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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14C

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934 (Amendment No.    )

Check the appropriate box:
o
Preliminary Information Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
Definitive Information Statement
 
 
 
AMERICAN RAILCAR INDUSTRIES, INC.
(Name of Registrant As Specified In Its Charter)
 
 
 
Payment of Filing Fee (Check the appropriate box):
   
 
o
No fee required
 
 
 
o
Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
 
 
 
 
(1)
Title of each class of securities to which transaction applies:
 
 
 
 
(2)
Aggregate number of securities to which transaction applies:
   
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
   
 
(4)
Proposed maximum aggregate value of transaction:
   
 
(5)
Total fee paid:
   
 
 
 
Fee paid previously with preliminary materials.
 
 
 
o
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
 
 
 
(1)
Amount Previously Paid:
   
 
(2)
Form, Schedule or Registration Statement No.:
   
 
(3)
Filing Party
   
 
(4)
Date Filed:
   

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AMERICAN RAILCAR INDUSTRIES, INC.
100 CLARK STREET
ST. CHARLES, MISSOURI 63301

NOTICE OF ACTION BY WRITTEN CONSENT AND APPRAISAL RIGHTS
AND
INFORMATION STATEMENT

WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.

To our Stockholders:

This notice of action taken by written consent and appraisal rights and information statement is being furnished to the holders of common stock, par value $0.01 per share (the “Common Stock”), of American Railcar Industries, Inc. (the “Company” or “we,” “our” or “us”), in connection with the Agreement and Plan of Merger (the “Merger Agreement”), dated as of October 22, 2018, by and between STL Parent Corp., a Delaware corporation (“Parent”), and the Company. The Merger Agreement is attached as Annex A to the accompanying information statement.

Upon the terms and subject to the conditions set forth in the Merger Agreement, a newly formed North Dakota corporation that is a wholly-owned subsidiary of Parent (“Merger Sub”) will be merged with and into the Company, with the Company continuing as the surviving corporation in the merger (the “Merger”). Following the consummation of the Merger, the Company will be a wholly-owned subsidiary of Parent.

Upon completion of the Merger, each share of Common Stock issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than (i) shares of Common Stock held by Parent, Merger Sub or any of their respective subsidiaries, (ii) shares of Common Stock owned by the Company or the Company’s subsidiaries, or (iii) shares of Common Stock owned by holders who have properly exercised appraisal rights under North Dakota law) will be cancelled and converted automatically into the right to receive $70.00 per share of Common Stock, without interest, which is payable in cash (the “Merger Consideration”). The aggregate Merger Consideration to be received by the stockholders of the Company will be approximately $1.34 billion. The Merger Consideration may be increased in the event that interest is determined to be payable as a result of Parent’s failure to timely deposit funds into escrow.

In connection with the signing of the Merger Agreement, IEH ARI Holdings LLC (“IEH”), the holder of a majority of the issued and outstanding shares of Common Stock of the Company, executed and delivered a written consent adopting and approving the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Written Consent”). The Written Consent will automatically become effective pursuant to the terms of the Merger Agreement at 6:00 p.m., New York City time, on November 26, 2018 (the “Written Consent Effective Time”), unless such time is otherwise extended or the Merger Agreement has been terminated in accordance with its terms.

Parent, on the one hand, and IEH, American Entertainment Properties Corp. (“AEPC”), Icahn Building LLC (“Icahn Building”), Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”), Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), Beckton Corp. (“Beckton”) and Carl C. Icahn (“Icahn,” and collectively with IEH, AEPC, Icahn Building, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Icahn, the “Stockholder Parties”), on the other hand, have all entered into a Voting Agreement, attached as Exhibit B to the Merger Agreement (the “Voting Agreement”). Subject to the terms and conditions of the Voting Agreement, the Stockholder Parties have agreed, among other things, to vote the shares of Common Stock over which they have voting power in favor of any proposal to adopt or approve or reapprove the Merger Agreement and the transactions contemplated thereby, including the Merger, and against any action or agreement that would reasonably be expected to prevent or materially delay the consummation of the Merger or any other transactions contemplated by the Merger Agreement.

The Voting Agreement also contains certain restrictions on the transfer of shares of Common Stock by the Stockholder Parties and includes a waiver of appraisal rights by the Stockholder Parties. The Voting Agreement will terminate upon the earlier of (i) the mutual written consent of Parent and the Stockholder Parties, (ii) the Effective Time, (iii) the termination of the Merger Agreement in accordance with its terms or (iv) the time of any modification, waiver or amendment of the Merger Agreement that reduces or changes the form of the Merger Consideration payable pursuant to the terms of the Merger Agreement as in effect on the date of the Voting Agreement or which is otherwise adverse to the Stockholder Parties in any material respect, in each case, without the prior written consent of the Stockholder Parties.

The Company’s Board of Directors carefully reviewed and considered the terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Merger, which requires approval of the Board of Directors and the Company’s stockholders under North Dakota law. The Board of Directors unanimously (i) approved and declared advisable the Merger Agreement, and the transactions contemplated thereby, including the Merger, (ii) determined that the terms of the Merger Agreement, including the Merger, are fair to, and in the best interests of, the Company and its stockholders, and (iii) recommended that the stockholders of the Company adopt and approve the Merger Agreement and the Merger.

The adoption of the Merger Agreement and the approval of the Merger and the other transactions contemplated in connection therewith by the Company’s stockholders requires the affirmative vote or written consent by holders of a majority of the voting power of the Company’s outstanding shares of Common Stock. On October 22, 2018, in connection with the signing of the Merger, IEH, which on such date was the record holder of 11,871,268 shares of Common Stock, representing approximately 62.2% of the outstanding shares of Common Stock, delivered the Written Consent. The Written Consent will automatically become effective pursuant to the terms of the Merger Agreement as of the Written Consent Effective Time, unless such time is otherwise extended or the Merger Agreement is terminated in accordance with its terms. As a result of the delivery of the Written Consent, no further action by any stockholder of the Company is required under applicable law or the Merger Agreement (or otherwise) to adopt the Merger Agreement, and the Company will not be soliciting your vote for or consent to the adoption of the Merger Agreement and the approval of the Merger and will not call a stockholders’ meeting for purposes of voting on the adoption of the Merger Agreement and the approval of the Merger. This notice and the accompanying information statement shall constitute notice to you from the Company of the Written Consent as required by Section 10-19.1-75 of the North Dakota Business Corporation Act (theNDBCA”).

Under Section 10-19.1-87 of the NDBCA, if the Merger is completed, subject to compliance with Sections 10-19.1-87 and 10-19.1-88 of the NDBCA, holders of shares of Common Stock, other than IEH, will have the right to dissent from the Merger by demanding payment in cash for their shares of Common Stock equal to the fair value of the shares as determined by agreement with the Company or by a court in an action timely brought by the dissenting stockholders instead of receiving a portion of the Merger Consideration for their shares of Common Stock. We refer to a dissenting stockholder’s right to demand payment for their shares of Common Stock as “appraisal rights.” To exercise your appraisal rights, you must submit a written demand for payment no later than thirty (30) days after the mailing of the accompanying information statement, or December 7, 2018, and comply precisely with the other procedures set forth in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA, which are summarized in the accompanying information statement. This summary and the description of Sections 10-19.1-87 and 10-19.1-88 of the NDBCA contained in the information statement are not a complete description of the requirements of Sections 10-19.1-87 and 10-19.1-88, and if you wish to exercise your appraisal rights, you should refer to the statute. A copy of Sections 10-19.1-87 and 10-19.1-88 of the NDBCA is attached to the accompanying information statement as Annex C. This notice and the accompanying information statement shall constitute notice to you from the Company of the availability of appraisal rights under Sections 10-19.1-87 and 10-19.1-88 of the NDBCA in connection with the Merger.

We urge you to read the entire information statement carefully. Please do not send in your Common Stock certificates at this time. If the Merger is completed, you will receive instructions regarding the surrender of your Common Stock certificates and payment for your shares of Common Stock.

BY ORDER OF THE BOARD OF DIRECTORS,

   
John O’Bryan
President and Chief Executive Officer

Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the fairness of the Merger or passed upon the adequacy or accuracy of the disclosures in this notice or the accompanying information statement. Any representation to the contrary is a criminal offense.

The accompanying information statement is dated November 6, 2018 and is first being mailed to stockholders on or about November 7, 2018.

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NOTICE OF ACTION BY WRITTEN CONSENT AND APPRAISAL RIGHTS AND INFORMATION STATEMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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SUMMARY

This summary highlights selected information from this information statement and may not contain all of the information that is important to you. To fully understand the Merger and the other transactions contemplated by the Merger Agreement, and for a more complete description of the legal terms of each of the foregoing, you should carefully read this entire information statement, the annexes attached to this information statement and the documents referred to or incorporated by reference in this information statement. We have included page references in parentheses to direct you to the appropriate place in this information statement for a more complete description of the topics presented in this summary. In this information statement, the terms “ARI,” “Company,” “we,” “us” and “our” refer to American Railcar Industries, Inc. and the terms “Board of Directors” and “Board” refer to the Board of Directors of the Company, unless otherwise specified. All references in this information statement to terms defined in the notice to which this information statement is attached have the meanings provided in that notice. This information statement is dated November 6, 2018 and is first being mailed to our stockholders on or about November 7, 2018.

The Parties (page 15)

The Company. The Company is a prominent North American designer and manufacturer of hopper and tank railcars, which are currently the two largest markets within the railcar industry. The Company provides its railcar customers with integrated solutions through a comprehensive set of high quality products and related services offered by its three reportable segments: manufacturing, railcar leasing and railcar services. The Company’s business model combines manufacturing, railcar leasing and railcar services and is designed to support the industry with complete railcar solutions over the full life cycle of the railcar. The Company’s principal executive offices are located at 100 Clark Street, St. Charles, Missouri 63301 and its telephone number is (636) 940-6000. The Company’s website is http://www.americanrailcar.com. The Company’s website address is being provided as an inactive textual reference only. Additional information about the Company is included in the documents incorporated by reference into this information statement and our filings with the SEC, copies of which may be obtained without charge by following the instructions in “Where You Can Find More Information” beginning on page 60.

The Company’s shares of Common Stock are listed on The Nasdaq Global Select Market (the “NASDAQ”) under the symbol “ARII.”

IEH. IEH is an indirect wholly owned subsidiary of Icahn Enterprises L.P. (“IEP”). IEP owns a 99% limited partner interest in Icahn Enterprises Holdings. Icahn Enterprises GP owns a 1% general partner interest in each of IEP and Icahn Enterprises Holdings. Icahn Enterprises Holdings is the sole member of Icahn Building, which is the sole stockholder of AEPC. AEPC is the sole member of IEH. Icahn, a United States citizen, is the sole stockholder of Beckton, which is the sole stockholder of Icahn Enterprises GP. Icahn is the chairman of the board of directors of Icahn Enterprises GP, the general partner of IEP. IEP is a diversified holding company engaged in ten primary business segments: Investment, Automotive, Energy, Railcar, Gaming, Metals, Mining, Food Packaging, Real Estate and Home Fashion. The principal place of business of IEH, IEP, Icahn Building and AEPC is 767 Fifth Avenue, 47th Floor, New York, New York 10153-0023. The principal place of business of Icahn Enterprises Holdings, Icahn Enterprises GP, and Beckton is 445 Hamilton Avenue, Suite 1210, White Plains, New York 10601. The principal place of business of Icahn is located at c/o Icahn Associates Corp., 767 Fifth Avenue, Suite 4700, New York, New York 10153. The telephone number for IEH, IEP, Icahn Building, AEPC, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton, and Icahn is (212) 702-4300. IEP’s website is http://www.ielp.com.

Parent. Parent is a newly formed Delaware corporation that is a wholly-owned subsidiary of ITE Rail Fund L.P. Parent’s principal executive offices are located at c/o ITE Management, 200 Park Avenue South, Suite 1511, New York, New York 10003 and its telephone number is (212) 390-0370. Parent does not maintain a website.

Merger Sub. Merger Sub is a newly formed North Dakota corporation that is a wholly-owned subsidiary of Parent. Merger Sub’s principal executive offices are located at c/o ITE Management, 200 Park Avenue South, Suite 1511, New York, New York 10003 and its telephone number is (212) 390-0370. Merger Sub does not maintain a website.

Sponsor. Sponsor is an affiliate of, and managed by, ITE Management, which is an investment firm targeting industrial and transportation assets and companies, and related industries and services with a critical focus on investments that generate current cash. ITE Management’s investment strategies focus on broad macro-economic themes.

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The Merger (page 17)

On October 22, 2018, the Company entered into the Merger Agreement with Parent, pursuant to which Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation in the Merger. Following the consummation of the Merger, the Company will be a wholly-owned subsidiary of Parent. On October 26, 2018, Merger Sub executed a joinder agreement (the “Joinder Agreement”) with the Company and Parent pursuant to which Merger Sub became a party to the Merger Agreement.

Merger Consideration (page 42)

Subject to the terms of the Merger Agreement, at the Effective Time, each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than (i) shares of Common Stock held by Parent, Merger Sub or any of their respective subsidiaries, (ii) shares of Common Stock owned by the Company or the Company’s subsidiaries, or (iii) shares of Common Stock owned by holders who have properly exercised appraisal rights under North Dakota law) will be cancelled and converted automatically into the right to receive $70.00 per share of Common Stock, without interest, which is payable in cash. The aggregate Merger Consideration to be received by the stockholders of the Company will be approximately $1.34 billion. The Merger Consideration may be increased in the event that interest is determined to be payable as a result of Parent’s failure to timely deposit funds into escrow.

There are no outstanding options or other rights to acquire from the Company, and no obligation of the Company to issue, any shares of Common Stock or other voting securities of the Company. Accordingly, other than the payment in respect of certain vested Company SARs as described below under “—Treatment of Company SARS,” there will be no vesting or conversion of stock or stock-based awards issued by the Company as a result of the Merger.

We encourage you to read the Merger Agreement, which is attached as Annex A to this information statement, as it is the legal document that governs the Merger and the other transactions contemplated thereby.

Treatment of Company SARs (page 25)

Pursuant to the Merger Agreement, at the Effective Time, each vested stock appreciation right granted under the Company’s 2005 Equity Incentive Plan, as amended and restated, that is outstanding and unexercised immediately prior to the Effective Time (the “Company SARs”) will be cancelled in exchange for the right to receive from Parent or its subsidiaries (including the Company as the surviving corporation in the Merger) a lump sum cash payment calculated pursuant to the terms of the Merger Agreement. In addition, any Company SAR which has an exercise or base price per share of Common Stock that is greater than or equal to the per share Merger Consideration and any Company SAR (or any portion thereof) that is unvested in accordance with its terms at the closing of the Merger will be cancelled at the Effective Time for no consideration or payment.

Reasons for the Merger; Board Approval and Recommendation (page 20)

The Board of Directors carefully reviewed and considered the terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Merger, which requires approval of the Board of Directors and the Company’s stockholders under North Dakota law. After consideration of the Merger Agreement and the various factors discussed in “The Merger—Reasons for the Merger” beginning on page 20, the Board of Directors unanimously (i) approved and declared advisable the Merger Agreement, and the transactions contemplated thereby, including the Merger, (ii) determined that the terms of the Merger Agreement, including the Merger, are fair to, and in the best interests of, the Company and its stockholders, and (iii) recommended that the stockholders of the Company adopt and approve the Merger Agreement and the Merger.

Required Stockholder Approval; Record Date (page 25)

The adoption of the Merger Agreement and the approval of the Merger by our stockholders requires the affirmative vote or written consent of the stockholders holding a majority of the voting power of the outstanding shares of Common Stock. In connection with the signing of the Merger Agreement, on October 22, 2018, IEH, which is the record owner as of such date of shares of Common Stock representing approximately 62.2% of the total number of shares of Common Stock outstanding and entitled to vote, delivered the Written Consent adopting and approving the Merger Agreement, the Merger and all of the other transactions contemplated by the Merger Agreement. The Written Consent will automatically become effective pursuant to the terms of the Merger Agreement as of the Written Consent Effective Time, unless such time is otherwise extended or the Merger Agreement is terminated in accordance

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with its terms. As of the Written Consent Effective Time, the Written Consent will effect the adoption and approval of the Merger Agreement and the Merger by the holders of the requisite number of shares of Common Stock of the Company in accordance with Section 10-19.1-98 of the NDBCA.

As a result of the delivery of the Written Consent, no further action by any stockholder of the Company is required to adopt and approve, and the Company is not soliciting your vote or consent to the adoption and approval of, the Merger Agreement and the Merger. The Company will not call a meeting of stockholders for purposes of voting on these matters.

This information statement shall constitute notice to you from the Company of stockholder action by less than unanimous written consent as required by Section 10-19.1-75 of the NDBCA. As of October 22, 2018, the date on which the Written Consent was delivered to Parent, which is the relevant date for the purposes of Section 10-19.1-75 of the NDBCA, there were 19,083,878 shares of the Company’s Common Stock outstanding and entitled to vote.

Under Section 10-19.1-88 of the NDBCA, holders of shares of the Company’s Common Stock who are entitled to appraisal rights must be provided a notice of appraisal rights. The record date for purposes of determining the stockholders entitled to receive the notice of appraisal rights is October 22, 2018, as of which date there were 19,083,878 shares of the Company’s Common Stock outstanding.

Stockholders who wish to exercise appraisal rights must make a written demand for payment on or prior to December 7, 2018, which is the date that is thirty (30) days following the mailing of this information statement, and otherwise comply precisely with the procedures set forth in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA for perfecting appraisal rights. For a summary of these procedures, see “Appraisal Rights” beginning on page 57. A copy of Sections 10-19.1-87 and 10-19.1-88 of the NDBCA is attached to this information statement as Annex C. If you hold your shares of Common Stock through a bank, brokerage firm, trust or other nominee and you wish to exercise your appraisal rights, you should consult with your bank, brokerage firm, trust or other nominee to determine the appropriate procedures for the making of a demand for appraisal by the bank, brokerage firm, trust or the other nominee.

Opinion of Western Reserve Partners, a division of Citizens Capital Markets, Inc. (page 28 and Annex B)

On October 15, 2018, the Company entered into an engagement letter with Western Reserve Partners, a division of Citizens Capital Markets, Inc., which we refer to as “Western Reserve,” to render an opinion as to the fairness, from a financial point of view, to the holders of the issued and outstanding Common Stock of the consideration to be received by the holders in connection with the transactions contemplated by the Merger Agreement, including the Merger. Pursuant to the Merger Agreement, the outstanding shares of Common Stock will be converted into the right to receive $70.00 per share in cash consideration, which we refer to as the “Merger Consideration”.

At the meeting of the Board of Directors on October 21, 2018, Western Reserve rendered its opinion to the Board of Directors to the effect that, as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken as set forth in its opinion, the Merger Consideration to be received by the holders of shares of Common Stock pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. The Company encourages you to read carefully and in its entirety the full text of Western Reserve’s written opinion attached as Annex B to this information statement, which is subject to the assumptions, limitations, qualifications and other conditions contained in such opinion and is necessarily based on economic, capital markets and other conditions, and the information made available to Western Reserve, as of the date of such opinion.

For a description of the opinion that the Board of Directors received from Western Reserve, see “The Merger—Opinion of Western Reserve” beginning on page 28.

Financing of the Transaction (page 26)

Parent estimates that the total amount of funds necessary to complete the Merger Agreement and the other transactions contemplated by the Merger Agreement will be approximately $1.34 billion, which will be funded through a combination of equity financing and debt financing, as described below. This amount includes the funds needed to, as applicable, (i) pay the aggregate Merger Consideration, (ii) repay in full, subject to certain exceptions, all material third party indebtedness for borrowed money of the Company and its subsidiaries, including all amounts outstanding under the Company’s existing credit facility, and (iii) pay related fees, commissions and expenses.

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Equity Commitment Letter (page 26)

On October 22, 2018, in connection with the signing of the Merger Agreement, ITE Rail Fund L.P. (“Sponsor”) executed and delivered to Parent an equity commitment letter pursuant to which Sponsor agreed to contribute, or cause to be contributed, to Parent, as an equity contribution, an aggregate amount equal to $440 million prior to or at the closing of the Merger. The equity commitment from Sponsor is subject to the satisfaction of customary conditions, including the funding of the debt financing described below (or any alternative financing contemplated by the Merger Agreement).

Debt Commitment Letters (page 26)

On October 22, 2018, in connection with the signing of the Merger Agreement, (i) Parent entered into a commitment letter with Credit Suisse AG and Credit Suisse Loan Funding LLC (collectively, the “OpCo Committed Lenders”), pursuant to which the OpCo Committed Lenders have committed to provide debt financing to the Company consisting of a senior secured first lien term facility in an amount equal to $150 million, plus an optional additional amount necessary to fund original issue discount or upfront fees with respect to such financing in connection with the associated “flex” provisions, at the closing of the Merger, and (ii) Parent and Sponsor entered into a commitment letter with Credit Suisse AG, Cayman Islands Branch (collectively, the “AssetCo Committed Lender”), pursuant to which the AssetCo Commitment Lender has committed to provide debt financing to a direct or indirect bankruptcy-remote special purpose subsidiary of the Company (the “AssetCo Borrower”) consisting of a secured term loan facility in an aggregate amount up to $770 million at the closing of the Merger. The financing to be provided by the OpCo Committed Lenders and the AssetCo Committed Lender under the debt commitment letters is subject to the satisfaction of customary conditions.

The transactions contemplated by the Merger Agreement are not conditioned upon Parent obtaining financing.

Limited Guarantee (page 27)

In connection with the Merger Agreement, Sponsor entered into a limited guarantee in favor of the Company to guarantee Parent’s and/or Merger Sub’s payment obligations with respect to the Parent Termination Fee of $130 million to be paid by Parent to the Company under the circumstances specified in the Merger Agreement and any amounts that are owed by Parent and/or Merger Sub with respect to monetary damages relating to any material breach of the Merger Agreement by Parent or Merger Sub, subject to the terms and limitations set forth in the limited guarantee.

The maximum aggregate liability of Sponsor under the limited guarantee will not exceed $130,250,000 less the amount of guaranteed obligations actually satisfied by Parent or Merger Sub.

Merger Agreement (page 41 and Annex A)

Conditions to the Merger (page 47)

The closing of the transactions contemplated by the Merger Agreement is subject to customary conditions, including, among other things:

receiving the required approval of the Company’s stockholders through the Written Consent of IEH (which Written Consent has been delivered to Parent);
twenty days having elapsed since the mailing to the Company’s stockholders of a definitive information statement with respect to the adoption of the Merger Agreement by IEH pursuant to the Written Consent; and
the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) (for which early termination was granted by the FTC on November 2, 2018).

Non-Solicitation; Window Shop Period; Change of Board Recommendation (page 48)

Pursuant to the Merger Agreement, the Company is restricted in its ability to initiate, solicit or knowingly encourage any acquisition proposal or the making or submission thereof or the making of any proposal that could reasonably be expected to lead to any acquisition proposal, or to participate in any negotiations regarding, or furnish to any third party any non-public information relating to the Company or its subsidiaries, in connection with any acquisition proposal.

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Notwithstanding the restrictions on the Company’s ability to solicit acquisition proposals, during the period from the date of the Merger Agreement to the Written Consent Effective Time, which we refer to as the “window shop period,” if the Company receives a bona fide written acquisition proposal from a third party that does not result from a violation of the Company’s non-solicitation obligations and the Board of Directors (or a committee thereof) determines in good faith, based on information then available (including financial analyses believed to be reasonable by the Board of Directors) and after consultation with outside counsel, that such acquisition proposal constitutes, or would reasonably be expected to result in, a superior proposal and the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties to the Company’s stockholders under applicable law or the agreed upon standard, then the Company has the right to, among other things, furnish non-public information to such third party and participate in discussions or negotiations with the third party making such acquisition proposal regarding the acquisition proposal, which we refer to as the “window shop activities.” The Company has agreed to promptly (and in any event within 24 hours) notify Parent in writing of the receipt of any acquisition proposal and provide certain information related thereto. From and after the Written Consent Effective Time, the Company will be prohibited from engaging in any window shop activities.

The Merger Agreement also restricts the ability of the Board of Directors to effect a change of board recommendation with respect to the Merger during the window shop period. The Board, however, may effect a change of board recommendation if, subject to the terms set forth in the Merger Agreement, the Company receives an acquisition proposal that the Board determines in good faith, after consultation with outside legal counsel and based on financial analyses believed to be reasonable by the Board of Directors, constitutes a superior proposal and failure to take such action would be inconsistent with the directors’ fiduciary duties to the Company’s stockholders under applicable law or the agreed upon standard. Under the Merger Agreement, Parent generally has an opportunity to offer to modify and improve the terms of the Merger Agreement in response to any such acquisition proposal before the Board may withdraw or modify its recommendation to stockholders in response to such acquisition proposal or terminate the Merger Agreement to enter into a definitive agreement with respect to such acquisition proposal. Upon termination of the Merger Agreement under circumstances relating to a change of board recommendation, the Company may be required to pay a termination fee of $65 million to Parent.

In the event a change of board recommendation with respect to the Merger is effected during the window shop period and the Merger Agreement is terminated in connection therewith, the Written Consent will not become effective as of the Written Consent Effective Time and will be deemed null and void.

The terms “acquisition proposal,” “superior proposal,” “agreed upon standard” and “change of board recommendation” are each defined in the section entitled “Merger Agreement—Non-Solicitation; Window Shop Period; Change of Board Recommendation” beginning on page 48.

Closing of the Merger (page 28)

The parties expect to complete the Merger in the fourth quarter of 2018. Completion of the Merger is, however, subject to various conditions, and it is possible that factors outside of the parties’ control could result in the Merger being completed at a later time or not at all.

If the marketing period (as defined in the Merger Agreement) relating to Parent’s debt financing has not ended as of the fifth business day after the satisfaction or waiver of all of the applicable closing conditions to the Merger, then the closing will occur on the earliest to occur of (i) a business day during the marketing period specified by Parent on no less than five business days’ notice and (ii) the fifth business day after the final day of the marketing period.

Termination of the Merger Agreement (page 50)

The Merger Agreement may be terminated by the mutual consent of Parent, on the one hand, and the Company, on the other. In addition, Parent, on the one hand, and the Company, on the other hand, may terminate the Merger Agreement if: (i) any governmental order permanently restraining, enjoining or prohibiting the Merger becomes final and non-appealable or any law is in effect that prevents or makes illegal the consummation of the Merger (a “Governmental Order Condition”); (ii) the Merger is not consummated by April 10, 2019 (the “Outside Date”); or (iii) the other party breaches any of its representations, warranties, covenants or agreements in the Merger Agreement in a manner that would prevent the conditions to the Merger from being satisfied prior to the Outside Date and such breach is (A) not capable of being cured or (B) has not been cured within thirty days after notice of such breach (a “Specified Breach”).

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Prior to the Written Consent Effective Time, the Merger Agreement may be terminated (i) by Parent, as a result of a change of board recommendation, or (ii) by the Company, as a result of a change of board recommendation, and in either such case the Company will be required to pay Parent a termination fee in the aggregate amount of $65 million. Once the Written Consent becomes effective on the Written Consent Effective Time, the parties will no longer be able to terminate the Merger Agreement under these specific provisions.

The Company may also terminate the Merger Agreement if, subject to certain conditions: (i) Parent and Merger Sub do not complete the Merger by the fifth business day after receipt of written confirmation of the Company that the Company is ready, willing and able to consummate the transactions contemplated by the Merger Agreement, including the Merger, (ii) Parent fails to timely deposit the requisite funds in escrow under certain conditions, or (iii) (A) the Company provides written notice (a “Breach Escrow Election Notice”) to Parent of a Specified Breach by Parent or Merger Sub that would reasonably be expected to prevent or materially impair the closing of the Merger and (B) Parent fails to deposit the Breach Escrow Amount (as defined in the Merger Agreement) and confirm in writing that it is willing to attempt in good faith to consummate the Merger.

A termination fee payment of $65 million will be payable by the Company to Parent if the Merger Agreement is terminated (i) by Parent, on the one hand, or by the Company, on the other hand, due to a change of board recommendation; or (ii) (A) by Parent, due to a Specified Breach by the Company, or (B) by either the Company or Parent, if the Effective Time has not occurred on or before the Outside Date and, in either case, at the time of such termination an acquisition proposal has been made and not withdrawn (except in each case the references in the definition of “acquisition proposal” to “20%” shall be replaced by “50%”), and within twelve (12) months after such termination, the Company has entered into a definitive agreement relating to or consummated an acquisition proposal.

A Parent Termination Fee of $130 million will be payable by Parent to the Company if the Merger Agreement is terminated (i) by the Company or Parent (A) due to a Governmental Order Condition, if the relevant governmental order relates to a failure to obtain the necessary clearances, approvals or authorizations under the HSR Act, or (B) if the Effective Time has not occurred on or before the Outside Date as a result of the applicable waiting period under the HSR Act relating to the Merger not having yet expired or been terminated by the Outside Date; or (ii) by the Company, (A) due to a Specified Breach or financing failure by Parent and Merger Sub, (B) due to Parent’s failure to timely deposit the requisite funds in escrow under certain conditions or (C) subject to the conditions set forth in the Merger Agreement, in connection with a Breach Escrow Election Notice. Pursuant to the terms of the Merger Agreement, Parent has agreed to deposit funds in escrow to secure Parent’s obligations to pay the Parent Termination Fee if such fee is payable to the Company under the terms of the Merger Agreement.

As described above, Sponsor entered into a limited guarantee in favor of the Company to guarantee, among other things, Parent’s and/or Merger Sub’s payment obligations with respect to the payment of the Parent Termination Fee of $130 million by Parent to the Company in the event the Merger Agreement is terminated under the circumstances described above.

Prior to the payment of the termination fee or Parent Termination Fee, the parties will also be entitled to seek all remedies available at law or in equity against the other, including specific performance.

Procedures for Receiving the Merger Consideration (page 42)

As soon as practicable after the Effective Time (and in no event later than three (3) Business Days after the Effective Time), the surviving corporation will cause a paying agent to mail to each holder of record of certificated shares of Common Stock (as of immediately prior to the Effective Time) a letter of transmittal and instructions as to how to surrender such holder’s stock certificates in exchange for the Merger Consideration. Holders of uncertificated shares of Common Stock (i.e., holders whose shares are held in book-entry form) will, upon receipt by the paying agent of an “agent’s message” in customary form, be entitled to receive the Merger Consideration, as promptly as practicable after the Effective Time without any further action required on the part of those holders.

Interest of Certain Persons in Matters to Be Acted Upon (page 36)

In considering our Board of Directors’ recommendations with respect to the Merger, you should be aware that the Company’s officers and directors might have interests in the Merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The Board of Directors was aware of these interests and considered them, among other matters, when it approved the Merger Agreement and the transactions contemplated thereby, including the Merger.

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Material U.S. Federal Income Tax Consequences of the Merger (page 37)

If you are a U.S. Holder (as defined in “The MergerMaterial U.S. Federal Income Tax Consequences” beginning on page 37), the receipt of the Merger Consideration pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. A U.S. Holder of shares of Common Stock receiving the Merger Consideration in the Merger generally will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between (x) the amount of cash the U.S. Holder receives (determined before deduction of any applicable withholding taxes) and (y) the adjusted tax basis of the surrendered shares of Common Stock.

If you are a Non-U.S. Holder (as defined in “The MergerMaterial U.S. Federal Income Tax Consequences” beginning on page 37), the Merger will generally not be a taxable transaction to you under U.S. federal income tax laws unless you have certain connections to the United States or certain other conditions are met.

Holders of shares of Common Stock should read the section entitled “The MergerMaterial U.S. Federal Income Tax Consequences” beginning on page 37 and consult their tax advisor about the U.S. federal, state, local and foreign tax consequences of the Merger.

Regulatory and Other Governmental Approvals (page 40)

The Merger Agreement provides that each of the parties must use its reasonable best efforts to obtain all necessary actions, waivers, consents, approvals, orders, and authorizations from all applicable governmental entities, including, without limitation, those in connection with the HSR Act. On October 23, 2018, each of Parent and the Company made the requisite filings with the Antitrust Division and the FTC pursuant to the HSR Act and requested early termination of the initial thirty-day waiting period, which request was granted by the FTC on November 2, 2018.

Appraisal Rights (page 57 and Annex C)

Pursuant to Section 10-19.1-87 of the NDBCA, holders of shares of Common Stock who did not consent to the adoption of the Merger Agreement and who precisely follow the procedures specified in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA within the appropriate time periods have the right to dissent from the Merger by demanding payment in cash for their shares of Common Stock equal to the fair value of the shares as determined by agreement with the Company or by a court in an action timely brought by the dissenting stockholders. We refer to a dissenting stockholder’s right to demand payment for their shares of Common Stock as “appraisal rights.” The value that you may be entitled to receive in connection with your exercise of appraisal rights may be less than, equal to or more than the amount of your share of the Merger Consideration.

Under Section 10-19.1-88 of the NDBCA, holders of shares of the Company’s Common Stock who are entitled to appraisal rights must be provided a notice of appraisal rights. The record date for purposes of determining the stockholders entitled to receive the notice of appraisal rights is October 22, 2018. As of such date, there were 19,083,878 shares of the Company’s Common Stock outstanding.

Stockholders who wish to exercise appraisal rights must make a written demand for payment on or prior to December 7, 2018, which is the date that is thirty (30) days following the mailing of this information statement, and otherwise comply precisely with the procedures set forth in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA for perfecting appraisal rights. For a summary of these procedures, see “Appraisal Rights” beginning on page 57. A copy of Sections 10-19.1-87 and 10-19.1-88 of the NDBCA is attached to this information statement as Annex C. If you hold your shares of Common Stock through a bank, brokerage firm, trust or other nominee and you wish to exercise your appraisal rights, you should consult with your bank, brokerage firm, trust or other nominee to determine the appropriate procedures for the making of a demand for appraisal by the bank, brokerage firm, trust or the other nominee.

This information statement will be sent to record holders of the Company’s Common Stock as of October 22, 2018.

Effect on Trading Market; Delisting and Deregistration of Common Stock (page 40)

Shares of the Company’s Common Stock are listed on the NASDAQ under the symbol “ARII.” The closing sale price of the Common Stock on the NASDAQ on October 19, 2018, which was the last trading day before we announced the Merger, was $46.29. On November 5, 2018, the last practicable trading day before the date of this information statement, the closing price of Common Stock on the NASDAQ was $70.45. You are encouraged to obtain current market prices for the Company’s Common Stock.

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If the Merger is completed, the Common Stock will no longer be listed on the NASDAQ. In addition, the registration of the Common Stock under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be terminated, and we will no longer file periodic reports with the SEC on account of the Common Stock.

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QUESTIONS AND ANSWERS ABOUT THE MERGER

The following questions and answers are intended to briefly address commonly asked questions as they pertain to the Merger Agreement and the transactions completed thereby, including the Merger. These questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the “Summary” beginning on page 1 and the more detailed information contained elsewhere in this information statement, the annexes to this information statement and the documents referred to or incorporated by reference in this information statement, each of which you should read carefully. You may obtain additional information, which is incorporated by reference in this information statement, without charge by following the instructions in “Where You Can Find More Information” beginning on page 60.

Q:What is the proposed transaction and what effects will it have on the Company?
A:On October 22, 2018, the Company entered into the Merger Agreement with Parent. Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation in the Merger. Following the consummation of the Merger, the Company will be a wholly-owned subsidiary of Parent.

If completed, the transactions contemplated by the Merger Agreement, including the Merger, will result in the change of control of the Company.

Q:What will I receive in the Merger?
A:The aggregate Merger Consideration to be received by the stockholders of the Company pursuant to the terms of the Merger Agreement will be approximately $1.34 billion, or $70.00 per share of Common Stock. Upon completion of the Merger and subject to the terms of the Merger Agreement, you will receive the per share Merger Consideration for each share of Common Stock that you own (other than shares owned by holders who have properly exercised their appraisal rights under North Dakota law), without interest, which is payable in cash.

For example, if you own 100 shares of Common Stock, you will receive $7,000.00 in cash in exchange for your shares of Common Stock, less any required withholding taxes. Upon completion of the Merger, you will not own any equity in the surviving corporation.

Q:Under what circumstances would the Merger Consideration be increased?
A:Pursuant to the terms of the Merger Agreement, Parent agreed to deposit an aggregate amount of $130 million in escrow to secure Parent’s obligations to pay the Parent Termination Fee if such fee is payable to the Company under the terms of the Merger Agreement. On October 24, 2018, Parent deposited $55 million in immediately available funds with Citibank, N.A. (the “Escrow Agent”) into an escrow account to be held pursuant to the terms and conditions of the escrow agreement (“Escrow Agreement”). In addition, on or prior to 5:00 p.m. on November 16, 2018, Parent has agreed to deposit up to an additional $75 million so that the aggregate amount held by the Escrow Agent pursuant to the terms of the Escrow Agreement is $130 million.

In the event that Parent fails to timely deposit the additional funds with the Escrow Agent to be held pursuant to the terms of the Escrow Agreement, then Parent will be required to pay interest on such amounts. Any such interest that is paid as a result of Parent’s failure to timely deposit the funds to be held in escrow will be added to the Merger Consideration that will be payable to the holders of Common Stock in connection with the closing of the transactions contemplated by the Merger Agreement. The Merger Consideration will only be increased in the limited circumstances in which (i) Parent fails to timely deposit the funds in escrow, but Parent subsequently deposits such funds in escrow including the additional interest amount, (ii) the Company does not terminate the Merger Agreement as a result of Parent’s failure to timely deposit such funds, and (iii) the transactions contemplated by the Merger Agreement are ultimately consummated.

Q:What is the purpose of the escrow agreement?
A:Pursuant to the terms of the Merger Agreement, Parent agreed to deposit an aggregate amount of $130 million in escrow to secure Parent’s obligations to pay the Parent Termination Fee if such fee is payable to the Company under the terms of the Merger Agreement.

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Q:When do you expect the Merger to be completed?
A: We are working to complete the Merger as quickly as possible. We currently expect to complete the Merger promptly after all of the conditions to the Merger have been satisfied or waived and subject to the other terms and conditions in the Merger Agreement. Completion of the Merger is currently expected to occur in the fourth quarter of 2018, subject to termination of the waiting period under the HSR Act, and other customary closing conditions. On November 2, 2018, the FTC granted early termination of the waiting period under the HSR Act.

If the marketing period (as defined in the Merger Agreement) relating to Parent’s debt financing has not ended as of the fifth business day after the satisfaction or waiver of all of the applicable closing conditions to the Merger, then the closing will occur on the earliest to occur of (i) a business day during the marketing period specified by Parent on no less than five business days’ notice and (ii) the fifth business day after the final day of the marketing period.

If the Merger is not completed on or before April 10, 2019, the Outside Date, the Merger Agreement may at that time be terminated by the Company, on the one hand, or Parent, on the other hand, and the Merger may then be abandoned.

Q:What happens if the Merger is not completed?
A:If the Merger is not completed for any reason, you will not receive any payment for your shares of Common Stock in connection with the Merger, the Company will remain a publicly traded company, and shares of Common Stock will continue to be traded on the NASDAQ.
Q:Am I being asked to vote on the Merger?
A:No. Applicable North Dakota law and the Merger Agreement require the adoption of the Merger Agreement and approval of the Merger by the holders of a majority of the voting power of the outstanding shares of Common Stock in order to effect the Merger and the other transactions contemplated by the Merger Agreement. The Company’s bylaws permit stockholders to act by written consent in certain circumstances, including in connection with the approval of transactions such as the Merger as contemplated by the Merger Agreement. On October 22, 2018, in connection with the signing of the Merger Agreement, IEH, which on such date was the record holder of 11,871,268 shares of Common Stock, representing approximately 62.2% of the outstanding shares of Common Stock, delivered the Written Consent. The Written Consent will automatically become effective pursuant to the terms of the Merger Agreement as of the Written Consent Effective Time, unless such time is otherwise extended or the Merger Agreement is terminated in accordance with its terms. As a result of the delivery of the Written Consent, no further action by any stockholder of the Company is required under applicable law or the Merger Agreement (or otherwise) to adopt the Merger Agreement. Therefore, your vote is not required and is not being sought. We are not asking you for a proxy, and you are requested not to send us a proxy.
Q:Why did I receive this information statement?
A:Applicable laws and securities regulations require us to provide you with notice of the action taken by the Written Consent that was delivered by IEH as well as other information regarding the Merger, even though your vote or consent is neither required nor requested to adopt or authorize the Merger Agreement, or to complete the Merger. This information statement also constitutes notice to you of the availability of appraisal rights in connection with the Merger under Sections 10-19.1-87 and 10-19.1-88 of the NDBCA, a copy of which is attached to this information statement as Annex C.
Q:Did the Board of Directors approve and recommend the Merger Agreement?
A:Yes. After careful consideration, the Board of Directors unanimously (i) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, (ii) determined that the terms of the Merger Agreement, including the Merger, are fair to, and in the best interests of, the Company and its stockholders, (iii) directed that the Merger Agreement be submitted to the stockholders of the Company and (iv) recommended that the stockholders of the Company adopt and approve the Merger Agreement and the Merger.

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Q:What happens if I sell my shares before completion of the Merger?
A:If you transfer your shares of Common Stock before consummation of the Merger, you will have transferred the right to receive a portion of the Merger Consideration for your shares of Common Stock and will lose your appraisal rights. In order to receive a portion of the Merger Consideration for your shares of Common Stock or exercise appraisal rights, you must hold your shares through the Effective Time of the Merger.
Q:Should I send in my Company Common Stock certificates now?
A:No. You will be sent a letter of transmittal with related instructions after completion of the Merger, describing how you may exchange your shares of Common Stock for your portion of the Merger Consideration. Please do NOT return your Company Common Stock certificate(s) to the Company.

Holders of uncertificated shares of Common Stock (i.e., holders whose shares are held in book-entry form) will automatically receive their portion of the Merger Consideration as promptly as practicable after the Effective Time without any further action required on the part of those holders.

Q:Is the Merger subject to the fulfillment of certain conditions?
A:Yes. Before the Merger can be completed, closing of the transactions contemplated by the Merger Agreement are subject to customary conditions, including, among other things, those set forth under the heading “Merger Agreement—Conditions to the Merger” beginning on page 47.
Q:What happens if a third party makes an offer to acquire the Company before the Merger is completed?
A:The Merger Agreement imposes restrictions on the Company’s ability to, among other things, solicit proposals from third parties during the period from the date of the Merger Agreement to the effective date of the Merger Agreement. Notwithstanding these restrictions, during the period from the date of the Merger Agreement to the Written Consent Effective Time, if the Company receives a bona fide written acquisition proposal from a third-party that does not result from a violation of the Company’s non-solicitation obligations and the Board of Directors (or a committee thereof) determines in good faith, based on information then available (including financial analyses believed to be reasonable by the Board) and after consultation with outside counsel, that such acquisition proposal constitutes, or would reasonably be expected to result in, a superior proposal and the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties to the Company’s stockholders under applicable law or the agreed upon standard, then the Company has the right to, among other things, furnish non-public information to such third party and participate in discussions or negotiations with any third party making such acquisition proposal regarding the acquisition proposal. In addition, subject to the terms and conditions of the Merger Agreement, the Board may effect a change of board recommendation with respect to the Merger if it determines that the acquisition proposal constitutes a superior proposal.

In the event a change of board recommendation with respect to the Merger is effected during the window shop period and the Merger Agreement is terminated in connection therewith, the Written Consent will not become effective as of the Written Consent Effective Time and will be deemed null and void. In addition, if the Merger Agreement is terminated under circumstances relating to a change of board recommendation, the Company may be required to pay a termination fee of $65 million to Parent. See “Merger Agreement—Non-Solicitation; Window Shop Period; Change of Board Recommendation” beginning on page 48.

Q:Am I entitled to exercise appraisal rights instead of receiving a portion of the Merger Consideration for my shares?
A:Yes. As a holder of Common Stock, you are entitled to appraisal rights under Sections 10-19.1-87 and 10-19.1-88 of the NDBCA in connection with the Merger if you meet certain conditions and comply with the applicable statutory procedures for perfecting appraisal rights, which are described in this information statement in “Appraisal Rights” beginning on page 57.
Q:What is householding and how does it affect me?
A:The SEC permits companies to send a single set of certain disclosure documents to stockholders who share the same address and have the same last name, unless contrary instructions have been received, but only if the

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applicable company provides advance notice and follows certain procedures. In such cases, each stockholder continues to receive a separate set of disclosure documents. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs as well as natural resources.

If you received a householded mailing and you would like to have additional copies of this information statement mailed to you, or you would like to opt out of this practice for future mailings, or if you received multiple copies of this information statement and would like to opt in to this practice for future mailings, please submit your request to the Company by phone at (636) 940-6000 or by mail to Attn: Secretary, American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301. We will promptly send additional copies of this information statement upon receipt of such request.

Q:Where can I find more information about the Company?
A:We file periodic reports and other information with the SEC. This information is available on the website maintained by the SEC at http://www.sec.gov. For a more detailed description of the available information, please refer to “Where You Can Find More Information” beginning on page 60.
Q:Will I owe taxes as a result of the Merger?
A:The receipt of the Merger Consideration pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes, and may also be a taxable transaction under applicable state, local, or foreign income or other tax laws. If you are a U.S. Holder (as defined in “The MergerMaterial U.S. Federal Income Tax Consequences”), you will generally be required to pay U.S. federal income tax on any gain recognized in connection with the Merger. If you are a Non-U.S. Holder (as defined in “The MergerMaterial U.S. Federal Income Tax Consequences”), you may be required to pay U.S. federal income tax in certain situations. Stockholders are urged to consult with their own tax advisors to determine the particular tax consequences to them (including the application and effect of any state, local or foreign income and other tax laws) of the Merger. For a more detailed explanation of the U.S. federal income tax considerations relevant to the Merger, see “The MergerMaterial U.S. Federal Income Tax Consequences” beginning on page 37.
Q:Who can help answer my other questions?
A:If you have more questions about the Merger, please contact our Investor Relations Department at (636) 940-6000. If your broker holds your shares of Common Stock, you should call your broker for additional information.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This information statement, and the documents to which we refer you in this information statement, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act that involve substantial known and unknown risks and uncertainties. In some situations, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential” and similar expressions intended to identify forward-looking statements. Such statements include, but are not limited to, statements regarding the Merger and the anticipated timing thereof, statements regarding Parent’s ability to consummate its debt financing in connection with the Merger, and statements regarding the Voting Agreement. You should consider these statements carefully because they discuss our plans regarding the Merger and our strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. There will be events in the future, however, that the Company is not able to predict accurately or control. The Company’s actual results may differ materially from the expectations that the Company describes in its forward-looking statements. Factors or events that could cause the Company’s actual results to materially differ may emerge from time to time, and it is not possible for the Company to accurately predict all of them. These forward-looking statements discuss our future expectations or state other forward-looking information, and may involve risks over which we have no control. Those risks include, without limitation:

risks associated with transactions generally, such as the inability to obtain, or delays in obtaining, required approvals under applicable antitrust legislation or regulations, certain other specified governmental consents and other regulatory and third party consents and approvals;
the outcome of any legal proceedings that may be instituted against the Company or others in connection with the Merger Agreement, the Voting Agreement, or any of the transactions contemplated thereby;
the effect of restrictions on our operations in the Merger Agreement;
the ability to retain certain key employees of the Company;
the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, including a termination under circumstances that could require us to pay the termination fee to Parent;
the amount of the costs, fees, expenses and charges related to the Merger;
the risk that the Merger may not be completed in a timely manner or at all, which may adversely affect our business and the price of our Common Stock;
the potential adverse effect on our business, properties and operations because of certain covenants we agreed to in the Merger Agreement;
the effect of the announcement of the Merger on our business relationships, operating results and business generally;
risks related to diverting management’s attention from our ongoing business operations;
Merger Agreement provisions that could discourage a potential competing acquirer or could result in any competing acquisition offer being at a lower price than it might otherwise be;
certain presently unknown or unforeseen factors;
the impact of legislative, regulatory and competitive changes and other risk factors relating to the industry in which the Company operates; and
other risks detailed in our filings with the SEC, including “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2017 and “Part II, Item 1A. Risk Factors” in our subsequent quarterly reports on Form 10-Q. See “Where You Can Find More Information” beginning on page 60.

We cannot assure you that the actual results or developments we anticipate will be realized or, if realized, that they will have the expected effects on our business or operations. All subsequent written and oral forward-looking statements concerning the Merger or other matters addressed in this information statement and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or

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referred to in this section. Forward-looking statements speak only as of the date of this information statement or the date of any document incorporated by reference in this document. Except as required by applicable law or regulation, we do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances.

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THE PARTIES

The Company

American Railcar Industries, Inc.
100 Clark Street
St. Charles, Missouri 63301
Phone: (636) 940-6000

The Company is a prominent North American designer and manufacturer of hopper and tank railcars, which are currently the two largest markets within the railcar industry. We provide our railcar customers with integrated solutions through a comprehensive set of high quality products and related services offered by our three reportable segments: manufacturing, railcar leasing and railcar services. Manufacturing consists of railcar manufacturing and railcar and industrial component manufacturing. We use certain of these components in our own railcar manufacturing and sell certain of these products to third parties. Railcar leasing consists of railcars manufactured by us and leased to third parties under operating leases. Railcar services consist of railcar repair, engineering and field services. Our business model combines manufacturing, railcar leasing and railcar services and is designed to support the industry with complete railcar solutions over the full life cycle of the railcar. Our primary customers include shippers, leasing companies, industrial companies, and Class I railroads. Our operations include eight manufacturing plants that fabricate and assemble raw materials, mainly steel, into railcars, railcar components and industrial components; eight railcar repair plants; and eleven mobile repair (mobile units) and mini repair shop (mini shop) locations.

The Company’s website is http://www.americanrailcar.com. Additional information about the Company is included in documents incorporated by reference into this information statement and our filings with the SEC, copies of which may be obtained without charge by following the instructions in “Where You Can Find More Information” beginning on page 60.

The Company’s shares of Common Stock are listed on the NASDAQ under the symbol “ARII.”

IEH and the other Stockholder Parties

IEH ARI Holdings LLC
767 Fifth Avenue, 47th Floor
New York, New York 10153-0023
Phone: (212) 702-4300
Icahn Enterprises Holdings L.P.
445 Hamilton Avenue, Suite 1210
White Plains, New York 10601
Phone: (212) 702-4300
American Entertainment Properties Corporation
767 Fifth Avenue, 47th Floor
New York, New York 10153-0023
Phone: (212) 702-4300
Icahn Enterprises G.P. Inc.
445 Hamilton Avenue, Suite 1210
White Plains, New York 10601
Phone: (212) 702-4300
Icahn Building LLC
767 Fifth Avenue, 47th Floor
New York, New York 10153-0023
Phone: (212) 702-4300
Beckton Corp.
445 Hamilton Avenue, Suite 1210
White Plains, New York 10601
Phone: (212) 702-4300
Icahn Enterprises L.P.
767 Fifth Avenue, 47th Floor
New York, New York 10153-0023
Phone: (212) 702-4300
Carl C. Icahn
c/o Icahn Associates Corp.
767 Fifth Avenue, Suite 4700
New York, New York 10153
Phone: (212) 702-4300

IEH is an indirect wholly owned subsidiary of IEP. IEP owns a 99% limited partner interest in Icahn Enterprises Holdings. Icahn Enterprises GP owns a 1% general partner interest in each of IEP and Icahn Enterprises Holdings. Icahn Enterprises Holdings is the sole member of Icahn Building, which is the sole stockholder of AEPC. AEPC is the sole member of IEH. Mr. Icahn, a United States citizen, is the sole stockholder of Beckton, which is the sole stockholder of Icahn Enterprises GP. Mr. Icahn is the chairman of the board of directors of Icahn Enterprises GP, the general partner of IEP. IEP is a diversified holding company engaged in ten primary business segments: Investment, Automotive, Energy, Railcar, Gaming, Metals, Mining, Food Packaging, Real Estate and Home Fashion.

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Parent

STL Parent Corp.
c/o ITE Management
200 Park Avenue South, Suite 1511
New York, NY 10003
Phone: (212) 390-0370

Parent is a newly formed Delaware corporation that is a wholly-owned subsidiary of Sponsor. Parent was formed by Sponsor solely for the purposes of completing the transactions contemplated by the Merger Agreement. Parent is a wholly-owned subsidiary of Sponsor and has not carried on any activities to date, except for activities incidental to its incorporation and activities undertaken in connection with the transactions contemplated by the Merger Agreement. Following the closing of the Merger, the Company will be a wholly-owned subsidiary of Parent. Parent does not maintain a website.

Merger Sub

Table Rock Merger Sub Corp.
c/o ITE Management
200 Park Avenue South, Suite 1511
New York, NY 10003
Phone: (212) 390-0370

Merger Sub is a newly formed North Dakota corporation that is a wholly-owned subsidiary of Parent. Merger Sub was formed by Parent solely for the purposes of completing the transactions contemplated by the Merger Agreement. Merger Sub is a wholly-owned subsidiary of Parent and has not carried on any activities to date, except for activities incidental to its incorporation and activities undertaken in connection with the transactions contemplated by the Merger Agreement. On October 26, 2018, Merger Sub executed the Joinder Agreement with the Company and Parent pursuant to which Merger Sub became a party to the Merger Agreement. Merger Sub does not maintain a website.

Sponsor

ITE Rail Fund L.P.
c/o ITE Management
200 Park Avenue South, Suite 1511
New York, NY 10003
Phone: (212) 390-0370

Sponsor is an affiliate of, and managed by, ITE Management L.P. (“ITE Management”), which is an investment firm targeting industrial and transportation assets and companies, and related industries and services with a critical focus on investments that generate current cash. ITE Management’s investment strategies focus on broad macro-economic themes. Sponsor does not maintain a website. ITE Management’s website is: https://www.itemgmt.com/.

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THE MERGER

Background of the Merger

On November 2, 2017, Mr. James J. Unger, of ITE Management, made an unsolicited inquiry about the Company to Mr. Cozza, President and Chief Executive Officer of Icahn Enterprises L.P., an affiliate of IEH (“IEP”), about exploring a potential strategic transaction with the Company. Mr. Unger is currently, and was at the time of his inquiry to the Company, a Managing Director of ITE Management. Mr. Unger previously served in a variety of executive positions at the Company from March 1995 through April 2009 and was a member of the Company’s Board of Directors from March 1995 through September 2013. Mr. Cozza in turn communicated the inquiry to Mr. Jeffrey S. Hollister, the Company’s President and Chief Executive Officer at such time. In order to facilitate due diligence, on November 27, 2017, the Company executed and delivered a confidentiality agreement with ITE Management, which agreement was effective as of November 2, 2017.

In November 2017 and through January 2018, ITE Management conducted limited due diligence on the Company. On January 28, 2018, in connection with a request from ITE Management, the Company entered into a joinder agreement with an unrelated third party (“Party A”) to the existing confidentiality agreement between ITE Management and the Company, pursuant to which Party A agreed to be bound by the terms of the confidentiality agreement as if it were an original signatory to the confidentiality agreement. Following the execution of the joinder agreement, Party A conducted due diligence on the Company. This joinder agreement was subsequently terminated in early July 2018.

On July 18, 2018, Mr. Unger contacted Mr. John O’Bryan, the Company’s current President and Chief Executive Officer, to reiterate ITE Management’s interest in pursuing a strategic transaction where it would acquire all of the issued and outstanding capital stock of the Company through a merger. During the summer and throughout the fall of 2018, ITE Management and its representatives, including its potential debt financing sources, continued to conduct due diligence on the Company.

On August 17, 2018, the Board of Directors held a meeting at which the Company’s senior management and Mr. Cozza briefed the directors about the ongoing communications with ITE Management. Representatives of Thompson Hine LLP, transaction counsel to the Company (“Thompson Hine”), and Brown Rudnick LLP, counsel to the Company (“Brown Rudnick”), were in attendance at the meeting. At the request of the Board of Directors, members of Thompson Hine reviewed the fiduciary duties of the Board of Directors and provided an overview of the potential structure of the proposed transaction.

Late in the evening on August 17, 2018, Willkie Farr & Gallagher LLP, counsel to ITE Management (“Willkie Farr”), distributed a draft of the merger agreement (such draft, and subsequent iterations thereof exchanged between the parties, referred to as the “Draft Merger Agreement”) to Thompson Hine. The Draft Merger Agreement contemplated a merger of a newly formed subsidiary of Parent, referred to herein as Merger Sub, with and into the Company, with the Company continuing as the surviving corporation after the merger. The Draft Merger Agreement included (i) a 15-day window shop period for the Company to respond to (but not actively solicit) other acquisition proposals; (ii) a closing condition pursuant to which Parent could elect not to close the transaction if holders representing more than 10% of the outstanding shares of Common Stock exercised dissenters’ rights with respect to the Merger; (iii) a termination fee of an unspecified amount to be payable by the Company to Parent in certain circumstances, including upon a termination of the agreement due to a change in recommendation of Directors or a termination as a result of a material breach by the Company of its obligations under agreement; and (iv) a termination fee of an unspecified amount payable by Parent to the Company in the event that Parent failed to close the merger because its financing was not available.

On August 20, 2018, Willkie Farr, Thompson Hine, and Brown Rudnick participated in a conference call to discuss the Draft Merger Agreement.

On August 23, 2018, Thompson Hine distributed a revised Draft Merger Agreement to Willkie Farr that provided for, among other things, HSR filing provisions, a 60-day window shop period, no closing condition relating to appraisal rights, a termination fee payable by the Company in an amount of $50 million, and a termination fee payable by Parent in an amount of $130 million payable in certain circumstances in which the agreement was terminated, including in the event of a breach by Parent of its obligations under the agreement.

On August 30, 2018, Willkie Farr distributed an updated Draft Merger Agreement reflecting, among other things, a 30-day window shop period, a closing condition relating to appraisal rights, a termination fee payable by

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the Company in an amount of $65 million in a number of circumstances, and a termination fee payable by Parent in an amount of $95 million payable in the event that Parent failed to close the merger because its financing was not available.

On September 6, 2018, the Board of Directors met with the Company’s senior management to review the significant open issues, which included the time period of the window shop period, the size of the termination fees and the triggers requiring payment of such fees, in the Draft Merger Agreement with Thompson Hine and Brown Rudnick.

On September 18, 2018, Willkie Farr distributed an initial draft of the voting agreement (such draft, and subsequent iterations thereof exchanged between the parties, referred to as the “Draft Voting Agreement”) and the form of written consent (such draft, and subsequent iterations thereof exchanged between the parties, referred to as the “Draft Written Consent”) to IEH.

On September 23, 2018, Willkie Farr distributed initial drafts of the equity commitment letter (such draft, and subsequent iterations thereof exchanged between the parties, referred to as the “Draft Equity Commitment Letter”) and the limited guarantee (such draft, and subsequent iterations thereof exchanged between the parties, referred to as the “Draft Limited Guarantee”) to Thompson Hine.

Between September 23 and September 27, 2018, representatives of Willkie Farr, Vedder Price LLP, asset-based financing counsel to ITE Management (“Vedder Price”), Thompson Hine, and Brown Rudnick participated in conference calls relating to due diligence and the Draft Merger Agreement. On September 27, 2018, Willkie Farr distributed a revised Draft Merger Agreement.

On September 28, 2018, ITE Management distributed initial drafts of the debt commitment letters (such drafts, and subsequent iterations thereof exchanged between the parties, referred to as the “Draft Debt Commitment Letters”).

On October 1, 2018, Mr. Yevgeny Fundler, the Company’s Senior Vice President, General Counsel and Secretary, participated in a conference call with representatives of Willkie Farr and Thompson Hine relating to regulatory and other due diligence matters.

On October 4, 2018, Brown Rudnick discussed the Draft Debt Commitment Letters with Willkie Farr and Vedder Price.

On October 5, 2018, Mr. Jason Koenig, Managing Director of ITE Management, Mr. Unger of ITE Management, Messrs. O’Bryan and Fundler of the Company, Mr. Luke M. Williams, Senior Vice President, Chief Financial Officer and Treasurer of the Company, Mr. Cozza of IEP, and representatives from Willkie Farr and Thompson Hine held an “all hands” call to discuss the open issues on the proposed transaction and draft documents, including the Draft Debt Commitment Letters. Also on October 5, 2018, Brown Rudnick and Vedder Price had discussions on the Draft Debt Commitment Letters.

On October 7, 2018, IEH provided comments on the Draft Voting Agreement and Draft Written Consent to Willkie Farr. In addition, on October 7, 2018, Willkie Farr and Vedder Price discussed the Debt Commitment Letters with Brown Rudnick.

On October 8, 2018, Vedder Price discussed the Debt Commitment Letters with Brown Rudnick.

On October 9, 2018, the Board of Directors met with the Company’s senior management, Thompson Hine and Brown Rudnick to review the significant open issues in the Draft Merger Agreement and the Draft Debt Commitment Letters. In connection with the Draft Merger Agreement, the members of the Board of Directors discussed the window shop provisions, the termination fees, the remedies, the closing conditions, and certain regulatory matters.

On October 9, 2018, Vedder Price distributed a revised draft of the Debt Commitment Letters to Brown Rudnick. Also, on October 9, 2018, the Company entered into a confidentiality agreement with ITE Management and began to conduct due diligence on ITE Management and its affiliates.

On October 10, 2018, Brown Rudnick participated in conference calls with Willkie Farr and Vedder Price to discuss the Debt Commitment Letters.

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On October 11, 2018, Thompson Hine distributed a draft of the disclosure schedules to the Merger Agreement to Willkie Farr. In addition, the parties held a conference call including Messrs. Koenig and Unger of ITE Management, Mr. Fundler of the Company, Mr. Cozza of IEP, Willkie Farr and Thompson Hine to discuss certain regulatory and other due diligence matters.

On October 12, 2018, representatives of the Board of Directors and the Company’s senior management discussed the terms of the proposed engagement of Western Reserve to provide an opinion to the Board of Directors as to the fairness from a financial point of view to the stockholders of the Company of the consideration to be received by the stockholders in the proposed transaction. On October 15, 2018, the Company entered into an engagement letter with Western Reserve.

On October 15, 2018, Thompson Hine distributed a revised Draft Merger Agreement to Willkie Farr, which provided, among other things, that Parent would be required to pay a termination fee to the Company in an amount of $130 million if the agreement were terminated as a result of a material breach by Parent.

On October 16, 2018, Willkie Farr distributed revised drafts of the Debt Commitment Letters to Brown Rudnick.

On October 17, 2018, Messrs. Koenig and Unger of ITE Management, Messrs. O’Bryan, Williams and Fundler of the Company, Mr. Cozza of IEP, Willkie Farr and Thompson Hine held another “all hands” call to discuss the remaining open issues on the draft transaction documents, including the triggers for payment of the Parent Termination Fee in the Draft Merger Agreement and the proposed restrictions on the Company’s operations between signing and closing in the Draft Merger Agreement.

On October 17, 2018, Willkie Farr, Vedder Price, and Brown Rudnick participated in conference calls regarding the Draft Debt Commitment Letters.

On October 18, 2018, representatives of Willkie Farr, Vedder Price, Thompson Hine and Brown Rudnick exchanged correspondence and participated on conference calls regarding the transaction documents, including the Draft Debt Commitment Letters. Later that day, Thompson Hine distributed a revised draft of the disclosure schedules and Willkie Farr distributed revised drafts of each of the Draft Merger Agreement, Draft Equity Commitment Letter and the Draft Limited Guarantee.

Throughout the day on October 19, 2018, representatives of ITE Management, the Company, Willkie Farr, Vedder Price, Thompson Hine, and Brown Rudnick participated in conference calls and exchanged emails regarding the proposed transaction and the draft documents.

On the afternoon of October 19, 2018, the Board of Directors held a telephonic meeting, including members of the Company’s senior management, Thompson Hine and Brown Rudnick, who were in attendance at the request of the Board of Directors. Thompson Hine advised the members of the Board of Directors as to their fiduciary duties in connection with the potential transaction and then provided a detailed summary of (i) the status of the negotiations between the Company and Parent, (ii) the drafts of the various transactions documents, and (iii) the terms that were continuing to be negotiated between the parties. Representatives of Thompson Hine then reviewed the provisions of the Draft Merger Agreement in detail, including a review of the conditions to closing, the circumstances in which the Merger Agreement may be terminated by either party and the associated termination fees that would be payable upon such termination, and the remedies available to the Company. Brown Rudnick then provided an overview of the terms and conditions of Parent’s proposed financing commitments including a review of the Draft Debt Commitment Letters.

Following a discussion among the members of the Board of Directors and its advisors, the Board discussed the anticipated timing of the transaction and determined that it would hold a subsequent meeting on the evening of October 21, 2018 to further review the Merger Agreement and the transactions contemplated thereby, including the Merger.

Between October 17, 2018 through October 21, 2018, all parties and their respective legal counsel participated in numerous conference calls, exchanged emails and distributed revised drafts of the definitive documents, the schedules and exhibits thereto, and the related press releases and filings to be made with the SEC in connection with the execution of the Merger Agreement and the transactions contemplated thereby. In connection with ongoing negotiations relating to the remedies available to the Company in the event of Parent’s breach, Parent agreed to deposit funds in escrow to secure Parent’s obligation to pay the Parent Termination Fee if such fee is payable to the Company under the terms of the Merger Agreement.

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On October 21, 2018, at 8 p.m., New York City time, the Board of Directors held a telephonic meeting, including members of the Company’s senior management, Thompson Hine and Brown Rudnick, who were in attendance at the request of the Board of Directors. The Board of Directors discussed the updates to the terms of the proposed transaction since the prior meeting on October 19, 2018 with representatives of Thompson Hine and Brown Rudnick.

At the request of the Board of Directors, representatives of Western Reserve were then invited to join the meeting. Western Reserve reviewed with the Board of Directors its financial analysis of the Merger Consideration of $70.00 per share of Common Stock in cash, without interest. At the meeting of the Board of Directors on October 21, 2018, Western Reserve rendered its opinion to the Board of Directors to the effect that, as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken as set forth in its opinion, the Merger Consideration to be received by the holders of shares of Common Stock pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

A discussion ensued among the members of the Board of Directors with representatives from Western Reserve, Thompson Hine and Brown Rudnick. Following the discussion, the Board of Directors then unanimously determined that it was advisable, fair to and in the best interests of the Company and its stockholders to enter into the Merger Agreement and the transactions contemplated thereby, including the Merger.

In the early morning of October 22, 2018, the parties finalized the transaction documents and exchanged signature pages, including the execution and delivery of the Voting Agreement by IEH.

The Company announced the execution of the Merger Agreement and the transactions contemplated thereby by issuing a press release on the morning of October 22, 2018.

On October 23, 2018, each of Parent and the Company made the requisite filings with the Antitrust Division and the FTC pursuant to the HSR Act and requested early termination of the initial thirty-day waiting period, which request was granted by the FTC on November 2, 2018.

On October 26, 2018, Merger Sub executed a joinder agreement (the “Joinder Agreement”) with the Company and Parent pursuant to which Merger Sub became a party to the Merger Agreement.

Structure of the Merger

On October 22, 2018, the Company entered into the Merger Agreement with Parent, pursuant to which Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation in the Merger. Following the consummation of the Merger, the Company will be a wholly-owned subsidiary of Parent. Subject to the terms of the Merger Agreement, at the Effective Time, each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Common Stock held by the Company, Parent or Merger Sub or any of their respective direct or indirect wholly-owned subsidiaries or shares of Common Stock owned by holders who have properly exercised their appraisal rights under North Dakota law) will be cancelled and converted automatically into the right to receive the per share Merger Consideration, or $70.00 per share of Common Stock, without interest, which is payable in cash. The aggregate Merger Consideration to be received by the stockholders of the Company will be approximately $1.34 billion. The Merger Consideration may be increased in the event that interest is determined to be payable as a result of Parent’s failure to timely deposit funds into escrow.

If completed, the transactions contemplated by the Merger Agreement, including the Merger, will result in the change of control of the Company.

Reasons for the Merger

The Board of Directors, at a meeting held on October 21, 2018, unanimously approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, and that it was in the best interests of the Company’s stockholders that the Company enter into the Merger Agreement and consummate the Merger. The Board of Directors made its determination after consultation with its advisors and considering a number of factors.

In reaching its determination, the Board of Directors consulted with the Company’s management and its advisors and considered a number of potentially positive factors, including the following:

Merger Consideration. The Board of Directors considered that Parent was offering to pay $70.00 per share of Common Stock in cash, without interest, pursuant to the terms of the Merger Agreement, which we refer

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to as the “Merger Consideration.” The Board of Directors believed that the Merger Consideration to be paid in the Merger represented a fair value in relation to both the current and the historical trading prices of the Common Stock. Specifically, the Board of Directors compared the $70.00 per share of Common Stock offered by Parent in the Merger to the closing price of the Common Stock on October 19, 2018, the last trading day prior to the announcement of the transaction, which was $46.29. In addition, the Board of Directors noted that the closing price for the shares of Common Stock had not been equal to or exceeded $70.00 per share since September 26, 2014.

Opinion of Western Reserve. The Board of Directors considered the opinion of Western Reserve Partners, a division of Citizens Capital Markets, Inc., which we refer to as “Western Reserve,” to the effect that, as of October 21, 2018 and based upon and subject to the various assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken as set forth in its opinion, the Merger Consideration of $70.00 per share of Common Stock in cash, without interest, to be received by the holders of shares of Common Stock pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. Western Reserve’s opinion is described in further detail below under “The Merger—Opinion of Western Reserve.”
Premium to Trading Price. The Board of Directors considered that the Merger Consideration of $70.00 per share of Common Stock to be received by the Company’s stockholders in the Merger represents a significant premium over the market prices at which shares of Common Stock traded prior to the announcement of the execution of the Merger Agreement, including the fact that the Merger Consideration of $70.00 represented a premium of approximately 51% over the closing price of the shares of Common Stock on October 19, 2018, the last trading day before announcement of the execution of the Merger Agreement.
Cash Consideration. The Board of Directors considered the fact that the Merger Consideration is all cash, which provides certainty and immediate liquidity and value to the Company’s stockholders, enabling the Company’s stockholders to realize value that has been created at the Company while eliminating long-term business and execution risk.
Nature of Stockholder Base. The Board of Directors considered the fact that, if not for the current transactions contemplated by the Merger Agreement, IEH could eventually decide to divest its holdings in the Company, and the possibility that any such sale could relate only to the shares of Common Stock held by IEH, in lieu of a transaction in which all stockholders would be entitled to participate. While IEH has not indicated that it has any current plans to divest its position, the Board of Directors also considered that any such sale conducted by IEH of its Common Stock could potentially impact the economic interests of the minority stockholders and may be detrimental to or adversely impact the minority stockholders when compared to the transactions contemplated by the Merger Agreement. The Board of Directors considered that the transactions contemplated by the Merger Agreement provide that all stockholders benefit pro rata in the control premium to be paid for the Company.
Support of the Significant Stockholder. The Board of Directors considered the support of IEH, the significant stockholder, which controls approximately 62.2% of the aggregate voting power of the shares of Common Stock, as evidenced by IEH’s willingness to enter into the Voting Agreement and deliver the Written Consent in connection with the signing of the Merger Agreement. The Written Consent does not become effective until the Written Consent Effective Time and shall be deemed null and void if, at any time prior to the Written Consent Effective Time, which is anticipated to occur on November 26, 2018, the Merger Agreement has been terminated in accordance with its terms.
Window Shop Period. The Board of Directors considered that the Company had a thirty-five day period in which to receive and respond to unsolicited acquisition proposals that may result in a superior proposal, which we refer to as the window shop period. In connection with the negotiation of the transactions contemplated by the Merger Agreement, the Board of Directors required that, during the window shop period, the Company be given the flexibility necessary to respond to any acquisition proposals that the Board of Directors believes constitutes, or would be reasonably likely to result in, a superior proposal and the failure to take such action would be reasonably expected to be inconsistent with the directors’ fiduciary duties to the Company’s stockholders. The Board of Directors believed that the window shop period and

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the terms of the Merger Agreement provided ample opportunity for the Company to respond to any unsolicited third-party proposals, if any were received by the Company, that may be more favorable from a financial point of view to the Company’s stockholders.

Likelihood of Completion of the Merger; Regulatory Matters. The Board of Directors reviewed the other terms of the Merger Agreement with its legal advisors and considered that the closing of the Merger was not subject to a financing condition. In addition, the Board of Directors considered (i) the terms, provisions and conditions of Parent’s debt financing commitments; (ii) the terms, provisions and conditions set forth in the equity commitment letter and the limited guarantee; and (iii) the limited conditions to the closing of the Merger and the fact that, in the view of the Board of Directors, it was likely that the conditions would be satisfied prior to the Outside Date specified in the Merger Agreement. The Board of Directors also considered the number of potential strategic parties operating in the industry in which the Company operates. In particular, the Board of Directors believed that any potential purchaser that was a strategic party may pose a greater risk in obtaining the necessary approvals under the HSR Act than Parent.
Available Remedies. The Board of Directors also negotiated for the right of the Company to seek specific performance to enforce Parent and Merger Sub’s obligations under the Merger Agreement, including enforcing Parent’s obligation to complete the Merger. In addition, the Board of Directors noted that the Company would be entitled to a Parent Termination Fee of $130 million payable by Parent in the event that the Merger Agreement were terminated for certain reasons, including, among other things, for failure to obtain the required approvals under the HSR Act. The Board of Directors also considered that the Merger Agreement specifically provided that the Company may seek all available remedies at law or in equity.
Regulatory Matters. The Board of Directors considered the risks associated with the Company continuing on as a stand-alone entity, including the risks associated with ongoing compliance with transportation, environmental, health, safety, and regulatory laws and regulations.

The Board of Directors also considered certain uncertainties, risks and potentially negative factors, including, but not limited to, the following:

Change of Control; No Participation in Future Operations. The Board of Directors considered that the transactions contemplated by the Merger Agreement, including the Merger, would result in a change of control of the Company. The Board of Directors also considered that, after the completion of the Merger, the Company would no longer be a public company and its stockholders would no longer be able to participate in any future earnings or growth of the Company.
Limitation on Alternative Proposals. The Board of Directors evaluated the limitations under the Merger Agreement on initiating, soliciting, facilitating or knowingly encouraging any acquisition proposals and that the window shop period would likely expire on November 26, 2018.
Conditions to Closing. The Board of Directors considered the fact that, while the Company expected the Merger to be consummated, there could be no assurance that all conditions to the parties’ obligations to complete the Merger would be satisfied or waived and that it was possible that the Merger may not be completed. The Board of Directors considered the risks associated with obtaining the approvals under the HSR Act.
Risks Associated with the Announcement of the Merger. The Board of Directors considered the fact that the announcement and pendency of the Merger, or the failure to complete the Merger, may cause harm to the Company’s relationships with its employees, including that it may be more difficult to attract and retain key personnel. The Board of Directors also considered that the announcement of the transaction may divert employees’ attention away from the Company’s day-to-day operations.
Restriction on Operations of the Company’s Business. The Board of Directors took into account that, although the Company will continue to exercise control over its operations prior to the closing, the Merger Agreement prohibits the Company from taking certain actions relating to how the Company’s business is conducted prior to the closing without the consent of Parent. As a result, the restrictions in the Merger Agreement may delay or prevent the Company from pursuing certain business opportunities that arise during the pendency of the Merger, whether or not the Merger is completed.

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Risks Associated with the Failure to Complete the Merger. The Board of Directors noted the fact that, if the Merger is not completed, then the Company will have incurred significant risk, transaction expenses and opportunity costs, including disruption to the Company’s existing operations, the failure to take advantage of potential growth or expansion of the Company’s existing operations, the diversion of the attention of the Company’s management and employees, and the potential of an increased level of employee attrition.
Termination Fee. The Board of Directors considered the possibility that the $65 million termination fee payable to Parent if the Board of Directors were to terminate the Merger Agreement as a result of a change of recommendation might have the effect of discouraging acquisition proposals.
Interests of the Company’s Directors and Officers. The Board of Directors was aware of and considered the interests that the Company’s directors and officers may have with respect to the Merger that differ from, or are in addition to, their interests as stockholders of the Company generally, as described in the section entitled “The Merger—Interest of Certain Persons in Matters to be Acted Upon.”

The foregoing discussion of the information and factors considered by the Board of Directors is not intended to be exhaustive but includes the material factors considered by the Board of Directors. In view of the complexity and wide variety of factors considered, the Board of Directors did not find it useful to and did not attempt to quantify, rank or otherwise assign weights to these factors. In addition, the Board of Directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, but rather the Board of Directors conducted an overall analysis of the factors described above, including discussions with the Company’s management and the advisors to the Board of Directors. In considering the factors described above, individual members of the Board of Directors may have given different weights to different factors.

After considering these factors, the Board of Directors concluded that the positive factors relating to the Merger Agreement and the Merger outweighed the potential negative factors and declared the advisability of the Merger Agreement and the Merger based upon the totality of the information presented to and considered by it.

Certain Financial Projections

The Company does not, as a matter of general practice, publicly disclose detailed internal projections of its future financial performance. The Company has, from time to time, as part of its ordinary course strategic and business planning efforts prepared forecasts and projections for internal use. Certain financial forecasts were provided by the Company’s management to Western Reserve (the “Financial Projections”), which Financial Projections were used and relied upon by Western Reserve in connection with performing its financial analyses summarized under “The Merger—Opinion of Western Reserve” beginning on page 28. The information in the Financial Projections that is set forth below was not provided to Parent.

($ in thousands)
Historical
Forecasted
Projected
 
2015
2016
2017
2018
2019
2020
2021
2022
2023
Manufacturing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue(1)
 
1,019,460
 
 
524,933
 
 
450,695
 
 
366,548
 
 
418,807
 
 
483,392
 
 
550,392
 
 
619,879
 
 
632,276
 
Railcar Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
116,714
 
 
132,245
 
 
134,966
 
 
132,954
 
 
147,587
 
 
156,114
 
 
166,707
 
 
178,638
 
 
190,808
 
Railcar Services:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue(2)
 
74,497
 
 
78,921
 
 
82,809
 
 
97,849
 
 
85,293
 
 
87,852
 
 
90,488
 
 
93,202
 
 
95,998
 
(1)Revenues for Manufacturing include revenues associated with intercompany transactions, which are based on an estimated fair market value of the leased railcars as if they had been sold to a third party and are eliminated in consolidation. Revenues from railcars manufactured for the Company’s Railcar Leasing segment are not recognized in consolidated revenues as railcar sales, but rather lease revenues are recognized over the term of the lease in accordance with monthly lease revenues.
(2)Revenues for Railcar Services include revenues associated with intercompany transactions, which are based on an estimated fair market value of such services as if they had been sold to a third party and are eliminated in consolidation.

The Financial Projections were not prepared with a view to public disclosure and are included in this information statement only because such Financial Projections were provided to Western Reserve for use in connection with its financial analyses. The Financial Projections were not prepared with a view to compliance with generally accepted

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accounting principles as applied in the United States or the published guidelines of the SEC regarding projections and forward-looking statements. Neither Western Reserve nor the Company’s independent registered public accounting firm, nor any other independent accountants, have audited, compiled, examined or performed any procedures with respect to the Financial Projections, nor have they or Western Reserve expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and express no opinion on, the Financial Projections.

The Financial Projections included in this information statement have been prepared by the Company’s management and are subjective in many respects. Furthermore, except as described above, the Financial Projections do not take into account any circumstances or events occurring after the date they were prepared. The Financial Projections are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this information statement are cautioned not to place undue reliance on this information. Although this summary of the Financial Projections is presented with numerical specificity, the projections reflect numerous variables, assumptions and estimates as to future events made by the Company’s management that the Company’s management believed were reasonable at the time the Financial Projections were prepared, taking into account the relevant information available to the Company’s management at such time. However, such variables, assumptions and estimates are inherently uncertain and many are beyond the control of the Company’s management. Because the Financial Projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year. The Financial Projections reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to the Company’s business, all of which are difficult to predict and many of which are beyond the Company’s control. As a result, there can be no assurance that the projected results will be realized or that actual results will not be significantly higher or lower than projected. The Financial Projections are subjective in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. As such, the Financial Projections constitute forward-looking information and are subject to risks and uncertainties, including the various risks set forth in the Company’s Form 10-K for the year ended December 31, 2017, that was filed with the SEC on February 23, 2018, and the other reports filed by the Company with the SEC.

As a result, there can be no assurance that the Financial Projections will be realized, and actual results may be materially better or worse than those contained in the Financial Projections. The inclusion of this information should not be regarded as an indication that the Board of Directors, the Company, Western Reserve, Parent, or any of their respective representatives and affiliates or any other recipient of this information considered, or now considers, the Financial Projections to be predictive of actual future results.

The Financial Projections are forward-looking statements. For information on factors that may cause the Company’s future results to materially vary, see the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Except to the extent required by applicable federal securities laws, the Company does not intend, and expressly disclaims any responsibility, to update or otherwise revise the Financial Projections to reflect circumstances existing after the date when the Company’s management prepared the Financial Projections or to reflect the occurrence of future events or changes in general economic or industry conditions, even in the event that any of the assumptions underlying the Financial Projections are shown to be in error. By including in this document a summary of certain Financial Projections, neither the Company nor any of its representatives or advisors (including Western Reserve) nor Parent or their respective representatives and affiliates makes any representation to any person regarding the ultimate performance of the Company or the surviving corporation compared to the information contained in such financial forecasts and should not be read to do so.

Board Approval and Recommendation

Under Section 10-19.1-98 of the NDBCA, the approval of the Board of Directors is required to approve and adopt the Merger Agreement and the Merger. The Board of Directors carefully reviewed and considered the terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Merger, which would require approval of the Board of Directors and the Company’s stockholders under North Dakota law. The Board of Directors unanimously (i) approved and declared advisable the Merger Agreement, and the transactions contemplated thereby, including the Merger, (ii) determined that the terms of the Merger Agreement, including the Merger, are fair to, and in the best interests of, the Company and its stockholders, and (iii) recommended that the stockholders of the Company adopt and approve the Merger Agreement and the Merger.

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Required Stockholder Approval; Record Date

Under North Dakota law and the Company’s Bylaws, approval by the Company’s stockholders may be provided by written consent of the stockholders holding a majority of the voting power of the outstanding shares of Common Stock. In connection with the signing of the Merger Agreement, on October 22, 2018, IEH, which is the record owner as of such date of shares of Common Stock representing approximately 62.2% of the total number of shares of Common Stock outstanding and entitled to vote on the adoption of the Merger Agreement and the approval of the Merger, delivered the Written Consent to the adoption and approval of the Merger Agreement, including the Merger. The Written Consent will automatically become effective pursuant to the terms of the Merger Agreement as of the Written Consent Effective Time, unless such time is otherwise extended or the Merger Agreement is terminated in accordance with its terms. If the Merger Agreement has been terminated in accordance with its terms prior to the Written Consent Effective Time, the Written Consent will not become effective and will be deemed null and void.

As a result of the delivery of the Written Consent, no further action by any stockholder of the Company is required under applicable law, including Section 10-19.1-98 of the NDBCA, or the Merger Agreement to adopt the Merger Agreement, and the Company will not be soliciting your vote for or consent to the adoption of the Merger Agreement and the approval of the Merger and will not call a stockholders’ meeting for purposes of voting on the adoption of the Merger Agreement and the approval of the Merger. Therefore, no further action by any stockholder of the Company is required under applicable law, the Company’s organizational documents or the Merger Agreement to adopt and approve the Merger Agreement or the Merger, and the Company is not soliciting your vote or consent to the adoption and approval of, the Merger Agreement or the Merger. The Company will not call a meeting of stockholders for purposes of voting on these matters.

When actions are taken by written consent of less than all of the stockholders entitled to vote on a matter, North Dakota law requires notice of the action to those stockholders who did not consent in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting. This information statement shall constitute notice to you from the Company of stockholder action by less than unanimous written consent as required by Section 10-19.1-75 of the NDBCA. As of October 22, 2018, the date on which IEH delivered the Written Consent, which is the relevant date for the purposes of Section 10-19.1-75 of the NDBCA, there were 19,083,878 shares of the Company’s Common Stock outstanding and entitled to vote.

Under Section 10-19.1-88 of the NDBCA, holders of shares of the Company’s Common Stock who are entitled to appraisal rights must be provided a notice of appraisal rights. The record date for purposes of determining the stockholders entitled to receive the notice of appraisal rights is also October 22, 2018. Stockholders who wish to exercise appraisal rights must make a written demand for payment on or prior to December 7, 2018, which is the date that is thirty (30) days following the mailing of this information statement, and otherwise comply precisely with the procedures set forth in in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA for perfecting appraisal rights. For a summary of these procedures, see “Appraisal Rights” beginning on page 57. A copy of Sections 10-19.1-87 and 10-19.1-88 of the NDBCA is attached to this information statement as Annex C. If you hold your shares of Common Stock through a bank, brokerage firm, trust or other nominee and you wish to exercise your appraisal rights, you should consult with your bank, brokerage firm, trust or other nominee to determine the appropriate procedures for the making of a demand for appraisal by the bank, brokerage firm, trust or the other nominee.

Because this information statement constitutes both notice to stockholders of the action by written consent and notice to stockholders of the availability of appraisal rights, this information statement will be sent to record holders of the Company’s Common Stock as of October 22, 2018.

Treatment of Company Stock Awards; Stock Appreciation Rights

There are no outstanding options or other rights to acquire from the Company, and no obligation of the Company to issue, any shares of Common Stock or other voting securities of the Company. Accordingly, other than the payment in respect of certain vested Company SARs as described below, there will be no vesting or conversion of stock or stock-based awards issued by the Company as a result of the Merger.

Pursuant to the terms of the Merger Agreement, at the Effective Time, each vested stock appreciation right granted under the Company’s 2005 Equity Incentive Plan, as amended and restated, that is outstanding and unexercised immediately prior to the Effective Time, or “Company SARs,” will be cancelled in exchange for the right to receive from Parent or its subsidiaries (including the Company as the surviving corporation in the Merger) a lump sum cash payment, without interest and less applicable taxes required to be withheld with respect to such payment, equal to, with respect to the portion, if any, of each Company SAR that is vested in accordance with its

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terms at or prior to the closing of the Merger (the “vested SAR portion”), the product of (i) the excess, if any, of (A) the Merger Consideration over (B) the exercise or base price per share of Common Stock subject to such vested SAR portion and (ii) the total number of shares of Common Stock underlying such vested SAR portion. The payment will be made on the first regularly scheduled payroll date occurring more than five (5) business days after the Effective Time.

Any Company SAR which has an exercise or base price per share of Common Stock that is greater than or equal to the per share Merger Consideration and any Company SAR (or any portion thereof) that is unvested in accordance with its terms at the closing of the Merger will be cancelled at the Effective Time for no consideration or payment.

Certain individuals who have served as directors and officers of the Company since the beginning of the 2018 fiscal year, including the Company’s named executive officers, will receive a lump sum cash payment calculated as described above in exchange for the cancellation of the Company SARs that they hold as of the Effective Time to the extent that their Company SARs have an exercise or base price per share of Common Stock that is less than the per share Merger Consideration.

Financing of the Transaction

Parent estimates that the total amount of funds necessary to complete the Merger Agreement and the other transactions contemplated by the Merger Agreement will be approximately $1.34 billion, which will be funded through a combination of equity financing and debt financing, as described below.

Equity Commitment Letter

On October 22, 2018, in connection with the signing of the Merger Agreement, Sponsor executed and delivered to Parent an equity commitment letter pursuant to which Sponsor agreed to contribute, or cause to be contributed, to Parent, as an equity contribution, an aggregate amount equal to $440 million prior to or at the closing of the Merger.

The equity commitment from Sponsor will be used by Parent solely to satisfy its and Merger Sub’s obligations under the Merger Agreement, including their obligations to fund (i) the aggregate Merger Consideration and (ii) related costs, fees and expenses required to be paid by Sponsor, Parent or Merger Sub or, after the closing of the Merger, the surviving corporation in connection with the Merger and the transactions contemplated thereby, in each case, pursuant to and in accordance with the terms of, and subject to the conditions of, the Merger Agreement.

Sponsor’s obligation to fund the equity commitment is conditioned upon, prior to or contemporaneously with the closing of the Merger, the following having occurred:

the end of the marketing period for Parent’s debt financing and the satisfaction or waiver by Parent of all conditions precedent to the obligation of Parent to consummate the transactions contemplated by the Merger Agreement;
the funding of Parent’s debt financing (or any alternative financing contemplated by the Merger Agreement); or
(i) the substantially contemporaneous consummation of the Merger in accordance with the terms of the Merger Agreement or (ii) the Company having obtained pursuant to the Merger Agreement an award of specific performance by a court of competent jurisdiction requiring Parent to effect the closing of the Merger, and the Company having irrevocably confirmed in writing to Parent that if the equity commitment is funded, then the closing of the Merger will occur.

The Company is an express third party beneficiary of the equity commitment letter solely for the purpose of seeking, and is entitled to seek, specific performance of Parent’s right to cause the equity commitment to be funded thereunder and for no other purpose, but only as and to the extent permitted pursuant to, and subject to the terms and conditions of, the equity commitment letter and the Merger Agreement.

Debt Commitment Letters

On October 22, 2018, in connection with the signing of the Merger Agreement, (i) Parent entered into a commitment letter with Credit Suisse AG and Credit Suisse Loan Funding LLC (collectively, the “OpCo Committed Lenders”), pursuant to which the OpCo Committed Lenders have committed to provide debt financing to the

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Company consisting of a senior secured first lien term facility in an amount equal to $150 million, plus an optional additional amount necessary to fund original issue discount or upfront fees with respect to such financing in connection with the associated “flex” provisions, at the closing of the Merger, and (ii) Parent and Sponsor entered into a commitment letter with Credit Suisse AG, Cayman Islands Branch (collectively, the “AssetCo Committed Lender”), pursuant to which the AssetCo Commitment Lender has committed to provide debt financing to a direct or indirect bankruptcy-remote special purpose subsidiary of the Company (the “AssetCo Borrower”) consisting of a secured term loan facility in an aggregate amount up to $770 million at the closing of the Merger. The financing to be provided by the OpCo Committed Lenders and the AssetCo Committed Lender under the debt commitment letters is subject to the satisfaction of customary conditions.

A portion of the proceeds of the equity commitment from the Sponsor and the debt financing from the Lenders will be used by Parent to satisfy its and Merger Sub’s obligations under the Merger Agreement, including their obligations (i) to fund the aggregate Merger Consideration, (ii) to repay in full all material third-party indebtedness for borrowed money of the Company and its subsidiaries, including amounts outstanding under the Company’s revolving credit agreement, other than (x) the Company’s equipment notes issued under the Longtrain III Facility (as defined in the Merger Agreement) and (y) amounts outstanding under the Company’s Axis joint venture credit facility (the “refinancing”), and/or (iii) to pay fees, commissions and expenses in connection with the foregoing.

The obligations of the Lenders to provide the debt financing under the debt commitment letters are subject to customary conditions, including, without limitation, the following (subject to certain exceptions and qualifications as set forth in the debt commitment letters):

the absence of a material adverse effect (as defined in the Merger Agreement) on the Company since the date of the Merger Agreement;
the substantially contemporaneous consummation of the Merger in all material respects;
the consummation, or substantially simultaneous consummation, of the funding of the equity financing;
the funding, or substantially simultaneous funding, of the debt financing by the AssetCo Committed Lender or the OpCo Committed Lenders, as applicable, in all material respects;
the occurrence, or substantially simultaneous occurrence of, the refinancing;
the receipt of certain specified financial statements of the Company;
the accuracy (subject to materiality standards set forth in the debt commitment letters) of certain specified representations and warranties in the Merger Agreement and in the definitive documents with respect to the debt financing; and
the execution and delivery of definitive documentation with respect to the debt financing.

The funding of the commitments of the OpCo Committed Lenders is also subject to a 15 business day marketing period.

The commitments under the debt commitment letters expire upon the earliest to occur of: (i) 5:00 p.m., New York City time, on the date that is five business days after the Outside Date, (ii) the termination of the Merger Agreement in accordance with its terms and (iii) the consummation of the Merger without the use of the debt financing.

The transactions contemplated by the Merger Agreement are not conditioned upon Parent obtaining financing.

Limited Guarantee

In connection with the Merger Agreement, Sponsor entered into a limited guarantee in favor of the Company to guarantee Parent’s and/or Merger Sub’s payment obligations with respect to the Parent Termination Fee of $130 million to be paid to the Company under the circumstances specified in the Merger Agreement and any amounts that are owed by Parent and/or Merger Sub with respect to monetary damages relating to any material breach of the Merger Agreement by Parent or Merger Sub, subject to the terms and limitations set forth in the limited guarantee.

The maximum aggregate liability of Sponsor under the limited guarantee will not exceed $130,250,00 less the amount of guaranteed obligations actually satisfied by Parent or Merger Sub.

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Closing of the Merger

We expect to complete the Merger in the fourth quarter of 2018. Completion of the Merger is, however, subject to various conditions, and it is possible that factors outside our control could result in the Merger being completed at a later time or not at all. We are working to complete the Merger as quickly as possible.

If the marketing period (as defined in the Merger Agreement) relating to Parent’s debt financing has not ended as of the fifth business day after the satisfaction or waiver of all of the applicable closing conditions to the Merger, then the closing will occur on the earliest to occur of (i) a business day during the marketing period specified by Parent on no less than five business days’ notice and (ii) the fifth business day after the final day of the marketing period.

Opinion of Western Reserve

On October 15, 2018, the Company entered into an engagement letter with Western Reserve Partners, a division of Citizens Capital Markets, Inc., which we refer to as “Western Reserve,” to render an opinion as to the fairness, from a financial point of view, to the holders of the issued and outstanding Common Stock of the consideration to be received by the holders in connection with the transactions contemplated by the Merger Agreement, including the Merger. Pursuant to the Merger Agreement, the outstanding shares of Common Stock will be converted into the right to receive $70.00 per share in cash consideration, which we refer to as the “Merger Consideration”.

At the meeting of the Board of Directors on October 21, 2018, Western Reserve rendered its opinion to the Board of Directors to the effect that, as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken as set forth in its opinion, the Merger Consideration to be received by the holders of shares of Common Stock pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. The Company encourages you to read carefully and in its entirety the full text of Western Reserve’s written opinion attached as Annex B to this information statement, which is subject to the assumptions, limitations, qualifications and other conditions contained in such opinion and is necessarily based on economic, capital markets and other conditions, and the information made available to Western Reserve, as of the date of such opinion.

The full text of the written opinion of Western Reserve, dated as of October 21, 2018, to the Board of Directors is attached as Annex B to this information statement. Western Reserve’s opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Western Reserve in rendering its opinion. The Company encourages you to read Western Reserve’s opinion carefully and in its entirety. Western Reserve’s opinion was directed to the Board of Directors (in its capacity as such) and addresses only the fairness, from a financial point of view and as of the date of the opinion, to the holders of shares of Common Stock of the Merger Consideration to be received by holders of shares of Common Stock pursuant to the Merger Agreement. It does not address the relative merits of the Merger as compared to any alternative transaction or opportunity that might be available to the Company, nor does it address the underlying business decision by the Company to engage in the Merger or the terms of the Merger Agreement or the documents referred to therein. Western Reserve’s opinion does not constitute a recommendation as to how or whether any holder of shares of Common Stock should consent, vote or act with respect to the Merger or any matter related thereto. The summary of the opinion of Western Reserve set forth below is qualified in its entirety by reference to the full text of the opinion.

Western Reserve’s procedures, investigations, and financial analysis with respect to the preparation of its opinion included, but were not limited to, review of the following:

a draft of the Merger Agreement, dated October 21, 2018, which was understood to be in substantially final form;
certain publicly available information concerning the Company, including recent Annual Reports on Form 10-K of the Company, recent Quarterly Reports on Form 10-Q of the Company and certain disclosures that Western Reserve deemed to be relevant to its analysis made on Form 8-K of the Company;
certain other internal information, primarily financial in nature, including financial estimates for fiscal year 2018, financial projections for fiscal years 2019 through 2023 and other projections, concerning the business and operations of the Company, furnished to Western Reserve by the Company for purposes of its analyses;

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certain financial projections for fiscal years 2019 through 2028 based on the best available estimates of the Company’s management and reviewed and approved by the Company’s management;
publicly available information with respect to certain other companies that Western Reserve believed to be comparable to the Company and the trading markets for certain of such other companies’ securities;
publicly available information concerning the trading markets of the Common Stock; and
publicly available information concerning the nature and financial terms of certain other transactions that Western Reserve considered relevant to its inquiry.

In Western Reserve’s review and analysis and in arriving at its opinion, Western Reserve assumed and relied upon the accuracy and completeness of all financial and other information provided to it or available to the public and that all information supplied and representations made by Company’s management regarding the Company and the Merger are substantially accurate in all respects material to its analysis, and further assumed and relied upon the representations and warranties of the Company, Parent and Merger Sub contained in the Merger Agreement. Western Reserve was not engaged to, and did not independently attempt to, verify any of such information. Western Reserve also relied upon the Company as to the reasonableness and achievability of the financial and operating projections (and the assumptions and bases therefor) provided to Western Reserve and, with the Company’s consent, Western Reserve assumed that such projections were reasonably prepared and reflect the best currently available estimates and judgments of the Company. Western Reserve was not engaged to assess the reasonableness or achievability of such projections or the assumptions on which they were based, and expressed no view as to such projections or assumptions. Also, Western Reserve was not engaged to, nor did it conduct, an appraisal of any of the assets, properties or facilities of the Company.

Western Reserve was not asked to, nor did it, offer any opinion as to the material terms of the Merger Agreement or the form of the Merger. In rendering its opinion, Western Reserve assumed, with the Company’s consent, that the final executed form of the Merger Agreement did not differ in any material respect from the last draft that Western Reserve received. In addition, Western Reserve assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained, all other conditions to the Merger as set forth in the Merger Agreement will be satisfied, and that the Merger will be consummated on a timely basis in the manner contemplated by the Merger Agreement. Western Reserve was not asked to solicit, nor has it solicited, third party interest in any transaction involving the Company prior to the rendering of Western Reserve’s opinion.

Western Reserve’s opinion is based upon economic and market conditions and other circumstances existing on, and information made available as of, the date of Western Reserve’s opinion and does not address any matters subsequent to such date. Western Reserve has assumed that all of the conditions required to implement the Merger will be satisfied, that the Merger will be completed in accordance with the Merger Agreement without any material amendments thereto or any material waivers or delays of any terms or conditions thereof, and that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the Company or the consummation of the Merger. Also, Western Reserve’s opinion is, in any event, limited to the fairness, as of the date of the opinion, from a financial point of view, of the Merger Consideration to be received by the holders of the Company’s Common Stock pursuant to the Merger Agreement, and does not address any other terms of the Merger Agreement or the underlying business decision by the Company’s management to effect the Merger. In that regard, Western Reserve further expressed no opinion concerning the fairness of the amount or nature of any compensation to be paid to any of the officers, directors or employees of the Company, or to any class of such persons, relative to the compensation to be received by the holders of the Company’s Common Stock in connection with the Merger. In addition, although subsequent developments may affect Western Reserve’s opinion, Western Reserve does not have any obligation to update, revise or reaffirm its opinion.

Western Reserve’s opinion was prepared solely for the use of the Board of Directors in discharging its fiduciary duties in evaluating the proposed Merger and is not intended to, and does not, confer any rights or remedies upon any other person, and is not intended to be used, and may not be used, by any other person or for any other purpose, without Western Reserve’s express consent.

Western Reserve’s opinion does not constitute a recommendation to any shareholder of the Company as to how or whether any such shareholder should consent, vote or act with respect to the Merger, or whether to proceed with the Merger or any related transaction, and does not indicate that the Merger Consideration is the best possibly

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attainable under any circumstances; instead, Western Reserve’s opinion merely states whether the Merger Consideration is within a range suggested by certain financial analyses. The Board’s decision as to whether to proceed with the Merger or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which Western Reserve’s opinion is based.

In connection with the rendering of its opinion, Western Reserve performed a variety of financial and comparative analyses, which are summarized below. The preparation of a fairness opinion is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. With respect to the “reference publicly traded companies analysis” and the “reference precedent transactions” included in the sum-of-the-parts analysis, in each case as summarized below, no company or transaction used as a comparison was identical or directly comparable to Company or the Merger. These analyses necessarily involved complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading, acquisition or other values of the companies or transactions concerned.

Western Reserve believes that its analyses and the summary below must be considered as a whole. Considering any portion of Western Reserve’s analyses or the factors considered by Western Reserve or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying the conclusion expressed in Western Reserve’s analyses and opinion. In addition, Western Reserve may have given various analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions, so that implied reference ranges resulting from any particular analysis described below should not be taken to be Western Reserve’s view of the Company’s actual value. Accordingly, the conclusions reached by Western Reserve are based on all analyses and factors taken as a whole and also on the application of Western Reserve’s own experience and judgment.

In performing its analyses, Western Reserve made numerous assumptions with respect to industry performance, general business, economic, monetary, regulatory, market and other conditions and other matters, many of which are beyond the Company’s and Western Reserve’s control. The analyses performed by Western Reserve are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. Estimates of the financial value of companies do not purport to be appraisals or necessarily reflect the prices at which companies or securities actually may be sold or acquired. Accordingly, the estimates used in, and the range of the valuations resulting from, any particular analysis described below are inherently subject to substantial uncertainty. The analyses performed were prepared solely as part of Western Reserve’s analysis of the fairness, from a financial point of view, to the holders of shares of Common Stock of the Merger Consideration to be received by holders of shares of Common Stock pursuant to the Merger Agreement, and were provided to the Board of Directors in connection with the delivery of Western Reserve’s opinion.

The following is a summary of the material financial analyses performed by Western Reserve in connection with Western Reserve’s delivery of its opinion and presentation to the Board of Directors at its meeting on October 21, 2018. The financial analyses summarized below include information presented in tabular format. In order to fully understand Western Reserve’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Western Reserve’s financial analyses. The following summary does not purport to be a complete description of the financial analyses performed by Western Reserve and factors considered in connection with Western Reserve’s opinion. The financial analyses summarized below were based upon historical financial information and financial forecasts provided by the Company’s management. The following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before October 19, 2018, and is not necessarily indicative of current or future market conditions.

Transaction Overview

For purposes of its opinion, the Company directed Western Reserve to assume for purposes of its analysis and opinion that the Merger Consideration would be an amount equal to $1,335.9 million in cash based on an offered price of $70.00 per share of Common Stock. After adding net debt as of June 30, 2018 as provided by the Company’s management, Western Reserve noted that Consideration in the amount of $1,335.9 million implied an enterprise value for the Company of approximately $1,753.2 million.

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Premiums Paid Analysis

Western Reserve reviewed publicly available information for selected completed or pending M&A transactions to determine the premiums paid in such transactions over recent trading prices of the target companies prior to announcement of the transaction. In its selection, Western Reserve applied, among other things, the following criteria:

transactions announced between October 16, 2015 and October 15, 2018;
transactions valued between $500 million and $5.0 billion; and
exclusion of transactions in industries with characteristics materially different than that of the Company.

Based on these criteria, Western Reserve reviewed the resulting 210 transactions, and the table below shows a comparison of premiums paid in the selected transactions over certain time periods to the premium that would be paid to the holders of the Company’s Common Stock based on the Merger Consideration in the Merger.

The analysis indicated the following premiums:

 
Purchase Price Premium
to Share Price
 
One Week Prior
Four Weeks Prior
Selected Transactions
 
 
 
 
 
 
Mean
 
22.4%
 
 
24.8%
 
Median
 
18.9%
 
 
21.0%
 
Company Reference Share Price(1)
$
45.89
 
$
47.09
 
Implied Company Share Price
 
 
 
 
 
 
Mean
$
56.15
 
$
58.76
 
Median
$
54.55
 
$
56.98
 
Valuation Range
$
54.55
 
$
58.76
 
Transaction Offer Premium
 
 
 
 
 
 
Premium to $70.00 per share consideration
 
52.5%
 
 
48.7%
 
(1)Share price timing based on assumed announcement date of October 22, 2018.

The premiums paid analysis showed that the premiums over the market prices for the Company’s Common Stock implied by the Merger Consideration were above the mean and the median range of premiums paid in the selected transactions.

Analysis of Reference Publicly Traded Companies

Western Reserve reviewed publicly available financial and stock market information of the following three public railcar manufacturing and leasing companies (the “Railcar Manufacturing and Leasing Companies”) that Western Reserve in its professional judgment considered generally relevant to the Company for purposes of its financial analyses, and compared such information with similar financial data of the Company provided by the Company’s management to Western Reserve:

Trinity Industries, Inc.
The Greenbrier Companies, Inc.
FreightCar America, Inc.

In its analysis, Western Reserve derived multiples for each of the Railcar Manufacturing and Leasing Companies on a consolidated basis calculated as the enterprise value, defined as the equity value based on the closing stock price on October 19, 2018, plus indebtedness, preferred stock and non-controlling interests (as applicable) less cash and marketable securities, divided by estimated earnings before interest, taxes, depreciation and amortization, and, where applicable, excluding stock-based compensation, and in the case of the Company, excluding stock-based compensation and non-recurring items, or Adjusted EBITDA.

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This analysis indicated the following:

Selected Railcar Manufacturing and Leasing Companies Multiples

Benchmark
High
Low
Selected EV/EBITDA
 
9.5x
 
 
8.0x
 

Using this reference range and the Company’s Adjusted EBITDA for the last twelve months ended June 30, 2018 as provided by the Company’s management, Western Reserve determined the total enterprise value range for the Company below on a consolidated basis.

Benchmark
Multiple Range
Implied Enterprise Value
Reference Range
(Dollar values in millions)
LTM 6/30/18 Adjusted EBITDA
 
8.0x - 9.5x
 
$
1,142.0 - $1,356.2
 

Adjusting the implied equity value portion of the implied enterprise value in the table above to account for a control share premium of 20.0%, Western Reserve determined the implied share price range for the Company as $45.56 to $59.02 per share (representing a corresponding multiple range of 9.0x to 10.8x).

None of the selected public companies are identical to the Company. In evaluating the Railcar Manufacturing and Leasing Companies, Western Reserve made numerous judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the Company’s and Western Reserve’s control. Mathematical analysis, such as determining the median, is not in itself a meaningful method of using the Railcar Manufacturing and Leasing Companies’ data.

Sum-of-the-Parts Analysis

A sum-of-the-parts analysis reviews a business’ operating performance and outlook on a segment-by-segment basis and compares each segment’s performance to a group of publicly traded companies to determine an implied market value for the enterprise as a whole. Western Reserve performed a sum-of-the-parts analysis for the Manufacturing segment and the Leasing segment of the Company.

Manufacturing Segment. Western Reserve reviewed publicly available financial and stock market information of the following ten public manufacturing companies (the “Manufacturing Companies”) that Western Reserve in its professional judgment considered generally relevant to the Company for purposes of its financial analyses, and compared such information with similar financial data of the Company provided by the Company’s management to Western Reserve:

PACCAR Inc.
Navistar International Corporation
Oshkosh Corporation
Terex Corporation
Wabash National Corporation
Federal Signal Corporation
Douglas Dynamics, Inc.
Alamo Group Inc.
The Manitowoc Company, Inc.
Spartan Motors, Inc.

Leasing Segment. Western Reserve reviewed publicly available financial and stock market information of the following eight public leasing companies (the “Leasing Companies”) that Western Reserve in its professional judgment considered generally relevant to the Company for purposes of its financial analyses, and compared such information with similar financial data of the Company provided by the Company’s management to Western Reserve:

Triton International Limited

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GATX Corporation
Textainer Group Holdings Limited
Mobile Mini, Inc.
CAI International, Inc.
McGrath RentCorp
Willis Lease Finance Corporation
General Finance Corporation

Although none of the reviewed companies included in the analyses are identical or directly comparable to the Company’s segments, these companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of the analysis by Western Reserve, were considered by Western Reserve, based on its professional judgments and experience, to be similar to the relevant operating segments of the Company.

Analysis of Reference Publicly Traded Companies

In its analysis, Western Reserve derived multiples for each of the Manufacturing Companies and the Leasing Companies calculated as the enterprise value, defined as the equity value based on the closing stock price on October 19, 2018, plus indebtedness, preferred stock and non-controlling interests (as applicable) less cash and marketable securities, divided by estimated earnings before interest, taxes, depreciation and amortization, and, where applicable, excluding stock-based compensation, and in the case of the applicable operating segment of the Company, excluding stock-based compensation and non-recurring items, or Adjusted EBITDA.

This analysis indicated the following:

Selected Manufacturing Companies and Leasing Companies Multiples

Benchmark
High
Low
Manufacturing - Selected EV/EBITDA
 
10.5x
 
 
9.0x
 
Leasing - Selected EV/EBITDA
 
12.0x
 
 
10.5x
 

Using this reference range and the Company’s Adjusted EBITDA for the last twelve months ended June 30, 2018 as provided by the Company’s management, Western Reserve determined the total enterprise value range for the Company’s operating segments.

Benchmark
Multiple Range
Implied Enterprise Value
Reference Range
(Dollar values in millions)
Manufacturing - LTM 6/30/18 Adjusted EBITDA
 
9.0x - 10.5x
 
$
210.2 - $245.2
 
Leasing - LTM 6/30/18 Adjusted EBITDA
 
10.5x - 12.0x
 
$
1,253.7 - $1,432.8
 

Adjusting the implied equity value portion of the implied enterprise value for each segment in the table above to account for a control share premium of 20.0%, Western Reserve determined an implied multiple range of 10.8x to 12.6x for the Company’s manufacturing segment and an implied multiple range of 11.9x to 13.7x for the Company’s leasing segment.

Analysis of Reference Precedent Transactions

Western Reserve reviewed, among other things, financial data to the extent available relating to nine selected transactions in the manufacturing sector and eight selected transactions in the leasing sector announced since August 2014 listed below that Western Reserve in its professional judgment considered generally relevant to the Company for the purposes of its financial analyses, which we refer to as the “selected transactions”.

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Manufacturing Selected Transactions

Month and Year Announced
Acquirer
Target
August 2017
Wabash National Corporation
Supreme Industries, Inc.

June 2017

Worthington Steel of Michigan, Inc.

AMTROL Inc.

May 2017

Federal Signal Corporation

Truck Bodies & Equipment International, Inc.

July 2016

Komatsu America Corp.

Joy Global Inc.

May 2016

Konecranes PLC

Terex Corporation, Material Handling and Port Solutions business

December 2015

American Securities

Blount International Inc.

November 2015

TransDigm Group Incorporated

Breeze-Eastern Corporation

July 2015

Westinghouse Air Brake Technologies Corporation

Faiveley Transport S.A.

August 2014

Compressco Partners Sub, Inc.

Compressor Systems, Inc.

Leasing Selected Transactions

Month and Year Announced
Acquirer
Target
September 2018

United Rentals, Inc.

BlueLine Rental

July 2018

United Rentals, Inc.

BakerCorp International Holdings, Inc.

August 2017

Double Eagle Acquisition Corp.

Williams Scotsman, Inc.

August 2017

United Rentals, Inc.

Neff Corporation

July 2017

General Finance Corporation

Royal Wolf Holdings Limited
October 2016
Avolon Holdings Limited
C2 Aviation Capital, Inc.

July 2016

Triton Container International Limited

Tal International Group

November 2014

Mobile Mini, Inc.

Evergreen Tank Solutions

In its analysis, Western Reserve derived multiples for each of the selected transactions, calculated as the enterprise value defined as the equity value based on the closing stock price on October 19, 2018, plus indebtedness, preferred stock and non-controlling interests (as applicable) less cash and marketable securities, divided by estimated earnings before interest, taxes, depreciation and amortization, and, where applicable, excluding stock-based compensation, and in the case of the Company, excluding stock-based compensation and non-recurring items, or Adjusted EBITDA.

This analysis indicated the following:

Selected Transactions Multiples

Benchmark
High
Low
Manufacturing - EV/EBITDA
 
10.5x
 
 
9.0x
 
Leasing - EV/EBITDA
 
10.0x
 
 
8.5x
 

Using these reference ranges and the Company’s Adjusted EBITDA for the last twelve months ended June 30, 2018 as provided by the Company’s management, Western Reserve determined the total enterprise value range for each of the Company’s operating segments.

Benchmark
Multiple Range
Implied Enterprise Value
Reference Range
(Dollar values in millions)
Manufacturing - LTM 6/30/18 Adjusted EBITDA
 
9.0x - 10.5x
 
$
210.2 - $245.2
 
Leasing - LTM 6/30/18 Adjusted EBITDA
 
8.5x - 10.0x
 
$
1,014.9 - $1,194.0
 

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Based on this analysis, Western Reserve determined an implied multiple range of 9.0x to 10.5x for the Company’s manufacturing segment and an implied multiple range of 8.5x to 10.0x for the Company’s leasing segment.

No transaction selected by Western Reserve for its analysis is identical to the Merger. In evaluating the Merger, Western Reserve made numerous judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the Company’s and Western Reserve’s control. Mathematical analysis, such as determining the median, is not in itself a meaningful method of analyzing transaction data.

Taking into account the implied multiples of reference public companies and reference M&A transactions as described above and selected by Western Reserve in its professional judgment, the selected multiple range of the manufacturing segment was determined to be 9.9x to 11.5x and the selected multiple range of the leasing segment was determined to be 10.2x to 11.8x, representing an implied enterprise valuation range of $230.8 million to $269.4 million for the manufacturing segment and $1,217.5 to $1,414.5 million for the leasing segment. Based on this analysis, Western Reserve calculated and an implied per share price range for the Company’s Common Stock of $54.03 to $66.37. Western Reserve compared the implied per share price range to the Company’s closing price per share of $46.29 on October 19, 2018 and the Merger Consideration of $70.00 per share.

Discounted Cash Flow Analysis

Western Reserve performed a discounted cash flow analysis on a consolidated basis to estimate the intrinsic value of the Company as of June 30, 2018 based on the sum of the present values of the Company’s (i) unlevered free cash flows through the fiscal year ending 2028 using financial forecasts provided by the Company’s management and (ii) a projected terminal value based on using the exit multiple approach. The terminal value of the Company was calculated by applying to the Company’s calendar year ending December 31, 2028 estimated EBITDA provided by the Company’s management a multiple of 10.5x. The present value of the free cash flows was then calculated using discount factors ranging from 0.3926 to 0.9769, which were based on the estimated weighted average cost of capital for the Company. The present value of the terminal value of the Company was calculated using a discount factor of 0.3747. This analysis indicated reference range per share of Common stock of $51.33 to $65.57 per share, compared to the $70.00 per share in cash consideration to holders pursuant to the Merger.

Additional Information

For reference purposes only and not as a component of its fairness analysis, Western Reserve reviewed the historical low and high closing prices of the shares of the Company’s Common Stock during the 52-week period prior to October 19, 2018, noting that the low and high closing prices during such period ranged from $35.71 per share to $47.50 per share of the Company’s Common Stock, as compared to the Merger Consideration in the Merger of $70.00 per share and the closing price per share as of October 19, 2018 of $46.29. The Merger Consideration represents a premium of 96.0% to such 52-week low price, 47.4% to such 52-week high price and 51.2% to the closing price on October 19, 2018.

General

Western Reserve was selected by the Company based on Western Reserve’s qualifications, expertise and reputation. Western Reserve is a widely recognized investment banking and advisory firm. Western Reserve, as part of its investment banking business, is regularly engaged in the valuation of businesses and securities in connection with public offerings, private placements, business combinations and similar transactions, financial restructurings and other financial services. Western Reserve’s opinion has been approved by the Valuation and Fairness Opinion Committee of Western Reserve.

Western Reserve will receive a customary fee from the Company for its services related to the delivery of Western Reserve’s opinion. Western Reserve did not serve as a financial advisor to the Company in connection with the Merger and therefore will not receive a separate fee from the Company for any such services. The Company has also agreed to indemnify Western Reserve against certain liabilities, including liabilities under the federal securities laws. During the two years preceding the date of rendering its opinion, Western Reserve has not been engaged by the Board as financial advisor in any other matters.

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Interest of Certain Persons in Matters to Be Acted Upon

In considering our Board of Directors’ recommendations with respect to the Merger, you should be aware that the Company’s officers and directors might have interests in the Merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. These additional interests are described below and under “Arrangements in Connection with a Change in Control.” The Board of Directors was aware of these interests and considered them, among other matters, when it approved the Merger Agreement, and the transactions contemplated thereby, including the Merger.

Insight Portfolio Group LLC

Insight Portfolio Group LLC (“Insight Portfolio Group”) is an entity formed and controlled by Mr. Icahn in order to maximize the potential buying power of a group of entities with which Mr. Icahn has a relationship in negotiating rates with a wide range of suppliers of goods, services and tangible and intangible property. The Company along with a number of other entities with which Mr. Icahn has a relationship acquired a minority equity interest in Insight Portfolio Group and has agreed to pay a portion of Insight Portfolio Group’s operating expenses. The Company may purchase a variety of goods and services as a member of the buying group at prices and on terms that the Company believes are more favorable than those which would be achieved on a stand-alone basis. Since March 2010, Mr. Yevgeny Fundler, Senior Vice President, General Counsel and Secretary of the Company, has consulted for Insight Portfolio Group as its general counsel. In 2017, the Company paid approximately $0.2 million in fees to Insight Portfolio Group. Prior to the closing of the transactions contemplated by the Merger Agreement, the Company will take all actions necessary to terminate its relationship with Insight Portfolio Group by distributing its interest in Insight Portfolio Group to IEH or otherwise disposing of such interest.

Prior Relationships Between the Company and Mr. Unger

Mr. James Unger is currently a Managing Director of ITE Management. From March 1995 to April 2009, Mr. Unger served as the Company’s president and chief executive officer, and served on the Company’s Board of Directors from March 1995 until April 2009. On April 1, 2009, Mr. Unger resigned as the Company’s president and chief executive officer and was appointed as vice chairman of the Company’s Board of Directors. On September 30, 2013, Mr. Unger resigned from the Company’s Board of Directors. In addition, (i) since June 2003, Mr. Unger has served as president of Ohio Castings Company, LLC, a joint venture in which the Company has an interest; (ii) from July 2007 to August 2010, Mr. Unger served on the executive committee of Axis, LLC, the axle manufacturing joint venture in which the Company has a 41.9% interest; and (iii) from 2008 to August 2010, Mr. Unger served on the board of directors of Amtek Railcar Industries Private Limited, the Indian joint venture in which the Company previously had an interest. Mr. Unger’s son, Steven Unger, is currently the Company’s Chief Commercial Officer. Mr. Steven Unger did not participate in the negotiations of the Merger Agreement or the transactions contemplated thereby. In addition, the Company’s headquarters facility in St. Charles, Missouri is owned by St. Charles Properties, an entity controlled by Mr. Unger. Except as set forth in this information statement, the Company does not have any existing relationships with ITE Management or Mr. Unger. Following the closing of the transactions contemplated by the Merger Agreement, Mr. Unger is anticipated to serve as a non-executive Chairman of the Company.

Directors’ and Officers’ Indemnification and Insurance

The Merger Agreement provides that for six (6) years from and after the Effective Time, Parent will maintain in effect directors’ and officers’ liability insurance and fiduciary liability insurance coverage for events occurring prior to the closing of the Merger covering those persons that are directors and officers of the Company as of the date of the Merger Agreement and as of the closing of the Merger. The insurance coverage must be on terms substantially equivalent to and no less favorable in the aggregate than the existing directors’ and officers’ liability insurance and fiduciary liability insurance maintained by the Company or, if no such insurance coverage is available, the best coverage that is then available; provided, however, that Parent will not be required to pay an annual premium in excess of 300% of the last annual premium paid by the Company prior to the date of the Merger Agreement.

Prior to the Effective Time, the Company intends to purchase prepaid “tail” policies which will provide coverage to directors and officers of the Company for an aggregate period of six (6) years with respect to claims arising from facts or events that occurred on or before the Effective Time, including in respect of the Merger Agreement or the transactions contemplated by the Merger Agreement. Such policies will satisfy Parent’s obligations described in the immediately preceding paragraph.

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The Merger Agreement provides that, following the Effective Time, Parent will cause the surviving corporation to indemnify, defend and hold harmless all past and present directors and officers of the Company or any of the Company’s subsidiaries to the fullest extent provided in the Company’s charter, Bylaws or similar organizational documents of any subsidiary of the Company or any indemnification contract of the Company or any of its subsidiaries in effect as of the date of the Merger Agreement, for actions or omissions occurring at or prior to the Effective Time, including in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement.

Arrangements in Connection with a Change in Control

The Company does not have any employment agreements or other arrangements with its employees, including its named executive officers, providing for payments upon termination or in connection with a change in control.

Pursuant to the terms of the Merger Agreement, at the Effective Time, each vested stock appreciation right granted under the Company’s 2005 Equity Incentive Plan, as amended and restated, that is outstanding and unexercised immediately prior to the Effective Time, or “Company SARs,” will be cancelled in exchange for the right to receive from Parent or its subsidiaries (including the Company as the surviving corporation in the Merger) a lump sum cash payment, without interest and less applicable taxes required to be withheld with respect to such payment, equal to, with respect to the portion, if any, of each Company SAR that is vested in accordance with its terms at or prior to the closing of the Merger (the “vested SAR portion”), the product of (i) the excess, if any, of (A) the Merger Consideration over (B) the exercise or base price per share of Common Stock subject to such vested SAR portion and (ii) the total number of shares of Common Stock underlying such vested SAR portion. The payment will be made on the first regularly scheduled payroll date occurring more than five (5) business days after the Effective Time.

Any Company SAR which has an exercise or base price per share of Common Stock that is greater than or equal to the per share Merger Consideration and any Company SAR (or any portion thereof) that is unvested in accordance with its terms at the closing of the Merger will be cancelled at the Effective Time for no consideration or payment.

Certain individuals who have served as directors and officers of the Company since the beginning of the 2018 fiscal year, including the Company’s named executive officers, will receive a lump sum cash payment calculated as described above in exchange for the cancellation of the Company SARs that they hold as of the Effective Time to the extent that their Company SARs have an exercise or base price per share of Common Stock that is less than the per share Merger Consideration.

Golden Parachute Compensation

None of the Company’s named executive officers will receive any compensatory payments or benefits that constitute “golden parachute” payments within the meaning of Item 402(t) of Regulation S-K. As described above, in connection with the Merger, each named executive officer will receive a lump sum cash payment in exchange for the cancellation of Company SARs that they hold as of the Effective Time to the extent that their Company SARs have an exercise or base price per share of Common Stock that is less than the per share Merger Consideration.

Material U.S. Federal Income Tax Consequences

The following is a summary of the material U.S. federal income tax consequences of the Merger to holders (other than IEH) whose shares of Common Stock are converted into the right to receive the Merger Consideration in the Merger, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the Code, temporary and final Treasury regulations promulgated thereunder, judicial decisions and administrative rulings and practice, all as in effect as of the date hereof, all of which are subject to change (possibly with retroactive effect). This discussion does not address aspects of U.S. federal taxation other than income taxation, nor does it address aspects of U.S. federal income taxation that may be applicable to particular stockholders, such as stockholders who are dealers in securities, traders in securities that elect to use a mark to market method of accounting, insurance companies, tax-exempt organizations, financial institutions, regulated investment companies, real estate investment trusts, S corporations, individual retirement or other tax-deferred accounts, corporations that accumulate earnings to avoid U.S. federal income tax, controlled foreign corporations, passive foreign investment companies, stockholders who hold their shares of Common Stock as part of a straddle, hedge, conversion, synthetic security or constructive sale transaction for U.S. federal income tax purposes, stockholders who hold shares of Common Stock that may constitute Section 306 stock, stockholders that are accrual method taxpayers

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for U.S. federal income tax purposes and are required to accelerate the recognition of any item of gross income with respect to the shares as a result of such income being recognized on an applicable financial statement, United States expatriates and former long-term residents, U.S. Holders (as defined below) who have a functional currency other than the U.S. dollar, stockholders subject to the alternative minimum tax, stockholders who will actually or constructively (under the rules of Section 318 of the Code) own any stock of Parent following the Merger, or stockholders who acquired their shares of Common Stock in a compensation transaction.

This summary is limited to persons that hold their shares of Common Stock as a “capital asset” within the meaning of Section 1221 of the Code. This discussion does not address any state, local, non-income or foreign tax consequences. There can be no assurance that the Internal Revenue Service (“IRS”) will not challenge the analysis or conclusions reached in this section, and no ruling from the IRS has been or will be sought on the transaction described herein or on any of the issues discussed below.

This summary is of a general nature only and is not intended to be legal or tax advice to either U.S. Holders or Non-U.S. Holders. Beneficial owners of shares of Common Stock are, therefore, urged to consult their own tax advisors as to the particular tax consequences applicable to them of exchanging their shares of Common Stock pursuant to the Merger, including the applicability of U.S. federal, state or local tax laws or non-U.S. or non-income tax laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.

This summary also does not address the tax consequences to holders of shares of Common Stock who exercise appraisal rights under the NDBCA.

The U.S. federal income tax consequences set forth below are included for general informational purposes only and are based upon current law as of the date hereof. Because individual circumstances may differ, each holder of Common Stock should consult such holder’s own tax advisor to determine the applicability of the rules discussed below to such holder and the particular tax effects of the Merger, including the application and effect of state, local, foreign income and other tax laws.

For purposes of this information statement, the term “U.S. Holder” means a beneficial owner of shares of Common Stock that, for U.S. federal income tax purposes, is:

(a)an individual who is a citizen or resident of the United States;
(b)a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state of the United States or the District of Colombia;
(c)an estate, the income of which is subject to federal income taxation regardless of source; or
(d)a trust (i) if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons have the authority to control all substantial decisions of such trust or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.

A “Non-U.S. Holder” is a beneficial holder of shares of Common Stock other than a U.S. Holder.

If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) is the beneficial holder of shares of Common Stock, the tax treatment of a partner in such partnership will depend upon the status of the partner and the activities of the partnership. Partners in such a partnership should consult their tax advisors as to the particular tax considerations applicable to them.

U.S. Holders

Disposition of Shares Pursuant to the Merger

Although not free from doubt, the Company intends to take the position that for U.S. federal income tax purposes the holders of our Common Stock will be treated as selling all of their shares of our Common Stock in exchange for cash in the Merger.

A U.S. Holder will recognize gain or loss on the disposition of its shares of Common Stock in the Merger. Gain or loss must be calculated separately for each block of shares of Common Stock (that is, shares of Common Stock acquired at the same cost in a single transaction) exchanged for cash in the Merger. The amount of gain or loss realized with respect to each block of shares of Common Stock generally will equal the difference between the amount of cash received for the Common Stock and the U.S. Holder’s adjusted tax basis in the shares. A U.S. Holder’s adjusted tax basis in a share of Common Stock generally will be equal to the amount the U.S. Holder paid

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for the share of Common Stock. Any gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder has held the shares of Common Stock for more than one year on the disposition date. Otherwise, such gain or loss will be short-term capital gain or loss. Long-term capital gains recognized by certain non-corporate U.S. Holders, including individuals, generally will be taxable at a reduced rate. The deductibility of capital losses is subject to limitations.

Medicare Tax

Certain U.S. Holders, including individuals, estates and trusts, may be subject to an additional 3.8% “Medicare” tax on capital gain, if any, realized on the sale of their shares of Common Stock. For individuals, the additional “Medicare” tax applies to the lesser of (i) net investment income or (ii) the excess of modified adjusted gross income over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). If you are a U.S. Holder that is an individual, estate or trust, you must consult your tax advisors regarding the applicability of the “Medicare” tax to you.

Information Reporting and Backup Withholding

Information returns may be required to be filed with the IRS relating to payments made to particular U.S. Holders. In addition, U.S. Holders may be subject to a backup withholding tax on such payments if they do not provide their taxpayer identification numbers in the manner required, or otherwise fail to comply with applicable backup withholding tax rules. Any amounts withheld under the backup withholding rules will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the recipient to a refund provided the required information is timely furnished to the IRS.

Non-U.S. Holders

A Non-U.S. Holder will generally not be subject to U.S. federal income tax on gain recognized on its shares of Common Stock pursuant to the Merger unless:

The gain, if any, on such shares is effectively connected with a trade or business of the Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to the Non-U.S. Holder’s permanent establishment in the United States);
The Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the Merger and certain other conditions are met; or
The Non-U.S. Holder owned, directly or under certain constructive ownership rules of the Code, more than 5% of our Common Stock at any time during the five-year period preceding the Merger (or, if less than five years, its holding period for such stock), and the Company is or has been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the five-year period preceding the Merger (or, if less than five years, such Non-U.S. Holder’s holding period for such stock).

A Non-U.S. Holder described in the first bullet point immediately above will be subject to regular U.S. federal income tax on any gain realized as if the Non-U.S. Holder were a U.S. Holder, subject to any applicable income tax treaty providing otherwise. If such Non-U.S. Holder is a foreign corporation for U.S. federal income tax purposes, then any gain described in the first bullet above may also be subject to an additional “branch profits tax” at a 30% rate (or a lower treaty rate).

With regard to the second bullet point immediately above, any foreign individuals who are present in the United States for 183 days or more in the taxable year of the Merger will be subject to tax at a rate of 30% (or a lower treaty rate) on any capital gain realized, which may be offset by certain U.S.-source capital losses recognized in the same taxable year.

With regard to the third bullet point immediately above, the Company believes that it has not been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the five-year period preceding the Merger. As a result, a Non-U.S. Holder described solely in the third bullet point immediately above (and not described in the first or second bullet point immediately above) should not be subject to U.S. federal income tax on any gain recognized on its shares of Common Stock pursuant to the Merger.

Information Reporting and Backup Withholding

We intend to apply U.S. information reporting and backup withholding (at a current rate of 24%) with respect to payments a Non-U.S. Holder receives pursuant to the Merger, as applicable, unless such Non-U.S. Holder (i) is

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an exempt recipient and, when required, demonstrates this fact, or (ii) provides a certificate (e.g., IRS Form W-8BEN or IRS Form W-8BEN-E) as to its non-U.S. status. Any amounts withheld under the backup withholding rules will be allowed as a credit against the Non-U.S. Holder’s U.S. federal income tax liability and may entitle the recipient to a refund provided the required information is timely furnished to the IRS.

Regulatory and Other Governmental Approvals

The Merger Agreement provides that each of the parties must use its reasonable best efforts to obtain all necessary actions, waivers, consents, approvals, orders, and authorizations from all applicable governmental entities, including, without limitation, those in connection with the HSR Act.

Antitrust/HSR

The Merger is subject to review by the U.S. Antitrust Division of the Department of Justice (the “Antitrust Division”) and the U.S. Federal Trade Commission (the “FTC”) under the HSR Act. The HSR Act provides that transactions like the Merger may not be completed until certain information and documents have been submitted to the Antitrust Division and the FTC and the applicable waiting period has expired or been terminated. On October 23, 2018, each of Parent and the Company made the requisite filings with the Antitrust Division and the FTC pursuant to the HSR Act and requested early termination of the initial thirty-day waiting period, which the FTC granted on November 2, 2018.

The FTC and the Antitrust Division frequently scrutinize the legality of transactions like the Merger. At any time before or after the consummation of the Merger, notwithstanding the early termination of the applicable waiting period under the HSR Act, the FTC or the Antitrust Division could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Merger or seeking a divestiture of a substantial portion of the Company’s assets or seeking other conduct relief. At any time before or after the consummation of the Merger, and notwithstanding the early termination of the applicable waiting period under the HSR Act, any state or private party could seek to enjoin the consummation of the Merger or seek other structural or conduct relief or damages.

Market Price of Our Stock; Effect on Trading Market; Delisting and Deregistration of Common Stock

Shares of the Company’s Common Stock are listed on the NASDAQ under the symbol “ARII.” The closing sale price of the Common Stock on the NASDAQ on October 19, 2018, which was the last trading day before we announced the Merger, was $46.26. On November 5, 2018, the last practicable trading day before the date of this information statement, the closing price of Common Stock on the NASDAQ was $70.45. You are encouraged to obtain current market prices for the Company’s Common Stock.

If the Merger is completed, the Common Stock will no longer be listed on the NASDAQ. In addition, the registration of the Common Stock under Section 12 of the Exchange Act will be terminated, and we will no longer file periodic reports with the SEC on account of the Common Stock.

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MERGER AGREEMENT

The summary of the material provisions of the Merger Agreement set forth below and elsewhere in this information statement is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached as Annex A to this information statement, and which is incorporated by reference into this information statement. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. We encourage you to read the Merger Agreement carefully in its entirety, as well as this information statement and any documents incorporated herein by reference.

The Merger

On October 22, 2018, the Company entered into a Merger Agreement with Parent, pursuant to which Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation in the Merger. Following the consummation of the Merger, the Company will be a wholly-owned subsidiary of Parent.

Subject to the terms of the Merger Agreement, at the Effective Time, each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than (i) shares of Common Stock held by Parent, Merger Sub or any of their respective subsidiaries, (ii) shares of Common Stock owned by the Company or the Company’s subsidiaries, or (iii) shares of Common Stock owned by holders who have properly exercised appraisal rights under North Dakota law) will be cancelled and converted automatically into the right to receive the per share Merger Consideration, or $70.00 per share of Common Stock, which is payable in cash. The aggregate Merger Consideration to be received by the stockholders of the Company will be approximately $1.34 billion. The Merger Consideration may be increased in the event that interest is determined to be payable as a result of Parent’s failure to timely deposit funds into escrow.

Directors and Officers; Articles of Incorporation; Bylaws

The board of directors of the surviving corporation will consist of the directors of Merger Sub or such other individuals designated by Parent to hold office from and after the Effective Time until their resignation or removal or until their respective successors have been duly elected and qualified.

The officers of Merger Sub immediately prior to the Effective Time or such other individuals designated by Parent as of the Effective Time will become the officers of the surviving corporation, each to hold office in accordance with the Articles of Incorporation and Bylaws of the surviving corporation until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Articles of Incorporation and Bylaws of the surviving corporation.

The Articles of Incorporation of the surviving corporation will be amended in the Merger to be in the form of the Articles of Incorporation attached as Exhibit C to the Merger Agreement, until thereafter changed or amended as provided therein or by applicable law. The Bylaws of Merger Sub in effect immediately prior to the Effective Time will be the Bylaws of the surviving corporation, and as so amended shall be the Bylaws of the surviving corporation until thereafter changed or amended as provided therein or by applicable law. A copy of the Bylaws is attached as Exhibit D to the Merger Agreement.

Stockholders Seeking Appraisal

The Merger Agreement provides that those stockholders who are entitled to demand, and who have properly demanded, payment for and appraisal of their shares will not have the right to receive a portion of the Merger Consideration for their shares of Common Stock, but will receive payment in cash for the fair value of their shares of Common Stock as determined in accordance with North Dakota law. If a holder fails to perfect, waives, withdraws or loses his, her or its right to appraisal of our Common Stock, his, her or its shares will be treated as if they had been converted into and are exchangeable for their share of the Merger Consideration as of the Effective Time without interest and the stockholder’s right to appraisal will be extinguished. The Company must give Parent prompt notice of demands for appraisal and the Company may not make a payment with respect to a demand for appraisal or settle any such demands without Parent’s prior written consent.

The fair value of shares of our Common Stock as determined in accordance with North Dakota law may be more or less than (or the same as) the Merger Consideration to be paid to stockholders who choose not to exercise their appraisal rights. Stockholders who wish to exercise appraisal rights must precisely follow specific procedures. Under

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Section 10-19.1-88 of the NDBCA, holders of shares of the Company’s Common Stock who are entitled to appraisal rights must be provided a notice of appraisal rights. The record date for purposes of determining the stockholders entitled to receive the notice of appraisal rights is October 22, 2018. As of October 22, 2018, there were 19,083,878 shares of the Company’s Common Stock outstanding.

Stockholders who wish to exercise appraisal rights must make a written demand for payment and appraisal on or prior to December 7, 2018, which is the date that is thirty (30) days following the mailing of this information statement, and otherwise comply precisely with the procedures set forth in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA for perfecting appraisal rights. Additional details on appraisal rights are described in “Appraisal Rights” beginning on page 57.

Procedures for Receiving Merger Consideration

As soon as practicable after the Effective Time (and in no event later than three (3) Business Days after the Effective Time), the surviving corporation will cause a paying agent to mail to each holder of record of certificated shares of Common Stock (as of immediately prior to the Effective Time) a letter of transmittal and instructions as to how to surrender such holder’s stock certificates in exchange for the Merger Consideration.

Upon surrender of such certificates to the paying agent (or delivery of an affidavit of loss thereof in accordance with the Merger Agreement), together with delivery of a duly executed and completed letter of transmittal, and such other documents as may be reasonably required by the paying agent, the holder of such certificates will be entitled to receive the per share Merger Consideration for each share of Common Stock formerly represented by such certificate, and the surrendered certificate will be immediately canceled. No interest will be paid or accrued on the cash payable upon surrender of such certificates.

If any portion of the Merger Consideration is to be paid to a person other than the person in whose name the surrendered certificate is registered, it will be a condition to such payment that (i) either such certificate be properly endorsed or otherwise be in proper form for transfer and (ii) the person requesting such payment will pay to the paying agent any transfer or other tax required as a result of such payment and establish to the satisfaction of Parent and the surviving corporation that such tax has been paid or is not required to be paid.

Parent, Merger Sub, the surviving corporation and the paying agent, as the case may be, will be entitled to deduct and withhold from any amounts otherwise payable pursuant to the Merger Agreement, such amounts as are required to be deducted and withheld pursuant to any applicable tax laws.

Holders of record of book-entry shares will not be required to deliver a certificate or an executed letter of transmittal to the paying agent to receive the Merger Consideration. In lieu thereof, such holder will, upon receipt by the paying agent of an “agent’s message” in customary form, be entitled to receive the Merger Consideration, as promptly as practicable after the Effective Time without any further action required on the part of those holders, and such book-entry shares will be cancelled. No interest will be paid or accrued on the cash payable upon surrender or transfer of such book-entry shares.

Representations and Warranties

The parties to the Merger Agreement have made certain customary representations and warranties, including representations and warranties relating to, among other things:

organization, good standing and similar matters;
due authorization, execution, delivery and enforceability of the Merger Agreement;
absence of conflicts with the parties’ governing documents, applicable laws and contracts; and
absence of brokers,’ finders’ and investment bankers’ fees or commissions.

In addition, the Merger Agreement contains the following customary representations and warranties made by the Company to Parent and Merger Sub, including representations and warranties relating to:

absence of pending or, to the knowledge of the Company, threatened litigation against the Company or any of its subsidiaries or any of their respective properties by or before any governmental entity that would, individually or in the aggregate, reasonably be expected to be material to the Company and its subsidiaries, taken as a whole;

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since January 1, 2016, the absence of any written challenge or question by a governmental entity as to the legal right of the Company or any of its subsidiaries to conduct its operations as presently or previously conducted that would, individually or in the aggregate, reasonably be expected to be material to the Company and its subsidiaries, taken as a whole;
absence of any judgment, order, writ, injunction, rule or decree of any governmental entity to which the Company or any of its subsidiaries or any of their respective properties is or are subject to that would, individually or in the aggregate, reasonably be expected to be material to the Company and its subsidiaries, taken as a whole;
ownership of the Company’s subsidiaries;
ownership and operations of the Company;
outstanding Company SARs;
documents filed with the SEC, compliance with applicable SEC filing requirements and accuracy of information contained in such documents;
compliance of financial statements with applicable accounting requirements and SEC rules and regulations and preparation in accordance with the United States generally accepted accounting principles, and the absence of certain undisclosed liabilities;
since January 1, 2018, the absence of any event, development or state of circumstances that, individually or in the aggregate, has had a Company Material Adverse Effect;
the vote of the Company’s stockholders required to approve the Merger Agreement and the ancillary agreements and transactions contemplated thereby, including the Merger;
compliance with laws, including the Foreign Corrupt Practices Act of 1977, as amended, and other anticorruption and trade laws;
filing of tax returns, payment of taxes and other tax matters;
employee benefits matters and labor matters;
environmental matters;
material contracts;
insurance;
real property and personal property;
ownership and use of intellectual property;
transactions with affiliates;
inapplicability of certain takeover laws;
allegations of sexual harassment;
certain joint ventures to which the Company is a party;
rolling stock and railcars (or interests therein) owned or leased by or on behalf of the Company and its subsidiaries; and
material railcar lease agreements.

The Merger Agreement also contains the following customary representations and warranties of Parent and Merger Sub, among others:

the absence of any pending or, to the knowledge of Parent, threatened litigation or other action or proceeding against Parent or Merger Sub or any of their respective properties by or before any governmental entity that would reasonably be expected to have a Parent Material Adverse Effect;
the absence of any outstanding judgment, order, injunction, rule or decree of any governmental entity against Parent or Merger Sub that would reasonably be expected to have a Parent Material Adverse Effect;

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the existence of financing commitments and sufficiency of funds necessary to consummate the Merger;
the solvency of Parent; and
the formation of Merger Sub solely for the purpose of the transactions contemplated by the Merger Agreement.

Certain of the representations and warranties in the Merger Agreement are qualified as to “materiality” or “Company Material Adverse Effect.” The Merger Agreement provides that a Company Material Adverse Effect means any effect, development, event, occurrence, fact, condition or change that, individually or in the aggregate, is or would reasonably be expected to become materially adverse to (a) the ability of the Company to consummate the transactions contemplated by the Merger Agreement, including the Merger, on a timely basis, or (b) the business, results of operations, condition (financial or otherwise) or assets of the Company and its subsidiaries, taken as a whole; provided, however, that “Company Material Adverse Effect” shall not include any effect, development, event, occurrence, fact, condition or change, arising out of or attributable to:

(i)general economic or political conditions in the United States;
(ii)conditions generally affecting the industries in which the Company or its subsidiaries operate;
(iii)any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates;
(iv)acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof;
(v)any actions required to be taken to obtain any approval or authorization under the HSR Act;
(vi)any action expressly required by the Merger Agreement or any action taken (or omitted to be taken) at the written request of Parent;
(vii)any changes in applicable laws or accounting rules (including GAAP) or the enforcement, implementation or interpretation thereof;
(viii)the announcement, pendency or completion of the transactions contemplated by the Merger Agreement, including the initiation of litigation by any person who is not party to the Merger Agreement, and including losses or threatened losses of employees, customers, suppliers, distributors, partners or others having relationships with the Company or its subsidiaries;
(ix)any natural disaster or act of God;
(x)certain specified regulatory matters; or
(xi)any failure by the Company or its subsidiaries to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failure (subject to the other provisions of the definition of “Company Material Adverse Effect”) shall not be excluded).

Any Company Material Adverse Effect arising out of or resulting from any event, occurrence, fact, condition or change referred to in clauses (i) - (iv) and (vii) may constitute, and will be taken into account in determining the occurrence of, a Company Material Adverse Effect only to the extent the impact of such event, occurrence, fact, condition or change is disproportionally adverse to the Company and its subsidiaries, taken as a whole, relative to other companies in the industries and geographic locations in which the Company and its subsidiaries operate.

Conduct of Business by the Company Prior to Consummation of the Merger

The Company agrees that prior to the Effective Time, except (i) to the extent required by applicable law, (ii) as otherwise expressly required by any other provision of the Merger Agreement or the ancillary agreements, or expressly required or permitted by the Company Disclosure Letter or (iii) with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its subsidiaries to, (A) conduct its operations only in the ordinary course of business and (B) use its commercially reasonable efforts to keep available the services of the current officers, employees and consultants of the Company and each of its subsidiaries and to preserve the goodwill and current relationships of the Company and each of its subsidiaries with customers, suppliers and other persons with which the Company or any of its subsidiaries has business relations.

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Further, the Company agrees that until the Effective Time, it will not, and will not permit any of its subsidiaries to, directly or indirectly, take any of the following actions without the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed in the case of certain actions):

amend or otherwise change or waive any provision of its organizational documents;
issue, sell, pledge, dispose of, grant, transfer or encumber any shares of capital stock of, or other equity interests in, the Company or any of its subsidiaries of any class, or securities convertible into, or exchangeable or exercisable for, any shares of such capital stock or other equity interests, or grant to any person any options, warrants or other rights of any kind to acquire any shares of such capital stock or other equity interests or such convertible or exchangeable securities of the Company or any of its subsidiaries;
subject to certain exceptions, sell, pledge, dispose of, transfer, encumber or otherwise impose any lien on any unit of rolling stock or railcar asset included on the Railcar Tape (as defined in the Merger Agreement) or otherwise leased by the Company or any of its subsidiaries as lessor, or sell, pledge, dispose of, transfer, lease, license, guarantee or encumber or otherwise impose any lien on any other property or assets of the Company or any of its subsidiaries;
subject to certain exceptions, declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or otherwise) with respect to any of the Company’s capital stock or other equity interests;
reclassify, combine, split, subdivide or amend the terms of, or redeem, purchase or otherwise acquire, directly or indirectly, any of the Company’s capital stock or other equity interests;
merge or consolidate the Company or any of its subsidiaries with any person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries;
acquire (including by merger, consolidation, acquisition of stock or assets or otherwise) any person (or any business line or division thereof) or assets, other than acquisitions of inventory and materials in the ordinary course of business or capital expenditures expressly permitted by the Company Disclosure Letter;
other than extensions of credit to customers in the ordinary course of business, including leases of railcars in the ordinary course of business and to the extent required to avoid an event of default under the Longtrain III Facility, make any loans, advances or capital contributions to, or investments in, any other person;
incur any indebtedness, issue any debt securities or guarantee any obligation of any person, other than (A) interest or fees incurred or accrued under the Company’s credit facilities or the Longtrain III Facility or (B) in connection with letters of credit or bonds issued by, or at the request of, the Company or one of its subsidiaries to governmental entities in the ordinary course of business and in connection with workers compensation laws;
subject to certain exceptions, terminate, cancel or renew, or agree to any material amendment to, any material contract, or enter into or amend any contract that, if existing on the date of the Merger Agreement, would be a material contract;
make (A) capital expenditures in 2018 in excess of the Company’s capital expenditure budget for 2018 or (B) capital expenditures in 2019 in excess of 125% of the capital expenditure budget for 2018 multiplied by the number of months then elapsed in 2019;
except to the extent required by the existing terms of the Company’s employee benefit plans existing on the date of the Merger Agreement: (A) increase or commit to increase the compensation or benefits payable or to become payable to any employee, independent contractor, director or officer of the Company or its subsidiaries; (B) enter into, establish, adopt, or become obligated to contribute to any new arrangement that if in effect on the date of the Merger Agreement would be a Company benefit plan or materially amend any of the Company’s benefit plans; (C) pay or award, or commit to pay or award, any bonuses or incentive compensation, or take any action to accelerate any rights or benefits or take any action to fund or in any other way secure the payment of compensation or benefits under any compensation or benefit plan; (D) grant any equity-based or equity-linked awards; (E) enter into, renew or renegotiate the terms of, any

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collective bargaining agreement, or any works council, labor union or similar agreement or arrangement or become obligated to contribute to any multiemployer benefit plan; (F) terminate, promote or change the title of any employee or other service provider (retroactively or otherwise) with annual compensation in excess of $100,000; or (G) hire or make an offer to hire any new employee, officer, director or individual consultant with annual compensation in excess of $100,000 (subject to certain exceptions);

make any material change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP or by a governmental entity;
compromise, settle or agree to settle any proceeding other than (A) compromises, settlements or agreements of proceedings (excluding litigation relating to the Merger Agreement and the transactions contemplated thereby, including the Merger) in the ordinary course of business that involve only the payment of monetary damages without the imposition of equitable relief on, or the admission of wrongdoing by, the Company or any of its subsidiaries and such monetary damages are within the respective deductible provided by the applicable insurance policy held by the Company or its subsidiary, as applicable, or (B) accommodations made to lessees or obligors under lease agreements in the ordinary course of business that are not, individually or in the aggregate, material;
directly or indirectly cancel, terminate, amend or modify, or fail to maintain, any insurance policies on which the Company or any of its subsidiaries are named as insureds or additional insureds or which cover the Company or any of its subsidiaries and their respective operations, business, properties or assets (including railcars), directors, officers, managing members (or equivalent positions) and employees (however, in the event that any such policy shall be cancelled, terminated, amended, modified or shall not be maintained, the Company shall procure substantially similar substitute insurance policies in at least such amounts and against such risks as are currently covered by such policies);
enter into any new line of business in any geographic area where such business is not conducted by the Company and its subsidiaries, or materially change the operations or business plan for any existing line of business or abandon or discontinue any existing material line of business, in each case as of the date of the Merger Agreement;
make, change or revoke any material tax election, change any material tax accounting method, file any material amended tax return, surrender any right to claim a material refund of taxes (other than by the passage of time), settle or compromise any material tax claim or liability or claim for a refund of taxes, change any material annual tax accounting period, enter into any material closing agreement or other material written binding agreement relating to taxes or any material tax sharing agreement, file any material tax return other than one prepared in a manner consistent with past practice, or consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment (other than pursuant to an extension of time to file any tax return obtained in the ordinary course of business);
enter into any agreement with the Pension Benefit Guaranty Corporation or any trustee of a defined benefit pension plan in respect of any Controlled Group Plan (as defined in the Merger Agreement) that would result in a payment being required to be paid by the Company or any of its subsidiaries;
form any subsidiary, or enter into any joint venture, partnership or similar arrangement;
execute any instruments which materially adversely affect title to the real property of the Company or otherwise enter into, consent to or record any instrument against any real property of the Company which has a material adverse effect upon the ability of Parent or the surviving corporation or their respective designees or tenants to carry on business at such real property after the closing of the Merger in substantially the same manner as carried on by the Company and its subsidiaries as of the date of the Merger Agreement;
sell, lease, sublease, license, mortgage, pledge or otherwise encumber with any lien (other than permitted liens) any of the real property owned by the Company, enter into any agreement or commitment for the purchase, acquisition, sale, lease, sublease, license, sublicense, occupancy or other direct or indirect transfer of any real property (subject to certain exceptions), or materially amend or modify, or voluntarily terminate or rescind, exercise or decline any material option, or request or grant any material waiver under, any lease of the Company;

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subject to certain exceptions, terminate, cancel or agree to any material amendment to, any railcar lease agreement of the Company; or
authorize or enter into any contract, or otherwise make any commitment, to do any of the foregoing.

Stockholder Action By Written Consent

Concurrently with the execution of the Merger Agreement, on October 22, 2018 the Company delivered the Written Consent to Parent that the Company had received from IEH, which on such date owned shares of Common Stock representing approximately 62.2% of the outstanding shares of Common Stock entitled to vote on the adoption of the Merger Agreement and approval of the Merger. Pursuant to the terms of the Merger Agreement, the Written Consent will automatically become effective as of the Written Consent Effective Time, unless such time is otherwise extended or the Merger Agreement is terminated in accordance with its terms. As a result of the delivery of the Written Consent, no further approval by the Company’s stockholders is required in connection with the Merger Agreement or the Merger.

In the event the Merger Agreement is terminated in accordance with its terms, the Written Consent will not become effective and will be deemed null and void.

Conditions to the Merger

The closing of the transactions contemplated by the Merger Agreement are subject to customary conditions, including, among other things, (i) receiving the required approval of the Company’s stockholders, which approval will be effected as of the Written Consent Effective Time, (ii) no temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition shall be in effect, and no law shall have been enacted, entered, promulgated, enforced or deemed applicable by any governmental entity that, in any case, prohibits or makes illegal the consummation of the Merger on the terms set forth in the Merger Agreement, (iii) the expiration or termination of the applicable waiting period under the HSR Act (for which the FTC granted early termination of the waiting period on November 2, 2018), and (iv) twenty (20) days having elapsed since the mailing to the Company’s stockholders of a definitive information statement with respect to adoption of the Merger Agreement by IEH pursuant to the Written Consent.

In addition, the closing of the transactions contemplated by the Merger Agreement are subject to the representations and warranties given by each party in the Merger Agreement continuing to be true and correct at and as of the Effective Time except for any such representations and warranties that relate to a specific date or time (which need only be true and correct as of such date or time) and except as has not had or would not reasonably be expect to have, individually or in the aggregate with all other failures to be true or correct, a Parent Material Adverse Effect (as defined in the Merger Agreement) with respect to the representations and warranties of Parent and Merger Sub, or a Company Material Adverse Effect with respect to the representations and warranties of the Company (other than certain representations and warranties of the Company, which must be true and correct in all material respects). The closing of the transactions contemplated by the Merger Agreement are also subject to each party thereto having performed and complied in all material respects with all covenants and agreements required to be performed or complied with by such party under the Merger Agreement.

The transactions contemplated by the Merger Agreement are not conditioned upon Parent obtaining financing.

Financing Cooperation

The Company has agreed, from the date of the Merger Agreement to the earlier of the Effective Time and the termination of the Merger Agreement, to, and to cause its subsidiaries to, use their respective commercially reasonable efforts to provide Parent on a timely basis, at Parent’s sole expense, such customary or necessary cooperation as is reasonably requested by Parent, upon reasonable advance notice, in connection with Parent’s debt financing, including, among other things, providing access to appropriate members of senior management of the Company and the information specifically set forth in the Merger Agreement. The cooperation obligation is subject to the limitations set forth in the Merger Agreement.

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Non-Solicitation; Window Shop Period; Change of Board Recommendation

Non-Solicitation

During the period from the date of the Merger Agreement until the Effective Time, or, if earlier, the termination of the Merger Agreement in accordance with its terms (the “interim period”), the Company, its affiliates and its and their respective representatives may not, on behalf of the Company, directly or indirectly:

initiate, solicit, facilitate or knowingly encourage any acquisition proposal or the making or submission thereof or the making of any proposal that could reasonably be expected to lead to any acquisition proposal (as defined below); or
participate in any negotiations regarding, or furnish any third party any non-public information relating to the Company or its subsidiaries, in connection with an acquisition proposal.

The Company must also, and must also cause its affiliates and representatives to, cease immediately and cause to be terminated, and not authorize or knowingly permit any of its or their representatives to continue, any and all existing activities, discussion or negotiations, if any, with any third party conducted prior to the date of the Merger Agreement with respect to any acquisition proposal and also use its reasonable best efforts to cause any such third party (or its agents or advisors) in possession of non-public information in respect of the Company or any of its subsidiaries that was furnished by or on behalf of the Company and its affiliates to return or destroy all of such information.

Window Shop Activities

Notwithstanding the restrictions on the Company’s ability to solicit acquisition proposals, if at any time following the date of the Merger Agreement and prior to the Written Consent Effective Time, which we refer to as the “window shop period,” (i) the Company receives a bona fide written acquisition proposal from a third party that does not result from the Company’s violation of the non-solicitation provision in the Merger Agreement and the Company, its affiliates and its and their representatives are not in willful and material breach of the non-solicitation and related window shop provisions of the Merger Agreement and (ii) the Board of Directors (or a committee thereof) determines in good faith, based on information then available and after consultation with outside counsel and based on financial analyses believed to be reasonable by the Board, that such acquisition proposal constitutes, or would reasonably be expected to result in, a superior proposal (as defined below) and the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties to the Company’s stockholders under applicable law or the agreed upon standard (as defined below), then the Company has the right to, among other things, furnish non-public information to such third party and participate in discussions or negotiations with any third party making such acquisition proposal regarding the acquisition proposal (“window shop activities”). From and after the Written Consent Effective Time, the Company will be prohibited from engaging in any window shop activities.

Change of Board Recommendation

During the interim period, the Board of Directors and any committee thereof may not:

adopt, approve or recommend, or publicly propose to adopt, approve or recommend, any acquisition proposal;
withdraw, change, qualify, withhold or modify, or publicly propose to withdraw, change, qualify, withhold or modify, in a manner adverse to Parent or Merger Sub, the recommendation of the Board of Directors with respect to the adoption and approval of the Merger Agreement and the Merger;
if an acquisition proposal has been publicly disclosed, fail, within three (3) days of the request of Parent, to publicly recommend against such acquisition proposal;
approve, authorize, cause or permit the Company or any of its subsidiaries to enter into any merger agreement, acquisition agreement, letter of intent, memorandum of understanding or other similar agreement relating to any acquisition proposal (a “company acquisition agreement”); or
resolve or agree to do any of the foregoing (any such of the foregoing actions, a “change of board recommendation”).

Notwithstanding the restrictions on the Board of Directors’ ability to effect a change of board recommendation, during the window shop period, if (i) the Company has received a bona fide acquisition proposal from a third party

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that does not result from a violation of the non-solicitation provisions applicable to the Company, its affiliates and their respective representatives described above, (ii) the Company, its affiliates and their respective representatives are not in willful and material breach of the non-solicitation and window shop provisions of the Merger Agreement and (iii) the Board of Directors (or a duly authorized committee thereof) determines in good faith after consultation with outside legal counsel and based on financial analyses believed to be reasonable by the Board of Directors, that such acquisition proposal constitutes a superior proposal and failure to take such action would be inconsistent with the directors’ fiduciary duties to the Company’s stockholders under applicable law or the agreed upon standard, the Board of Directors may at any time prior to the Written Consent Effective Time, effect a change of board recommendation with respect to such acquisition proposal, subject to the terms of the Merger Agreement. Except as otherwise expressly provided in the Written Consent, a change of board recommendation will have no effect on the effectiveness of the Written Consent.

Pursuant to the terms of the Merger Agreement, to effect a change of board recommendation:

the Company shall have provided to Parent at least five (5) business days’ prior written notice (the “notice period”) of the Company’s intention to take such actions, which notice must specify the basis for the change of board recommendation, the identity of the third party making the superior proposal, the material terms and conditions of the superior proposal and a copy of the applicable company acquisition agreement and any other material documents with respect thereto;
during the notice period, if requested by Parent, the Company shall have, and shall have caused its representatives to have, engaged in good faith negotiations with Parent and its representatives regarding any amendments or modifications to the Merger Agreement proposed by Parent and intended to cause the relevant acquisition proposal to no longer constitute a superior proposal; and
at the end of the notice period, the Board of Directors (or a duly authorized committee thereof) shall have considered in good faith any proposed amendments or modifications to the Merger Agreement, including a change to the price terms thereof and the other agreements contemplated thereby that may be offered by Parent (“proposed changed terms”) no later than 6:00 p.m., New York City time, on the last day of the notice period and shall have determined in good faith after consultation with outside legal counsel that the superior proposal continues to constitute a superior proposal if such proposed changed terms were to be given effect (except that the Board of Directors (or a duly authorized committee thereof) may have regard to whether the terms of Parent’s debt financing are sufficient to fund the proposed changed terms). In the event of any change to the price terms or any other material revision or amendment to the terms of such superior proposal, the Company will be required to deliver a new written notice to Parent and against comply with the requirements described in the foregoing paragraphs with respect to such new written notice.

In the event a change of board recommendation with respect to the Merger is effected during the window shop period, the Written Consent will not become effective as of the Written Consent Effective Time and will be deemed null and void. In addition, if the Merger Agreement is terminated under circumstances relating to a change of board recommendation, the Company may be required to pay a termination fee of $65 million to Parent.

The Company has agreed to promptly (and in any event within 24 hours) notify Parent in writing of the receipt of any acquisition proposal, any request for non-public information relating to the Company or its subsidiaries made in connection with an acquisition proposal or request for access to the business, properties, assets, books or records of the Company or any of its subsidiaries made in connection with an acquisition proposal, which notice shall identify the third party making such acquisition proposal and include a copy of such acquisition proposal (or, if not made in writing, a reasonably detailed written description of such acquisition proposal). The Company has also agreed to keep Parent promptly informed (and in any event within 24 hours) in all material respects of the status of, and any material communications relating to, such acquisition proposal (including any change in the price or other material terms thereof) and to provide Parent within 24 hours after receipt thereof all copies of any material correspondence and written materials received by the Company from the persons making such acquisition proposal.

As used in this information statement and the Merger Agreement, an “acquisition proposal” means any inquiry, offer or proposal from a third party not affiliated with the Company concerning (i) a merger, consolidation, business combination, recapitalization, reorganization or similar transaction involving the Company or any of its subsidiaries, (ii) a sale, lease or other disposition by merger, consolidation, business combination, share exchange, joint venture or otherwise, of assets of the Company (including equity interests of any subsidiary of the Company) or its

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subsidiaries representing more than 20% of the consolidated assets of the Company and its subsidiaries, measured either by book value or fair market value, (iii) an issuance or acquisition (including by way of merger, consolidation, business combination or share exchange) of equity interests representing more than 20% of the voting power of the Company, or (iv) any combination of the foregoing (in each case, other than the Merger).

As used in this information statement and the Merger Agreement, a “superior proposal” means a bona fide unsolicited written acquisition proposal (except the references therein to “20%” shall be replaced by “75%”) that the Board of Directors (or a duly authorized committee thereof) determines in good faith after consultation with legal counsel, taking into account such factors as the Board (or any duly authorized committee thereof) considers in good faith to be appropriate (including the conditionality, timing and likelihood of consummation of such proposals), is reasonably likely to be consummated in accordance with its terms taking into account all financial (including economic and financing terms), regulatory (which may include the relative likelihood and timeliness of obtaining antitrust approvals), legal and other aspects, and, if consummated, would be more favorable from a financial point of view to the Company’s stockholders than the Merger (taking in account any proposed changed terms).

As used in this information statement and the Merger Agreement, the “agreed upon standard” means a duty to obtain the highest value reasonably available to the Company’s stockholders, it being acknowledged by the parties that such standard (i) is to be applied only for the limited purposes of the specific clauses of the Merger Agreement in which it appears, (ii) shall not imply that the directors of the Company have a fiduciary duty to act in accordance with such standard unless and to the extent such duty is required by applicable law, and (iii) is intended to have contractual effect only as between the parties in order to provide an enhanced level of certainty concerning the circumstances in which the Board of Directors (or a duly authorized committee thereof) may take the actions permitted by Sections 5.3(b) and Section 5.3(d) of the Merger Agreement (which pertain to the window shop activities and a change of board recommendation).

Termination of the Merger Agreement

The Merger Agreement may be terminated and the Merger and other transactions contemplated thereby may be abandoned at any time prior to the Effective Time as follows:

by mutual written consent of the Company, on the one hand, and Parent, on the other hand;
by either the Company, on the one hand, or Parent, on the other hand, if:
any governmental entity has issued, prior to the Effective Time, an order permanently restraining, enjoining or otherwise prohibiting, the consummation of the Merger, and such order has become final and non-appealable, or any law enacted or promulgated by any governmental entity is in effect that prevents or makes illegal the consummation of the Merger (a “Governmental Order Condition”); provided that the right to terminate the Merger Agreement as a result of a Governmental Order Condition will not be available to a party if the issuance of, or failure to resolve or have vacated or lifted, such Governmental Order Condition was primarily due to a breach by such party of any of its covenants or agreements under the Merger Agreement; or
the Merger is not consummated by April 10, 2019 (the “Outside Date”), provided that the right to terminate the Merger Agreement if the Merger is not consummated by the Outside Date shall not be available to any party whose breach of the Merger Agreement primarily caused or resulted in the failure of the closing of the Merger to occur on or before the Outside Date.
by Parent, if:
at any time prior to the Effective Time, the Company breaches any of its representations, warranties, covenants or agreements in the Merger Agreement in a manner that would prevent the conditions to the Merger from being satisfied prior to the Outside Date and (i) such breach is not capable of being cured or (ii) such breach is capable of being cured and has not been cured within thirty days after notice of such breach (a “Specified Breach”), provided, that Parent is not permitted to terminate the Merger Agreement if Parent or Merger Sub is then in material breach of any of their respective representations, warranties, covenants or agreements contained in the Merger Agreement; or
the Board of Directors has made a change of board recommendation in accordance with the terms of the Merger Agreement.

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by the Company, if:
at any time prior to the Written Consent Effective Time, the Board of Directors (or a duly authorized committee thereof) has made a change of board recommendation in accordance with the Merger Agreement, provided that the Company pays, concurrently with the termination, the termination fee of $65 million to Parent;
at any time prior to the Effective Time, a Specified Breach by Parent or Merger Sub occurs, provided, that the Company is not permitted to terminate the Merger Agreement if the Company is then in material breach of any of its representations, warranties, covenants or agreements contained in the Merger Agreement;
(A) all of the conditions to the closing of the Merger applicable to the Company have been and continue to be satisfied or waived on the date the closing of the Merger should have occurred pursuant to the Merger Agreement (other than those conditions that by their nature can only be satisfied on the closing, provided that each of which is capable of being satisfied at the closing), (B) the Company has irrevocably confirmed to Parent in writing that it stands ready, willing and able to consummate the transactions contemplated by the Merger Agreement, including the Merger, and that the Company is prepared to take such actions within its control to cause the closing to occur and (C) Parent and Merger Sub do not complete the Merger by the fifth (5th) business day after receipt of the above written confirmation and the Company was prepared to take such actions within its control to cause the closing to occur on the date such written confirmation was delivered and on each business day of such five (5) business day period (the “Closing Breach”); or
Parent fails to timely deposit the requisite funds in escrow under certain conditions.

The Company may also terminate the Merger Agreement if, following delivery by the Company of a written notice to Parent of a Specified Breach by Parent or Merger Sub that would reasonably be expected to prevent or materially impair the closing of the Merger (a “Breach Escrow Election Notice”), (A) Parent, by the deadline specified in the Merger Agreement, fails to (1) deposit the Breach Escrow Amount (as defined in the Merger Agreement) and (2) confirm in writing that it is willing to attempt in good faith to consummate the Merger, or (B) the breach of the Merger Agreement by Parent that gave rise to the written notice provided by the Company makes the consummation of the Merger impossible.

In the event of termination of the Merger Agreement by either the Company or Parent, written notice will be given to the other party or parties, specifying the provisions of the Merger Agreement pursuant to which such termination is made and the basis therefor described in reasonable detail. Upon termination, the Merger Agreement will become void and have no further force and effect, without any liability or obligation on the party of any party (except as otherwise provided in the Merger Agreement), provided that none of the parties will be relieved from liabilities for damages incurred or suffered as a result of a material breach of any representations, warranties, covenants or other agreements set forth in the Merger Agreement prior to such termination or the requirement to make the termination fee payments described below under “—Termination Fees.”

Termination Fee

A termination fee payment of $65 million will be payable by the Company to Parent if the Merger Agreement is terminated:

by Parent, on the one hand, or by the Company, on the other hand, due to a change of board recommendation; or
(i) by Parent, due to a Specified Breach by the Company, or (ii) by either the Company or Parent, if the Effective Time has not occurred on or before the Outside Date and, in either case, at the time of such termination an acquisition proposal has been made and not withdrawn (except in each case the references in the definition of “acquisition proposal” to “20%” shall be replaced by “50%”), and within twelve (12) months after such termination, the Company has entered into a definitive agreement relating to or consummated an acquisition proposal.

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A Parent Termination Fee of $130 million will be payable by Parent to the Company if the Merger Agreement is terminated:

by the Company or Parent (i) due to a Governmental Order Condition, if the relevant governmental order relates to a failure to obtain the necessary clearances, approvals or authorizations under the HSR Act, or (ii) if the Effective Time has not occurred on or before the Outside Date as a result of the applicable waiting period under the HSR Act relating to the Merger not having yet expired or been terminated by the Outside Date;
by the Company, due to a Closing Breach by Parent and Merger Sub; or
by the Company, as a result of Parent’s failure to timely deposit the requisite funds in escrow under certain conditions.

In addition, the Company is also entitled to the Parent Termination Fee in the event that (i) the Company delivers a Breach Escrow Election Notice to Parent and (ii) (A) the Company terminates the Merger Agreement in connection therewith or (B) (1) the Merger Agreement is terminated after delivery of the Breach Escrow Election Notice for any other reason and (2) there has not been a willful and material breach of the Merger Agreement by the Company that was a cause of the failure of the closing of the Merger to occur.

As described under “The Merger—Financing of the Transaction—Limited Guarantee,” Sponsor entered into a limited guarantee in favor of the Company to guarantee, among other things, Parent’s and/or Merger Sub’s payment obligations with respect to the payment of the Parent Termination Fee of $130 million by Parent to the Company in the event the Merger Agreement is terminated under the circumstances described above.

In the event that the Company fails to pay the termination fee to Parent when due, or Parent fails to pay the Parent Termination Fee to the Company when due, such party will reimburse the other party for all reasonable costs and expenses actually incurred or accrued by such party (including reasonable fees and expenses of counsel) in collection with any action taken to collect payment of such amounts, together with interest on such unpaid amounts.

Remedies; Specific Performance

The parties have agreed that, (i) except for an order of specific performance as and only to the extent expressly permitted by the Merger Agreement and (ii) the Company’s rights as a third party beneficiary under Parent’s equity commitment letter, the Company’s right to receive the Parent Termination Fee from Parent when payable pursuant to the terms of the Merger Agreement, and the Company’s right to seek damages following termination, will constitute the Company’s exclusive remedies against Parent, Merger Sub, the Sponsor, Parent’s financing sources or any of their respective former, current or future general or limited partners, stockholders, equity holders, controlling person, members, managers, agents, representatives, affiliates or assignees (collectively, “Parent related parties”) for all losses or damages suffered as a result of the failure of the transactions contemplated by the Merger Agreement to be consummated (for any reason or for no reason or otherwise) or for a breach or failure to perform under the Merger Agreement or under the limited guarantee, Parent’s equity commitment letter, any certificate or other document delivered in connection thereunder or otherwise in respect of any oral representation made or alleged to have been made in connection therewith.

Notwithstanding anything to the contrary contained in the Merger Agreement, (i) under no circumstances will the Company be entitled to, and in no event will the Company seek to recover, monetary damages from any Parent related party (other than Parent, Merger Sub or the Sponsor pursuant to the limited guarantee), (ii) in no event will the Company be entitled to seek or obtain any consequential damages that were not reasonably foreseeable or specific or punitive damages from any Parent related party and (iii) in no event will any amounts recovered from Parent or Merger Sub or Sponsor be in excess of the maximum amount (as defined in the limited guarantee).

The Company, Parent and Merger Sub have agreed that, except where the Merger Agreement is terminated in accordance with the terms set forth above, each party is entitled to seek an injunction or injunctions, specific performance and other equitable relief to prevent breaches or threatened breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement. The Company, however, is only entitled to an injunction, specific performance or other equitable remedies in connection with enforcing Parent’s and Merger Sub’s obligations to consummate the Merger and causing the equity financing to be funded if, and only if, (i) the marketing period has ended and the closing conditions applicable to the Company have been satisfied or waived at the time the closing would have occurred but for the failure of Parent and Merger Sub to complete the closing by the

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date that the closing is required to have occurred, (ii) the debt financing (or any alternative financing contemplated by the Merger Agreement) is available to be funded or has been funded or will be funded at the closing if the equity financing is funded at the closing, and (iii) the Company has irrevocably confirmed in writing to Parent that (A) all conditions to the Company’s obligations to consummate the closing set forth in the Merger Agreement have been satisfied or waived and (B) if specific performance is granted and the debt financing is funded, then the closing will occur.

In no event will the Company be entitled to receive both a grant of specific performance that results in a closing of the merger at which the Merger Consideration is received by the Company’s stockholders and monetary damages.

Employee Matters

The Merger Agreement provides that, for a period of six (6) months following the Effective Time, the employees of the Company that remain employed by the surviving corporation will receive base compensation that is no less favorable than the base compensation in effect immediately prior to the Effective Time. Parent will also provide benefits (including target annual cash bonus opportunity but excluding equity-based or equity-linked compensation or benefits, and excluding any pension or other retiree benefits) to each continuing employee that, taken as a whole, have a value that is substantially comparable in the aggregate to such benefits provided to similarly-situated employees of Parent and its subsidiaries, or provided to such continuing employee immediately prior to the Effective Time, as determined by Parent in its discretion. Notwithstanding the foregoing, continuing employees who are subject to collective bargaining agreements will receive the compensation and benefits provided for in the applicable collective bargaining agreements.

Following the completion of the Merger, Parent will recognize each continuing employee’s service with the Company or any of its subsidiaries for all purposes with respect to benefit plans maintained by Parent or any of its subsidiaries, including determining eligibility to participate, vesting and benefit accruals (including any vacation and paid time off accruals), provided, however, that such service need not be recognized or credited (i) to the extent that such recognition would result in any duplication of coverage or benefits, (ii) with respect to a newly established plan for which prior service is not taken into account or with respect to any equity-based compensation, or (iii) to the extent that such recognition would result in benefit accruals with respect to any defined benefit plan.

Parent will take reasonable best efforts to waive, or cause to be waived, any pre-existing condition limitations, exclusions, evidence of insurability, actively-at-work requirements and waiting periods under any welfare benefit plan maintained by Parent or any of its subsidiaries in which continuing employees (and their covered family members) will be eligible to participate from and after the Effective Time, except to the extent that such pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods would not have been satisfied or waived under the comparable Company benefit plan immediately prior to the Effective Time. In addition, Parent will take reasonable best efforts to recognize, or cause to be recognized, the dollar amount of all co-payments / co-insurance, deductibles, out-of-pocket maximums and similar expenses incurred by each continuing employee (and his or her covered family members) during the calendar year in which the Effective Time occurs for purposes of satisfying such year’s deductible and out-of-pocket maximum under the relevant welfare benefit plans in which such continuing employee (and family members) will be eligible to participate from and after the Effective Time.

From and after the Effective Time through the end of calendar year 2018, Parent will, or will cause the surviving corporation to, honor and continue the Company’s Management Incentive Plan for fiscal year 2018 as in effect immediately prior to the Effective Time in accordance with its terms. Parent will also pay, or will cause the surviving corporation to pay, to eligible Company employees cash bonuses under the Management Incentive Plan for calendar year 2018 in the ordinary course (and at the time ordinarily paid) based on actual results for such year.

Amendment, Extension, and Waiver

The parties may amend provisions of the Merger Agreement at any time, except that after stockholder approval has been obtained, no amendment that requires further approval by stockholders of the Company is permitted without the further approval of such stockholders. All such amendments must be in writing and signed by each of the parties.

At any time prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any breach of the representations and warranties of the other party contained in the Merger Agreement or in any document delivered pursuant to the Merger Agreement, or (c) waive compliance by the other with any of the agreements or covenants contained in the Merger Agreement,

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except that after stockholder approval has been obtained, no extension or waiver that decreases the Merger Consideration, other than as explicitly contemplated by the Merger Agreement, or which adversely affects the rights of the Company’s stockholders, is permitted without the further approval of such stockholders. Any agreement on the part of a party to any such extension or waiver will be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to the Merger Agreement to assert any of its rights under the Merger Agreement or otherwise shall not constitute a waiver of such rights.

Governing Law

The Merger Agreement and all claims and causes of action based upon, arising out of or in connection therewith will be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to laws that may be applicable under conflicts of laws principles (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Notwithstanding the foregoing, the Merger, the fiduciary duties of the Board of Directors and the internal corporate affairs of the Company will, in each case, be governed by the laws of the State of North Dakota, and any claim, controversy or dispute of any kind or nature to which the debt financing sources are a party and that is in any way related to any debt commitment letter, the Merger Agreement, the transactions contemplated by the Merger Agreement or the debt financing, will be governed by, and construed in accordance with, the internal laws of the State of New York, without giving effect to principles or rules or conflict of laws to the extent such principles or rules would require or permit the application of laws of another jurisdiction.

In addition, any matter to which a source of Parent’s debt financing is a party that is related to a Company Material Adverse Effect, the interpretation of representations and warranties under the Merger Agreement, or the consummation of the transactions contemplated by the Merger Agreement, in each case, will be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

Joinder Agreement

On October 26, 2018, Merger Sub executed the Joinder Agreement with the Company and Parent pursuant to which Merger Sub became a party to the Merger Agreement. A form of the Joinder Agreement is attached as Exhibit E to the Merger Agreement.

Escrow Agreement

Pursuant to the terms of the Merger Agreement, Parent agreed to deposit funds in escrow to secure Parent’s obligations to pay the Parent Termination Fee if such fee is payable to the Company under the terms of the Merger Agreement. On October 24, 2018, Parent deposited $55 million in immediately available funds with Citibank, N.A. (the “Escrow Agent”) into an escrow account to be held pursuant to the terms and conditions of the escrow agreement (“Escrow Agreement”). In addition, on or prior to 5:00 p.m. on November 16, 2018, Parent has agreed to deposit up to an additional $75 million so that the aggregate amount held by the Escrow Agent pursuant to the terms of the Escrow Agreement is $130 million. In the event that Parent fails to deposit such additional amount, in whole or in part, with the Escrow Agent, then the Company may terminate the Merger Agreement and be entitled to payment of the Parent Termination Fee.

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VOTING AGREEMENT

The summary of the material provisions of the Voting Agreement set forth below and elsewhere in this information statement is qualified in its entirety by reference to the Voting Agreement, a copy of which is attached as Exhibit B to the Merger Agreement attached as Annex A to this information statement and is incorporated by reference into this information statement. This summary does not purport to be complete and may not contain all of the information about the Voting Agreement that is important to you. We encourage you to read the Voting Agreement carefully in its entirety, as well as this information statement and any documents incorporated herein by reference.

In connection with the execution of the Merger Agreement, Parent, on one hand, and IEH and certain of IEH’s affiliates (each, a “Stockholder Party,” and collectively, the “Stockholder Parties”), on the other hand, entered into a Voting Agreement with respect to all Common Stock owned of record or beneficially by the Stockholder Parties, and any additional shares of Common Stock or other voting securities of the Company of which the Stockholder Parties acquire record or beneficial ownership of during the term of the Voting Agreement (collectively, the “Subject Shares”). As of October 22, 2018, the record date for determining stockholders entitled to act by written consent with respect to the Merger Agreement, IEH was the record owner of 11,871,268 shares of Common Stock, representing approximately 62.2% of the voting power of the issued and outstanding shares of Common Stock and the requisite number of shares of Common Stock necessary to adopt and approve the Merger Agreement in accordance with Section 10-19.1-98 of the NDBCA. The other Stockholder Parties, which consist of certain affiliates of IEH, beneficially own all of the shares of Common Stock held of record by IEH.

Subject to the terms and conditions set forth in the Voting Agreement, from October 22, 2018 through the date on which the Voting Agreement is terminated in accordance with its terms (the “Voting Period”), each Stockholder Party is required to vote, or cause the applicable holder of its Subject Shares to vote (or deliver a duly executed written consent with respect thereto), all of its Subject Shares (i) in favor of (a) any proposal to adopt and approve or reapprove the Merger Agreement and the transactions contemplated thereby, including the Merger, and (b) waiving any notice requirements applicable to the Merger, the Merger Agreement or any of the transactions contemplated therein contained in or pursuant to the Company’s organizational documents or applicable law, and (ii) against (x) any action or agreement that would reasonably be expected to prevent or materially delay the consummation of the Merger or any other transactions contemplated by the Merger Agreement, (y) any acquisition proposal and any action in furtherance of any such acquisition proposal and (z) any action, proposal, transaction or agreement that is intended or would result in a breach in any material respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or the Stockholder Parties under the Voting Agreement. During the Voting Period, each Stockholder Party has also agreed to not take, or cause the applicable holder of its Subject Shares to take, any action to revoke, supersede, withdraw, terminate or otherwise impair or override, the Written Consent.

Each Stockholder Party has also agreed to waive and not exercise any rights to demand appraisal of any shares of Common Stock held by the Stockholder Party or right to dissent from the Merger that such Stockholder Party may have under applicable law, including pursuant to Section 10-19.1-87 of the NDBCA. Further, while the Voting Agreement remains in effect, subject to certain exceptions, each Stockholder Party has agreed not to commence, join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Parent, the Company or any of their respective successors, directors or officers, (a) challenging the validity, binding nature or enforceability of, or seeking to enjoin the operation of, the Voting Agreement or the Merger Agreement, or (b) alleging a breach of any fiduciary duty of any person in connection with the evaluation, negotiation, entry into or consummation of the Merger Agreement.

During the Voting Period, each Stockholder Party, subject to certain exceptions, is prohibited from, without Parent’s prior written consent, (i) directly or indirectly, whether by merger, consolidation or otherwise, offering for sale, selling (including short sales), transferring, tendering, pledging, encumbering, assigning or otherwise disposing of (including by gift or by operation of law) (collectively, a “transfer”), or entering into any contract, option, derivative, hedging or other agreement or arrangement or understanding (including any profit-sharing arrangement, through the granting of any proxies or powers of attorney, in connection with a voting trust or voting agreement or by operation of law) with respect to, or consenting to or permitting, a transfer of, any or all of the Subject Shares or any interest therein or (ii) taking any action inconsistent with the Voting Agreement, the Merger Agreement or the transactions contemplated thereby.

Further, during the Voting Period, each Stockholder Party has agreed it shall not, and shall not authorize or permit any of its respective representatives to, (i) initiate, solicit, facilitate or knowingly encourage any acquisition

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proposal or the making or submission thereof or the making of any proposal that could reasonably be expected to lead to any acquisition proposal, (ii) participate in any negotiations regarding, or furnish any third party any non-public information relating to the Company or its subsidiaries, in connection with an acquisition proposal or (iii) adopt or approve any acquisition proposal. The Stockholder Parties have also agreed to, and to cause their respective representatives to, cease immediately and cause to be terminated any and all existing activities, discussion or negotiations, if any, with any third party conducted prior to the date of the Voting Agreement with respect to any acquisition proposal.

The Voting Agreement will terminate upon the earliest of (i) the mutual written consent of Parent and the Stockholder Parties, (ii) the Effective Time, (iii) the termination of the Merger Agreement in accordance with its terms or (iv) the time of any modification, waiver or amendment of the Merger Agreement that reduces or changes the form of the Merger Consideration payable pursuant to the terms of the Merger Agreement as in effect on the date of the Voting Agreement or which is otherwise adverse to the Stockholder Parties in any material respect, in each case, without the prior written consent of the Stockholder Parties.

On October 22, 2018, the Company received and delivered to Parent the Written Consent executed by IEH, which on such date owned shares of Common Stock representing approximately 62.2% of the outstanding shares of Common Stock entitled to vote on the adoption of the Merger Agreement and the approval of the Merger. Therefore, no further approval by the Company’s stockholders is required in connection with the Merger Agreement or the Merger.

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APPRAISAL RIGHTS

The discussion of the provisions set forth below is not a complete summary regarding your appraisal rights under North Dakota law and is qualified in its entirety by reference to the full text of Sections 10-19.1-87 and 10-19.1-88 of the NDBCA, which is attached to this information statement as Annex C. Stockholders intending to exercise appraisal rights should carefully review Annex C in its entirety. Failure to follow precisely any of the statutory procedures set forth in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA will result in a loss of these rights.

If the Merger is completed, holders of Common Stock who did not consent to the adoption of the Merger Agreement and who precisely follow the procedures specified in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA within the appropriate time periods have the right to dissent from the Merger by demanding payment in cash for their shares of Common Stock equal to the fair value of the shares as determined by agreement with the Company or by a court in an action timely brought by the dissenting stockholders. We refer to a dissenting stockholder’s right to demand payment for their shares of Common Stock as “appraisal rights.”

The following summary description of Sections 10-19.1-87 and 10-19.1-88 of the NDBCA is intended as a brief summary of the material provisions of the statutory procedures required to be followed by a stockholder to exercise their appraisal rights pursuant to Sections 10-19.1-87 and 10-19.1-88 of the NDBCA. This summary, however, is not a complete statement of all applicable requirements and is qualified in its entirety by reference to the full text of Sections 10-19.1-87 and 10-19.1-88 of the NDBCA, which is attached to this information statement as Annex C. All references in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA and this summary to “stockholder” are to the record holder of the shares of Common Stock as to which appraisal rights are asserted. Failure to comply strictly with the procedures set forth in Sections 10-19.1-87 and 10-19.1-88 of the NDBCA will result in the loss of appraisal rights.

Under Section 10-19.1-87 of the NDBCA, where a merger is adopted by stockholders acting by written consent in lieu of a meeting of the stockholders, then either the constituent corporation, before the Effective Time, or the surviving corporation must notify each stockholder of the constituent corporation who did not sign or consent to the written consent that such stockholder is entitled to exercise appraisal rights. The notice must also include a form to be used to certify the date on which the stockholder, or the beneficial owner on whose behalf the stockholder dissents, acquired its shares of Common Stock or an interest in them and to demand payment.

Under Section 10-19.1-88 of the NDBCA, holders of shares of the Company’s Common Stock who are entitled to exercise appraisal rights must be provided a notice of appraisal rights. The record date for purposes of determining the stockholders entitled to receive the notice of appraisal rights is October 22, 2018. As of October 22, 2018, there were 19,083,878 shares of the Company’s Common Stock outstanding.

This information statement constitutes notice to holders of Common Stock concerning the availability of appraisal rights under Sections 10-19.1-87 and 10-19.1-88 of the NDBCA, copies of which are attached to this information statement as Annex C. Any stockholder who wishes to exercise such appraisal rights or who wishes to preserve his, her or its right to do so should review the following discussion and Annex C carefully, because failure to timely and properly comply with the procedures specified will result in the loss of appraisal rights under the NDBCA.

Holders of shares of Common Stock who desire to exercise their appraisal rights, who we refer to as “dissenting stockholders,” must deliver to the Company a written demand for payment (along with the certification form) and their certificated shares of the Company’s Common Stock, if any, for deposit with the Company within thirty (30) days after the date of mailing of this Notice of Action By Written Consent and Appraisal Rights and information statement, or December 7, 2018.

All written demands for appraisal of shares of Common Stock must be mailed or delivered to: American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301, Attention: Corporate Secretary. Only a holder of record of shares of Common Stock is entitled to demand an appraisal of the shares registered in that holder’s name. A record stockholder may exercise appraisal rights as to fewer than all shares of Common Stock registered in the record stockholder’s name only if the record stockholder dissents with respect to all shares beneficially owned by any one person and discloses the name and address of each beneficial owner on whose behalf the stockholder is exercising appraisal rights. A beneficial stockholder may exercise appraisal rights as to the shares of Common Stock held on the beneficial stockholder’s behalf only if the beneficial stockholder complies with the procedure for the perfection of appraisal rights described below.

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A dissenting stockholder will retain all other rights of a stockholder until the Merger takes effect. However, under the NDBCA, a dissenting stockholder may not also challenge the corporate action (i.e., the Merger) creating the right to appraisal rights unless the action is unlawful or fraudulent with respect to the stockholder or the Company.

After the Effective Time, or after the Company receives a valid demand for payment, whichever is later, the Company will remit, to each dissenting stockholder who has timely and properly submitted a written demand for payment (including the certification form) and deposited its certificated shares, if any, the amount the Company estimates to be the fair value of the shares of Common Stock, plus interest, which we refer to as the “remittance.” Under the NDBCA, “fair value” with respect to shares of Common Stock subject to appraisal rights means the value of the shares immediately before the effective date of the Merger. In accordance with the NDBCA, the remittance will be accompanied by: (i) the Company’s closing balance sheet and statement of income for a fiscal year ending not more than sixteen months before the effective date of the Merger, together with the latest available interim financial statements; (ii) an estimate by the Company of the fair value of the shares and a brief description of the method used to reach the estimate; and (iii) a copy of Sections 10-19.1-87 and 10-19.1-88 of the NDBCA.

If the dissenting stockholder believes the amount of the remittance from the Company is less than the fair value of its shares plus interest, such dissenting stockholder may decline the Company’s offer and give written notice to the Company within thirty (30) days after the Company has mailed the remittance, and demand payment of the difference. If a dissenting stockholder fails to timely demand payment of the difference, such stockholder is entitled only to the amount of the remittance. Within sixty (60) days of the Company’s receipt of a demand from a dissenting stockholder challenging the proposed remittance, the Company shall either pay to the dissenting stockholder the amount demanded by the dissenting stockholder or, following discussions with the dissenting stockholder, the amount agreed to by the Company and the dissenting stockholder or file in court a petition requesting that a court determine the fair value of the dissenting stockholder’s shares of Common Stock plus interest. The petition is required to be filed in Burleigh County, North Dakota, which is the county in North Dakota in which the registered office of the Company is located, and must name as parties all dissenters who have exercised appraisal rights and who have not reached agreement with the Company.

After filing the petition, the Company must serve all parties with a summons and a copy of the petition. The court may appoint appraisers, with powers and authorities the court deems proper, to receive evidence on and recommend the amount of the fair value of the shares of Common Stock. The court shall determine whether the dissenting stockholder(s) in question have fully complied with the requirements of Section 10-19.1-88 of the NDBCA, and shall determine the fair value of the shares, taking into account any and all factors the court finds relevant, computed by any method or combination of methods that the court, in its discretion, sees fit to use, whether or not used by the Company or by a dissenting stockholder. The fair value of the shares as determined by the court is binding on all stockholders, wherever located. The court will also determine the costs and expenses of the proceeding, including the reasonable expenses in compensation of any appraisers appointed by the court, and is required to assess those costs and expenses against the Company, except that the court may assess part or all of those costs and expenses against a dissenting stockholder whose action in demanding payment for its shares of Common Stock is found to be arbitrary, vexatious, or not in good faith. The court may also award, in its discretion, fees and expenses to an attorney for the dissenting stockholders out of the amount awarded to the dissenting stockholders, if any.

A dissenting stockholder is entitled to judgment for the amount by which the fair value of the shares as determined by the court, plus interest, exceeds the amount of the remittance, if any, previously remitted to the dissenting stockholder by the Company. The dissenting stockholder shall not be liable to the Company for the amount, if any, by which the amount of the remittance, if any, previously remitted to the dissenting stockholder by the Company exceeds the fair value of the shares as determined by the court, plus interest.

If the court finds that the Company has failed to comply substantially with Section 10-19.1-88 of the NDBCA, the court may assess all fees and expenses of any experts or attorneys as the court deems equitable. These fees and expenses may also be assessed against a person who has acted arbitrarily, vexatiously, or not in good faith in bringing the proceeding, and may be awarded to a party injured by those actions.

In view of the complexity of Sections 10-19.1.87 and 10-19.1-88 of the NDBCA, the Company’s stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the beneficial ownership of our Common Stock as of November 5, 2018 (unless otherwise noted) of our directors and named executive officers (as determined in accordance with SEC rules), all of our directors and executive officers as a group and each person who we know beneficially owns more than 5% of our Common Stock. This information is based upon information received from or on behalf of the named individuals or from publicly available information and filings by or on behalf of those persons with the SEC. Beneficial ownership, which is determined in accordance with the rules and regulations of the SEC, means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of our Common Stock. Except as otherwise indicated in the footnotes to the table, we believe that each person identified in the table possesses sole voting and investment power over all shares of Common Stock shown as beneficially owned by the person. As of November 5, 2018, 19,083,878 shares of the Company’s Common Stock were issued and outstanding. Except as otherwise indicated, the business address for each of the following persons is c/o American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301.

 
Shares of Common Stock
Beneficially Owned
Name of Beneficial Owner
Amount
of Shares
Percent of
Class(1)
Directors:
 
 
 
 
 
 
SungHwan Cho
 
 
 
 
James C. Pontious
 
2,500
 
 
*
 
J. Mike Laisure
 
 
 
 
Harold First(2)
 
1,500
 
 
*
 
Jonathan Frates
 
 
 
 
Michael Nevin
 
 
 
 
Patricia A. Agnello
 
 
 
 
Named Executive Officers:
 
 
 
 
 
 
Jeffrey S. Hollister
 
 
 
 
Luke M. Williams
 
51
 
 
*
 
Yevgeny Fundler
 
 
 
 
John O’Bryan
 
 
 
 
All executive officers and directors as a group (11 persons)
 
4,051
 
 
*
 
Five Percent (5%) Beneficial Owners:
 
 
 
 
 
 
Carl C. Icahn(3)
 
11,895,068
 
 
62.2%
 
Dimensional Fund Advisors LP(4)
 
1,368,379
 
 
7.2%
 
*Represents less than 1%.
(1)Based on 19,083,878 shares of Common Stock outstanding as of October 25, 2018.
(2)All 1,500 shares beneficially owned by Mr. First are held by the Harold First Pension Plan.
(3) The following information is based on a Form 4 filed with the SEC on June 4, 2012 and Schedule 13D/A filed on February 27, 2017 by Mr. Carl Icahn, as well as additional correspondence from representatives of Mr. Carl Icahn. Mr. Icahn may be deemed to beneficially own 11,895,068 shares. These shares are owned as follows: (i) 11,871,268 shares are owned by IEH, and (ii) 23,800 shares are owned by Ms. Gail Golden, Mr. Icahn’s wife. Icahn Enterprises Holdings is the sole member of Icahn Building. Icahn Building is the sole shareholder of AEPC. AEPC is the sole member of IEH. Icahn Enterprises GP is the general partner of Icahn Enterprises Holdings and is wholly-owned by Beckton. Beckton is wholly-owned by Mr. Icahn, who is also the indirect majority owner of IEP, which is the sole limited partner of IEH. As of November 5, 2018, IEH is the record holder of 11,871,268 shares of our Common Stock. Mr. Icahn, by virtue of his relationship to IEH, AEPC, Icahn Building, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton, IEP and Ms. Golden, may be deemed to beneficially own (as that term is defined in Rule 13d-3 under the Exchange Act) the shares directly owned by IEH and Ms. Golden. Mr. Icahn disclaims beneficial ownership of such shares for all other purposes. The address for Mr. Icahn is c/o Icahn Associates Corp., 767 Fifth Avenue, Suite 4700, New York, New York 10153. In connection with the Merger, IEH, AEPC, Icahn Building, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn have entered into a Voting Agreement with Parent. See “Voting Agreement” on page 55. On October 22, 2018, in connection with the signing of the Merger Agreement, the Company received and delivered to Parent the Written Consent executed by IEH, which on such date owned shares of Common Stock representing approximately 62.2% of the outstanding shares of Common Stock entitled to vote on the adoption of the Merger Agreement. The Written Consent will automatically become effective on November 26, 2018 as of the Written Consent Effective Time. Therefore, no further approval by the Company’s stockholders is required in connection with the Merger Agreement and the Merger. If consummated, the Merger would result in a change in control of the Company. See “Merger Agreement” on page 41.
(4)The amount and nature of ownership listed is based solely upon information contained in Dimensional Fund Advisors LP’s (Dimensional) Schedule 13G/A, filed with the SEC on February 9, 2018. As of December 31, 2017, Dimensional had the sole power to vote 1,345,523 shares and the sole dispositive power over 1,368,379 shares. Dimensional disclaimed beneficial ownership of the 1,368,379 shares. The address for Dimensional is Building One, 6300 Bee Cave Road, Austin, Texas 78746.

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WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, and other documents with the SEC. These reports contain additional information about the Company. The Company’s SEC filings are made electronically available to the public at the SEC’s website located at http://www.sec.gov. Stockholders can also obtain free copies of our SEC filings through the “Investor Relations” section of the Company’s website at http://www.americanrailcar.com. The Company’s website address is being provided as an inactive textual reference only. The information provided on the Company’s website, other than the copies of the documents listed or referenced below that have been or will be filed with the SEC, is not part of this information statement, and therefore is not incorporated herein by reference.

The SEC allows the Company to “incorporate by reference” information that it files with the SEC in other documents into this information statement. This means that the Company may disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this information statement. This information statement and the information that the Company files later with the SEC may update and supersede the information incorporated by reference. Similarly, the information that we later file with the SEC may update and supersede the information in this information statement.

The Company incorporates by reference each document it files under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial filing of this information statement and before the Effective Time. The Company also incorporates by reference in this information statement the following documents filed by it with the SEC under the Exchange Act:

Company Filings:
Period or Date Filed:
Quarterly Reports on Form 10-Q
Filed May 1, 2018, for the Quarterly Period ended March 31, 2018, filed August 1, 2018, for the Quarterly Period ended June 30, 2018, and filed October 30, 2018 for the Quarterly Period ended September 30, 2018
Definitive Proxy Statement on Form DEF 14A
Filed April 26, 2018, for the Annual Meeting of the Company held on June 5, 2018
Current Reports on Form 8-K
Filed January 2, 2018, January 19, 2018, February 6, 2018, March 22, 2018, April 17, 2018, June 6, 2018, July 5, 2018, August 1, 2018, and October 22, 2018
Annual Report on Form 10-K
Filed February 23, 2018, for the Fiscal Year ended December 31, 2017

Notwithstanding the foregoing, the Company is not incorporating any document, portion thereof or information not deemed “filed” in accordance with SEC rules, including any information furnished pursuant to Item 2.02 or Item 7.01 of our Current Reports on Form 8-K, except to the extent specified otherwise in such Current Reports.

The Company undertakes to provide without charge to each person to whom a copy of this information statement has been delivered, upon request, by first class mail or other equally prompt means, a copy of any or all of the documents incorporated by reference in this information statement, other than the exhibits to these documents, unless the exhibits are specifically incorporated by reference into the information that this information statement incorporates. You may obtain documents incorporated by reference by requesting them in writing or by telephone at American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301, Attention: Investor Relations, Telephone: (636) 940-6000.

Parent and Merger Sub have supplied, and the Company has not independently verified, the information in this information statement relating to Parent and Merger Sub.

Some banks, brokers and other nominee record holders may be participating in the practice of “householding” information statements and annual reports. This means that only one copy of our information statement and annual report to stockholders may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document upon written or oral request. Please direct your inquiry or request by mail or telephone to us at the above address and telephone number. If you want to receive separate copies of this information

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statement or annual report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and telephone number.

Stockholders should not rely on information that purports to be made by or on behalf of the Company other than that contained in or incorporated by reference in this information statement. The Company has not authorized anyone to provide information on behalf of the Company that is different from that contained in this information statement. This information statement is dated November 6, 2018. No assumption should be made that the information contained in this information statement is accurate as of any date other than that date, and the mailing of this information statement will not create any implication to the contrary.

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Annex A

AGREEMENT AND PLAN OF MERGER
   
by and between
   
STL PARENT CORP.
   
and
   
AMERICAN RAILCAR INDUSTRIES, INC.
   
Dated as of October 22, 2018