EXHIBIT 99.4
LETTER OF INTENT
[Letterhead of Linamar Corporation]
000 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
CONFIDENTIAL
March 26, 2003
McLaren Performance Technologies, Inc.
00000 Xxxx Xxxxx Xxxx Xxxx
Livonia, Michigan 48152
Letter of Intent to Acquire all Issued and Outstanding Shares of McLaren
Performance Technologies, Inc.
Gentlemen:
This letter of intent ("Letter of Intent") will confirm our preliminary
agreement in principle with respect to the acquisition of all of the issued and
outstanding shares of capital stock of McLaren Performance Technologies, Inc., a
Delaware corporation ("McLaren"), by Linamar Corporation, an Ontario corporation
("Linamar").
1. Merger. The acquisition of McLaren will be consummated through a merger of a
Delaware corporation to be formed and wholly-owned by Linamar ("Linamar Sub"),
with and into McLaren, with McLaren to be the surviving corporation and a
wholly-owned subsidiary of Linamar (the "Merger").
2. Merger Consideration. In the Merger, each share of McLaren common stock, par
value $.00001 per share (the "McLaren Common Stock"), outstanding as of the
closing of the Merger, will be converted into the right to receive either (i)
US$1.03 in cash (the "Fixed Amount"), or (ii) 0.1666 Linamar common shares,
provided that the number of Linamar common shares issued to any one stockholder
shall be round down to the nearest whole share.
If, after the date hereof and prior the date of the closing of the Merger,
McLaren is able to reduce its outstanding indebtedness for borrowed money by an
amount which exceeds value of any payments (in cash or other consideration) in
respect thereof, then the Fixed Amount shall be increased by an amount equal to
the quotient of (i) the amount of such excess, divided by (ii) the number of
issued and outstanding shares of McLaren Common Stock on a fully diluted basis,
rounding down to the nearest whole cent; provided, however, that in no case will
the Fixed Amount exceed US$1.10.
3. Treatment of Options. In the Merger, each outstanding vested and unvested
option to acquire McLaren Common Stock would be immediately vested, cancelled,
and converted in the right to receive an amount in cash equal to the product of
(i) the excess, if any, of the Fixed Amount over the per share exercise price
thereof, times (ii) the number of shares of McLaren Common Stock subject
thereto.
4. Merger Agreement and Voting Agreement. Upon execution of this Letter of
Intent, counsel to Linamar will commence the drafting of an Agreement and Plan
of Merger (the "Merger Agreement") among Linamar, Linamar Sub and McLaren, and
the parties will promptly negotiate, in good faith, the terms thereof. The
Merger Agreement will be in a form customary for transactions of this type and
will include, in addition to those matters specifically set forth in this Letter
of Intent, customary break-up fees and purchaser protections, customary
representations, warranties, indemnities, covenants and agreements of Linamar
and McLaren, customary conditions to closing and other customary matters. In
addition, counsel to Linamar will commence the drafting of a voting
agreement (the "Voting Agreement"), pursuant to which each of the officers,
directors, and 5% or greater holders of McLaren Common Stock and their
affiliates, would (i) irrevocably agree to vote (A) for the approval of the
Merger Agreement and Merger at the McLaren stockholder meeting, and (B) against
any alternative transaction, (ii) grant Linamar an irrevocable proxy to vote
such stockholder's shares in connection with the matters in clause (i) above,
and (iii) agree to sell their shares to Linamar for the Fixed Amount.
5. Purchase Investigation. Linamar will promptly begin and diligently pursue an
investigation of the legal, business, environmental and financial condition of
McLaren. McLaren will extend its full cooperation to Linamar and its lawyers,
accountants and other representatives in connection with such investigation.
Linamar, its lawyers, accountants and other representatives shall have full
access to McLaren's books and records, facilities, accountants, key employees,
customers, and suppliers for the purpose of conducting such investigation.
6. Conditions Precedent. The obligation of the parties to consummate the Merger
shall be subject to and contingent upon:
X. Xxxxxxx's complete satisfaction with its due diligence investigation of
McLaren prior to entering into the Merger Agreement.
B. The approval of the Merger and the Merger Agreement by the boards of
directors of McLaren and Xxxxxxx
X. The due execution and delivery of the Merger Agreement by XxXxxxx, Linamar,
and Linamar Sub.
D. The due execution and delivery of the Voting Agreement.
E. The scheduling of a special meeting of the McLaren stockholders as soon as
practical after execution of the Merger Agreement, and the recommendation by the
McLaren board of directors that the McLaren stockholders vote in favor of the
Merger and the Merger Agreement at such stockholder meeting.
F. The filing of a joint proxy statement/prospectus on Form S-4 and the approval
thereof by the US Securities and Exchange Commission.
G. The approval of the Merger by a majority of McLaren's stockholders.
H. The absence of any material adverse effects (as defined in the Merger
Agreement).
I. The truth and accuracy of the representations and warranties in the Merger
Agreement as of the date of the Merger.
J. The renegotiation of the terms of certain McLaren indebtedness on terms
reasonably satisfactory to Linamar.
K. The business of McLaren shall have been conducted in the ordinary course
after the date hereof, with no material assets having been acquired or disposed
of, no employment or other long term commitments having been entered into, no
dividends having been paid or declared, and no amendment of its certificate of
incorporation or bylaws having been approved or adopted.
L. All required consents and approvals of third parties (including, but not
limited to, creditors) and government agencies shall have been obtained.
M. The compliance with all applicable federal and state securities laws.
N. The delivery of a legal opinion of XxXxxxx's counsel in a form which is
customary in similar transactions.
O. The resignation of all McLaren directors.
P. The execution and delivery of Employment Agreements and/or Non-Compete
Agreements by certain key employees of McLaren.
7. Conduct of Business. Pending execution of the Merger Agreement, McLaren shall
conduct its business in accordance with the ordinary course of business and
shall use its best efforts to maintain its business and assets. Except as set
forth herein, McLaren will not (i) issue or agree to issue any additional shares
of McLaren Common Stock or of any other voting security or any rights to acquire
any such additional McLaren Common Stock or voting security, except for shares
issuable upon the exercise of previously granted employee stock options, if any,
and (ii) authorize or consummate any dividends or distributions of its assets to
its shareholders, any consolidation, merger, sale of its assets other than in
the ordinary course of business, or purchase of all or substantially all of the
assets of any entity, any amendment to its certificate of incorporation or
bylaws, or any other extraordinary corporate transaction
8. Public Announcements. Subject to applicable law, neither party hereto shall
make any public announcement relating to this transaction until the signing of
the Merger Agreement, and any announcements made thereafter will be mutually
agreed upon and jointly made by the parties.
9. Filings and Applications. Each party shall cooperate fully with the other
party in furnishing any necessary information required in connection with (i)
the preparation, distribution and filing with the Securities and Exchange
Commission ("SEC"), in each case, if necessary, of a proxy statement, an
information statement, and any other filing or document required by the SEC, and
(ii) the preparation, distribution and filing of any filings, applications and
notices which may be required by other federal, state and local governmental or
regulatory agencies or stock exchanges in any jurisdiction, including the United
States and Canada.
10. Brokers. Neither Linamar, McLaren, nor any of their officers, directors,
employees or stockholders has retained or used, and none of them will retain or
use, the services of any broker, finder or investment banker which would result
in the imposition of a fee or any other compensation of any kind to any
third-parties in connection with the Merger, other than the fees in the amount
of up to $35,000 owed by McLaren to X.X. Xxxx & Company, LLC. Each party agrees
to indemnify the other for any fees for which the other becomes responsible as a
result of a breach of this paragraph 10.
11. Responsibility and Costs. Each party will be responsible for their own costs
and expenses associated with the transactions contemplated hereby, including,
but not limited to, legal fees and costs, and the costs associated with
obtaining shareholder, governmental and other third party approvals prior to
closing of the Merger.
12. Exclusivity. In consideration of Linamar's undertaking the costs and
expenses of conducting due diligence and continuing negotiations, XxXxxxx agrees
that for a period of 90 days after the date hereof, it shall not consider, seek
or solicit, negotiate with, or engage anyone to seek, solicit, or negotiate on
behalf of McLaren or its stockholders, or provide or cause to be provided
information to, any third party in connection with any proposal or offer with
respect to the acquisition of McLaren, or all or substantially all of its
assets. In addition, without the prior written consent of Linamar, XxXxxxx will
not disclose to any person either the fact that discussions or negotiations are
taking place concerning a possible Merger between the parties or any of the
terms, conditions or other facts with respect to any such possible Merger,
including the status thereof. McLaren shall make all of its directors, officers,
employees, affiliates, brokers, agents, advisors and representatives aware of
the terms of this paragraph 12 and shall cause them to comply herewith, and
shall be liable for any breach hereof by any of them.
13. Governing Law/Jurisdiction. This Letter of Intent shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to such State's principles of conflicts of law. The parties consent to the
jurisdiction of the courts of the United States and New York located in such
state for the resolution of any dispute relating to this Letter of Intent.
14. Absence of Enforceable Agreement. Except for the provisions of paragraph 5
(second and third sentence) and paragraphs 7 through 14 (inclusive), which are
intended to be binding, this Letter of Intent is not intended to be, and does
not constitute, a binding or enforceable agreement, but is merely a general
statement of intent which sets forth the general basis for the negotiation and
preparation of the Merger Agreement and related documents. Except for the
aforementioned provisions, no legal or equitable duties, responsibilities or
rights are created hereby, and each party covenants not to institute or
participate in any proceeding seeking to establish a contrary position.
15. Third Parties. This Letter of Intent is intended for the sole and exclusive
benefit of the parties hereto and their respective successors and controlling
persons, and no other person, firm or corporation shall have any third-party
beneficiary or other rights hereunder.
If the foregoing represents your understanding of the terms of our preliminary
agreement, please sign this Letter of Intent on the below-designated line and
return a copy to the undersigned no later than 5:00 p.m. (Eastern time) on March
27, 2003.
LINAMAR CORPORATION
By: /s/ Xxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Chief Executive Officer
Accepted and Agreed as of the date first set forth above.
McLAREN PERFORMANCE TECHNOLOGIES, INC.
By: /s/ Xxxxx XxXxx
---------------------------------
Name: Xxxxx XxXxx
Title: Chief Executive Officer
