purchase and sale of the SIH
Shares To Be Purchased By Buyer (hereinafter called the "Closing") shall take
place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York, at 10:00 a.m. on March 31, 1997 (or as soon as practicable
following the satisfaction (or, where permissible, due waiver by the parties
entitled to the benefits thereof) of the conditions set forth in Article VII),
or on such other date and at such other time and place as may be mutually agreed
upon by SIH and Incentive, on the one hand, and Vestar and Harvard on behalf of
the Buyer, on the other hand. The date on and the time at which the Closing
actually occurs being hereinafter referred to as the "Closing Date".
SECTION 3.2. Transactions to be Effected at the Closing. At the
Closing:
(a) SIH shall deliver to Buyer certificates representing the SIH
Shares To Be Purchased By Buyer, duly endorsed in blank in proper form for
transfer, with appropriate transfer stamps, if any, affixed; and
(b) Buyer shall deliver to SIH payment of the Purchase Price in
immediately available funds to an account designated by SIH in writing at
least two Business Days prior to the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SIH AND INCENTIVE
SIH and Incentive, jointly and severally, represent and warrant to
Buyer as follows:
SECTION 4.1. Corporate Existence and Power. Each of SIH and
Incentive is duly organized and validly existing under their respective
jurisdictions of incorporation, and each of SIH and Incentive has all requisite
corporate power and authority to execute and deliver this Agreement and the SIH
Redemption Agreement and to consummate the transactions contemplated hereby and
thereby to be consummated by it.
6
SECTION 4.2. Authorization. The execution and delivery of this
Agreement and the SIH Redemption Agreement by each of SIH and Incentive and the
consummation by each of them of the transactions contemplated hereby and thereby
to be consummated by each of them have been duly and validly authorized and
approved by all necessary corporate or other action required on the part of each
of SIH and Incentive. This Agreement has been, and the SIH Redemption Agreement
will be, duly executed and delivered by SIH and Incentive.
SECTION 4.3. Enforceability. This Agreement constitutes, and when
executed and delivered by SIH and Incentive, the SIH Redemption Agreement will
constitute, a legal, valid and binding obligation of each of SIH and Incentive
enforceable against each of SIH and Incentive in accordance with the respective
terms of such agreements, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
SECTION 4.4. SIH Shares. On the date hereof, SIH does, and on the
Closing Date SIH will, own the SIH Shares (including the SIH Shares To Be
Purchased By Buyer) of record and beneficially and the SIH Shares are fully paid
and nonassessable. On the date hereof, SIH has, and on the Closing Date SIH will
have, good, valid and marketable title to the SIH Shares (including the SIH
Shares To Be Purchased By Buyer), free and clear of all claims, liens,
encumbrances, restrictions (including without limitation restrictions on the
power to vote or dispose of the SIH Shares), security interests and charges of
any nature whatsoever, including without limitation any preemptive right or
right of first refusal or first offer of any party (except for those
restrictions set forth in the Existing Stockholders Agreement) or any agreement,
arrangement or understanding regarding the sale or transfer of the SIH Shares
(other than this Agreement, the SIH Redemption Agreement and the Existing
Stockholders Agreement). On the Closing Date, upon delivery by SIH to each of
Harvard, Vestar, AIP and Management Purchasers of the SIH Shares to be purchased
by it or him in exchange for the Purchase Price payable by it or him, each of
Vestar, Harvard, AIP and the Management Purchasers will receive good, valid and
marketable title to the SIH Shares to be purchased by it or him, free and clear
of all claims, liens, encumbrances, restrictions, security interests and charges
of any nature whatsoever (other than any such claims, liens, encumbrances,
restrictions, security interests and charges created by, or arising as a result
of the ownership of such SIH Shares, by Vestar, Harvard, AIP or such Management
Purchaser, as the case may be, and not created by, or arising as a result of,
any action by SIH or Incentive).
SECTION 4.5. Litigation. There is no litigation or proceeding
pending or, to the actual knowledge of SIH or Incentive, threatened or any
investigation pending or threatened
7
against SIH or Incentive which would prohibit either SIH or Incentive from
consummating, or otherwise impair the ability of either SIH or Incentive to
consummate, the Transaction.
SECTION 4.6. Noncontravention. The execution, delivery and
performance by each of SIH and Incentive of this Agreement and the SIH
Redemption Agreement and the consummation by each of SIH and Incentive of the
transactions contemplated hereby or thereby will not (a) violate any
organizational document of SIH or Incentive, (b) violate any law, rule,
regulation, order, judgment, injunction, ruling or decree of any court or
governmental authority applicable to SIH or Incentive or any of their respective
assets or (c) with or without notice or lapse of time or both, require any
consent, approval or notice under, constitute a violation of or default under,
conflict with, give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any lien, security interest,
encumbrance or other charge upon any of the assets of SIH or Incentive under,
any contract, agreement, note, mortgage, license, permit or instrument by which
either SIH or Incentive is bound or to which either of their respective assets
is subject, except for the waiver by WABCO of its right of first refusal under
the Existing Stockholders Agreement to purchase the SIH Shares To Be Purchased
By Buyer, which waiver has been given by WABCO in the SIH Redemption Agreement.
SECTION 4.7. Consents. No consent, approval, order or authorization
of, or exemption by, or filing or registration with, or notice to, any
governmental authority is required to be obtained or made by either SIH or
Incentive in connection with the execution, delivery and performance by each of
them of this Agreement and the SIH Redemption Agreement or the consummation by
them of the transactions contemplated hereby and thereby (other than any filings
with the SEC required to be made by Incentive or SIH after the Closing).
SECTION 4.8. Brokers and Finders. Neither SIH nor Incentive has
employed any broker, finder or agent or agreed to pay to any person any broker's
fee, finder's fee, commission or other similar form of compensation in
connection with this Agreement, the other Transaction Documents or the
transactions contemplated hereby or thereby.
SECTION 4.9. Acquisition Proposals. As of the date hereof, Incentive
is not aware of any discussions regarding any Acquisition Proposal after October
30, 1996.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EACH BUYER
Each of Harvard, Vestar, AIP and the Management Purchasers,
severally and not jointly, hereby represents and warrants to SIH and Incentive
as follows:
8
SECTION 5.1. Existence, Power and Capacity. In the case of each of
Vestar, Harvard and AIP, it is duly organized and validly existing under its
jurisdiction of organization, and it has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby to be consummated by it. In the case of each Management
Purchaser, he has the legal capacity to execute, deliver and perform this
Agreement.
SECTION 5.2. Authorization. The execution and delivery of this
Agreement by it or him and the consummation by it or him of the transactions
contemplated hereby to be consummated by it or him have been duly and validly
authorized and approved by all necessary action required on its or his part.
This Agreement has been duly executed and delivered by it or him.
SECTION 5.3. Enforceability. This Agreement constitutes its or his
legal, valid and binding obligation enforceable against it or him in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
SECTION 5.4. Litigation. There is no litigation or proceeding
pending or, to its or his actual knowledge, threatened or any investigation
pending or threatened against it or him which would prohibit it from
consummating, or otherwise impair its or his ability to consummate, the SIH
Purchase.
SECTION 5.5. Noncontravention. The execution, delivery and
performance by it or him of this Agreement and the consummation by it or him of
the transactions contemplated hereby to be consummated by it or him will not (a)
in the case of Vestar, Harvard or AIP, violate any of its organizational
documents, (b) subject to the satisfaction of the condition set forth in Section
7.2(e), violate any law, rule, regulation, order, judgment, injunction, ruling
or decree of any court or governmental authority applicable to it or him or any
of its or his assets or (c) with or without notice or lapse of time or both,
require any consent, approval or notice under, constitute a violation of or
default under, conflict with, give rise to any right of termination,
cancellation or acceleration under, or result in the creation of any lien,
security interest, encumbrance or other charge upon any of its or his assets
under, any contract, agreement, note, mortgage, license, permit or instrument by
which it or he is bound or to which its or his assets is subject.
SECTION 5.6. Consents. No consent, approval, order or authorization
of, or exemption by, or filing or registration with, or notice to, any
governmental authority is required to be obtained or made by it or him in
connection with the execution,
9
delivery and performance by it or him of this Agreement or the consummation by
it or him of the transactions contemplated hereby to be consummated by it or him
(other than any filings (x) with the SEC required to be made by it or him after
the Closing and (y) under the HSR Act required to be made by it or him, and
subject to the satisfaction of the condition set forth in Section 7.2(e)).
SECTION 5.7. Brokers and Finders. It or he has not employed any
broker, finder or agent or agreed to pay to any person any broker's fee,
finder's fee, commission or other similar form of compensation in connection
with this Agreement, the other Transaction Documents or the transactions
contemplated hereby or thereby.
SECTION 5.8. Investment Intent. It or he acknowledges that it or he
is aware that the sale of the SIH Shares To Be Purchased By Buyer has not been
registered under the Securities Act and that WABCO has no obligation to register
or cause the registration of the sale of such shares under the Securities Act,
except as otherwise provided in the Stockholders Agreement or the Registration
Rights Agreement. It or he is acquiring the SIH Shares to be purchased by it or
him for investment and not with a view to, or for sale in connection with, any
distribution thereof. It or he has such knowledge and experience in financial
and business matters in general and in investments in particular so as to be
capable of evaluating the merits and risks of its of his proposed investment in
the SIH Shares to be purchased by it or him.
SECTION 5.9. Acquisition Proposals. As of the date hereof, it or he
is not aware of any discussions regarding any Acquisition Proposal after October
30, 1996, except as disclosed in the letter from Vestar to Incentive of even
date herewith.
SECTION 5.10. Financing. It or he has funds available to it or him
in an amount sufficient to purchase the SIH Shares to be purchased by it or him
hereunder and, in the case of Vestar and Harvard, the other SIH Shares which it
may become obligated to purchase pursuant to the proviso to the first sentence
of Section 2.1.
ARTICLE VI
COVENANTS
SECTION 6.1. Further Assurances and Cooperation. (a) Each of the
parties hereto will use its reasonable best efforts to effect the Closing of the
SIH Purchase by March 31, 1997.
(b) Each of the parties hereto agrees to use its reasonable best
efforts to insure that the conditions set forth in Article VII are satisfied,
insofar as such matters are within the control of such party.
10
(c) Each of SIH, Incentive and Vestar shall encourage the senior
management of WABCO to make "roadshow"-type presentations to the investment
community.
SECTION 6.2. Alternative Transaction Proposals. (a) Incentive and
SIH will not, directly or indirectly, through any officer, director,
representative, affiliate or agent (i) solicit, initiate, encourage or assist in
the submission of any inquiries, proposals or offers from any corporation,
partnership, person or other entity or group relating to any acquisition or
purchase of assets of WABCO, or any equity interest in WABCO (including any SIH
Shares), or any other form of recapitalization transaction involving WABCO or
any merger, consolidation, business combination, spin-off, liquidation or
similar transaction involving WABCO, other than the Transaction (each an
"Acquisition Proposal"), (ii) participate in any discussions or negotiations
regarding an Acquisition Proposal or furnish to any person or entity (other than
Buyer or WABCO) any information concerning WABCO or the proposed Transaction,
(iii) otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person (other than
Buyer or WABCO) to make or enter into an Acquisition Proposal or (iv) sell,
assign, convey or transfer any SIH Shares or any interest therein or grant any
right to acquire any interest therein or agree or propose to do any of the
foregoing.
(b) If either Incentive or SIH receives any inquiry, proposal or
offer to enter into any transaction of the type referred to in Section 6.2(a)
(i), (ii), (iii) or (iv) above, such party will inform Vestar and Harvard on
behalf of Buyer of the terms thereof, except to the extent prohibited by
applicable law, rule or regulation of any governmental authority or stock
exchange by which Incentive or SIH is bound.
(c) Except to the extent that outside counsel advises that
applicable law requires otherwise, neither Incentive, SIH nor any of their
respective officers, directors, representatives, affiliates or agents will
disclose to any person, without the prior written consent of Vestar and Harvard
on behalf of Buyer, the fact that Incentive and SIH have entered into this
Agreement and the SIH Redemption Agreement and are engaged in the Transaction.
SECTION 6.3. Releases and Statements. Each of the parties hereto
will consult with each other before issuing any press release or otherwise
making any public statements with respect to the Transaction and other matters
contemplated hereby and will not issue any such press release or make any other
public statement prior to such consultation, and, except to the extent that
outside counsel advises that applicable law requires otherwise, any such press
release or public statement will be approved in advance by each of the parties
hereto.
11
SECTION 6.4. Topping Fee. If, prior to December 31, 1997, Incentive
or SIH or any of their affiliates sells or agrees to sell any SIH Shares at a
price in excess of the Purchase Price, which sale or agreement relates to any
Acquisition Proposal made after October 30, 1996 and prior to March 31, 1997,
Incentive and SIH will, jointly and severally, be obligated to pay to Vestar,
Harvard, and AIP on a pro rata basis (based on the percentage of the total
number of SIH Shares to be purchased by Vestar, Harvard and AIP which is to be
purchased by each such party), promptly following the consummation of such sale
and by wire transfer of immediately available funds, an amount, for each SIH
Share so sold, equal to 45% of the excess of (i) the price received by Incentive
or SIH or any of their affiliates for such SIH Share over (ii) $11.00; provided
that no amount shall be payable to Vestar, Harvard or AIP if this Agreement
shall have been terminated by Buyer pursuant to Section 8.1(a)(ii) because any
of the conditions set forth in Sections 7.2(f) and 7.2(g) shall not have been
satisfied. If all or a portion of the price received by Incentive or SIH or any
of their affiliates for SIH Shares is paid in a form other than cash, including
any right to receive a contingent payment, the amount of consideration received
by Incentive or SIH or any of their affiliates shall be deemed to be the amount
of any cash consideration and the fair market value of any non-cash
consideration on the date of consummation of the sale of the SIH Shares. Such
fair market value shall be determined (A) mutually by Incentive, Vestar and
Harvard or (B) if Vestar, Harvard, and Incentive cannot so agree within 30 days,
by a nationally recognized New York based United States investment banking firm
selected by Vestar and Harvard from a list of three such firms prepared by
Incentive. The fees and expenses of such investment banking firm shall be borne
50% by Incentive and 50% by Vestar, Harvard and AIP on a pro rata basis (based
on the percentage of the total number of SIH Shares to be purchased by Vestar,
Harvard and AIP which is to be purchased by each such party).
SECTION 6.5. Expenses. Each of the parties hereto will pay its own
expenses incurred or to be incurred in connection with the Transaction. None of
the parties hereto shall engage any broker, finder or agent or agree to pay to
any person any broker's fee, finder's fee, commission or other similar form of
compensation in connection with this Agreement, the other Transaction Documents
or the transactions contemplated hereby or thereby.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1. Conditions Precedent to Each Party's Obligation to
Effect the Closing. The obligation of each party hereto to consummate the
Closing hereunder shall be subject to the satisfaction (or, where permissible,
waiver by the party or
12
parties, as the case may be, entitled to the benefits thereof) on the Closing
Date of each of the following conditions:
(a) no preliminary or permanent injunction or other order issued by
any United States federal or state court of competent jurisdiction or any
court of the Kingdom of Sweden of competent jurisdiction or by any United
States federal or state governmental or regulatory body or any
governmental or regulatory body of the Kingdom of Sweden nor any statute,
rule, regulation or order of any United States federal or state
governmental authority or governmental authority of the Kingdom of Sweden
shall be in effect which (i) restrains, enjoins or otherwise prohibits
SIH, Incentive, Buyer or WABCO from consummating the Transaction or (ii)
would impose any material limitations on Buyer's ability to exercise full
rights of ownership of the SIH Shares to be purchased by Buyer; and
(b) prior to or simultaneously with the Closing, the SIH Redemption
shall be consummated in accordance with the SIH Redemption Agreement and
all of the SIH Shares To Be Purchased By Buyer shall be purchased by Buyer
pursuant hereto.
SECTION 7.2. Conditions Precedent to the Obligation of Each Buyer.
The obligation of each of Vestar, Harvard, AIP and the Management Purchasers to
effect the Closing shall be subject to the satisfaction (or, where permissible,
waiver by such party) on the Closing Date of each of the following conditions:
(a) each of SIH and Incentive shall have performed and complied in
all material respects with each of its agreements and covenants contained
herein to be performed or complied with by SIH or Incentive, as the case
may be, on or prior to the Closing Date;
(b) each of the representations and warranties of SIH and Incentive
contained herein (and, in the case of each of Harvard and AIP only, each
of the representations and warranties of WABCO contained in the
Representation Letter) shall be true in all material respects on and as of
the Closing Date with the same effect as though made on and as of the
Closing Date (except to the extent such representations and warranties
speak as of an earlier date);
(c) Buyer shall have received a certificate to the effect that the
conditions set forth in the foregoing clauses (a) and (b) have been
satisfied, signed by an executive officer of each of SIH and Incentive;
(d) each of the Stockholders Agreement and the Registration Rights
Agreement shall have been executed and delivered by the parties thereto
(other than Buyer and WABCO);
13
(e) the waiting period, and any extension thereof, under the HSR Act
shall have been terminated or expired thereunder without challenge;
(f) there shall not have occurred any event that could reasonably be
expected to have a material adverse effect on the business, assets,
properties, operations, condition (financial or otherwise) or prospects of
WABCO and its subsidiaries taken as a whole; and
(g) there shall not have occurred any material disruption or any
other event that could reasonably be expected to have a material adverse
effect on the financial, banking or capital markets in the United States.
SECTION 7.3. Conditions Precedent to the Obligations of SIH and
Incentive. The obligations of SIH and Incentive to effect the Closing shall be
subject to the satisfaction (or, where permissible, waiver by SIH and Incentive)
on the Closing Date of all of the following conditions (provided that any
failure by any of AIP and the Management Purchasers to satisfy any of the
following conditions shall be deemed waived if Vestar and Harvard are purchasing
at Closing the SIH Shares to have been purchased by such defaulting party or
parties pursuant to the proviso to the first sentence of Section 2.1):
(a) each of Vestar, Harvard, AIP and the Management Purchasers shall
have performed and complied in all material respects with each of its
agreements and covenants contained herein to be performed or complied with
by it on or prior to the Closing Date;
(b) each of the representations and warranties of each of Harvard,
Vestar, AIP and the Management Purchasers contained herein shall be true
in all material respects on and as of the Closing Date with the same
effect as though made on and as of the Closing Date (except to the extent
such representations and warranties speak as of an earlier date);
(c) SIH and Incentive shall have received from each of Vestar,
Harvard, AIP and the Management Purchasers a certificate, signed by an
executive of such party, to the effect that the conditions set forth in
the foregoing clauses (a) and (b) have been satisfied with respect to it;
and
(d) SIH and Incentive shall have received a letter from WABCO
substantially in the form of Exhibit E hereto.
14
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. Termination. (a) This Agreement may be terminated and
the Transaction abandoned at any time prior to the Closing:
(i) by the mutual written consent of Incentive and SIH, on the one
hand, and Vestar and Harvard on behalf of Buyer, on the other hand; or
(ii) by either Incentive and SIH, on the one hand, or Vestar or
Harvard on behalf of Buyer, on the other hand, if the Closing shall not
have occurred on or prior to March 31, 1997, provided that the right to
terminate this Agreement pursuant to this Section 8.1(a)(ii) shall not be
available to any party whose failure to fulfill any of its obligations
under this Agreement, or whose breach of any representation or warranty by
it set forth herein, has been the cause of, or resulted in, the failure of
the Closing to have occurred on or before such date.
(b) In the event of termination of this Agreement by any party
pursuant to this Section 8.1, written notice thereof shall forthwith be given to
the other parties hereto and this Agreement shall forthwith become of no further
force and effect, except for the provisions of this Article VIII and Sections
6.3, 6.4 and 6.5 and Article IX, each of which shall continue in full force and
effect. The foregoing provisions shall not limit or restrict the availability of
specific performance or other injunctive relief to the extent that specific
performance or other injunctive relief would otherwise be available to a party
hereunder. Nothing in this Section 8.1 shall be deemed to relieve any party from
any liability for any breach by such party of its representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 8.2. Amendments and Waivers. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. Incentive and SIH, on the one hand, and Vestar and Harvard on
behalf of Buyer, on the other hand, may, by an instrument in writing signed on
behalf of such party, waive compliance by the other party with any term or
provision of this Agreement that such other party was or is obligated to comply
with or perform. In particular it is acknowledged and agreed that Buyer may not
waive the conditions set forth in Section 7.1(b) as conditions to the
obligations of SIH and Incentive to effect the Closing.
15
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Non-Survival of Representations and Warranties. None of
the representations and warranties contained in this Agreement or in the
Representation Letter shall survive the Closing, except for the representations
and warranties made by each of Incentive and SIH in Section 4.4.
SECTION 9.2. Notices. Any notice, request, demand, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given (i) when delivered by hand, (ii)
five Business Days after it is mailed, certified or registered mail, return
receipt requested with postage prepaid, (iii) when answered back if sent by
telecopy (with receipt confirmed) or (iv) three Business Days after it is sent
by express delivery service, as follows:
(a) if to SIH, to:
Scandinavian Incentive Holding B.V.
c/o Incentive AB
Hamngatan 2
S-11147 Stockholm, Sweden
Attention: Mr. Mikael Lilius
Telephone No.: (011) 46-8-613-65-17
Telecopier No.: (011) 46-8-611-81-61
with a copy to:
Advokatfirman Vinge KB
Smalandsgatan 20, Box 1703
S-111 87 Stockholm, Sweden
Attention: Hans Wibom, Esq.
Telephone No.: (011) 46-8-614-31-45
Telecopier No.: (011) 46-8-614-31-90
(b) if to Incentive, to:
Incentive AB
Hamngatan 2
S-111 47 Stockholm, Sweden
Attention: Mr. Mikael Lilius
Telephone No.: (011) 46-8-613-65-17
Telecopier No.: (011) 46-8-611-81-61
16
with a copy to:
Advokatfirman Vinge KB
Smalandsgatan 20, Box 1703
S-111 87 Stockholm, Sweden
Attention: Hans Wibom, Esq.
Telephone No.: (011) 46-8-614-31-45
Telecopier No.: (011) 46-8-614-31-90
(c) if to Vestar, to:
Vestar Equity Partners, L.P.
1225 17th Street, Suite 1660
Denver, Colorado 80202
Attention: Mr. James P. Kelley
Telephone No.: (303) 292-6300
Telecopier No.: (303) 292-6639
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Peter J. Gordon, Esq.
Telephone No.: (212) 455-2605
Telecopier No.: (212) 455-2502
(d) if to Harvard, to:
c/o Harvard Private Capital Group, Inc.
600 Atlantic Avenue, 26th Floor
Boston, Massachusetts 02110
Attention: Mr. Mark Rosen
Telephone No.: (617) 523-4400
Telecopier No.: (617) 523-1063
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110-26242
Attention: Larry J. Rowe, Esq.
Telephone No.: (617) 951-7000
Telecopier No.: (617) 951-7050
(e) if to AIP, to
American Industrial Partners
551 Fifth Avenue
Suite 3800
New York, NY 10176
Attention: Mr. Robert J. Klein
Telephone No.: (212) 983-1399
Telecopier No.: (212) 986-5099
17
with a copies to:
American Industrial Partners
One Maritime Plaza
Suite 2525
San Francisco, CA 94111
Attention: Mr. Ken Pereira
Telephone No.: (415) 788-7354
Telecopier No.: (415) 788-5302
and
Latham & Watkins
5800 Sears Tower
Chicago, Illinois 60606
Attention: Mark Stegemoeller, Esq.
Telephone No.: (312) 876-7690
Telecopier No.: (312) 993-9767
(f) if to any Management Purchaser, to him
c/o Westinghouse Air Brake Company
1000 Air Brake Avenue
Wilmerding, Pennsylvania 15148
Attention: Mr. Robert Brooks
Telephone No.: (412) 825-1315
Telecopier No.: (412) 825-1156
with a copy to:
Reed Smith Shaw & McClay
435 Sixth Avenue
Pittsburgh, Pennsylvania 15219
Attention: David L. DeNinno, Esq.
Telephone No: (412) 288-3214
Telecopier No: (412) 288-3063
SECTION 9.3. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
SECTION 9.4. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same agreement.
SECTION 9.5. Interpretation. The section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
SECTION 9.6. Entire Agreement. This Agreement, including the
exhibits hereto, constitutes the entire agreement
18
among the parties hereto and supersedes any prior agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof.
SECTION 9.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF.
SECTION 9.8. Successors and Assigns. This Agreement shall not be
assignable by either SIH or Incentive without the prior written consent of
Vestar and Harvard on behalf of Buyer or by Buyer without the prior written
consent of SIH and Incentive. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to confer on
any person, other than the parties hereto and their respective successors and
permitted assigns, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
SECTION 9.9. Conciliation and Arbitration. (a) If any dispute, claim
or difference arises out of or relates to this Agreement (a "Dispute"), the
parties hereto shall use their reasonable best efforts to resolve the Dispute
and, if they so desire, consult outside experts for assistance in arriving at
such a resolution.
(b) Any Dispute shall be finally settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") effective as of the commencement of the arbitration (the
"Rules"), except as such Rules may be modified as provided herein. The
arbitration shall be held in New York, New York, unless the parties mutually
agree to have the arbitration held elsewhere, and judgment upon the award made
therein may be entered by any court having jurisdiction thereof, provided,
however, that nothing contained in this Section 9.9 shall be construed to
preclude a party from bringing any action in any court of competent jurisdiction
for injunctive or other provisional relief to compel another party to comply
with its obligations under this Agreement during the pendency of the arbitration
proceedings. The arbitral tribunal shall be composed of three arbitrators, who
shall be experienced commercial litigators admitted to practice law in the State
of New York. Incentive and SIH shall appoint one arbitrator and Vestar and
Harvard on behalf of Buyer shall appoint one arbitrator. If such parties fail to
nominate an arbitrator in accordance with the preceding sentence within thirty
days from the date when the notice of intention to arbitrate referred to in Rule
6 of the Rules (the "Commencement Notice") has been received by the Respondent
(as defined in the Rules) such appointment shall, upon written request by either
party to the AAA, be made in accordance with Rule 14 of the Rules. The two
arbitrators thus appointed shall attempt to agree upon the third arbitrator to
act as chairperson of the arbitration tribunal. If said two
19
arbitrators fail to appoint the chairperson within thirty days from the date of
appointment of the second arbitrator, upon written request of either party to
the AAA, such appointment shall be made in accordance with Rule 15 of the Rules.
The arbitrators shall have no power to waive, alter, amend, revoke or suspend
any of the provisions of this Agreement, provided, however, that the arbitrators
shall have the power to decide all questions with respect to the interpretation
and validity of this Section 9.9. The arbitration shall be conducted, and the
award shall be rendered, in the English language. An arbitrator may not act as
an advocate for the party nominating him, and all three arbitrators shall be
impartial and unbiased. A majority vote by the three arbitrators shall be
required on any decision made by them; provided, however, that lacking such a
majority in the case of question of amounts of dollar or other quantities, the
vote for the greatest amount or quantity shall be deemed to be a vote for the
amount or quantity next in magnitude in order to form a majority for such vote.
The arbitrators shall permit such discovery as they shall determine is
appropriate in the circumstances, taking into account the needs of the parties
and the desirability of making discovery expeditious and cost-effective. Any
such discovery shall be limited to information directly relevant to the
controversy or claim in arbitration and shall be concluded within thirty days
after the appointment of the arbitration panel. This agreement to arbitrate
shall be binding upon the heirs, successors and assigns and any trustee,
receiver or executor of any party hereto. Except to the extent required by law
or court or administrative order, no party, arbitrator, representative, counsel
or witness shall disclose or confirm to any person not present at the
arbitration hearings any information about the arbitration proceeding or
hearings, including the names of the parties and arbitrators, the nature and
amount of the claims, the financial condition of any party, the expected date of
hearing or the award made.
(c) Subject to and not in any way limiting the preceding Section
9.9(b), each of the parties hereto irrevocably consents and submits to the
jurisdiction in any action brought in connection with this Agreement in the
United States District Court for the Southern District of New York or any New
York court of competent jurisdiction, including, but not limited to, any action
to enforce an award rendered pursuant to the preceding Section 9.9(b). Incentive
and SIH hereby appoint CT Corporation System as their agent for service of
process in New York. The submission of the parties to jurisdiction as set forth
in this Section 9.9(c) does not constitute and shall not be deemed a consent to
jurisdiction for any purpose other than those expressly set forth in this
Agreement.
20
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
INCENTIVE AB
By: /s/ Mikael Lilius + /s/ Soren Mellstig
---------------------------------------
Name: Mikael Lilius + Soren Mellstig
Title: CEO & Executive Vice President
SCANDINAVIAN INCENTIVE HOLDINGS,
B.V.
By: /s/ Mikael Lilius + /s/ Soren Mellstig
---------------------------------------
Name: Mikael Lilius + Soren Mellstig
Title: Director & Director
Number of SIH
Shares to be Purchased VESTAR EQUITY PARTNERS, L.P.
By: VESTAR ASSOCIATES, L.P.
Its: General Partner
By: VESTAR ASSOCIATES CORPORATION
Its: General Partner
2,400,000 SIH Shares By: /s/ James P. Kelley
---------------------------------------
Name: James P. Kelley
Title: Managing Director
HARVARD PRIVATE CAPITAL HOLDINGS,
INC.
By: /s/ Mark A. Rosen
---------------------------------------
Name: Mark A. Rosen
Title: Authorized Signatory
2,400,000 SIH Shares By: /s/ Michael R. Eisenson
------------------------------------
Name: Michael R. Eisenson
Title: Authorized Signatory
21
AMERICAN INDUSTRIAL PARTNERS
CAPITAL FUND II, L.P.
By: AMERICAN INDUSTRIAL
PARTNERS II, L.P.
Its: General Partner
By: AMERICAN INDUSTRIAL PARTNERS
CORPORATION
Its: General Partner
900,000 SIH Shares By: /s/ Theodore C. Rogers
------------------------------------
Name: Theodore C. Rogers
Title: Chairman
22
THE MANAGEMENT PURCHASERS
300,000 SIH Shares
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement")
dated as of March 5, 1997, by and among the VOTING TRUST (the "Voting Trust)
created under the Second Amended WABCO Voting Trust/Disposition Agreement, dated
as of December 13, 1995 (the "Voting Trust Agreement"), VESTAR EQUITY PARTNERS,
L.P., a Delaware limited partnership ("Vestar"), HARVARD PRIVATE CAPITAL
HOLDINGS, INC., a Massachusetts corporation ("Harvard"), AMERICAN INDUSTRIAL
PARTNERS CAPITAL FUND II, L.P., a Delaware limited partnership ("AIP"), and
WESTINGHOUSE AIR BRAKE COMPANY, a Delaware corporation ("WABCO"). The Voting
Trust, Vestar, Harvard, AIP and WABCO are sometimes individually referred to as
a "Party" and collectively the "Parties".
WHEREAS, this Agreement amends and restates the Stockholders
Agreement dated as of January 31, 1995 (the "Existing Stockholder Agreement") by
and among the Voting Trust, Scandinavian Incentive Holdings B.V. ("SIH") and
WABCO, and to which Vestar/WABCO Investors, L.P., Vestar Capital Partners, Inc.,
William E. Kassling, Emilio A. Fernandez, and Incentive AB executed limited
joinders;
WHEREAS, concurrently with this Agreement becoming effective Vestar,
Harvard, AIP and members of WABCO's management are purchasing 6 million of the
shares of Common Stock owned by SIH and WABCO is repurchasing 4 million of the
shares of Common Stock owned by SIH (the purchase of such 10 million SIH Shares,
the "SIH Repurchase"); and
WHEREAS, the Parties desire to set forth certain agreements with
respect to the ownership of Common Stock by the Parties other than WABCO and
certain other matters relating to WABCO.
NOW, THEREFORE, in consideration of the promises and mutual
covenants hereinafter set forth, the Parties hereby agree as follows:
1. DEFINITIONS
1.1 In addition to the terms defined elsewhere herein, the following terms
shall have the following meanings:
1.1.1 "Act" shall mean the Securities Act of 1933, as amended.
1.1.2 "Affiliate" shall mean any entity which is now, or hereinafter
becomes controlled by, or in control of, or in common control with,
another entity. "Control" shall mean more than fifty percent (50%)
of the ownership interest or voting rights of any entity, directly
or indirectly.
1.1.3 "AIP Shares" shall mean the shares of Common Stock owned by
AIP.
1.1.4 "Associate" shall mean any natural person who is a partner,
officer, director or employee of (i) another person, (ii) a
corporate general partner of a limited partnership or (iii) a
company or partnership that controls, is controlled by, or is under
common control with, such person. "Person" shall mean an individual,
corporation, partnership, association, joint-stock company, trust
and unincorporated association.
1.1.5 "Common Stock" shall mean shares of common stock, par value
$.01 per share, of WABCO.
1.1.6 "ESOP" shall mean, collectively, the WABCO Employee Stock
Ownership Plan effective January 1, 1995 and the WABCO Employee
Stock Ownership Trust established effective January 1, 1995 pursuant
to the WABCO Employee Stock Ownership Trust Agreement between WABCO
and the U.S. Trust Company of California, N.A., as such plan and
trust may be amended, modified or supplemented from time to time.
1.1.7 "Harvard Shares" shall mean the shares of Common Stock owned
by Harvard.
1.1.8 "Pulse Shares" shall mean the shares of Common Stock delivered
by WABCO pursuant to that certain Asset Purchase Agreement dated as
of January 23, 1995, by and among WABCO, Pulse Acquisition
Corporation, Pulse Electronics, Incorporated and Pulse Embedded
Computer Systems, Inc.
1.1.9 "Qualifying Public Offering" shall mean a sale of shares of
Common Stock in a bona fide underwritten public offering that is
registered under the Act and conducted in the United States in a
manner reasonably designed to effect a broad distribution of such
shares.
1.1.10 "SEC" shall mean the United States Securities and Exchange
Commission.
1.1.11 "SIH Shares" shall mean the 10,000,000 shares of Common Stock
owned by SIH.
1.1.12 "Trustholders" shall mean the holders of Trust Certificates
issued by the Voting Trust in exchange for shares of Common Stock.
1.1.13 "Vestar Shares" shall mean the shares of Common Stock owned
by Vestar or Vestar Capital Partners, Inc.
-2-
1.1.14 "Voting Trust Shares" shall mean the shares of Common Stock
owned by the Voting Trust.
2. NOTICE OF CERTAIN ACTIVITIES
2.1 Harvard hereby agrees that, so long as a Harvard representative is on
the Board of Directors of the Company, Harvard shall provide prompt
written notice to the Company if at any time Harvard competes with WABCO
in the railway products or rail passenger transit business, provided,
however, that this covenant shall only apply with respect to investments
by Harvard in excess of $10,000,000.
2.2 Vestar hereby agrees that, so long as a Vestar representative is on
the Board of Directors of the Company, Vestar shall provide prompt written
notice to the Company if at any time Vestar or a wholly-owned subsidiary
of Vestar competes with WABCO in the railway products or rail passenger
transit business; provided, however, that this covenant shall only apply
with respect to investments by Vestar or any of its wholly-owned
subsidiaries in excess of $10,000,000.
3. CERTAIN PURCHASES AND CORPORATE MATTERS
3.1 Repurchases. On or about the date hereof, (i) WABCO is acquiring from
SIH 4,000,000 of the SIH Shares (the "SIH Repurchase"), and (ii) Vestar,
Harvard, AIP and certain members of WABCO's management are collectively
purchasing 6,000,000 of the SIH Shares.
3.2 By-Laws. On or before the effective date hereof, the By-Laws of WABCO
(the "ByLaws") shall be amended to read as set forth in Exhibit 3.2 to
this Agreement.
4. MANAGEMENT OF WABCO
4.1 Board of Directors.
4.1.1 Composition.
(a) Subject to paragraphs (b) through (h) hereof, the Board of
Directors of WABCO (the "Board") shall consist of such number of
persons as is determined from time to time by the affirmative vote
of a majority of the Directors then in office.
(b) The Board shall maintain a Nominating Committee, which
Nominating Committee shall nominate persons to be elected to the
Board as set forth in this Agreement. The Chairman of the Board
shall have exclusive authority to select the members of the Board
who will serve on the Nominating Committee, subject in any event to
the provision in Section 4.1.1(h). At any time that a new Director
is elected pursuant to the terms of this Agreement, the remaining
Directors then in office shall have an obligation to ratify and
approve such elections.
(c) The Nominating Committee shall nominate persons for election to
the Board so that the Board shall be comprised of the following: (i)
the Chief Executive of WABCO; (ii) another executive officer of
WABCO; (iii) at least three individuals
-3-
who are not employees of WABCO or any of its subsidiaries; (iv) one
individual designated by Vestar (the "Vestar Director") (so long as
Vestar and its partners, and Vestar Capital and its stockholders and
officers, and their respective Affiliates collectively and
beneficially own at least 50% of the shares of Common Stock
beneficially owned by Vestar and Vestar Capital immediately after
the closing of the SIH Repurchase); (v) one individual designated by
William E. Kassling (so long as Mr. Kassling and members of his
immediate family and their Affiliates collectively and beneficially
own at least 50% of the shares of Common Stock beneficially owned by
Mr. Kassling immediately after the closing of the SIH
Repurchase); (vi) one individual designated by Harvard (the "Harvard
Director") (so long as Harvard and its stockholders and officers and
their respective Affiliates collectively and beneficially own at
least 50% of the shares of Common Stock beneficially owned by
Harvard immediately after the closing of the SIH Repurchase); and
(vii) Emilio A. Fernandez (so long as (x) Mr. Fernandez is able and
willing to serve and (y) Mr. Fernandez and his immediate family and
their Affiliates (the "Fernandez Group") collectively and
beneficially own at least 50% of the Pulse Shares. So long as Mr.
Fernandez meets the qualifications set forth in the foregoing clause
(vii), the Chairman of the Board shall direct the Nominating
Committee to nominate Mr. Fernandez as a member of the Board of
Directors.
(d) If requested by WABCO in order to comply with paragraph (c)
above, Vestar, Mr. Kassling and/or Harvard shall cause its designee
for Director to resign effective at such time as Vestar, Mr.
Kassling or Harvard, as the case may be, no longer has the ability
to designate a Director pursuant to paragraph (c) above, and Mr.
Fernandez shall resign effective at such time as the Fernandez Group
no longer beneficially owns at least 50% of the Pulse Shares.
(e) Vestar, Harvard and Mr. Kassling may, at any time during which
their respective right to designate Directors is applicable, cause
the removal of any Director designated by it or him and designate a
new individual or individuals to serve as Director or Directors by
prior written notice to the Nominating Committee, which shall
promptly nominate such individual(s) for election to the Board.
Except with respect to Mr. Fernandez, in the event of a vacancy on
the Board of Directors caused by the death, resignation or removal
of a Director prior to the fulfillment of his term, the Party or
other person or entity originally designating such Director shall,
so long as its right to designate such Director is applicable,
designate an individual to serve as a successor Director and shall
promptly notify the Nominating Committee of such action in writing,
and the Nominating Committee shall promptly nominate such individual
for election to the Board. The death, resignation or removal of Mr.
Fernandez as a director shall terminate his right to serve on the
Board of Directors, and the Fernandez Group shall have no right to
designate a successor to fill any vacancy caused by such death,
resignation or removal.
(f) Any person designated by Vestar, Harvard, Mr. Kassling or, in
the case of Mr. Fernandez, the Chairman of the Board, as provided
for herein shall be nominated by the Nominating Committee to be
elected to the Board at the stockholders' meeting, or by the
Directors already elected to the Board, as the case may be, voting
in conformity with such nomination. In furtherance thereof, each of
the Voting Trust, Vestar, Harvard, Vestar Capital, AIP, Mr.
Kassling, Mr. Fernandez, Robert J. Brooks, Howard J. Bromberg and
John M. Meister agrees to vote all of the shares of Common Stock and
any other voting securities of WABCO from time to time held by it or
him in favor of, and each of the Voting Trust, Harvard, Vestar
Capital, AIP, Mr. Kassling, Mr. Fernandez, Mr. Brooks, Mr. Bromberg
-4-
and Mr. Meister agrees to cause any shares of Common Stock or other
WABCO voting securities as to which it or he from time to time has
the right to direct the vote to be voted in favor of, and to take
any other appropriate steps to cause, the election to the Board of
individuals designated by Vestar, Harvard and/or Mr. Kassling and,
in the case of Mr. Fernandez, the Chairman of the Board, and
nominated by the Nominating Committee in accordance with this
Section 4.1.1; provided, that Mr. Kassling shall not be deemed to
control any shares of Common Stock held by the ESOP for purposes of
this Section 4.1
(g) Each director elected in accordance with the foregoing
paragraphs (b) through (f) shall be elected to one of three classes,
as allocated by the Chairman of the Board in his sole discretion.
Each director will be elected to hold office for a term expiring at
the third succeeding annual meeting. In all such cases, a Director's
term of office shall continue until his successor is duly elected
and qualified or until his earlier resignation or removal. Until
such time as Vestar designates a new individual in accordance with
this Section 4.1.1, James P. Kelley shall be the Vestar Director and
shall continue in his current term as a Director. The Harvard
Director shall fill the vacancy to be created by Mikael Lilius'
resignation from the Board and shall be nominated for a full term
expiring in 2000. Each other Director currently serving as such
(with the exception of Mr. Lilius) will continue his present term.
(h) Each committee of the Board shall include either the Vestar
Director or the Harvard Director (as determined by Harvard and
Vestar) as one of its members.
4.1.2 Powers and Management.
(a) The Board of Directors shall have full power to control, manage
and direct the business of WABCO and to take such actions as may be
necessary to further the purposes of WABCO.
(b) The management of the business of WABCO shall be the
responsibility of a Chief Executive Officer, to be appointed by the
Board of Directors. William E. Kassling shall continue to be the
Chief Executive Officer of WABCO and he shall continue to serve as
Chief Executive Officer until replaced by the Board of Directors in
accordance with the provisions of any employment agreement then in
force between WABCO and Mr. Kassling. The Chief Executive Officer of
WABCO shall, subject to subsection(a) above, be entitled to make all
decisions regarding the ordinary course of business operations of
WABCO according to good business practice.
(c) All of the Directors shall have one vote each. A quorum shall be
constituted by a majority of the Directors then in office.
5. TRANSFER OF SECURITIES
5.1 No Transfer.
-5-
5.1.1 Except as permitted by Section 5.2 hereof, until March 31,
2001, neither Vestar, Harvard, AIP nor the Voting Trust shall sell,
transfer, assign, mortgage, change, hypothecate, give away or
otherwise dispose of (collectively, "transfer") any Common Stock
owned or held by it. Any transfer contrary to the provisions of this
Agreement shall be null and void. The foregoing shall not restrict
(i) the transferability of interests in the Voting Trust so long as
any such transfer does not affect the underlying Common Stock and
(ii) the ability of Vestar Capital Partners, Inc. to pledge the
40,000 Vestar Shares currently held by Vestar Capital Partners, Inc.
5.1.2 No transfer of shares of Common Stock by Vestar, Harvard, AIP
or the Voting Trust shall be permitted pursuant to Section 5.2
hereof except (i) pursuant to an effective registration statement
covering such shares under the Act and any applicable state
securities laws, (ii) in a transaction permitted by Rule 144
promulgated under the Act and as to which WABCO has received
reasonably satisfactory evidence of compliance with the provisions
of Rule 144, (iii) to a person whom the seller reasonably believes
is a Qualified Institutional Buyer within the meaning of Rule 144A
promulgated under the Act purchasing for its own account or for the
account of a Qualified Institutional Buyer that is aware that the
transfer is being made in reliance upon Rule 144A promulgated under
the Act, or (iv) upon receipt of a legal opinion in form and
substance reasonably acceptable to WABCO rendered by counsel (who
may be an employee of the party for whom or on whose behalf the
opinion is being rendered) reasonably satisfactory to WABCO to the
effect that the transaction does not require registration under the
Act and any applicable state securities laws. This Section shall not
apply to transfers by Vestar, Harvard or AIP to their respective
Affiliates as permitted by Section 5.2.1.
5.1.3 At the request of WABCO, each share certificate for the Common
Stock held by Vestar, Harvard, AIP or the Voting Trust shall be
provided with the following legend:
"The shares of stock represented by this certificate are
subject to, and may be sold, transferred, assigned, mortgaged,
changed, hypothecated, given away or otherwise disposed of
(collectively, "transferred") only in accordance with, the
provisions of the Amended and Restated Stockholders Agreement
dated as of March 5, 1997. The shares of stock represented by
this certificate have not been registered under the Securities
Act of 1933, as amended (the "Act"), or any applicable state
securities laws, and may not be transferred , and Westinghouse
Air Brake Company (the "Company") is not required to give
effect to any attempted transfer, except in accordance with
the terms of said Stockholders Agreement and (i) pursuant to
an effective registration statement covering such security
under the Act and any applicable state securities laws, (ii)
in a transaction permitted by Rule 144 promulgated under the
Act and as to which the Company has received reasonably
satisfactory evidence of compliance with the provisions of
Rule 144, (iii) to a person whom the seller reasonably
believes is a Qualified Institutional Buyer within the meaning
of Rule 144A promulgated under the Act purchasing for its own
account or for the account of a Qualified Institutional Buyer
that is aware that the transfer is being made in reliance upon
Rule 144A promulgated under the Act, or (iv) upon receipt of a
legal opinion in form and substance reasonably acceptable to
the Company rendered by counsel (who may be an employee of the
party for whom or on whose behalf the opinion is
-6-
being rendered) reasonably satisfactory to the Company to the
effect that the transaction does not require registration
under the Act and any applicable state securities laws."
5.2 Transfers Allowed.
5.2.1 On or prior to March 31, 1998 the Harvard Shares, the Vestar
Shares and the AIP Shares may only be transferred (i) to Affiliates
or partners of such transferor who agree in a writing, in form and
substance reasonably satisfactory to WABCO, to be bound by and
subject to the provisions of this Agreement , (ii) in connection
with the exercise of "piggyback" registration rights granted to such
transferor by WABCO, or (iii) in connection with any merger,
consolidation, reorganization, recapitalization or similar
transaction or any tender or exchange offer approved or recommended
by WABCO's Board of Directors. After March 31, 1998 the Harvard
Shares, the Vestar Shares and the AIP Shares may be transferred as
permitted under the foregoing clauses (i), (ii) and (iii) and (w) in
a Qualifying Public Offering, (x) in any disposition to a person
which, to the best knowledge of Harvard, Vestar or AIP, as the case
may be, after due inquiry (it being understood that Harvard, Vestar
and AIP may rely on representations and warranties made by such
person and such person's Schedule 13D or Schedule 13G filings with
the SEC unless Harvard, Vestar or AIP has actual knowledge that such
Schedules are not accurate), will not beneficially own, together
with such person's Affiliates, a number of shares of Common Stock
then outstanding on a fully diluted basis which, when combined with
the number of Harvard Shares, Vestar Shares or AIP Shares, as the
case may be, being disposed of in such disposition would constitute
more than 6% of the shares of Common Stock then outstanding on a
fully diluted basis, (y) to or through any broker, underwriter,
placement agent or other financial intermediary, acting in such
capacity, which undertakes in a writing reasonably satisfactory to
WABCO to effect any subsequent transfer by it of such Harvard
Shares, AIP Shares or Vestar Shares, as the case may be, in a
Qualifying Public Offering or (z) to any person (other than any
person which, to the best knowledge of Harvard, Vestar or AIP, as
the case may be, after due inquiry, is a competitor or customer of
WABCO or has, prior to such sale, initiated or been an active
participant in, an unsolicited change of control transaction by
tender offer, proxy contest, consent solicitation or otherwise with
respect to WABCO), provided that WABCO shall have a right of first
offer with respect to any Harvard Shares, Vestar Shares or AIP
Shares, as the case may be, proposed to be sold in accordance with
this clause (z) pursuant to Section 5.2.2 hereof unless WABCO shall
have approved of such transfer in writing.
5.2.2 If either Harvard, Vestar or AIP (the "Selling Party")
proposes to sell any Harvard Shares, Vestar Shares or AIP Shares, as
the case may be pursuant to clause (z) of Section 5.2.1 hereof (a
"Third Party Sale"), the Selling Party shall not transfer such
Shares (the "Offered Shares") without first offering the Offered
Shares to WABCO in accordance with the following procedures. The
Selling Party shall provide to WABCO written notice of its intention
to sell (the "Sale Notice"), which Sale Notice shall include a
request for WABCO to make a written offer (the "WABCO Offer") to
purchase for cash all of the Offered Shares. WABCO shall have the
right to make a WABCO Offer for the Offered Shares by notifying the
Selling Party (such notice being referred to as an "Election
Notice") at any time within 35 days of WABCO's receipt of the Sale
Notice of WABCO's
-7-
intent to make such WABCO Offer; provided, that any such Election
Notice from WABCO shall be irrevocable, contain all of the material
terms and conditions of the sale and be accompanied by a commitment
letter from a bank or other responsible source of financing for such
purchase or a certificate signed by the Chief Financial Officer of
WABCO certifying that WABCO has sufficient funds to purchase the
Offered Shares. If WABCO exercises its right to purchase the Offered
Shares pursuant to the foregoing sentence, the closing of the
purchase of the Offered Shares by WABCO shall take place at the
principal offices of WABCO on a date specified by WABCO in the
Election Notice, but in any event not later than 100 days after
receipt by WABCO of the Sale Notice. On the closing date for such
purchase, the Selling Party shall deliver the Offered Shares to
WABCO free and clear of all liens, encumbrances and security
interests and, in connection therewith, the Selling Party shall
execute and deliver such agreements, documents and instruments,
including stock powers, as WABCO shall reasonably require. If WABCO
fails to deliver an Election Notice within 35 days of receipt by
WABCO of the Selling Party Sale Notice or if WABCO otherwise advises
the Selling Party in writing that WABCO does not intend to exercise
its right to acquire the Offered Shares, the Selling Party shall be
entitled to sell the Offered Shares to any other person without any
requirements as to the terms and conditions of such sale; provided,
that if the Selling Party does not sell the Offered Shares by the
earlier to occur of 180 days from the expiration of WABCO's right to
deliver an Election Notice or 180 days from written notice from
WABCO that it does not intend to exercise its right to acquire the
Offered Shares, the provisions of this Section 5.2.2 shall again
apply to the Offered Shares.
If WABCO delivers its Election Notice for the Offered Shares within
35 days of receipt by WABCO of the Selling Party Sale Notice, the
Selling Party shall be entitled to offer the Offered Shares to any
person pursuant to a Third Party Sale at a price that is more
favorable to the Selling Party than those set forth in the Election
Notice, provided that any such sale must occur within 180 days of
the date of delivery of the Election Notice.
Notwithstanding the foregoing, if the Selling Party's Sale Notice is
in connection with any tender offer or exchange offer for
outstanding Common Stock, WABCO shall be required to the extent
WABCO desires to purchase the Offered Shares to exercise its right
to so purchase, and to close such purchase of, the Offered Shares by
the date which is the earlier of (i) 10 days following receipt of
such Sale Notice and (ii) the business day prior to the expiration
of such tender or exchange offer.
5.2.3 After March 31, 1998 Harvard, Vestar and AIP shall be
permitted to sell Shares pursuant to and subject to the limitations
set forth in Rule 144 of the SEC under the Act.
5.2.4 Notwithstanding any provision herein to the contrary,
Trustholders (other than William E. Kassling, Robert J. Brooks,
Howard J. Bromberg and John M. Meister, who shall be subject to
Section 5.2.5 below) shall, to the extent permitted by the Voting
Trust Agreement, be permitted to transfer Voting Trust Shares,
withdraw Voting Trust Shares from the Voting Trust, and/or sell or
otherwise dispose of Shares at any time. Upon expiration of the
Voting Trust, Voting Trust Shares may be distributed in accordance
with the terms thereof and such Voting Trust Shares will no longer
be subject to Section 5.1.
-8-
5.2.5 (a) Except as permitted by Section 5.2.5(b), 5.2.5(c) and
5.2.5(d), until March 31, 2001, none of Messrs. Kassling, Fernandez,
Brooks, Bromberg and Meister (collectively, the "Management Group")
shall sell, transfer, assign, mortgage, change, hypothecate, give
away or otherwise dispose of (collectively "transfer") any shares of
Common Stock beneficially owned by him or any of his interest in the
Voting Trust (treating any Common Stock held by the Voting Trust for
the account of any member of the Management Group as Common Stock
owned by such member).
(b) Subject to Section 5.2.5(f) below, each member of the Management
Group shall be permitted to transfer shares of Common Stock
beneficially owned by him at any time in accordance with the terms
of Section 8 of the Voting Trust Agreement, as in effect on the date
hereof, regardless of whether such person is a participant in the
Voting Trust. Each member of the Management Group who is also a
participant in the Voting Trust shall be permitted to withdraw
shares of Common Stock from the Voting Trust at any time in
accordance with the terms of the Voting Trust Agreement, as in
effect on the date hereof.
(c) So long as any member of the Management Group continues to be an
employee of WABCO or any of its subsidiaries, such member, together
with his transferees permitted under this Section 5.2.5, may
transfer during each 12-month period following the effective date of
this Agreement, in the aggregate, 5% of the shares of Common Stock
beneficially owned by such member on the date of this Agreement.
(d) In the event that a member of the Management Group's employment
with WABCO and its subsidiaries is terminated for any reason, such
member, together with his transferees permitted under this Section
5.2.5, may transfer during each 12-month period following the
effective date of such termination, in the aggregate, 20% of the
shares of Common Stock beneficially owned by such member on the
effective date of such termination. The restriction in this Section
5.2.5(d) may be waived by the Chairman of the Board of WABCO as to
any member of the Management Group if such member delivers to the
Chairman a request for waiver indicating that such waiver is
required in order to alleviate personal hardship. The decision as to
whether and to what extent to grant a waiver shall be in the sole
discretion of the Chairman.
(e) Each member of the Management Group agrees not to effect any
public sale or distribution of shares of Common Stock owned by him
or any similar security of the Company, or any securities
convertible into or exchangeable or exercisable for such securities,
or any securities into which such securities are convertible or for
which such securities are exchangeable or exercisable, during the 10
days prior to, and during the 90 day period beginning on, the
effective date of any registration statement in which "Holders" (as
defined in that certain Common Stock Registration Rights Agreement
of even date herewith among the Company, Vestar, Harvard, AIP, the
Voting Trust and certain other holders of shares of Common Stock)
are participating in connection with an underwritten public offering
of shares of Common Stock (except as part of such registration), if
and to the extent reasonably requested in writing (with reasonable
prior notice) by the lead managing underwriter of the underwritten
public offering.
(f) Each member of the Management Group agrees that no shares of
Common Stock (or any interests in the Voting Trust) beneficially
owned by him, his spouse or his minor children will be transfered in
a transfer permitted by this
-9-
Section 5.2.5 (other than subsections (c) and (d) above) unless the
transferee agrees in a writing, in form and substance reasonably
satisfactory to WABCO, to be bound by and subject to the provisions
of this Section 5.2.5.
(g) Shares of Common Stock beneficially owned by the Management
Group are as follows:
William E. Kassling 1,548,336 shares
Emilio A. Fernandez 643,444 shares
Robert J. Brooks 437,300 shares
Howard J. Bromberg 640,200 shares
John M. Meister 251,000 shares
It is agreed that the foregoing shares include all shares of Common
Stock controlled by the Management Group and their respective
spouses and minor children and that all of the foregoing shares
shall be subject to this Agreement.
(h) Shares of Common Stock held by the ESOP shall not be deemed to
be beneficially owned by any member of the Management Group for
purposes of this Agreement. Shares of Common Stock held in the
Voting Trust (other than shares deposited by members of the
Management Group in the Voting Trust) also shall not be deemed to be
beneficially owned by any member of the Management Group for
purposes of this Agreement.
6. ASSIGNMENT
6.1 This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the Parties to this Agreement and their
respective successors and assigns.
6.2 Neither this Agreement nor any of the rights, interests and
obligations hereunder shall be assignable by any Party without the prior
written consent of the other Parties; provided, however, Vestar, Harvard
and AIP shall have the right to assign their rights, interests and
obligations hereunder to their respective Affiliates from time to time so
long as such Affiliates agree in a writing, in form and substance
reasonably satisfactory to WABCO, to be bound by and subject to the
provisions of this Agreement.
7. TERM
7.1 This Agreement shall continue in effect (unless terminated by a mutual
agreement of the Parties) until March 31, 2007.
8. CONCILIATION AND ARBITRATION
8.1 Conciliation. If any dispute, claim or difference arises out of or
relating to this Agreement, or as to the rights and liabilities of the
Parties hereunder or as to the breach or invalidity hereof, or in
connection with the construction of this Agreement (each such event being
hereinafter called a "Dispute"), the Parties shall use their best efforts
to resolve the Dispute and, if they so desire, consult outside experts for
assistance in arriving at such a resolution.
-10-
8.2 Arbitration. (a) Any Dispute shall be finally settled by arbitration
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") effective as of the commencement of the
arbitration(the "Rules"), except as such Rules may be modified as provided
in this Agreement. The arbitration shall be held in New York, New York,
unless the parties mutually agree to have the arbitration held elsewhere,
and judgment upon the award made therein may be entered by any court
having jurisdiction thereof; provided, however, that nothing contained in
this paragraph shall be construed to limit or preclude a party from
bringing any action in any court of competent jurisdiction for injunctive
or other provisional relief to compel another party to comply with its
obligations under this Agreement during the pendency of the arbitration
proceedings. The arbitral tribunal shall be composed of three(3)
arbitrators, who shall be experienced commercial litigators admitted to
practice law in the State of New York. If the Dispute is between two of
the Parties, each Party shall appoint one arbitrator. If the Dispute is
among more than two Parties hereto, the Parties shall mutually agree upon
and appoint two arbitrators. If such Parties fail to nominate an
arbitrator (in the case of a two-party Dispute) or if the Parties fail to
agree upon two arbitrators (in the case of a more than two Party Dispute)
in accordance with the two preceding sentences within thirty(30) days from
the date when the notice of intention to arbitrate referred to in Rule 6
of the Rules (the "Commencement Notice") has been received by the
Respondent (as defined in the Rules) such appointment shall, upon written
request by either or any Party (as the case may be) to the AAA, be made in
accordance with Rule 14 of the Rules. The two arbitrators thus appointed
shall attempt to agree upon the third arbitrator to act as chairperson of
the arbitration tribunal. If said two (2) arbitrators fail to appoint the
chairperson within thirty (30) days from the date of appointment of the
second arbitrator, upon written request of either party to the AAA, such
appointment shall be made in accordance with Rule 15 of the Rules. The
arbitrators shall have no power to waive, alter, amend, revoke, or suspend
any of the provisions of this Agreement, provided, however, that the
arbitrators shall have the power to decide all questions with respect to
the interpretation and validity of this Subsection 8.2. An arbitrator may
not act as an advocate for the party nominating him, and all three
arbitrators shall be impartial and unbiased. A majority vote by the three
arbitrators shall be required on any decision made by them; provided,
however, that lacking such a majority in the case of questions of amounts
of dollar or other quantities, the vote for the greatest amount or
quantity shall be deemed to be a vote for the amount or quantity next in
magnitude in order to form a majority for such vote. The arbitrators shall
permit such discovery as they shall determine is appropriate in the
circumstances, taking into account the needs of the Parties and the
desirability of making discovery expeditious and cost-effective. Any such
discovery shall be limited to information directly relevant to the
controversy or claim in arbitration and shall be concluded within thirty
(30) days after the appointment of the arbitration panel. This agreement
to arbitrate shall be binding upon the heirs or successors and the assigns
and any trustee, receiver or executor of each party hereto. Except to the
extent required by law or court or administrative order, no party,
arbitrator, representative, counsel or witness shall disclose or confirm
to any person not present at the arbitration hearings, any information
about the arbitration proceeding or hearings, including the names of the
parties and arbitrators, the nature and amount of the claims, the
financial condition of any party, the expected date of hearing or the
award made.
(b) Subject to and not in any way limiting subsection (a) hereof, each of
the parties hereto irrevocably consents to personal jurisdiction in any
action brought in connection with this Agreement in the United Stated
District Court for the Southern District of New York or any New York court
of competent jurisdiction, including, but not limited to, any action to
enforce an award rendered pursuant to subsection (a) hereof, and the
Voting Trust and WABCO each hereby appoints Reed Smith Shaw & McClay,
Attention: Ruth
-11-
S. Perfido, Esq. as its agent for service of process, Vestar hereby
appoints Vestar Capital Partners, Inc., Attention: Robert L. Rosner as its
agent for service of process, Harvard hereby appoints Ropes & Gray,
Attention: Larry J. Rowe as its agent for service of process and AIP
hereby appoints American Industrial Partners Corporation, Attention: Ken
Pereira as its agent for service of process. The submission of the Parties
to jurisdiction as set forth in this subsection (b) does not constitute
and shall not be deemed a consent to jurisdiction for any purpose other
than those expressly set forth in this Agreement.
9. GENERAL PROVISIONS
9.1 Notices. Any notice, request, demand, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall
be deemed to have been duly given (i) when delivered by hand, (ii) five
business days after it is mailed certified or registered mail, return
receipt requested with postage prepaid, (iii) when answered back if sent
by telecopy (with receipt confirmed) or (iv) three business days after it
is sent by express delivery service, as follows:
If to Vestar:
c/o Vestar Capital Partners, Inc.
Seventeenth Street Plaza
1225 17th Street
Suite 1600
Denver, CO 80202
Attention: James P. Kelley
Fax: 303-292-6639
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Peter J. Gordon, Esq.
Fax: 212-455-2502
If to the Voting Trust:
c/o Westinghouse Air Brake Company
1001 Air Brake Avenue
Wilmerding, PA 15148
Attention: William E. Kassling
Fax: 412-825-1156
-12-
With a copy to:
Reed Smith Shaw & McClay
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: David L. DeNinno, Esq.
Fax: 412-288-3063
If to Harvard:
c/o Harvard Private Capital Group, Inc.
600 Atlantic Avenue, 26th Floor
Boston, Massachusetts 02100
Attention: John Sallay
Fax: 617-523-1063
With a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110-26242
Attention: Larry J. Rowe, Esq.
Fax: 617-951-7050
If to AIP:
American Industrial Partners
551 Fifth Avenue
Suite 3800
New York, NY 10176
Attention: Robert J. Klein
Fax: 212-986-5099
With a copy to:
American Industrial Partners
One Maritime Plaza
Suite 2525
San Francisco, CA 94111
Attention: Ken Pereira
Fax: 415-788-5302
-13-
If to WABCO:
Westinghouse Air Brake Company
1001 Air Brake Avenue
Wilmerding, Pennsylvania 15148
Attention: William E. Kassling
Fax: (412) 825-1156
With a copy to:
Reed Smith Shaw & McClay
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: David L. DeNinno, Esq.
Fax: 412-288-3063
Any Party may change its address specified for notices here in by
designating a new address by notice in accordance with this Section.
9.2 Waiver. Any failure on the part of either Party hereto to comply with
any of its obligations, agreement or conditions hereunder may be waived by
the other Party. No waiver of any provision of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or
not similar, nor shall any waiver constitute a continuing wavier.
9.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective heirs, legal representatives,
executors, administrators, successors and assigns as permitted by the
terms of this Agreement.
9.4 Severability. If any provision of this Agreement should be or become
fully or partly invalid or unenforceable for any reason whatsoever or
violate any applicable law, this Agreement is to be considered divisible
as to such provision and such provision is to be deleted from this
Agreement, and the remainder of this Agreement shall be deemed valid and
binding as if such provision were not included herein. There shall be
substituted for any such provision deemed to be deleted a suitable
provision which, as far as it is legally possible, comes nearest to what
the Parties desired or would have desired according to the sense and
purpose of this Agreement had this been considered when concluding this
Agreement.
9.5 Headings. The section and other headings in this Agreement are
inserted solely as a matter of convenience and for reference only, and do
not constitute a part of this Agreement.
9.6 Entire Agreement. This Agreement constitutes the entire agreement
among the Parties as to the subject matter hereof and supersedes any other
agreements, representations, warranties, or communications, whether oral
or written, among the Parties (or their Affiliates) relating to the
subject matter hereof. Each of WABCO, the other parties hereto and, by its
execution and delivery of its termination letter, SIH hereby acknowledges
and agrees that the Existing Stockholders Agreement is amended and
restated in full by this Agreement and that all obligations owed by SIH
and its Affiliates
-14-
to WABCO under the Existing Stockholders Agreement (other than under
Section 10 thereof) are terminated effective upon the effectiveness of
this Agreement.
9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and such laws shall also
govern in the settlement by arbitration or otherwise of any and all
disputes arising between the Parties as well as the validity of the
arbitration clause in Section 11 above.
9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.9 Exhibits Incorporated. All Exhibits attached hereto are incorporated
herein by reference, and all blanks in such Exhibits, if any, will be
filled in as required in order to consummate the transactions contemplated
herein and in accordance with this Agreement.
9.10 Modifications. No modification, alteration, addition, change or
amendment of the terms of this Agreement shall be binding on the Parties
unless reduced to writing and duly executed by each of the Parties hereto
in the same manner as the execution of this Agreement.
9.11 Effect of Stock Splits, Stock Dividends, Etc. If the outstanding
shares of Common Stock shall be changed into or exchangeable for a
different number or kind of shares of stock or other securities of WABCO
or another corporation, or if the outstanding number of shares of Common
Stock is increased or decreased, in each case as a result of a stock
dividend, stock split-up, reverse stock split-up, reorganization,
reclassification, combination of shares, merger, consolidation or like
event (collectively, a "Stock Event"), the provisions of this Agreement
shall apply to the shares or other securities acquired pursuant to such
Stock Event (the "Additional Shares") to the extent (but only to the
extent) that such provisions apply to the shares of Common Stock on which
or as a result of which the Additional Shares are issued or paid to the
holders thereof.
9.12. Effectiveness. This Agreement shall become effective upon the
consummation of the SIH Repurchase.
-15-
IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first above
written.
VESTAR EQUITY PARTNERS, L.P.
By: VESTAR ASSOCIATES, L.P., its General
Partner
By: VESTAR ASSOCIATES CORPORATION,
its General Partner
/s/ James P. Kelley
-----------------------------------
By: James P. Kelley
Title: Managing Director
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By: /s/ Mark A. Rosen
--------------------------------------------
Its: Authorized Signatory
By: /s/ Michael R. Eisenson
--------------------------------------------
Its: Authorized Signatory
VOTING TRUST
By: /s/ Robert J. Brooks
--------------------------------------------
Its: Trustee
WESTINGHOUSE AIR BRAKE COMPANY
By: /s/ Robert J. Brooks
--------------------------------------------
Its: Vice President and Secretary
-16-
AMERICAN INDUSTRIAL PARTNERS
CAPITAL FUND II, L.P.
By: American Industrial Partners II, L.P., its
General Partner
By: American Industrial Partners Corporation,
its General Partner
/s/ Theodore C. Rogers
------------------------------------------
By: Theodore C. Rogers
Title: Chairman
-17-
JOINDER
Vestar Capital Partners, Inc. joins in this Amended and Restated
Stockholders Agreement for the limited purpose of agreeing to be bound by and to
be entitled to the benefits of Sections 2, 4 and 5 hereof.
VESTAR CAPITAL PARTNERS, INC.
By: /s/ James P. Kelley
--------------------------------------------
Name: James P. Kelley
Title: Managing Director
-18-
JOINDER
The undersigned join in this Amended and Restated Stockholders
Agreement for the limited purpose of agreeing to be bound by and to be entitled
to the benefits of Sections 4 through 9 hereof.
/s/ William E. Kassling
--------------------------------------
William E. Kassling
DAVIDECO, INC.
By: /s/ William E. Kessling
--------------------------------------
Its: Director
/s/ Emilio A. Fernandez
--------------------------------------
Emilio A. Fernandez
/s/ Ofelia Fernandez
--------------------------------------
Ofelia Fernandez
/s/ Robert J. Brooks
--------------------------------------
Robert J. Brooks
SUEBRO, INC.
By: /s/ Robert J. Brooks
--------------------------------------
Its: President
/s/ John M. Meister
--------------------------------------
John M. Meister
-19-
AMENDMENT NO. 1 TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
THIS AMENDMENT NO. 1, dated as of March , 1997 TO THE AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT (this "Amendment"), dated as of March 5, 1997,
by and among the VOTING TRUST (the "Voting Trust") created under the Second
Amended WABCO Voting Trust/Disposition Agreement, dated as of December 13, 1995
(the "Voting Trust Agreement"), VESTAR EQUITY PARTNERS, L.P., a Delaware limited
partnership ("Vestar"), HARVARD PRIVATE CAPITAL HOLDINGS, INC., a Massachusetts
corporation ("Harvard"), AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND II, L.P., a
Delaware limited partnership ("AIP"), and WESTINGHOUSE AIR BRAKE COMPANY, a
Delaware corporation ("WABCO").
WITNESSETH THAT:
WHEREAS, the parties hereto have previously entered into that certain
Amended and Restated Stockholders Agreement (the "Stockholders Agreement"),
dated as of March 5, 1997; and
WHEREAS, the parties hereto executed the Stockholders Agreement based
upon the understanding that Howard J. Bromberg ("Mr. Bromberg") would execute a
joinder to such Stockholders Agreement; and
WHEREAS, it is now the understanding of the parties hereto that Mr.
Bromberg will not be asked to execute such a joinder; and
WHEREAS, the parties hereto wish to amend the Stockholders Agreement to
delete references to Mr. Bromberg from such Stockholders Agreement.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants hereinafter set forth and intending to be legally bound hereby, agree
as follows:
Section 1. Amendments.
Section 4.1.1(f) of the Stockholders Agreement is hereby amended in its
entirety to read as follows:
Any person designated by Vestar, Harvard, Mr. Kassling or, in the case
of Mr. Fernandez, the Chairman of the Board, as provided for herein
shall be nominated by the Nominating Committee to be elected to the
Board at the stockholders' meeting, or by the Directors already elected
to the Board, as the case may be, voting in conformity with such
nomination. In furtherance thereof, each of the Voting Trust, Vestar,
Harvard, Vestar Capital, AIP, Mr. Kassling, Mr. Fernandez, Robert J.
Brooks and John M. Meister agrees to vote all of the shares of Common
Stock and any other voting securities of WABCO from time to time held
by it or him in favor of, and each of the Voting Trust, Harvard, Vestar
Capital, AIP, Mr. Kassling, Mr. Fernandez, Mr. Brooks and Mr. Meister
agrees to cause any shares of Common Stock or other WABCO voting
securities as to which it or he from time to time has the right to
direct the vote to be voted in favor of, and to take any other
appropriate steps to cause, the election to the Board of individuals
designated by Vestar, Harvard and/or Mr. Kassling and, in the case of
Mr. Fernandez, the Chairman of the Board, and nominated by the
Nominating Committee in accordance with this Section 4.1.1; provided,
that Mr. Kassling shall not be deemed to control any shares of Common
Stock held by the ESOP for purposes of this Section 4.1
Section 5.2.4 of the Stockholders Agreement is hereby amended in its
entirety to read as follows:
Notwithstanding any provision herein to the contrary, Trustholders
(other than William E. Kassling, Robert J. Brooks and John M. Meister,
who shall be subject to Section 5.2.5 below) shall, to the extent
permitted by the Voting Trust Agreement, be permitted to transfer
Voting Trust Shares, withdraw Voting Trust Shares from the Voting
Trust, and/or sell or otherwise dispose of Shares at any time. Upon
expiration of the Voting Trust, Voting Trust Shares may be distributed
in accordance with the terms thereof and such Voting Trust Shares will
no longer be subject to Section 5.1.
Section 5.2.5(a) of the Stockholders Agreement is hereby amended in its
entirety to read as follows:
Except as permitted by Section 5.2.5(b), 5.2.5(c) and 5.2.5(d), until
March 31, 2001, none of Messrs. Kassling, Fernandez, Brooks and Meister
(collectively, the "Management Group") shall sell, transfer, assign,
mortgage, change, hypothecate, give away or otherwise dispose of
(collectively "transfer") any shares of Common Stock beneficially owned
by him or any of his interest in the Voting Trust (treating any Common
Stock held by the Voting Trust for the account of any member of the
Management Group as Common Stock owned by such member); provided,
however, that members of the Management Group also shall be permitted
to transfer at any time shares of Common Stock in the circumstances
described in clauses (i), (ii) and (iii) of the first sentence of
Section 5.2.1 hereof.
Section 5.2.5(g) of the Stockholders Agreement is hereby amended in its
entirety to read as follows:
Shares of Common Stock beneficially owned by the Management Group are
as follows:
William E. Kassling 1,548,336 shares
Emilio A. Fernandez 643,444 shares
Robert J. Brooks 437,300 shares
John M. Meister 251,000 shares
It is agreed that the foregoing shares include all shares of Common
Stock controlled by the Management Group and their respective spouses
and minor children and that all of the foregoing shares shall be
subject to this Agreement.
Section 2. Miscellaneous. Except as expressly set forth herein, the
terms and provisions of the Stockholders Agreement are and shall remain in full
force and effect.
Section 3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Delaware.
-2-
IN WITNESS WHEREOF, the Parties hereto, by their officers thereunto
duly authorized, have executed and delivered this Amendment as of the day and
year first above written.
VESTAR EQUITY PARTNERS, L.P.
By: VESTAR ASSOCIATES, L.P., its General
Partner
By: VESTAR ASSOCIATES CORPORATION,
its General Partner
By:
Title:
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By:_________________________________________
Its:________________________________________
By:_________________________________________
Its:________________________________________
VOTING TRUST
By:_________________________________________
Its:________________________________________
WESTINGHOUSE AIR BRAKE COMPANY
By:_________________________________________
Its:________________________________________
-3-
AMERICAN INDUSTRIAL PARTNERS
CAPITAL FUND II, L.P.
By: American Industrial Partners II, L.P.,
its General Partner
By: American Industrial Partners
Corporation, its General Partner
By:
Title:
-4-
COMMON STOCK
REGISTRATION RIGHTS AGREEMENT
This COMMON STOCK REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of March 5, 1997, is made and entered into by Westinghouse Air Brake
Company, a Delaware corporation (the "Company"), Harvard Private Capital
Holdings, Inc., a Massachusetts corporation ("Harvard"), American Industrial
Partners Capital Fund II, L.P., a Delaware limited partnership ("AIP"), the
Voting Trust (the "Voting Trust") created under the Second Amended WABCO Voting
Trust/Disposition Agreement, dated as of December 13, 1995, Vestar Equity
Partners, L.P., a Delaware limited partnership ("Vestar"), Vestar Capital
Partners, Inc. ("Vestar Capital"), Emilio A. Fernandez, Jr., Emilio A.
Fernandez, Jr., as custodian for Eric A. Fernandez, and Ofelia B. Fernandez
(collectively, the "Pulse Shareholders").
WHEREAS, the parties hereto other than Harvard, Vestar and AIP are
parties to that certain Common Stock Registration Rights Agreement dated as of
January 31, 1995 (the "Existing Registration Rights Agreement");
WHEREAS, concurrently with this Agreement becoming effective Vestar,
Harvard, AIP and certain members of the Company's management are purchasing 6
million of the shares of Company common stock, par value $.01 per share (the
"Common Stock") owned by Scandinavian Incentive Holding B.V. ("SIH") and the
Company is redeeming 4 million of the shares of Common Stock owned by SIH (such
purchase and redemption being referred to herein collectively as the "SIH
Repurchase");
WHEREAS, the Company believes that the SIH Repurchase is in the best
interest of the Company; and
WHEREAS, the parties hereto have requested, and the Company has
agreed to provide, the registration rights set forth herein;
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company, Harvard,
Vestar, Vestar Capital, AIP, the Pulse Shareholders and the Voting Trust hereby
agree as follows:
1. Definitions. As used in this agreement, the following capitalized
terms shall have the following respective meanings:
(a) "Affiliate" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with the
Person specified.
(b) "Control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(d) "Holder" shall mean (i) each of Harvard, Vestar, Vestar Capital,
AIP, the Voting Trust, the Pulse Shareholders (so long as any such Person is a
holder of Registrable Securities) and (ii) any transferee (or subsequent
transferee) of Registrable Securities from persons identified in clause (i), who
agrees in a writing reasonably satisfactory in form and substance to the Company
to be bound by the provisions of this Agreement.
(e) "Person" shall mean an individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
(g) "Pulse Shares" shall mean the shares of Common Stock delivered
by the Company to Pulse Electronics and Pulse Computer pursuant to that certain
Asset Purchase Agreement, dated as of January 23, 1995, by and among the
Company, Pulse Acquisition Corporation, Pulse Electronics and Pulse Computer.
(h) "Registrable Securities" shall mean the Securities. As to any
particular Registrable Securities, such Securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
Securities shall have become effective under the Securities Act and such
Securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been otherwise transferred or sold to the
public, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition of
them shall not require registration of them under the Securities Act or (iii)
they shall have ceased to be outstanding.
(i) "Registration Expenses" shall mean all expenses incident to
performance of or compliance with this Agreement, including, without limitation,
(i) all SEC and stock exchange or National Association of Securities Dealers,
Inc. registration, listing and filing fees, (ii) all fees for and expenses of
complying with securities or blue sky laws (including fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all word processing, duplicating, printing,
messenger and delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange pursuant to clause (vii) of Section 3, (v) the fees and disbursements
of counsel for the Company and of its independent public accountants, including
the expenses of any special audits and/or "cold comfort" letters required by or
incidental to such performance and compliance, (vi) the fees and disbursements
of one counsel selected by Holders of a majority of the Registrable Securities
sought to be registered, such counsel to be reasonably satisfactory to the
Company, and (vii) any fees and disbursements of underwriters customarily paid
by the issuers or sellers of securities, but excluding underwriting discounts
and commissions payable with respect to the Registrable Securities and any
applicable transfer taxes.
(j) "Securities" shall mean, collectively, the shares of Common
Stock being acquired in the SIH Purchase (other than the four million shares
being redeemed by the Company), the Pulse Shares beneficially owned by the Pulse
Shareholders and the shares of Common Stock held from time to time in the Voting
Trust and any other shares of Common Stock which may be owned by Holders from
time to time.
(k) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(l) "SEC" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act.
(m) "Supplemental Demand" shall mean a request by Harvard, the
Voting Trust or Vestar pursuant to Section 2(a), 2(b) or 2(c) hereof, as the
case may be (other than a first or second demand thereunder), for registration
of Registrable Securities pursuant to a Form S-3 Registration Statement at a
time when the Company is eligible to use Form S-3 for registration of such
Registrable Securities.
-2-
2. Demand Registration.
(a) Harvard Demand. Harvard shall have the right to make two
requests to the Company for the registration of Registrable Securities owned by
Harvard, upon the terms and conditions set forth herein. Harvard's first request
(the "First Harvard Demand") may be made at any time commencing after June 30,
1998. Harvard's second request (the "Second Harvard Demand") may be made at any
time commencing one year after the consummation of any public offering of the
Registrable Securities made in connection with the exercise of the First Harvard
Demand. One or both of the Harvard demands may be made by an Affiliate of
Harvard to which Registrable Securities owned by Harvard have been transferred,
but in no event shall Harvard and such Affiliate be permitted to make more than
two demands in the aggregate pursuant to this Section 2(a). Harvard also shall
be permitted to make an unlimited number of Supplemental Demands.
(b) Voting Trust Demands. The Voting Trust shall have the right to
make two requests to the Company for the registration of Registrable Securities
held by the Voting Trust, upon the terms and conditions set forth herein. The
Voting Trust's first and second (the "First Voting Trust Demand" and "Second
Voting Trust Demand") requests maybe made at any time that the First Harvard
Demand and the Second Harvard Demand, respectively, may be made. The Voting
Trust also shall be permitted to make an unlimited number of Supplemental
Demands.
(c) Vestar Demands. Vestar shall have the right to make two requests
to the Company for the registration of Registrable Securities owned by Vestar or
Vestar Capital, upon the terms and conditions set forth herein. Vestar's first
and second (the "First Vestar Demand" and "Second Vestar Demand") requests may
be made at any time that the First Harvard Demand and the Second Harvard Demand,
respectively, may be made. One or both of the Vestar demands may be made by an
Affiliate of Vestar to which Registrable Securities owned by Vestar have been
transferred, but in no event shall Vestar and such Affiliate be permitted to
make more than two demands in the aggregate pursuant to this Section 2(c).
Vestar also shall be permitted to make an unlimited number of Supplemental
Demands.
(d) Actions Upon Demand. Upon the written request of Harvard, the
Voting Trust or Vestar, at any time at which a demand may be made in accordance
with paragraph (a), (b), or (c) above, requesting that the Company register
under the Securities Act all or part of the Registrable Securities held by such
Holder and specifying the intended method of disposition thereof, the Company
will promptly give written notice (the "Notice") of such requested registration
to the other Holders of Registrable Securities. The Company will include in such
registration all Registrable Securities of any Holder with respect to which the
Company has received written requests for inclusion therein within 15 business
days after the receipt by such Holder of the Notice (which request shall specify
the Registrable Securities intended to be disposed of by such Holder). The
Company thereupon will, as expeditiously as possible, use its reasonable best
efforts to effect the registration under the Securities Act of the Registrable
Securities so as to permit the disposition (in accordance with the intended
method thereof as aforesaid) of the Registrable Securities so to be registered.
(e) Incidental Registration. (i) If the Company at any time proposes
to register any of its securities under the Securities Act (other than pursuant
to subsection (a), (b) or (c) of this Section 2) on any form other than Form S-4
or S-8 (or any similar form then in effect) for sale for its own account or
otherwise, and if the registration form proposed to be used may be used for the
registration of Registrable Securities, the Company will each such time give
prompt written notice to all Holders of Registrable Securities of its intention
to do so. Upon the written request of any such Holder made within 30 days after
the receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such Holder), the
-3-
Company will use its reasonable best efforts to cause all such Registrable
Securities, the Holders of which shall have so requested the registration
thereof, to be registered under the Securities Act (with the securities at the
time proposed to be registered for sale for the Company's own account or
otherwise), to the extent requisite to permit the sale or other disposition (in
accordance with the intended methods thereof as aforesaid) by the Holders of the
Registrable Securities to be so registered).
No registration effected pursuant to a request or requests referred
to in this subsection (e) shall be deemed to have been effected pursuant to
subsection (a), (b) or (c) of this Section 2.
Notwithstanding anything to the contrary in this subsection (e), the
Company shall have the right to discontinue any registration under this
subsection (e) at any time prior to the effective date of such registration if
the registration of the other securities giving rise to such registration under
this subsection (e) is discontinued (and notice of such discontinuance will be
promptly given to each participating Holder); but no such discontinuation shall
preclude an immediate or subsequent request for registration pursuant to
subsections (a), (b) or (c) of this Section 2.
(f) Limitations on Demand. The Company shall not be obligated to
file a registration statement, or file any amendment or supplement thereto, and
may suspend the sellers' rights to make sales pursuant to an effective
registration statement, at any time when the Company, in the good faith judgment
of its Board of Directors, reasonably believes that the filing thereof at the
time requested, or the offering of securities pursuant thereto, would adversely
affect a pending or proposed public offering of the Company's securities, a
financing, or an acquisition, merger, recapitalization, consolidation,
reorganization or similar transaction, or negotiations, discussions or pending
proposals with respect thereto, or would otherwise be seriously detrimental to
the Company and its stockholders. The filing of a registration, or any amendment
or supplement thereto, by the Company cannot be deferred, and the sellers'
rights to make sales pursuant to an effective registration statement cannot be
suspended pursuant to the provisions of the preceding sentence for more than
fifteen days after the abandonment or consummation of any of the foregoing
proposals for transactions or, in any event, for more than 90 days after the
date of the Board's determination referenced in the preceding sentence (and the
Company shall not be entitled to request more than one such suspension in any
nine month period). If the Company pursuant to this Section 2(f) suspends the
sellers' right to make sales pursuant to an effective registration statement,
the applicable registration period shall be extended by the number of days of
such suspension. If the Company pursuant to this Section 2(f) delays the filing
with the SEC of a registration statement or any amendment or supplement thereto
or the effectiveness of such registration statement, Harvard, the Voting Trust,
or Vestar, as the case may be, may, by written notice to the Company withdraw
its request made pursuant to Section 2(a), 2(b), or 2(c), respectively, and
thereafter shall be entitled to make one additional request pursuant to Section
2(a), 2(b), or 2(c), as the case may be, in lieu of the withdrawn request.
(g) Expenses. Subject to the last sentence of Section 3(e), the
Company will pay all Registration Expenses in connection with the registration
of Registrable Securities pursuant to this Section 2, whether or not such
registration shall become effective, except that all Registration Expenses in
connection with the registration of Registrable Securities pursuant to a
Supplemental Demand by Harvard, Vestar and/or the Voting Trust, as the case may
be, shall be paid by the Holders participating in such Supplemental Registration
whether or not such registration shall become effective.
(h) Effective Registration Statement. A registration requested
pursuant to this Section 2 will not be deemed to have been effected unless a
registration statement with respect
-4-
thereto has become effective; provided, that if, within 90 days after it has
become effective, the offering of Registrable Securities pursuant to such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court for any reason
other than a violation of applicable law solely by the Holders and the
registration has not within three business days thereafter become effective,
such registration will be deemed not to have been effected, and a Holder may, by
written notice to the Company, withdraw its request made pursuant to Section
2(a), 2(b), or 2(c), as the case may be, and thereafter shall be entitled to
make one additional request pursuant to Section 2(a), 2(b), or 2(c), as the case
may be, in lieu of the withdrawn request.
(i) Selection of Underwriters. If a requested registration pursuant
to this Section 2 involves an underwritten offering in which the Company is
participating by including therein at least $3 million of Common Stock for its
own account, the Company shall have the right to select the lead managing
underwriter of the offering, which shall be an investment banking firm of
nationally recognized standing reasonably satisfactory to the Holder demanding
registration pursuant to Section 2(a), 2(b), or 2(c), as the case may be, and
the Holder demanding registration pursuant to Section 2(a), 2(b), or 2(c), as
the case may be, shall have the right to select a co-manager, which shall be an
investment banking firm of nationally recognized standing reasonably
satisfactory to the Company. If a requested registration pursuant to this
Section 2 involves an underwritten offering in which the Company is not
participating by including therein at least $3 million of Common Stock for its
own account, the Holder demanding registration pursuant to 2(a), 2(b) or 2(c),
as the case may be, shall have the right to select the lead managing underwriter
of the offering, which shall be an investment banking firm of nationally
recognized standing reasonably satisfactory to the Company, and the Company
shall have the right to select a co-manager, which shall be an investment
banking firm of nationally recognized standing reasonably satisfactory to the
Holder demanding registration.
(j) Priority in Registrations. If a registration pursuant to this
Section 2 involves an underwritten offering and the lead managing underwriter
advises the Company in writing that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering within a price range stated by the Holder requesting
registration as being acceptable, the Company will include in such registration
the securities the Company proposes to sell for its own account, if any, and the
number of such Registrable Securities requested to be included in such
registration that, in the opinion of the lead managing underwriter, can be sold,
allocated pro rata among the Company and all requesting Holders on the basis of
the total number of shares proposed to be registered by the Company in good
faith and the number of shares of Registrable Securities then held by each such
Holder (provided that any Registrable Securities thereby allocated to any such
Holder that exceed such Holder's request will be reallocated among the remaining
requesting Holders based on the number of shares of Registrable Securities held
by each such Holder).
(k) Additional Demand Registration. Notwithstanding any other
provisions of this Section 2, at any time or from time to time, if, solely as a
result of the operation of Section 2(j), the Company effects the registration of
less than 80% of (x) the Registrable Securities requested to be registered
pursuant to Section 2(a), (y) the Registrable Securities requested to be
registered pursuant to Section 2(b), or (z) the Registrable Securities requested
to be registered pursuant to Section 2(c) and the amount which is less than such
80% threshold has not been registered pursuant to a subsequent incidental
registration pursuant to Section 2(e), the holders of not less than 50% of the
remaining Registrable Securities owned or held by Harvard, the Voting Trust or
Vestar and/or Vestar Capital, as the case may be, shall be entitled to request
an additional registration pursuant to Section 2(a), Section 2(b), or Section
2(c), as the case may be. Any such registration shall be requested and effected
in accordance with the terms of this Section 2, and the Company will pay all
Registration Expenses in connection with any such registration but only to the
same extent as the Company was required to pay such Registration Expenses
-5-
pursuant to Section 2(g) in connection with the registration pursuant to which
such Holders initially requested registration.
(l) Registration of Other Securities. Whenever the Company shall
effect a registration pursuant to Section 2 hereof, no securities other than
Registrable Securities and Common Stock being sold by the Company for its own
account shall be included among the securities covered by such registration
unless all requesting Holders and the Company shall have consented thereto in
writing.
(m) Registration Statement Form. Registration under Section 2 hereof
shall be on such appropriate registration form prescribed by the SEC under the
Securities Act (i) as shall be selected by the Company and as shall be
reasonably acceptable to the Holder of a majority of the Registrable Securities
covered by such registration statement and (ii) as shall permit the disposition
of the Registrable Securities pursuant to the intended method of disposition
thereof specified in accordance with Section 2(d). The Company agrees to include
in such registration statement filed pursuant to Section 2 hereof all
information which any Holder, upon advice of counsel or upon the advice of the
lead managing underwriter (or upon the advice of any demanding Holder if the
Company shall have selected the lead managing underwriter or if the registration
statement is not being filed in connection with an underwritten offering), to
facilitate the marketing of such shares, shall reasonably request. Without
limiting the Company's obligations under the preceding sentence, the Company
may, if permitted by law, effect any registration requested under Section 2
hereof by the filing of a registration statement on Form S-3 (or any successor
or similar short form registration statement).
(n) "Other Registration Rights". The Company shall not grant to any
person registration rights which (i) are exercisable prior to the time when
registration rights hereunder are first exercisable, (ii) would result in the
deferral of a demand registration which could otherwise be affected hereunder,
(iii) would operate to reduce the number of Registrable Securities which could
be registered pursuant to a demand registration hereunder by Harvard, Vestar or
the Voting Trust, (iv) except with respect to Common Stock issued by the Company
in the future, would operate to reduce the number of Registrable Securities
which could be registered in any other registration hereunder or (v) would have
priority for inclusion in any registration hereunder over any Registrable
Securities of any Holder.
3. Registration Procedures. (a) If and whenever the Company is
required to use its reasonable best efforts to effect the registration under the
Securities Act of Registrable Securities as provided in this Agreement, the
Company will, as expeditiously as possible:
(i) prepare and file with the SEC as soon as practicable a
registration statement with respect to such Registrable Securities, and,
subject to Section 2(f), use its reasonable best efforts to cause such
registration statement to become effective;
(ii) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective until the earlier of (x) the date on which all of the
Registrable Securities have been disposed of in accordance with the method
of disposition set forth in such registration statement and (y) 90 days
after the effective date of such registration statement and to comply with
the provisions of the Securities Act applicable to the Company with
respect to the disposition of all securities covered by such registration
statement during such period; provided, that before filing a registration
statement or prospectus, or any amendments or supplements thereto, the
Company will furnish to one counsel, selected by the Holders of a majority
of the Registrable Securities covered by such registration statement to
represent all Holders of Registrable Securities covered by such
registration statement, at least five business days
-6-
prior to the filing of such registration statement and the prospectus
contained therein and at least one business day prior to the filing of any
amendment or supplements thereto, copies of all documents proposed to be
filed, which documents will be subject to the review of such counsel and
no such registration statement or prospectus, or any amendment or
supplement thereto, shall be filed to which such counsel shall have
reasonably objected on the grounds that such registration statement or
prospectus, or amendment or supplement (with respect to disclosures or
omissions in the case of a registration under Section 2 relating to the
Holders of Registrable Securities), does not comply in all material
respects with the requirements of the Securities Act or the rules or
regulations thereunder and shall have specified the basis for such
objection in reasonable detail;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement such number of copies of such final conformed
versions of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits and any documents
incorporated by reference), such number of copies of such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other final documents, as such seller may reasonably request in
writing in order to facilitate the disposition of the Registrable
Securities;
(iv) use its reasonable best efforts to register or qualify the
Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller
shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction, subject itself to taxation in any
jurisdiction (other than taxes related to the issuance of the Registrable
Securities) or consent to general service of process in any jurisdiction
where, but for the requirements of this clause (iv), it would not be
obligated to be so qualified, subject to taxation or subject to general
service of process;
(v) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities.
(vi) promptly notify each seller of any such Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (ii) of this Section 3,
of the Company's becoming aware that that prospectus included in such
registration statement, as then in effect, includes 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 therein not misleading in the
light of the circumstances then existing, and at the request of any such
seller, prepare and furnish to such seller a reasonable number of copies
of an amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an 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 not misleading in the light of
the circumstances then existing;
-7-
(vii) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the registration statement,
an earnings statement which shall satisfy the provisions of Section 11(a)
of the Securities Act and the rules and regulations promulgated
thereunder;
(viii) use its best efforts to list, subject to official notice of
issuance, such Registrable Securities on any securities exchange on which
the Common Stock is then listed, if such Registrable Securities are not
already so listed and if such listing is then permitted under the rules of
such exchange;
(ix) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions as sellers of a
majority of such Registrable Securities covered by such registration
statement or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities;
(x) obtain a "cold comfort" letter or letters from the Company's
independent public accountants, addressed to such seller (and the
underwriters, if any), in customary form and covering matters of the type
customarily covered by "cold comfort" letters dated the effective date of
such registration statement (and, if such registration includes an
underwritten offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance to
such seller; and
(xi) use its reasonable best efforts to furnish to each seller of
Registrable Securities a signed counterpart, addressed to such seller (and
the underwriters, if any), of a customary opinion of counsel for the
Company dated the effective date of such registration statement (and, if
such registration includes an underwritten offering, dated the date of the
closing under the underwriting agreement), reasonably satisfactory in form
and substance to such seller;
(xii) subject to Section 7, make available for reasonable inspection
by, or give reasonable access to, any seller of such Registrable
Securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement.
(b) In connection with any registration requested pursuant to this
Agreement, management of the Company shall participate in customary road show
meetings reasonably requested upon reasonable prior notice by the lead managing
underwriter of such offering.
(c) The Company may require each seller of Registrable Securities as
to which any registration is being effected to furnish the Company with such
information regarding such seller and the distribution of such securities as
required to be included in the related registration statement as the Company may
from time to time reasonably request in writing.
(d) Each Holder of Registrable Securities being sold pursuant to a
registration effected pursuant hereto agrees that as of the date that a final
prospectus is made available to it for distribution to prospective purchasers of
such Registrable Securities it shall cease to distribute
-8-
copies of any preliminary prospectus prepared in connection with the offer and
sale of such Registrable Securities.
(e) Each Holder of Registrable Securities further agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in clause (vi) of Section 3(a), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vi) of Section
3(a), and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. Notwithstanding the
foregoing, the Holder shall not be responsible for any continued disposition of
Registrable Securities by any underwriter. In the event the Company
shall give any such notice, the period mentioned in clause (ii) of Section 3(a)
shall be extended by the number of days during the period from, and including
the date of the giving of, such notice pursuant to clause (vi) of Section 3(a)
and including the date when each seller of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by clause (vi) of Section 3(a). If any event
of the kind described in clause (vi) of Section 3(a) occurs and such event is
the fault solely of one or more Holders, such Holder or Holders shall pay all
Registration Expenses attributable to the preparation, filing and delivery of
any supplemented or amended prospectus contemplated by clause (vi) of Section
3(a).
(f) Each Holder of Registrable Securities agrees that it will pay
all underwriting discounts and commissions applicable to its sale of Registrable
Securities in any underwritten public offering effected pursuant to this
Agreement, all transfer taxes applicable to its sale of Registrable Securities
and, subject to the provisions set forth in clause (vi) of the definition of
Registration Expenses, the fees and disbursements of its counsel. Except as
otherwise provided in clause (vi) of the definition of Registration Expenses, if
two or more Holders jointly retain counsel, the fees and expenses of such
counsel shall be borne by such Holders on such basis as such Holders shall
mutually agree in writing.
4. Indemnification.
(a) Indemnification by the Company. In connection with any
registration statement filed by the Company under the Securities Act pursuant to
Section 2, the Company will, and it hereby agrees to, indemnify and hold
harmless, to the extent permitted by law, the seller of any Registrable
Securities covered by such registration statement, each other Person, if any,
who participates as an underwriter in the offering or sale of such securities
and each other Person, if any, who controls such Holder or seller or any such
underwriter, and their respective directors, officers, employees, stockholders,
partners, agents and representatives, and their respective Affiliates, against
any and all losses, claims, damages, expenses or liabilities, joint or several,
to which such indemnified party may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages, expenses or
liabilities (or actions or proceedings in respect thereof, whether or not such
indemnified party is a party thereto) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereto, or (ii) any 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 the light of the circumstances
then existing, and the Company will reimburse such indemnified party for any
legal or any other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, that as to any preliminary prospectus, the Company shall
not be liable to any indemnified party if
-9-
such party failed to send or give a copy of the final prospectus to any person
within the time required by the Securities Act and such untrue statement or
alleged untrue statement of material fact or omission or alleged omission to
state a material fact in such preliminary prospectus was corrected in such final
prospectus; and provided, further, that the Company shall not be liable to any
indemnified party in any such case to the extent that any such loss, claim,
damage, expense, liability (or action or proceeding in respect thereof), arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement or amendment or
supplement thereto or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information with respect to such
seller furnished to the Company by or on behalf of such seller for use in the
preparation thereof; and provided, further, that the Company shall not be liable
for any amounts paid in connection with any settlement if such settlement is
effected without the written consent of the Company (which shall not be
unreasonably withheld); and provided, further, that the Company will not be
liable to any Person who participates as an underwriter in the offering or sale
of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, under the indemnity
agreement in this Section 4(a) with respect to any preliminary prospectus or the
final prospectus or the final prospectus as amended or supplemented, as the case
may be, to the extent that any such loss, claim, damage or liability of such
underwriter or controlling Person results from the fact that such underwriter
sold Registrable Securities to a person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the final
prospectus (including any documents incorporated by reference therein) or of the
final prospectus as then amended or supplemented (including any documents
incorporated by reference therein), whichever is most recent, if the Company has
previously furnished copies thereof to such underwriter. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such seller or any indemnified party and shall survive the transfer of
such securities by such seller.
(b) Indemnification by the Seller. In connection with any
registration statement filed by the Company under the Securities Act pursuant to
Section 2, each Holder of Registrable Securities covered by such registration
statement shall, and hereby agrees to, indemnify and hold harmless (in the same
manner and to the same extent and subject to the same provision as set forth in
Section 4(a)) the Company, each other Holder of Registrable Securities, any
underwriter and each other Person, if any, who controls the Company or such
Holder or any such underwriter, and their respective directors, officers,
employees, partners, stockholders, agents and representatives, and their
respective Affiliates, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary,
final or summary prospectus contained therein, or any amendment or supplement,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information with respect to such
Holder furnished to the Company by such Holder for use in preparation of such
registration statement, preliminary, final or summary prospectus or amendment or
supplement, or a document incorporated by reference into any of the foregoing.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any of the Holders, or any
of their respective controlling Persons, directors, officers, employees,
stockholders, partners, agents and representatives, or any of their respective
Affiliates, and shall survive the transfer of such securities by such Holder.
Notwithstanding the foregoing, the liability of any Holder under this Section
4(b) shall be limited to an amount equal to the amount by which the total price
at which the Registrable Securities were sold by such Holder and distributed to
the public in the offering which gave rise to the liability exceeds the amount
of any damages that such Holder has otherwise been required to pay be reason of
such offering. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees and expenses reasonably incurred by such party
in connection with any investigation or proceeding.
-10-
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification or contribution may
be made pursuant to this Section 4, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action or proceeding; provided, that
the failure of the indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 4, except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case any such action
or proceeding is brought against an indemnified party, the indemnifying party
shall assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party has agreed to pay such
fees and expenses or (ii) the indemnifying party shall have failed to assume the
defense of such action or proceeding or to employ counsel reasonably
satisfactory to the indemnified party therein or (iii) the named parties to any
such action or proceeding (including any impleaded party) include both the
indemnifying party and the indemnified party and (x) there are one or more legal
defenses available to the indemnified party which are different from or
additional to those available to the indemnifying party and which result in a
conflict between the indemnifying party and such indemnified party or (y) the
representation of both parties by the same counsel would be inappropriate due to
differing interests between them, in either which case under the preceding
clause (iii), if the indemnified party notifies the indemnifying party in
writing that the indemnified party elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action or proceeding on behalf of the
indemnified party. No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation. The
indemnifying party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys at any time for all indemnified parties, which firm shall be
designated in writing by the indemnified parties.
(d) Contribution. If the indemnification provided for in this
Section 4 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party in lieu of indemnifying such
indemnified party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified party in connection with the actions that
results in such losses, claims, damages, liabilities and expenses, as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and the indemnified parties shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. Notwithstanding the foregoing, no Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities were sold by such Holder and distributed to the
public in the offering that resulted in such losses, claims, damages,
liabilities and expenses exceed the amount of any damages that such Holder has
otherwise been required to pay by reason of any such actions. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include any legal or other fees
and expenses reasonably incurred by such party in connection with any
investigation or proceeding.
-11-
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The obligation of each Holder to contribute in respect of any offering of
Registrable Securities is several in the same proportion that the proceeds of
such offering received by such Holder bears to the total proceeds of such
offering and not joint. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 4, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 4(a) or (b), as the case may be, without regard to the
relative fault of said indemnifying parties or indemnified party or any other
equitable consideration provided for in this Section 4(d).
(e) Non-Exclusivity. The obligations of the parties under this
Section 4 shall be in addition to any liability which any party may otherwise
have to any other party.
5. Holdback Agreement.
(a) Restrictions on Public Sale by Holders. Each Holder agrees not
to effect any public sale or distribution of Registrable Securities or any
similar security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, or any securities into which
such securities are convertible or for which such securities are exchangeable or
exercisable, during the 10 days prior to, and during the 90 day period beginning
on, the effective date of any registration statement in which Holders are
participating in connection with an underwritten public offering of the
Registrable Securities (except as part of such registration), if and to the
extent reasonably requested in writing (with reasonable prior notice) by the
lead managing underwriter of the underwritten public offering.
(b) Restrictions on Public Sale by the Company. The Company agrees
not to effect any primary public sale or distribution of any securities similar
to those being registered, or any securities convertible into or exchangeable or
exercisable for such securities, or any securities into which such securities
are convertible or for which such securities are exchangeable or exercisable,
during the 10 days prior to, and the 90 day period beginning on, the effective
date of any registration statement in which Holders are participating in
connection with an underwritten public offering if an to the extent reasonably
requested in writing (with reasonable prior notice) by the lead managing
underwriter of the underwritten public offering.
6. Participation in Underwritten Registrations. No Holder of
Registrable securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's securities on the
basis provided in and in compliance with any underwriting arrangements and (b)
complete and executes all questionnaires, appropriate and limited powers of
attorney, escrow agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangements.
7. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding; provided, however,
that no such amendment which would have an adverse effect on any Holder shall be
effective as to such Holder without the written consent of such
-12-
Holder (or if such Holder is not an original Holder hereunder, without the
written consent of at least a majority of the Registrable Securities held by the
original Holder who directly or indirectly transferred shares to such Holder,
together with all other direct or indirect transferees of such original Holder).
Each Holder of Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 7(a), whether or not
such Registrable Securities shall have been marked to indicate such consent.
(b) Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, assigns and transferees.
(c) Notices. Any notice, request, demand, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given (i) when delivered by hand, (ii)
five business days after it is mailed certified or registered mail, return
receipt requested with postage prepaid, (iii) when answered back if sent by
telecopy (with respect confirmed) or (iv) three business days after it is sent
by express delivery service, as follows:
(i) if to the Company, to:
Westinghouse Air Brake Company
1001 Air Brake Avenue
Wilmerding, Pennsylvania 15148
With a copy to:
Reed Smith Shaw & McClay
435 Sixth Avenue
Pittsburgh, Pennsylvania 15219
Attention: David L. DeNinno
Telecopier: 412-288-3063
(ii) if to Harvard, to:
c/o Harvard Private Capital Group, Inc.
600 Atlantic Avenue, 26th Floor
Boston, Massachusetts 02100
Attention: John Sallay
Telecopier: 617-523-1063
With a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110-26242
Attention: Larry J. Rowe
Telecopier: 617-951-7050
(iii) if to AIP:
American Industrial Partners
551 Fifth Avenue, Suite 3800
New York, New York 10176
Attention: Robert J. Klein
-13-
Telecopier: 212-986-5099
With a copy to:
American Industrial Partners
One Maritime Plaza, Suite 2525
San Francisco, California 94111
Attention: Ken Pereira
Telecopier: 415-788-5302
and
Latham & Watkins
5800 Sears Tower
Chicago, IL 60606
Attention: Mark Stegemoeller, Esq.
Telecopier: 312-993-9767
(iv) if to the Voting Trust, to:
c/o Westinghouse Air Brake Company
1001 Air Brake Avenue
Wilmerding, Pennsylvania 15148
Attention: Robert J. Brooks
Telecopier: (412) 825-1156
With a copy to:
Reed Smith Shaw & McClay
435 Sixth Avenue
Pittsburgh, Pennsylvania 15219
Attention: David L. DeNinno
Telecopier: (412) 288-3063
(v) if to Vestar or Vestar Capital, to:
Vestar Capital Partners, Inc.
Seventeenth Street Plaza
1225 17th Street, Suite 1600
Denver, Colorado 80202
Attention: James P. Kelley
Telecopier: (303) 292-6639
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Peter J. Gordon, Esq.
Telephone No.: (212) 455-2605
Telecopier No.: (212) 455-2502
-14-
(vi) if to any Pulse Shareholder, to such Holder at such Holder's
address, telephone number of telecopier number set forth in
the Company's records.
All such notices and communications shall be deemed to have been given or made
(1) when delivered by hand, (2) five business days after it is mailed, certified
or registered mail, return receipt requested with postage prepaid, (3) when
answered by if sent by telex, telegram or telecopy (with receipt confirmed) or
(4) three business days after it is sent by express delivery service.
(d) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(e) Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument.
(g) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed therein. The parties to this Agreement hereby
agree to submit to the jurisdiction of the courts of the State of New York in
any action or proceeding arising out of or relating to this Agreement.
(h) Specific Performance. The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States or any state thereof, in
addition to any other remedy to which they may be entitled at law or equity.
(i) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter. Vestar and the Voting Trust hereby
agree that all rights of either of them under the Existing Registration Rights
Agreement are hereby terminated.
(j) Effectiveness. This Agreement shall become effective upon the
consummation of the SIH Repurchase.
-15-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
WESTINGHOUSE AIR BRAKE COMPANY
By: /s/ Robert J. Brooks
--------------------------------------
Name: Robert J. Brooks
Title: Vice President and Secrtary
HARVARD PRIVATE CAPITAL HOLDINGS,
INC.
By: /s/ Mark A. Rosen
--------------------------------------
Name: Mark A. Rosen
Title: Authorized Signatory
By: /s/ Michael R. Eisenson
--------------------------------------
Name: Michael R. Eisenson
Title: Authorized Signatory
VOTING TRUST
By: /s/ Robert J. Brooks
--------------------------------------
Name: Robert J. Brooks
Title: Trustee
VESTAR EQUITY PARTNERS, L.P.
By: VESTAR ASSOCIATES, L.P., its
General Partner
By: VESTAR ASSOCIATES
CORPORATION, its General Partner
By: /s/ James P. Kelley
---------------------------------
Name: James P. Kelley
Title: Managing Director
VESTAR CAPITAL PARTNERS, INC.
By: /s/ James P. Kelley
--------------------------------------
Name: James P. Kelley
Title: Managing Director
-16-
AMERICAN INDUSTRIAL PARTNERS
FUND II, L.P.
By: AMERICAN INDUSTRIAL
PARTNERS, II, L.P., its General
Partner
By: AMERICAN INDUSTRIAL
PARTNERS CORPORATION, its
General Partner
By: /s/ Theodore C. Rogers
-------------------------------
Name: Theodore C. Rogers
Title: Chairman
/s/ Emilio A. Fernandez, Jr.
-------------------------------------------
Emilio A. Fernandez, Jr.
/s/ Emilio A. Fernandez, Jr.
-------------------------------------------
Emilio A. Fernandez, Jr.,
as custodian for Eric A. Fernandez
/s/ Ofelia B. Fernandez
-------------------------------------------
Ofelia B. Fernandez
-17-
EXHIBIT 6
VESTAR EQUITY PARTNERS, L.P.
245 Park Avenue
41st Floor
New York, New York 10167
March 5, 1997
Harvard Private Capital Holdings, Inc.
c/o Harvard Private Capital Group, Inc.
600 Atlantic Avenue, 26th Floor
Boston, Massachusetts 02110
Attention: John Sallay
American Industrial Partners Capital Fund II, L.P.
c/o American Industrial Partners
One Maritime Plaza
Suite 2525
San Francisco, CA 94111
Attention: Ken Pereira
Gentlemen:
Reference is hereby made to (i) the Stock Purchase Agreement, dated as of
March 5, 1997 (the "Stock Purchase Agreement"), among Scandinavian Incentive
Holdings, B.V. ("SIH"), Incentive AB ("Incentive"), Vestar Equity Partners, L.P.
("Vestar"), Harvard Private Capital Holdings, Inc. ("Harvard"), American
Industrial Partners Capital Fund II, L.P. ("AIP"), and the individuals
identified on the signature pages thereto as Management Purchasers (the
"Management Purchasers"), pursuant to which, among other things, each of Vestar,
Harvard, AIP and the Management Purchasers have agreed to purchase from SIH
shares of common stock, par value $.01 per share (the "Common Stock"), of
Westinghouse Air Brake Company ("WABCO"), on the terms and subject to the
conditions contained therein, and (ii) the Amended and Restated Stockholders
Agreement, dated as of March 4, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Stockholders Agreement"), among WABCO, the
Voting Trust (as defined therein), Vestar, Harvard and AIP, and joined in for
certain limited purposes by Vestar Capital Partners, Inc., William E. Kassling,
Emilio A. Fernandez and certain other persons named therein, pursuant to which,
among other things, the parties to the Stockholders Agreement have agreed to
certain restrictions on the transfer of Common Stock owned or held by them, on
the terms and subject to the conditions contained therein.
In consideration of each of Vestar, Harvard and AIP agreeing to enter into
the Stock Purchase Agreement and the Stockholders Agreement and of the promises
and mutual covenants hereinafter set forth, each of Vestar, Harvard and AIP
hereby agree as follows:
1. Additional Stock Transfer Restrictions. (a) Except as permitted by
clause (b) or (c) below or required by clause (d) below, each of Vestar, Harvard
and AIP agree that, in addition to the restrictions on the transfer of Common
Stock by Vestar, Harvard and AIP
contained in the Stockholders Agreement, neither Vestar, Harvard nor AIP shall
sell, transfer, assign, mortgage, change, hypothecate, give away or otherwise
dispose of (collectively, "transfer") any Common Stock owned or held by it
without the prior written consent of (i) in the case of any transfer by Vestar,
Harvard, (ii) in the case of any transfer by Harvard, Vestar, and (iii) in the
case of any transfer by AIP, each of Vestar and Harvard; provided that if any
party hereto transfers a percentage of the Common Stock owned or held by it,
each of the other parties hereto may transfer the same percentage of the Common
Stock owned or held by it in separate transactions or as provided in the Common
Stock Registration Rights Agreement among the parties hereto, WABCO and certain
other persons.
(b) Notwithstanding the provisions contained in clause (a) above (but in
any event subject to the provisions contained in the Stockholders Agreement),
each of Vestar, Harvard and AIP shall be permitted to transfer any Common Stock
owned or held by it without any prior written consent as required above, if such
transfer is to any Affiliate (as defined in the Stockholders Agreement), other
than (i) in the case of Vestar or AIP, an Affiliate that is a limited partner of
Vestar or AIP, as the case may be, and (ii) in the case of Harvard, an Affiliate
that is a stockholder of Harvard that does not control or wholly own Harvard,
directly or indirectly.
(c) If Vestar and Harvard propose to transfer Common Stock owned or held
by them in accordance with the exceptions set forth in Sections 5.2.1(x) or
5.2.1(z) of the Stockholders Agreement and clause (a) above (but not clause (b)
above), Vestar and Harvard shall have the obligation, and AIP shall have the
right, to require the proposed transferee to purchase from AIP up to a number of
shares of Common Stock equal to the product of (i) the total number of shares of
Common Stock beneficially owned by AIP and (ii) a fraction the numerator of
which is the total number of shares of Common Stock held by Vestar and Harvard
which are actually included in the contemplated transfer and the denominator of
which is the aggregate number of shares of Common Stock beneficially owned by
Vestar and Harvard. Such purchase shall be made at the same price per share of
Common Stock and otherwise upon the same terms and conditions applicable to
Vestar and Harvard. Vestar and Harvard shall give notice to AIP of each proposed
transfer giving rise to AIP's tag-along rights hereunder at least 30 days prior
to the proposed consummation of such transfer, setting forth the number of
shares of Common Stock proposed to be so transferred, the name and address of
the proposed transferee, the proposed amount and form of consideration and other
terms and conditions of payment offered by the proposed transferee, and a
representation that the proposed transferee has been informed of AIP's tag-along
rights under this clause (c) and has agreed to purchase shares of Common Stock
in accordance with the terms hereof. The tag-along rights provided by this
clause (c) must be exercised by AIP within 10 days following receipt of the
notice required by the preceding sentence, by delivery of a written notice to
Vestar and Harvard indicating AIP's desire to exercise its tag-along rights and
specifying the number of shares of Common Stock it desires to sell. If the
proposed transferee fails to purchase from AIP shares of Common Stock with
respect to which it has properly exercised its tag-along rights hereunder, then
Vestar and Harvard shall not be permitted to make the proposed transfer.
(d) If Vestar and Harvard receive an offer from a third party which is not
an Affiliate of either Vestar or Harvard to purchase all of the shares of Common
Stock owned by Vestar and Harvard and such offer is accepted by Vestar and
Harvard, then AIP hereby agrees, upon the written request of Vestar and Harvard,
that it will transfer all shares of Common Stock owned by it to such purchaser
on the same terms and subject to the same conditions
3
applicable to Vestar and Harvard; provided that such purchase must not be in
violation of the Stockholders Agreement; and provided further that AIP will not
be required to make any representations or warranties regarding WABCO.
(e) If either Vestar or Harvard proposes to transfer Common Stock owned or
held by it in accordance with the exceptions set forth in Section 5.2.1(y) or
Section 5.2.3 of the Stockholders Agreement, it shall give AIP hereto written
notice of such proposed transfer at the time Vestar or Harvard gives notice to
the other of such proposed transfer and in any event at least three (3) business
days prior to the consummation of such proposed transfer.
(f) The provisions contained in this Section 1 shall apply from the date
hereof until March 31, 2001.
2. Agreement to Select Director for each Board Committee. Each of Vestar
and Harvard agree that, in connection with their collective right pursuant to
the Stockholders Agreement to select a director designated by either Vestar or
Harvard to be seated on each committee of WABCO's Board of Directors, they shall
in good faith make such selection or selections as are necessary to cause such
committee seat to be filled in a timely manner.
3. Miscellaneous. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. No modification, change
or amendment of the terms of this Agreement shall be binding on the parties
hereto unless reduced to writing and duly executed by the parties hereto which
hold or own at least 66-2/3% of the then outstanding shares of Common Stock
subject to the provisions of this Agreement; provided that no modification,
change or amendment hereto which adversely affects any party hereto
disproportionately from the other parties hereto shall be binding on such first
party without its prior consent. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware and such laws
shall also govern in the settlement by arbitration or otherwise of any and all
disputes arising between the parties hereto. This Agreement shall become
effective upon the occurrence of the Closing under the Stock Purchase Agreement.
4
Please indicate your confirmation of this Agreement by executing the
enclosed copy of this letter and delivering it to Vestar.
Very truly yours,
VESTAR EQUITY PARTNERS, L.P.
By: Vestar Associates, L.P.
Its: General Partner
By: Vestar Associates Corporation
Its: General Partner
By: /s/ James P. Kelley
------------------------------
Name: James P. Kelley
Title:
Agreed to and accepted as of
the date first written above:
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By: /s/ Mark A. Rosen
-------------------------------------
Name: Mark A. Rosen
Title: Authorized Signatory
By: /s/ Michael R. Eisenson
-------------------------------------
Name: Michael R. Eisenson
Title: Authorized Signatory
AMERICAN INDUSTRIAL PARTNERS CAPITAL
FUND II, L.P.
By: American Industrial Partners II, L.P.
Its: General Partner
By: American Industrial Partners Corporation
Its: General Partner
By: /s/ Theodore C. Rogers
-------------------------------------
Name: Theodore C. Rogers
Title: Chairman
Letter Agreement To Be Executed by
Management Purchasers Who Are Not Parties to
the Stockholders Agreement
March 20, 1997
Vestar Equity Partners, L.P.
1225 17th Street, Suite 1660
Denver, Colorado 80202
Harvard Private Capital Holdings, Inc.
c/o Harvard Private Capital Group, Inc.
600 Atlantic Avenue, 26th Floor
Boston, Massachusetts 02110
American Industrial Partners Capital
Fund II, L.P.
c/o American Industrial Partners
551 Fifth Avenue, Suite 3800
New York, New York 10176
Westinghouse Air Brake Company
1001 Air Brake Avenue
Wilmerding, Pennsylvania 15148
Re: Stock Purchase Agreement dated as of March 5, 1997
(the "Purchase Agreement")
Ladies and Gentlemen:
The undersigned is a Management Purchaser under the Purchase
Agreement. The undersigned will not be subject to the Amended and Restated
Stockholders Agreement dated as of March 5, 1997 (the "Stockholders Agreement")
and is delivering this letter agreement to you in order to induce you to enter
into the Purchase Agreement. The undersigned agrees that prior to April 1, 1998
the SIH shares being purchased by the undersigned pursuant to the Purchase
Agreement ("Acquired Shares") shall not be sold, transferred, assigned,
mortgaged, hypothecated, given away, changed or otherwise disposed of after such
purchase except in the circumstances described in the first sentence of Section
5.2.1 of the Stockholders Agreement; provided that Acquired Shares may be
pledged as collateral to a bona fide financial institution to secure a loan
obtained for the purpose of financing the undersigned's purchase of Acquired
Shares. Thereafter, the Acquired Shares shall not be transferred except as
follows: (i) to immediate family members, a corporation controlled by the
undersigned or his immediate family, or grantor or other trusts or other
vehicles (including individual retirement accounts) for tax, estate or financial
planning purposes; (ii) as collateral security for a loan or other credit; (iii)
in the event of personal hardship; (iv) up to one-third of the Acquired Shares
can be sold and/or released from this letter agreement each calendar year*; and
(v) following termination of employment with WABCO for any reason. However, the
undersigned intends to hold the Acquired Shares for investment purposes and has
no present intention to sell the Acquired Shares. Transferees of Acquired Shares
pursuant to transfers permitted hereby will agree to be bound in the aggregate
by this letter agreement prior to transfer and subject to the provisions hereof.
This letter agreement shall continue in effect until the earlier to occur of (x)
March 31, 2001 and (y) the termination of the Stockholders Agreement.
- --------
* For Management Purchasers who are also corporate officers listed in the
1996 WABCO Annual Report this exception shall be limited to 5% of the
Acquired Shares each year rather than one-third.
Sincerely,
------------------------------------------
[Signature of Management Purchaser]
Letter Agreement To Be Executed by
Management Purchasers Who Are Parties to
the Stockholders Agreement
March 20, 1997
Vestar Equity Partners, L.P.
1225 17th Street, Suite 1660
Denver, Colorado 80202
Harvard Private Capital Holdings, Inc.
c/o Harvard Private Capital Group, Inc.
600 Atlantic Avenue, 26th Floor
Boston, Massachusetts 02110
American Industrial Partners Capital
Fund II, L.P.
c/o American Industrial Partners
551 Fifth Avenue, Suite 3800
New York, New York 10176
Westinghouse Air Brake Company
1001 Air Brake Avenue
Wilmerding, Pennsylvania 15148
Re: Stock Purchase Agreement dated as of March 5, 1997
(the "Purchase Agreement")
Ladies and Gentlemen:
The undersigned is a Management Purchaser under the Purchase
Agreement and is also executing a joinder to the Amended and Restated
Stockholders Agreement dated as of March 5, 1997 (the "Stockholders Agreement").
The undersigned is delivering this letter agreement to you in order to induce
you to enter into the Purchase Agreement. The undersigned agrees that prior to
April 1, 1998 the SIH shares being purchased by the undersigned pursuant to the
Purchase Agreement ("Acquired Shares") shall not be sold, transferred, assigned,
mortgaged, changed, hypothecated, given away or otherwise disposed of except in
the circumstances described in the first sentence of Section 5.2.1 of the
Stockholders Agreement . Thereafter, transfer of the Acquired Shares shall be
governed by the provisions of the Stockholders Agreement.
Sincerely,
------------------------------------------
[Signature of Management Purchaser]