UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

____________________________________) Document Filed Electronically

IN RE TOWER AUTOMOTIVE ) Civil Action No. 1:05-cv-01926-RWSSECURITIES LITIGATION )____________________________________)

PLAINTIFFS’ CONSOLIDATED AMENDED CLASS ACTION COMPLAINT

SHALOV STONE & BONNER LLPLee S. ShalovThomas G. Ciarlone485 Seventh AvenueNew York, NY 10018Tel: 212-239-4340Fax: 212-239-4310

VIANALE & VIANALE LLPKenneth J. VianaleJulie Prag Vianale(Members of the Bar of this Court)2499 Glades Road, Suite 112Boca Raton, FL 33431Tel: (561) 392-4750Fax: (561) 392-4775

Lead Counsel for Lead Plaintiffs and the Class

TABLE OF CONTENTS

NATURE OF THE ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

JURISDICTION AND VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

SUBSTANTIVE ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

I. Background to the Class Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

A. Johnson Creates Hidden Creek to Buy Out Automotive Companies, Including Tower . . . . . . . . . . . . . . . . . . . . . . . . 12

B. Hidden Creek Buys Tower in 1993 and Takes it Public in 1994 . . . . . . . 13

C. Tower’s Round of Roll-Ups: 1994 to 2000 . . . . . . . . . . . . . . . . . . . . . . . 14

D. Tower Becomes Debt-Laden After its Acquisitions . . . . . . . . . . . . . . . . 16

E. Hidden Creek and Onex Cash Out in 1996 and 1997 . . . . . . . . . . . . . . . 17

II. Defendants’ Fraudulent Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

A. Undisclosed Adverse Information RegardingTower’s Failure to Integrate its 14 Acquisitions . . . . . . . . . . . . . . . . . . . 21

B. Undisclosed Adverse Information Regarding Tower’sFactoring Arrangements with a Third Party -- GE . . . . . . . . . . . . . . . . . . 23

C. Undisclosed Adverse Information RegardingTower’s Long Term Supply Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

D. Undisclosed Adverse Information Regarding Tower’sInability to Pay its Vendors and its Vendors’ Refusalto Supply More Goods When Tower Failed to Pay Them . . . . . . . . . . . 31

E. Undisclosed Adverse Information Regarding Tower’s Plans for Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

III. Materially False and Misleading Statements andOmissions During the Class Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

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A. Defendants’ False Statements and Omissions Regardingthe Success of Tower’s Integration of its Acquisitions . . . . . . . . . . . . . . 44

B. Defendants’ False Statements and Omissions RegardingTower’s Factoring Arrangements with GE and the OEMs . . . . . . . . . . . 47

C. Defendants’ False Statements and OmissionsRegarding Tower’s Long-Term Supply Contracts . . . . . . . . . . . . . . . . . . 75

D. Defendants’ False Statements and OmissionsRegarding Tower’s Inability to Pay its Vendors . . . . . . . . . . . . . . . . . . . 77

E. Defendants’ False Statements and OmissionsRegarding Tower’s Plan for Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . 78

THE TRUTH IS REVEALED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

ADDITIONAL SCIENTER ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

APPLICABILITY OF PRESUMPTION OF RELIANCE:FRAUD-ON-THE-MARKET DOCTRINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

LOSS CAUSATION ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

TOWER’S DECEPTIVE ACCOUNTING AND FINANCIAL REPORTING . . . . . . . . . . 90

PLAINTIFFS’ CLASS ACTION ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

NO SAFE HARBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

COUNT IAgainst All Defendants Except Hidden Creek and J2R for Violationsof Section 10(b) Of The Exchange Act And Rule 10b-5(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

COUNT IIAgainst Defendants Johnson, Rued, Hidden Creek and J2R for Violations of Section 10(b)Of the Exchange Act and Rule 10b-5 (a) & (c) Promulgated Thereunder . . . . . . . . . . . . . . . . . 100

COUNT IIIAgainst All Defendants Except J2R For Violation of Section 20(a) Of The Exchange Act . . . 103

JURY TRIAL DEMANDED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Plaintiffs, individually and on behalf of all other persons similarly situated, allege upon

personal knowledge matters pertaining to themselves and their own acts, and as to all other matters,

upon information and belief, based upon the investigation undertaken by their counsel, which

included, among other things, the following: communication with witnesses, including former

employees of Tower Automotive, Inc. (“Tower” or the “Company”), with knowledge about Tower’s

business, operations, accounting and business practices or about the industry and markets in which

Tower operated; review and analysis of publicly-available news articles and reports, public filings

with the Securities and Exchange Commission (“SEC”), press releases, securities’ analyst reports,

affidavits and other documents filed in the related Tower-bankruptcy proceeding; review of the

transcript of the May 9, 2005 deposition of defendant Kathleen Ligocki (“Ligocki”); and consultation

with a forensic accountant. Individuals who provided information included in this complaint did so

on a confidential basis and are identified as follows by number as confidential witness (“CW-__”)

with a description of their connection to the Company:

CW-1 Former Tower employee who worked as a SeniorInternal Auditor and Information Technology Auditorin Tower’s Internal Audit Office at Tower’sheadquarters from February 2003 to June 2004

CW-2 Former Vice-President of Finance from 1999 to June2003, based at Tower’s headquarters

CW-3 Former Tower employee who worked as a BusinessUnit Leader at Tower’s Corydon Plant from January2002 to May 2003

CW-4 Former employee who was the Executive VicePresident of Tower from November 2000 to September30, 2001

CW-5 Former employee who worked at Tower from 1997 toSeptember 2003 and who was Director of Sales andEngineering for the Ford Account in 2003

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CW-6 Former Manager of Maintenance at Tower’s Milwaukeeplant from 1984 to 2002

CW-7 Former Tower employee, who was a MaintenanceSupervisor at the Milwaukee facility, from 1969 to2002, responsible for press operations, maintenance,repair and supervising machinists

CW-8 Former Tower employee (1995 to July 2004) whosemost recent position at Tower was project manager atTower’s Corydon plant

CW-9 Former Tower employee who worked as a SeniorAccountant at Tower’s two Bellevue, Ohio plants fromSeptember 1, 2003 to June 15, 2005

CW-10 Former Tower employee at Tower’s Bellevue, Ohioplant who worked as an employee of A. O. Smith from1991 through Tower’s acquisition of the plant and aTower employee through January 2005, and whoworked as an MRO purchaser at the Bellevue plant

CW-11 Former Tower employee, who worked at the Milan,Tennessee plant for 25 years through February 2005

CW-12 Former employee who worked as an Accounting Clerkfor Active Tool and then for Tower until the end of2004

CW-13 Business Unit Director at Tower’s Milan, Tennesseefacility from 2001 to 2004

CW-14 Former Tower employee from 1994 to November 2001,first as an organizational development consultant (1999to May 2000), then as an employee with responsibilityfor these issues (May 2000 to November 2001)

CW-15 Former employee of Tower who was Vice President ofOperations, primarily involved with production, andwho left Tower in early 2000

CW-16 Former employee of Tower who worked as a SeniorQuality Engineer at Tower from November 2000 toFebruary 2005; also worked at Novi headquartersapproximately one year before leaving Tower

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Plaintiffs believe that after a reasonable opportunity for discovery, further substantial

evidentiary support for the allegations set forth herein will be shown to exist.

NATURE OF THE ACTION

1. This is a securities fraud class action brought under Sections 10(b) and 20(a) of the

Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, on

behalf of the purchasers of Tower securities during the period December 21, 2000 to February 1,

2005, inclusive (the “Class Period”).

2. Tower -- a supplier of automotive parts -- filed for bankruptcy on February 2, 2005.

Tower was formed in April 1993 when defendant S. A. Johnson (“Johnson”) and his company

Hidden Creek Industries, Inc. (“Hidden Creek”) teamed up with Onex Corporation (“Onex”), a

Canadian public company, to buy several automotive companies that supplied auto components to

large automakers, or original equipment manufacturers (“OEMs”). Johnson’s company, Hidden

Creek, was managed by J2R Partners (“J2R”), a partnership between Johnson and defendant Scott

D. Rued (“Rued”).

3. Tower had annual revenues of only $86 million in 1993, but Johnson’s stated goal

was to consolidate, or “roll-up,” several other automotive parts makers to transform Tower into the

country’s largest automotive parts suppliers. In April 1994, Hidden Creek and Onex took Tower

public in an initial public offering (“IPO”). Tower then went on an acquisition spree, rolling up 14

automotive parts makers, by its own account, in the next six years, and joint-venturing with other

companies. Tower effectively bought a revenue stream; by 2000, it reported annual revenues of $2.5

billion.

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4. In rolling up these companies, Tower acquired their long-term supply contracts with

the OEMs. Tower was locked into these contracts, many of which paid Tower less each year than

the year before -- so called “loss leaders.” Tower misrepresented the extent of its exposure to these

losing contracts. On February 2, 2005, when Tower sought bankruptcy protection, it disclosed that

many of its long-term supply contracts mandated successively-lower annual payments to Tower.

5. Saddled with these loss contracts, Tower’s only hope of making a profit was to cut

its costs, primarily by integrating its medley of disparate companies into an efficient and cost-saving

whole. Tower falsely told investors that it had successfully integrated its “multiple acquisitions,”

and thus “extracted significant cost savings and synergies.” (12/21/01 Form S-4A, Am. 3). Far from

successfully integrating its acquisitions, Tower became a five-legged elephant with declining annual

profits, crushing debt service, and a fatal liquidity problem.

6. Defendant Ligocki has left no doubt about this; shortly after she became Tower’s

CEO in August 2003, she stated: “Insufficient focus was given to post merger integration,

financial discipline and operating excellence.” (October 2003 Conference Call). After Tower’s

bankruptcy filing, Ligocki admitted: “We have too much debt.” Contrary to its public statements,

Tower had failed to do the “streamlining as it should have as it bought various companies,” and

“each plant acted like its own $100 million to $300 million unit[; they] should have been

integrated earlier as they were bought,” according to Ligocki. (Detroit Free Press, Feb. 5, 2005).

7. Tower’s spiral downward into bankruptcy was of no matter to defendants Johnson

and Rued; they had made millions from the “consulting fees” Tower had paid Hidden Creek for

“advice” and “due diligence” between 1994 and 2003. Johnson and Rued’s investment partnership,

J2R, together with Onex, cashed out of Tower in 1996 and 1997, selling their Tower stock in

“Factoring” is the “[s]ale of accounts receivable of a firm to a factor at a discount1

price.” Black’s Law Dictionary (5 ed.).th

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secondary offerings whose costs Tower absorbed, when Tower’s stock price was still high, and

before it began to suffer financially from its failure to integrate. (Form S-3, filed 4/30/02 at 50)

(“J2R sold substantially all of [its] Tower Automotive common stock in 1996 and 1997 and, as a

result, do[es] not have a material economic interest in any of the securities or capital stock of Tower

Automotive.”). In 1996, J2R, Johnson and Rued sold 83,332 shares at $23.24 for total proceeds of

$1,936,635; Onex sold 1.75 million shares in 1996 for $40,670,000. In April 1997, J2R sold another

103,222 shares for proceeds of $4,478,400; Onex sold 1.75 million shares for a stunning

$50,074,683. (Form 424B1, filed 4/15/97 at 46). Hidden Creek, however, continued to suck fees

out of Tower until late into the Class Period.

8. Tower started “factoring” its accounts receivable in 2001. Tower began selling its1

accounts receivable to a third party, GE Electric Capital Corporation (“GE”), in return for quick

cash: Tower typically required payment on invoices in 60 days; with its factoring arrangement,

Tower could be paid in 10 days. The large U.S. auto makers, Ford, General Motors (“GM”) and

DaimlerChrysler guaranteed GE -- the factor -- that they would pay Tower’s invoices to it. By

factoring, Tower was paid faster, but received less money. Under Generally Accepted Accounting

Principles (“GAAP”), particularly Statement of Position 94-6, Tower was required to disclose its

factoring arrangements in its financial statements and discuss their magnitude; impact on Tower’s

liquidity; and Tower’s contingency plans, if any, to replace this accelerated cash flow, should the

large OEMs discontinue their guarantees or should GE discontinue these factoring arrangements --

which in fact they did, a substantial factor causing Tower to file for bankruptcy, by its own

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admission. This disclosure was critical because Tower was always just one factoring agreement

cancellation away from bankruptcy. The OEMs were not obligated, by contract or otherwise, to

continue guaranteeing these payments, and, by withdrawing their guarantee, the OEMs could cause

the program to end at any time. The precariousness of this situation was not disclosed to Tower

shareholders. Tower never disclosed that its factoring program with these key customers depended

for its existence on their willingness to serve as guarantor. Nor was it disclosed that the customers’

guarantees could be withdrawn at the customer’s whim. As CW-2 stated when asked why the OEMs

stopped guaranteeing Tower’s factoring arrangement: “Because they could,” meaning, because they

were very large, had leverage over their suppliers, and were “extremely arbitrary.”

9. Tower made none of these disclosures; instead, Tower told investors that its liquidity

was not a problem. On April 22, 2003, for example, defendant Campbell, then Tower’s CEO, told

investors during a conference call that “[liquidity] seems to be on everybody’s mind and they’re

worried about it. But don’t.” (Fair Disclosure Transcript of 4/23/03 conference call). On July 22,

2003, defendant Ernie Thomas (“Thomas”), Tower’s CFO, echoed Campbell, telling investors “[we

have] total liquidity $232 million at the end of the second quarter, which puts us in a very great

shape.” (Fair Disclosure Transcript of 7/22/03 conference call).

10. Defendant Ligocki, however, testified that: “The company was very tight on cash

when I joined [in August 2003],” and “[a]t the time the company was fragile, we were extremely

short of cash ... .” (May 9, 2005 Transcript of Kathleen Ligocki’s Deposition taken in Tower

Automotive, Inc. v. George Keritsis, et al., Bankruptcy Case No. 05-10578-alg; Adversary

Proceeding No. 05-01225-alg, at 13 & 15) (hereinafter “Ligocki Tr.”) (emphasis added). Both

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Campbell and Thomas resigned from Tower in August 2003, shortly after making the false

statements quoted above.

11. Throughout 2004, Tower sought to hide the depth of its liquidity problems. Tower

was unable even to pay its own vendors for basic supplies. Numerous confidential witnesses have

stated that the Company’s suppliers cut off basic products to Tower for non-payment. None of this

was disclosed to the Company’s investors.

12. In the third quarter of 2004, Tower’s financial situation became desperate, when it

was unable to continue factoring its receivables. In October 2004, Tower disclosed for the first time

that it had been factoring its accounts receivable with its U.S.-based OEMs. (Form 8-K, filed

10/20/04). Tower announced that these OEMs “are canceling these programs,” and that “[t]he

approximate liquidity impact by customer will be: Ford $80 million; GM $25 million; DCX

[DaimlerChrysler] $35 million.” (Id.). Tower lied to investors, stating that it had “secured a

solution to offset the one time liquidity impact of the plan termination.” (Id.). In reality, in October

2004, Ligocki and other Tower executives “were working contingency plans” -- planning for

bankruptcy protection. (Ligocki Tr. at 26, 29, 30).

13. On February 2, 2005, Tower announced that it had filed a bankruptcy petition.

Ligocki told the marketplace that “the recent termination of early pay programs at certain automakers

has adversely affected our liquidity.” Ligocki also said Tower’s “restrictive capital structure and an

unsustainable debt load” had forced Tower to seek a “financial reorganization” in bankruptcy.

14. Tower and defendants made a variety of false statements and omissions to the

investing public during the Class Period that artificially inflated the price of Tower securities until

corrective disclosures revealed Tower’s true financial and operating condition, causing plaintiffs’

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economic loss, which included the following subject areas: (i) Tower’s failure to disclose its “built-

in” losses on its long-term supply contracts; (ii) Tower’s false statements about its success in

integrating its numerous corporate acquisitions and the supposed cost savings it attained thereby; (iii)

Tower’s failure to disclose the nature and extent of its dependence on factoring arrangements to

maintain its liquidity; (iv) Tower’s failure to disclose its inability to pay its vendors for basic goods

and its vendors’ refusal to deliver and/or extend credit for such basic supplies due to non-payment;

and (v) Tower’s plans for bankruptcy. Defendants Johnson, Rued, J2R and Hidden Creek also are

liable for engaging in a scheme to defraud Tower investors under Rule 10b-5(a) & (c) wholly apart

from their false statements and omissions alleged against defendants.

JURISDICTION AND VENUE

15. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C.

§§1331, 1337 and 1367 and Section 27 of the Exchange Act (15 U.S.C. §78aa).

16. This action arises under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C.

§§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder (17 C.F.R. §240.10b-5).

17. Venue is proper in this District pursuant to Section 27 of the Exchange Act (15 U.S.C.

§78aa) and 28 U.S.C. §1391(b) and (c). Furthermore, venue is appropriate in this Court as the

Company’s bankruptcy proceedings are in this District.

18. In connection with the acts and omissions alleged in this complaint, defendants,

directly or indirectly, used the means and instrumentalities of interstate commerce, including, but

not limited to, the mails, interstate telephone communications, and the facilities of the national

securities markets.

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PARTIES

19. The Lead Plaintiffs. The Lead Plaintiffs appointed by the Court on May 23, 2005

are the following: Nathan F. Brand, Dorothea C. Brand, Tombstone Limited Partnership, Frederic

E. Mohs and Paula A. Mohs. Lead Plaintiffs purchased the Company’s common stock and the 6.75

% Trust Convertible Preferred Securities of Tower Automotive Capital Trust (“Capital Trust”), a

wholly-owned statutory business trust of the Company and created at the Company’s direction (the

“Preferred Securities”), during the Class Period, as set forth in their certifications annexed hereto,

and were damaged thereby.

20. According to the Company’s 2003 Form 10-K, the Preferred Securities are

redeemable, in whole or in part, on or after June 30, 2001 and all Preferred Securities must be

redeemed no later than June 30, 2018. The Preferred Securities are convertible, at the option of the

holder, into the common stock of the Company at a rate of 1.6280 shares of common stock for each

Preferred Security. In addition, (i) all of the voting securities of Capital Trust are owned directly or

indirectly by the Company; (ii) Capital Trust has no independent operations and exists for the sole

purpose of issuing securities representing undivided beneficial interests in the assets of Capital Trust

and investing the proceeds thereof in 6.75% Convertible Subordinated Debentures due June 30, 2018

issued by the Company; and (iii) the Company has unconditionally guaranteed the obligations of

Capital Trust under the Preferred Securities. From the date the Preferred Securities were issued in

June 1998 to the third quarter of 2003, the Preferred Securities were presented in the Company’s

consolidated financial statements as mezzanine financing of the Company.

21. Non-Defendant Tower. On February 2, 2005, Tower filed a bankruptcy petition in

the Southern District of New York under Chapter 11 of the United States Bankruptcy Code. Tower

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is incorporated in Delaware. It designed and produced structural components and assemblies used

to make automotive vehicles. Tower’s products include body structures and assemblies, lower

vehicle frames and structures, chassis modules and systems, and suspension components. Major

automotive OEMs purchased these components, including BMW, DaimlerChrysler, Fiat, Ford, GM,

Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. During the Class Period, Tower

maintained its principal place, first at 5211 Cascade Road SE, Suite 300, Grand Rapids, MI 49546.

In approximately February 2004, Tower removed its headquarters to 27175 Haggerty Road, Novi,

MI 48377. (2003 Form 10-K, filed 3/8/04). Tower is not named as a defendant because it filed a

bankruptcy petition. During the Class Period, Tower had 12,000 employees of which approximately

7,000 worked in the U.S. (Tower bankruptcy records).

22. The Named Defendants. The individual defendants named below served Tower in

the capacities listed below and received substantial compensation; the other named defendants are

Hidden Creek and J2R:

Name Position

Campbell President and Chief Executive Officer until his retirement onJuly 29, 2003; member of the Executive Committee; Campbellsigned the following Tower SEC filings: 9/11/00 S-4; 10/30/00S-4/A; 11/28/00 S-4/A; 12/21/00 S-4/A; 12/31/00 10-K; 4/27/01S-8; 9/21/01 S-3; 11/6/01 S-3/A; 11/28/01 S-3/A; 12/21/01 S-3/A; 12/31/01 10-K; 4/3/02 S-3; 4/24/02 S-3/A; 4/30/02 S-3/A;6/30/02 10-Q; 9/30/02 10-Q; 12/31/02 10-K; 12/31/02 10-K/A;3/31/03 10-Q; 6/30/03 10-Q; 7/22/03 S-4; 9/8/03 S-4/A;10/29/03 S-4A.

Thomas Chief Financial Officer until his resignation on August 13,2003; Thomas signed the following Tower SEC filings:12/31/02 10-K; 12/31/02 10-K/A; 3/31/03 10-Q; 6/30/03 10-Q;7/22/03 S-4.

Name Position

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Ligocki President and Chief Executive Officer since July 29, 2003;Ligocki signed the following Tower SEC filings: 9/8/03 S-4/A;9/30/03 10-Q; 10/29/03 S-4/A; 12/31/03 10-K; 3/31/04 10-Q;6/30/04 10-Q; 9/21/04 S-3; 9/21/04 S-8; 9/30/04 10-Q; 12/14/04S-3/A.

James A. Mallak(“Mallak”)

Chief Financial Officer since January 5, 2004; Mallak signedthe following Tower SEC filings: 12/31/03 10-K; 3/31/04 10-Q;6/30/04 10-Q; 7/16/04 14/A; 8/4/04 14/A; 8/24/04 14/A;9/21/04 S-3; 9/21/04 S-8; 9/30/04 10-Q; 12/14/04 S-3/A.

Johnson Chairman and Director from April 1993 to February 2, 2005;member of the Executive Committee; Johnson signed thefollowing Tower SEC filings: 4/7/00 14/A; 9/11/00 S-4s4;10/30/00 S-4/A; 11/28/00 S-4/A; 12/21/00 S-4/A; 12/31/00 10-K; 4/20/01 14/A; 4/27/01 S-8; 9/21/01 S-3; 11/6/01 S-3/A;11/28/01 S-3/A; 12/21/01 S-3/A; 12/31/01 10-K; 4/3/02 14/A;4/3/02 S-3; 4/24/02 S-3/A; 4/30/02 S-3/A; 12/31/02 10-K;12/31/02 10-K/A; 4/23/03 14-A; 7/22/03 S-4; 9/8/03 S-4/A;10/29/03 S-4/A; 12/31/03 10-K; 5/20/04 14/A; 7/16/04 14/A;8/4/04 14/A; 8/24/04 14-A; 9/21/04 S-3; 9/21/04 S-8; 12/14/04S-3/A.

Rued Vice President and a Director from April 1993 to May 8, 2003;member of the Executive Committee until 2003; Rued signedthe following Tower SEC filings: 9/11/00 S-4; 10/30/00 S-4/A;11/28/00 S-4/A; 12/21/00 S-4/A; 12/31/00 10-K; 4/27/01 S-8;9/21/01 S-3; 11/6/01 S-3/A; 11/28/01 S-3/A; 12/21/01 S-3/A;12/31/01 10-K; 4/3/02 S-3; 4/24/02 S-3/A; 4/30/02 S-3/A;12/31/02 10-K; 12/31/02 10-K/A.

Name Position

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Anthony A. Barone(“Barone”)

Vice President, Chief Financial Officer and Treasurer from May1995 to October 2002. Barone remained an employee of Toweruntil May 31, 2003; Barone signed the following Tower SECfilings: 2/16/00 8-K; 3/31/00 10-Q; 4/24/00 8-K; 6/30/00 10-Q;7/25/00 8-K; 8/1/00 8-K; 9/11/00 S-4; 9/30/00 10-Q; 10/2/00 8-K; 10/23/00 8-K/A; 10/30/00 S-4/A; 11/28/00 S-4/A; 12/21/00S-4/A; 12/31/00 10-K; 12/31/00 K/A; 2/5/01 8-K; 3/31/01 10-Q; 4/11/01 8-K; 4/19/01 8-K; 4/27/01 S-8; 6/30/01 10-Q;6/30/01 Q/A; 6/30/01 Q/A2; 7/25/01 3-E1; 7/26/01 E1A;7/30/01 8-K; 8/27/01 IA; 9/4/01 8-K; 9/5/01 8-K/A; 9/5/01 IA;9/11/01 IA; 9/19/01 IA; 9/21/01 S-3; 9/28/01 8-K; 9/30/01 10-Q; 10/22/01 8-K; 11/6/01 S-3/A; 11/28/01 S-3/A; 12/21/01 S-3/A; 12/28/01 8-K; 12/31/01 10-K; 3/31/02 10-Q; 4/3/02 S-3;4/24/02 S-3/A; 4/30/02 S-3/A; 6/30/02 10-Q; 9/30/02 10-Q.

Christopher T. Hatto(“Hatto”)

Controller; hired in Spring 2004; reported to Mallak (LigockiTr. at 28); signed the following SEC filings: 10/20/04 8-K;9/30/04 10-Q; and 12/6/04 8-K.

Hidden Creek A corporation that lists its headquarters as 80 S. 8 Str., 4508th

IDS Center, Minneapolis, MN (Minnesota Secretary of State’srecords)

J2R A limited partnership listing is address as 4508 IDS Center,Minneapolis, MN

SUBSTANTIVE ALLEGATIONS

I. Background to the Class Period

A. Johnson Creates Hidden Creek to Buy Out Automotive Companies, Including Tower

23. In 1989, Johnson was fired as CEO of Pentair, Inc., a publicly-traded automotive

company based in Minneapolis. Johnson then teamed up with Gerry Schwartz (“Schwartz”), a

former Kohlberg Kravis Roberts partners, who had founded Onex, a large Canadian public company,

traded on the Toronto Stock Exchange (TSX: OCX.SV). Schwartz enlisted Johnson to find

corporate leveraged buyout opportunities in Johnson’s area of expertise: the automotive industry.

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Johnson formed Hidden Creek, headquartered in Minneapolis, as an “acquisition partnership”

between J2R and Onex to buy and develop industrial automotive manufacturing businesses. J2R,

in turn, is a partnership based in Minneapolis, founded, owned, and run by Johnson and Rued. Onex

invested $10 million in Hidden Creek for an 80% ownership interest. According to Schwartz “Tony

[Johnson] is the chief executive (of Hidden Creek) ... [and] [i]t’s his company to grow.” (Johnson

Takes Aim at LBO Targets After Ouster from Pentair, Minneapolis-St. Paul City Business, June 26,

1989, Sec. 1, p.5).

24. Hidden Creek first acquired Automotive Industries, Inc. in 1990 for $210 million.

Hidden Creek acquired two more companies in 1990: Dura Automotive Hardware and Mechanical

Components, taking them public in 1996 under the name Dura Automotive Hardware (Nasdaq:

DRRA). In 1992, Hidden Creek acquired Plasti-Fiber Industries, Inc., a maker of sun visors for

automobile windshields. Hidden Creek bought Tower in 1993 (discussed below); Commercial

Vehicle Group, which it took public in August 2004 (Nasdaq: CVGI); and J. L. French in 1999.

B. Hidden Creek Buys Tower in 1993 and Takes it Public in 1994

25. Hidden Creek formed Tower in 1993 to acquire R. J. Tower Corporation in a

leveraged transaction (Form S-3, filed 4/30/02, at 50), for which Hidden Creek received $500,000.

Johnson, Rued and Onex, through Hidden Creek, took Tower public the following year, in 1994, in

an IPO co-underwritten by R.W. Baird. (3/25/97 Form S-3). Tower sold another 4,465,800 common

shares in a secondary offering to the public in June 1996, and 17,000,000 common shares in another

secondary offering in April 1997. (2000 Form 10-K, at 6).

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C. Tower’s Round of Roll-Ups: 1994 to 2000

26. Tower’s self-proclaimed goal was “growing critical mass,” according to Campbell.

(3/25/02 Tower Conference Call). Campbell said, “that really meant doing acquisitions.” (Id.) In

the next six years, between 1994 and 1999, Tower rolled up companies with borrowed money,

invested heavily in others like J. L. French, and entered joint ventures, as detailed below:

1994

' In May 1994, Tower acquired Edgewood, a maker of hood and deck lidhinges (6/31/95 Form S-3/A, at 27);

' In June 1994, Tower bought Kalamazoo, a supplier of structural stampingsand assemblies (Id.).;

1996

' In January 1996, Tower acquired Trylon for approximately $25 million, aseller of small, precision metal stampings and assemblies (Id.);

' In May 1996, Tower purchased MSTI from MascoTech for $79 million.MSTI supplied stampings used in chassis and suspension systems for NorthAmerican OEMs (Id. at 26);

1997

' In April 1997, Tower borrowed $700 million to acquire AutomotiveProducts Company of A. O. Smith, a manufacturer of lower vehicle structures andmodules (full frames, front and rear suspension subframes and suspension modules).(Tower website (www.towerautomotive.com (“History”))).

' In May 1997, Tower acquired the Italian company, Societa IndustriaMeccania E Stampaggio S.p.A. (“SIMES”).

' In October 1997, Tower acquired a 40% equity interest in Metalsa S. de R.L.for $120 million, paying an additional $26 million under contractual earnoutprovisions as of 2002.

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1998

' In March 1998, Tower acquired a 40% interest in Metalurgica Caterina S.A.in Sao Paulo, Brazil, for approximately $48 million; it supplied structural stampingsand assemblies to the Brazilian automotive market. (4/30/02 Form S-3, Am. No. 2,at 13).

' In July 1998, Tower acquired IMAR s.r.l. and OSLAMT for $32 million incash plus the assumption of approximately $17 million of indebtedness, and paidanother $15 million based on the achievement of certain operating targets. (4/30/02Form S-3, Am. No. 2 at 14).

1999

' In July 1999, Tower acquired Active Tool Corporation and Active ProductsCorporation for approximately $315 million.

' In October 1999, Tower acquired a 49% interest in Seojin IndustrialCompany Limited (“Seojin”) for $21 million. Seojin supplied frames, modules andstructural components to the Korean automotive industry. Tower also “advanced”$19 million to Seojin in return for variable rate convertible bonds due October 30,2009. (4/30/02 Form S-3, Am. 2, at 13).

' In October 1999, Tower lent $30 million to J. L. French in exchange for aconvertible subordinated promissory note due October 14, 2009. In November 2000,Tower exercised its option to convert the note into 7,124 shares of Class A “1”Common Stock and invested another $2.9 million in J. L. French through thepurchase of Class P Common Stock. In May 2000, Tower invested another $11million by purchasing Class A Common Stock. (4/30/02 Form S-3, Am. 2, at 15).

2000

' In January 2000, Tower acquired Dr. Meleghy GmbH & Co. KGWerkzeugbau und Presswerk, Bergisch Gladbach (“Dr. Meleghy”) forapproximately $86 million. (Id. at 13). Dr. Meleghy designed and producedstructural stampings, exposed surface panels, and modules for the Europeanautomotive industry. (Id.). Dr. Meleghy’s manufacturing plants were located inGermany, Hungary and Poland. (Id.).

' In March 2000, Tower entered into a joint venture called “DTA” withDefiance Testing & Engineering Services, for product technology and development.(Tower website).

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' In May 2000, Tower acquired the stock of Algoods, Inc. for approximately$33 million. Algoods Inc. manufactured aluminum heat shields and impact discs forthe North American automotive industry from aluminum mini-mill andmanufacturing operations located in Toronto, Canada. (4/30/02 Form S-3, Am. 2, at13).

' In July 2000, Tower acquired the remaining 60% equity interest inMetalurgica Caterina S.A. that it did not already own for $42 million. (Id.)

' In September 2000, Tower acquired a 17% equity interest in YorozuCorporation, a supplier of suspension modules and structural parts to the Asian andNorth American automotive markets. Tower was to pay Nissan Motor Co. (“Nissan”)approximately $38 million over 2 ½ years for the 17% interest. (Id.) In February2001, Tower exercised its option to buy more equity, and agreed to pay Nissan anadditional $29.5 million. (Id.)

' In November 2000, Tower paid $10 million for Strojarne Malacky, a.s.(“Preskam”), a manufacturer of upper body structural assemblies for Volkswagen,Porsche and Skoda, located in Slovakia. (Id.)

27. These roll-ups greatly increased Tower’s revenues: in 1993 revenues were $86

million; for the year ended December 31, 1999, Tower reported revenues of $2.2 billion (2000 Form

10-K, filed 3/30/01, at 2, 15); and $2.5 billion for the year ended December 31, 2000. (Id.).

D. Tower Becomes Debt-Laden After its Acquisitions

28. By buying these companies with borrowed money, Tower became highly leveraged.

“The rapid growth by acquisition has yielded a complex capital structure that has caused the

company to be highly levered,” Ligocki said in an October 23, 2003 conference call shortly after

becoming Tower’s new CEO, reading from a slide presentation. (A copy of the slide presentation

is annexed hereto as Exhibit A). In 2000, Tower recorded its debt on its financial statements as $1.3

billion (2001 Form 10-K, filed March 30, 2001, at 26); it required $1.14 of assets to generate $1 of

revenue. (Automotive News, February 4, 2002, p. 3) (citing Tower’s 2000 financial statements).

According to Campbell, because Tower was “growing this critical mass,” it “needed to learn to

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integrate very quickly.” (3/25/02 Conference Call) (emphasis added). As alleged below, this never

occurred, as defendants well knew.

E. Hidden Creek and Onex Cash Out in 1996 and 1997

29. The Hidden Creek/Onex insiders sold most of their controlling interest in Tower in

1996 and the remainder in 1997, after Tower had reached “critical mass,” in Campbell’s terms.

“Onex and J2R sold substantially all of their Tower Automotive common stock in 1996 and 1997

and, as a result, do not have a material economic interest in any of the securities or capital stock of

Tower Automotive.” (Form S-3, filed April 30, 2002 at page 50).

30. In 1996, Tower sold 4,620,000 shares to the public in a secondary offering at $24.50

per share. (Form 424B1, filed 6/21/96). As part of this offering, J2R, Johnson and Rued sold a total

of 83,332 shares for which they received $23.24 per share (reflecting an underwriters’ discount from

the $24.50 public offering price). J2R, Johnson and Rued received a total of $1,936,635 for their

1996 sales.

31. In 1997, Tower acquired substantially all the assets of Automotive Products

Company, a division of A. O. Smith. To help finance that $700 million acquisition, Tower offered

8,500,000 shares to the public in another secondary offering priced at $35.00 per share. (Form

424B1, filed 4/15/97). J2R and Onex again sold large amounts of their stock in this secondary

offering. J2R sold 103,222 shares at $33.68 per share (representing a discount to underwriters from

the $35.00 offering price) and received $4,378,400. (Form 424B1, filed 4/15/97 at 46). (The

partners of J2R were listed as Johnson, Rued, W. H. Clement, Robert H. Hibbs, Mary L. Johnson

and Carl E. Nelson). Onex sold 1,486,778 shares at $33.68 per share (discounted for underwriters’

Tower, Onex and J2R were parties to an Investor Stockholders Agreement pursuant to2

which each party agreed to vote his or its shares in the same manner that Onex voted its shares,and Tower granted Onex and J2R and its partners the right to register their shares of commonstock and agreed to pay all of the expenses of the secondary offering under which Onex and J2Rsold their stock. (Id. at 47).

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commissions) and received $50,074,683. (Id.). J2R also received $1,250,000 for advising Tower

on the Automotive Products Company acquisition. (Form 424B1, filed 4/15/97 at 48).2

32. This “cash out” was no accident. The acquisition of Automotive Products Company

from A. O. Smith greatly increased Tower’s debt and interest expense, because Tower had to enter

into a new credit agreement to finance part of the acquisition. (Form 424B1, filed 4/15/97, at 10).

(“The APC Acquisition will significantly increase the Company’s debt service obligations ... . The

degree to which the Company is leveraged could make it more difficult for [it] to adjust to rapidly

changing market conditions ... .”).

33. According to a former employee of Tower who was Vice President of Operations,

primarily involved with production, and who left Tower in early 2000 (“CW-15”), he/she strenuously

opposed Tower’s acquisition of Automotive Products Company in 1997. According to CW-15, this

company was too large (it was as large or larger than Tower when acquired) and had a culture too

different from Tower’s for it to be properly integrated. CW-15 described himself/herself as a “voice

in the wilderness” on this issue. According to CW-15, prior to the Automotive Products Company

acquisition, the stated strategy within Tower was one of growth through planned acquisition. CW-15

saw the acquisition of Automotive Products Company as an abandonment of this strategy. (Ligocki

stated after the bankruptcy filing that Tower never properly integrated this acquisition, as alleged

below). According to CW-15, Johnson wanted to acquire everything he saw.

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34. Moreover, CW-15 was brought in to improve operations at the Traverse City plant,

which was acquired from Trylon in 1996. After CW-15 evaluated the plant, CW-15 told Rued that

the revenue numbers Rued had projected for the plant were impossible. CW-15 told Rued the sales

just were not there.

35. According to CW-1, Johnson made money on every acquisition through fees received

by Hidden Creek, and when the acquisition streak ended, he “cashed out.” CW-1 is a former Tower

employee who worked as a Senior Internal Auditor and Information Technology Auditor in Tower’s

Internal Audit Office at Tower’s Grand Rapids headquarters from February 2003 to June 2004.

CW-1’s other job responsibilities at Tower included identifying business risks and controls;

providing management with recommendations to improve the control environment; preparing

scorecards for Executives to track open issues; and acting as the “Sarbanes-Oxley Project

Administrator” by assisting business units with control activity documents. CW-1 has a B.S. in

Accounting and a Masters of Science of Administration in Information Systems.

36. According to a former Tower employee who worked there from 1994 to November

2001, first as an organizational development consultant (1999 to May 2000), then as an employee

with responsibility for these issues (May 2000 to November 2001) (“CW-14”), Tower held a

corporate meeting in Europe in July 2000 at which Barone, then CFO, was present. According to

CW-14, Barone shared with the group an “alert” regarding revenue for the balance of 2000. Barone

said that revenue for the last half of 2000 was not looking very good. Barone explained that the

OEMs were experiencing lagging sales and demanding pricing concessions from Tower. Barone

said that revenue for the last half of the year [2000] was going to be below expectations, and that

adjustments in the operations plan for the year were going to have to be made. This information was

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concealed from the investing public. In fact, Tower issued an earnings release on July 20, 2000

which quoted Campbell as stating: “The performance of our recent acquisitions, including active,

or Meleghy and Algoods, along with our enterprise-wide focus on improving shareholder value,

continue to positively affect our operating results.” On July 25, 2000, Tower announced that it had

completed an offering of Euro 150 million of senior notes in a private placement.

II. Defendants’ Fraudulent Scheme

37. As alleged in detail below, beginning in December 2000, and continuing throughout

the Class Period, defendants knowingly and/or recklessly issued to the investing public materially

false and misleading statements concerning Tower’s acquisitions, liquidity, ability to pay vendors,

financial position and plans for bankruptcy. Unbeknownst to investors, defendants’ self-serving

public statements concealed a bleak reality: (i) defendants knew, but did not disclose, or recklessly

disregarded, that the Company was unable to adequately integrate its various acquisitions into

Tower; (ii) defendants knew but did not disclose, or recklessly disregarded, that the Company had

entered into factoring arrangements with a third party and was dependent on factoring to maintain

adequate cash flow to sustain operations; (iii) that Tower was locked into losing long-term supply

contracts mandating regular price decreases of 3% - 5% annually; (iv) that Tower was unable to pay

its own vendors for basic supplies and, in many instances, its vendors had refused to supply more

goods and/or extend credit because of Tower’s non-payment; (v) defendants knew that Tower was

preparing for bankruptcy as early as October 2004, even while they falsely told the marketplace

Tower had sufficient liquidity for the remainder of 2004 and into 2005.

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A. Undisclosed Adverse Information RegardingTower’s Failure to Integrate its 14 Acquisitions

38. Tower’s own CEO, defendant Ligocki, and numerous former Tower employees have

stated that the Company failed to successfully integrate the 14 companies it acquired between 1994

and 2000, and thus failed to obtain the cost savings and synergies from these acquisitions, as publicly

proclaimed. Adequate integration and the extraction of cost savings and synergies were critical to

Tower’s ability to remain profitable given the many long-term supply contracts it inherited with these

acquisitions containing mandatory annual price decreases over the life of the contracts.

39. On October 23, 2003, during a conference call, Ligocki admitted Tower’s lack of

integration:

KATHLEEN LIGOCKI: Good morning, everyone. As the newCEO, I’d like to begin by sharing some of my initial impressions onTower Automotive. We look back, Tower was one of the successfulroll-ups of the 1990's in the automotive sector. A number ofcompanies attempted roll-ups during this time and it’s to Tower’scredit that they developed a successful business model.

The resulting culture of decentralization has prevented Towerfrom really leveraging economies of scale. The focus is on top linegrowth. Insufficient focus was given to post merger integration,financial discipline and operating excellence. When the marketchanged in about 2001, the company did switch efforts to organicrevenue growth and the good news is, its significant strength in thebacklog of newly booked business the $1.5 billion gross, roughly $1billion net, is real. [Fair Disclosure Transcript of October 23, 2003Tower Conference Call, at p. 1]. (A copy of the slide Ligocki usedfor this presentation is annexed hereto as Ex. A).

40. Ligocki confirmed her statements three days after Tower filed for bankruptcy:

Tower, Ligocki said, also didn’t do the streamlining it shouldhave as it bought various companies, such as MascotechStamping in 1996 for $79 million, Milwaukee-based A.O. Smith

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for $700 million in 1997 and Detroit-based Active Tool for $315million in 1999.

‘This company had been run where each plant acted like its own$100-million to $300-million unit,’ she said. ‘All plants shouldhave been integrated earlier as they were bought.’ [ Article byJeffrey McCracken, Detroit Free Press, February 5, 2005] (emphasisadded).

41. According to its bankruptcy filing, Tower’s gross margin steadily declined, from

14.7% in 2000 to 11.2% in 2001; 10.8% in 2002; 9.1% in 2003, and only 7.1% for the first nine

months of 2004. This corroborates Ligocki’s statements.

42. According to CW-1, Tower was not integrating acquired companies. CW-1 stated

that the acquired plants “operated as individual ‘mom and pop’ businesses” rather than as parts of

the Company.

43. In addition, after the Class Period, Ligocki testified: “Tower has a number of plants

that have inefficient capacity. We need to streamline those, relocate some of the capacity, and load

the process that we still plan to keep ... .” (Ligocki Tr. at 41).

44. On April 7, 2004, at a Morgan Stanley conference, Tower and Ligocki presented

slides about Tower to an audience stating: “Previously insufficient focus given to post-merger

integration, financial disciplines, operational excellence.” (Copy attached hereto as Ex. B). On

April 29, 2004, Ligocki told analysts that Tower was still focusing on “the integration of our

operations into a greater whole.” (Fair Disclosure Transcript of April 29, 2004 conference call at

p.4). Ligocki noted that in this regard: “we’ve just begun.” (Id.).

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B. Undisclosed Adverse Information Regarding Tower’sFactoring Arrangements with a Third Party -- GE

45. Tower never fully disclosed that it was factoring a large amount of its accounts

receivable with a third party, GE, in return for quick cash.

46. In 2001, Tower experienced a significant slow down in its business, which affected

its cash flow. Tower began to depend heavily on “factoring” arrangements with its major U.S.

customers, including Ford, GM, DaimlerChrysler and many others, but failed to disclose this to

investors. Under these factoring arrangements, Tower sold its accounts receivable to a third party --

GE -- in exchange for receiving a discounted payment more quickly. Instead of waiting the usual

60 days to be paid on an invoice, Tower could receive payment in 10 days by selling its accounts

receivable at a discount. Tower was heavily dependent on the factoring arrangements (“Early Pay”

programs) which were set up by Ford, GM and DaimlerChrysler -- companies that accounted for

60% or more of Tower’s revenues at any point in time during the Class Period. (These auto makers

guaranteed payment of Tower’s invoices to GE). Tower received the majority of its revenues from

the 3 big U.S. auto makers, as follows:

SOURCES OF TOWER’S REVENUES

2003 2002 2001

Ford 35% 38% 35%

DaimlerChrysler 19% 22% 25%

GM 10% 8% 4%

(2003 Form 10-K at 74).

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47. Tower, however, never disclosed the extent of its dependence on its factoring

arrangement with GE which had been arranged by Ford, GM and DaimlerChrysler, until these

companies cancelled them in 2004.

48. Major auto makers historically paid their suppliers’ invoices 60 days after receipt

(Detroit Free Press, February 3, 2005; Crain’s Detroit Business, November 8, 2004). Suppliers

wanting faster cash flow contracted with financial institutions to convert their receivables (invoiced

amounts) to cash immediately. Under these “factoring” arrangements, suppliers sold their accounts

receivable at a discount in return for immediate cash:

Factoring arrangements are a means of discounting accountsreceivable on a nonrecourse, notification basis. Accounts receivableare sold outright, usually to a transferee (the factor) that assumes thefull risk of collection, without recourse to the transferor in the eventof a loss. Debtors are directed to send payments to the transferee.(FASB Statements No. 125 and 140)

49. In 1999 GE implemented a factoring program. Under the program, when a supplier

to GM, Ford or Chrysler issued an invoice, GE would: (a) purchase the supplier’s newly created

receivable at a discount, after obtaining assurance (a guarantee) from GM, Ford or the Chrysler

Group that the receivable was valid and would be paid in 60 days; (b) pay the supplier the discounted

amount within ten days; and (c) collect the full invoice amount from GM, Ford or the Chrysler

Group after 60 days. (Crain’s Detroit Business, November 8, 2004). The supplier received cash

shortly after issuing an invoice; the factor made a quick profit (what it paid to the supplier minus

what it received from the auto maker); and the auto maker paid the supplier’s invoice in 60 days.

50. By at least the first quarter of 2001, Tower suffered a cash crisis because it was

performing under a substantial number of loss contracts, had lower gross margins, and had funneled

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more than $50 million to J. L. French (an undisclosed related party) and Hidden Creek. At March

31, 2001, Tower reported a nil amount of “cash and cash equivalents” and a negative working

capital: current liabilities exceeded current assets by approximately $36.9 million. Tower was

unable to meet its obligations as they came due without substantial borrowing or the sale of

assets. Tower began factoring material amounts of its accounts receivable with GE for operating

cash, and continued to do so through the end of the Class Period.

51. Because the factored amounts had grown substantially, the 60-day (short term)

pipeline of cash receipts that had enabled Tower to meet its short term cash needs had dried up,

exposing Tower to the risk that it would be unable to pay bills and service its debt if GE ceased its

factoring operations or if the U.S. OEMs stopped guaranteeing payment of Tower’s invoices. Tower

never adequately disclosed its dependence on these factoring arrangements to obtain operating cash,

as GAAP requires. As a result, Tower failed to fully and adequately disclose the real risk that it

could go bankruptcy if and when these factoring arrangements were eliminated.

52. During 2003, the SEC examined factoring arrangements in the auto industry and auto

makers’ compliance with GAAP (Article 5 of Regulation S-X and FASB Statement No. 140). The

SEC declared that in substance “these transactions equate to the purchaser [the auto maker] obtaining

financing from a lender in order to pay amounts due to its vendors... . The purchaser should

derecognize its trade accounts payable and record a new liability classified on its balance sheet as

a borrowing from the lender.” (12/11/03 Speech by Robert J. Comerford, Professional Accounting

Fellow, Office of the Chief Accountant of the SEC, www.sec.gov/news/speech/ spch121103ric.htm)

(received from the SEC pursuant to plaintiffs’ FOIA request). Because compliance with SEC’s

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guidance was not acceptable to the OEMs, they withdrew their guarantees and effectively terminated

GE’s factoring arrangement.

53. When the factoring arrangement ended, Tower was unable to meet its obligations as

they came due, and filed for bankruptcy. Defendant Ligocki stated in Tower’s February 2, 2005

press release that the U.S. OEM’s termination of their “Early Pay” program was a significant cause

of Tower’s bankruptcy. (See infra “The Truth is Revealed”). Defendants concealed: (a) the

existence and magnitude of Tower’s factoring transactions; (b) the impact of Tower’s factoring

transactions on Tower’s liquidity; (c) the impact of Tower’s factoring transactions on Tower’s

financial statements; and (d) Tower’s financial exposure vulnerability if the factoring arrangements

came to an end.

54. The American Institute of Certified Public Accountants issued Statement of Position

94-6, Disclosure of Certain Significant Risks and Uncertainties (“SOP 94-6”) in December 1994.

It requires a Company to disclose information about the nature of the company’s operations and “the

general nature of the risk associated with concentrations” in “business transacted with a particular

customer, supplier, lender, grantor, or contributor,” that make “the enterprise vulnerable to the risk

of a near-term severe impact.” A “severe impact” is “[a] significant financially disruptive effect on

the normal functioning of the entity.” (SOP 94-6).

55. Defendants were responsible for Tower’s financial statements. Tower’s financial

statements failed to comply with SOP 94-6’s disclosure provisions because they omitted facts about

the existence and magnitude of Tower’s factoring arrangement with GE, the impact of these

factoring transactions on Tower’s liquidity, the risk attending Tower’s business volume with GE and

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Tower’s vulnerability to GE’s or the OEM’s discontinuance of the factoring arrangement. (See also

SEC Staff Accounting Bulletin No. 99).

56. Defendants also failed to include a narrative in the Management Discussion &

Analysis (“MD&A”) section of the Company’s public filings explaining known trends or

uncertainties that might reasonably be expected to have an effect on revenue, operating income or

net income. (SEC Staff Accounting Bulletin No. 101; Securities Act Release No. 6835 (5/18/89);

Financial Reporting Release No. 36).

57. Former Tower employees have confirmed the details of the fast pay program.

According to a former Tower Employee who was the Executive Vice-President of Tower from

November 2000 to September 30, 2001 (“CW-4”), the fast pay agreements with GE were put in

place at Tower in 2001. According to CW-4, defendants Barone and Campbell and their “financial

team” were responsible for implementing the plan in the third quarter of 2001. (The financial team

included Jim Bernard). CW-4 attended Board meetings and “the Board was made aware” of Tower’s

factoring of receivables under these fast pay programs. Indeed, the board could not help knowing

of the factoring arrangement with GE because it constituted the life blood of the Company.

58. According to CW-4, the implementation of the factoring arrangement was discussed

at a Board meeting (which CW-4 attended), as well as at an “internal meeting” attended by Barone,

Campbell, CW-4, and other regional leaders. CW-4 stated that the factoring fast pay program was

introduced “for cash flow purposes.”

59. CW-4 worked in the Novi office when Tower’s headquarters were in Grand Rapids.

CW-4 reported directly to Campbell and was the head of the U.S./Canada Division, managing all

segments of business, such as Quality, R&D, and Purchasing. The U.S./Canada Division was

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divided into three product lines: (i) Body Structures, headed by Jeff Wilson; (ii) Frame Business,

headed by Greg Wagner; and (iii) Assembly and Modules, headed by Bob Donagan. All of these

people reported directly to CW-4.

60. CW-4 also held weekly phone conferences with Campbell and the Global Team (the

heads of the other regional divisions). According to CW-4, Campbell issued a monthly 3-4 page

statement of business to all Board members, usually via e-mail. This was Campbell’s commentary

on how the Company was doing on a “macro” scale, addressing profits and performance generally.

Board members also received a more extensive “financial book” in a binder either every month or

every quarter. According to CW-4 profitability was declining at this time.

61. According to CW-4, defendant Johnson was the Chairman of the Board but Campbell

generally took the lead in Board discussions. Campbell and Barone attended all Board meetings.

CW-4 recalled that Rued was on the Board also, and that the Board met quarterly but sometimes held

one or two extra strategy meetings during the year.

62. Defendants also affirmatively hid the true extent of Tower’s factoring of its accounts

receivable, as the following exchange on an analyst conference call shows:

DAVID F. BRADLEY [analyst]: And then the accounts receivableacceleration, what’s the number for the end of the quarter?

DUGALD CAMPBELL: We don’t -- we don’t share that information.

(Fair Disclosure Transcript 4/22/03, at 4).

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C. Undisclosed Adverse Information RegardingTower’s Long Term Supply Contracts

63. Tower failed to disclose during the Class Period that many of the long-term supply

contracts it had “inherited” when it acquired the companies discussed above, called for regular price

decreases, of between 3% to 5% per year. The result was that Tower was locked into contracts that

lasted from 3 to 10 years and mandated regular price decreases.

64. Tower’s long-term contracts with OEMs obligated it to produce products at a fixed

price, without a guaranteed “minimum” quantity. Tower admitted in its bankruptcy filing that many

of its long-term contracts called for regular price decreases:

[T]he Company has not always been able to achieve its desired levelof cost savings with respect to existing product lines. In many cases,long-term supply contracts with the Company’s customers call forregular price decreases. In cases where the Company is unable toachieve cost savings sufficient to offset these price decreases, theCompany’s profit margin decreases accordingly.

(Affidavit of James Mallak, Chief Financial Officer and Treasurer of Tower Automotive, Inc., InSupport of First Day Motions and Pursuant to Local Bankruptcy Rule 1007-2, filed in In re TowerAutomotive, Inc. (Bankr. Ct. S.D.N.Y.) at ¶50) (Sworn to Feb. 2, 2005) (emphasis added).

65. According to Tower’s former Vice-President of Finance from 1999 to June 2003,

based at Tower’s Grand Rapids headquarters (“CW-2”), “We had no way of knowing what pricing

demands the OEMs would make on our existing and future contracts. Were we supposed to state

in our 10-Ks and Qs that we were weak and that the OEMs had us by the throat?” CW-2 acted as

a “Finance Mentor,” was responsible for the due diligence work done on Tower’s acquisitions of

Active Tool, for Corporate Cash Management, Corporate Accounting and financial

reporting/planning, corporate budgeting and strategic planning.

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66. According to a former Tower employee who worked as a Business Unit Leader at

Tower’s Corydon Plant from January 2002 to May 2003 (“CW-3”), Tower’s long-term supply

contracts required Tower to reduce its price every year by 3% to 5%. CW-3 was hired by Tower to

turn around the Corydon plant, where Tower made Ford Explorers. In addition, according to CW-3,

one of the ways that the big auto makers, such as Ford, GM and DaimlerChrysler, squeezed suppliers

like Tower was on the costs associated with building the tooling, agreeing to reimburse them. Later,

they agreed to pay back the cost of the tooling to Tower over the life of the contract. This required

suppliers like Tower to lay out a lot of capital up front and carry it over a long period of time.

67. In addition, CW-4 confirmed that Tower’s long-term supply contracts with Ford, GM

and DaimlerChrysler had built in price decreases of 3% to 5% per year. CW-4 regularly attended

Board of Directors’ meetings and is described more fully above in the discussion of Tower’s

factoring of receivables.

68. According to a former employee who worked at Tower from 1997 to September 2003

and who was Director of Sales and Engineering for the Ford Account in 2003 (“CW-5”), whenever

Tower got a new piece of business from an OEM, Tower gave something up on its existing contracts

with that OEM. According to CW-5, “long-term contracts” that suppliers enter into with OEMs are

not like the contracts one sees in most businesses. The OEM typically issues a purchase order, which

is accepted by the supplier. The OEM is not bound to buy in any particular quantity, and the

purchase orders are generally for a one-year term at a time. The OEM generally repays the supplier

for the tooling on the contract, and the OEM owns the tooling machinery. It was common for prices

that Tower charged to be reduced annually. CW-5 came to Tower in 1997 as part of the A. O. Smith

acquisition, and reported to Jim Bernard, Tower’s Head of Sales.

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D. Undisclosed Adverse Information Regarding Tower’sInability to Pay its Vendors and its Vendors’ Refusalto Supply More Goods When Tower Failed to Pay Them

69. Numerous Tower former employees stated that the Company began pushing back the

time it would pay its vendors because of Tower’s lack of cash flow. According to former employees,

this began in 2002, and worsened in late 2003 to the date Tower declared bankruptcy in February

2005. In many instances, Tower refused to pay vendors at all, which caused its vendors to stop

delivering product. Tower never disclosed its deep problems in paying vendors -- facts which bore

heavily on Tower’s statements to investors about the adequacy of its cash flow to fund operations.

70. According to CW-4, Campbell and Barone extended the vendor payment period from

30 days to 60 days shortly before CW-4 left Tower on September 30, 2001. According to CW-4,

Campbell and Barone made the decision to extend the vendor payment period because Tower was

having liquidity problems. The decision was passed down to all Tower facilities, “probably through

e-mail.” CW-4 was sure Campbell and Barone were responsible for this decision because

“everything went through them.” No decision of importance was made without their approval,

according to CW-4.

71. After Tower decided to extend vendor payments, CW-4 stated, there was some “push

back” from the vendors. Hundreds of vendors were affected; it was a “cross-section of all suppliers.”

The vendors did not complain directly to CW-4, but CW-4 heard about complaints from Tom Zak,

an employee in Tower’s purchasing department in Novi, Michigan.

72. According to another Tower former employee, the Manager of Maintenance at

Tower’s Milwaukee plant from 1984 to 2002 (“CW-6”), the Milwaukee facility started pushing back

payments to vendors in the beginning of 2000. CW-6 worked at the Milwaukee plant when it was

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still owned by A. O. Smith and continued there after Tower acquired it. It initially pushed payments

out to 90 days; by the end of 2000, it had pushed payments out to 120 days or more. This practice

was still continuing when CW-6 left Tower in 2002. CW-6 believes that some companies would not

get paid for up to 6 months. Some of the major companies that were getting paid late were: Dan

Foss, International Drive, Price Erecting, Plennis, Roman Electric, United Plumbing, Wennenger,

and Grainger. These companies supplied parts for the assembly lines. According to CW-6, Tower

owed each of these companies between $20,000 to $100,000.

73. CW-6 would pass vendor invoices on to the accounting department, headed by Tom

Gorgen, who had been transferred to CW-6’s department from Plant 6, the heavy truck department

in Milwaukee. CW-6 stated that the instructions to put off payment came from Jim Garfield, one

of the Milwaukee plant managers (probably press operations manager), who ultimately received his

orders from Tower’s headquarters. According to CW-6, Garfield attended meetings at Tower’s

headquarters every month.

74. In addition, according to CW-6, when Tower first took over A. O. Smith, CW-6 could

approve invoices of up to $2,000 without getting approval from anyone in accounting. In 2000, the

amount CW-6 could approve started to go down: first to $1,000, then to $500. By the time CW-6

left Tower in 2002, CW-6 could not sign a purchase order for any amount without getting

permission. CW-6 had to submit the invoices to Garfield through the accounting department, which

usually took one or two months.

75. According to CW-6, Tower wanted to “nickel and dime everything” and was “just

running the plant to the minimum” and “running the equipment into the ground.” There was a

problem with some part of the line almost every day because Tower would not pay for new parts.

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76. According to another former Tower employee, who was a Maintenance Supervisor

at the Milwaukee facility, from 1969 to 2002, responsible for press operations, maintenance, repair

and supervising machinists (“CW-7”), the Milwaukee plant “built and subsidized” all of the other

Tower facilities; its engineers went all over the country to help out at the other plants. The facility

had 9 large buildings and the facility measured about 2.2 miles around the perimeter. In 1997, when

Tower acquired the plant, it had 5,800 employees. Tower’s disclosures list the Milwaukee plant’s

size at 3,118,000 square feet, nearly three times larger than Tower’s second largest plan at Elkton,

Michigan. (2001 Form 10-K at 14).

77. Tower’s problems paying vendors continued in 2003 and 2004. Tower not only paid

its suppliers late, but in many instances, noted below, Tower refused to make any payments at all.

Tower failed to disclose its inability to make timely payments to its suppliers -- a sure sign that

Tower was suffering more profound liquidity problems and was exposed to a greater risk of

bankruptcy, than it was telling the public.

78. According to a former Tower employee who worked as a project manager at Tower’s

Corydon plant (1995 to July 2004) (“CW-8”), the Corydon plant was struggling to pay its bills.

During the first half of 2004, it fell into arrears with several vendors. CW-8 recalled that their

vendor for National Standard brand weld wire, Arc Weld, cut Tower off for a few days during the

first half of 2004 for non-payment. Corydon had to get a check to Arc Weld to clear the account

before Arc Weld would ship more wire. This held up shipments from Arc Weld for a day or two.

Arc Weld was the plant’s only supplier for weld wire.

79. According to a former Tower employee who worked as a Senior Accountant at

Tower’s two Bellevue, Ohio plants from September 1, 2003 to June 15, 2005 (“CW-9”), Tower’s

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corporate department in Novi, Michigan had to approve every vendor bill for payment. (CW-9

reported to plant controller Howard Cook, who in turn reported to Chuck Kuhen at Novi).

According to CW-9, Tower had failed to pay many suppliers for well over 90 days at any given time

in 2004. If a vendor did not supply the plant with “business critical” products, it was not paid for

a very long time. For example, vendors selling office supplies and MRO (maintenance, repairable

and operational) vendors, were paid up to 6 months late. Tower’s computer system allowed officers

and others at Novi corporate headquarters to look at all of the plant’s financials.

80. According to a former Tower employee at Tower’s Bellevue, Ohio plant who worked

as an employee of A. O. Smith from 1991 through Tower’s acquisition up to January 2005, and who

worked as an MRO purchaser at the Bellevue plant (“CW-10”), Tower was unable to pay its vendors

on a timely basis starting at the end of 2003, throughout 2004 and into 2005. Tower was on “credit

hold” (i.e., no more credit sales until the existing balance is paid down), with virtually all of their

MRO vendors at one time or another in 2004. According to CW-10, “starting at the end of 2003,

we had real credit problems.” CW-10 stated: “Getting the vendors paid became increasingly difficult

at the end of 2003 and into January 2004. It was bad throughout 2004. By the beginning of 2005,

it had become ridiculous.” According to CW-10, during 2004, vendors, fed up with slow payments,

were beginning to require cash in advance, COD, and were imposing “credit holds.” CW-10 stated

that during 2004 the magnitude of Tower’s MRO vendors that had Tower on “credit hold” was 95%.

Most MRO vendors placed Tower on credit hold on multiple occasions. CW-10 recalled that Motion

Industries (a supplier of bearings and motors for production line) and Granger (supplier of a wide

variety of MRO materials), definitely had Tower on credit hold in 2004. Granger and MSC applied

credit hold to orders from every plant; others, like Motion Industries, would put one plant that was

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behind on hold but not necessarily every plant. Most vendors assessed 1% to 1.5% of the invoice

as a late fee. Late fees were routinely assessed against Tower in 2004; but it was Tower’s policy not

to pay vendor late fees. Some vendors were refusing to deal with Tower at all.

81. CW-10 learned from conversations with Carroll Cannon (CW-10’s supervisor and

a purchaser of productive materials, such as steel), that the plant was having the same issues with

suppliers of steel and other productive material. CW-10 related that Cannon expressed concern to

CW-10 in mid-2004 that some of the productive vendors might refuse to ship productive materials

(i.e., steel) due to non-payment. “By the time I left [in January 2005], we were a on credit hold with

everybody,” CW-10 said.

82. CW-10 also explained that Novi headquarters knew of the vendor payment issues.

Tower had a centralized computer system that ran on the QAD operating system. CW-10 could only

look at the numbers for CW-10’s plant, but knew that people at the corporate level could access the

financial numbers -- including accounts payable -- for all the plants. Beginning in mid-2004, CW-10

said, each plant had to generate a weekly spreadsheet that was sent to the corporate office. The

spreadsheet listed all the accounts payable, which vendors were owed money, for how long and how

much they were owed. The spreadsheet also had a comments area, where it was to be noted if a

particular vendor was demanding payment at risk of withholding delivery of necessary supplies.

This spreadsheet report was sent weekly from the Bellevue plant to Novi headquarters. According

to CW-10, vendors began telling CW-10 in mid-2004 that Tower was headed for bankruptcy.

83. According to defendant Ligocki, commitments that had to be paid eventually came

to defendant Mallak’s attention:

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Q. What if a commitment -- I had asked if a commitment were madefor payments to be made in the next 30 days. Who would haveknowledge of that commitment?

* * * *A. If there were a commitment that were made that were a writtencommitment, a contract or in that kind of form, it would eventuallycome through the financial organization for payment.

Q. Meaning Mr. Mallak again?

A. Yes.

(Ligocki Tr. at 99).

84. Another Tower former employee, who worked at the Milan, Tennessee plant for 25

years, confirmed Tower’s late payments to vendors. (“CW-11”). CW-11 was employed at Milan

by A. O. Smith before Tower acquired it, and resigned from Tower in February 2005. CW-11 began

at Milan in engineering, passed through accounting and maintenance, finally spending the last ten

years in the Purchasing Department. CW-11’s direct supervisor was Michelle Bona. CW-11’s job

was ordering MRO materials for the plant -- products needed to keep the machines in good working

order, as opposed to production materials such as steel. (Michelle Bona purchased the productive

materials for the plant; CW-11 purchased the MRO materials). CW-11 prepared “re-order reports”

reflecting what MRO materials were needed and placed the orders with the vendors. CW-11 also

fielded calls from vendors from time to time when payments were late.

85. According to CW-11, in 2004 to February 2005, Tower was very slow in getting

payments to its vendors. CW-11 fielded a lot of calls during this time from vendors who had

invoices past 60 days due. During this time, Charles Parker (responsible for accounts payable at

Milan) told CW-11: “Michigan has told us to tell vendors that their checks are in the mail when they

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are not.” CW-11 understood that Tower’s Comptroller was Parker’s supervisor, and believed that

this directive came from the Comptroller. CW-11 said that the productive vendors were also not

being timely paid, and CW-11 stated that on more than one occasion, checks had to be sent by

overnight delivery (Federal Express) to steel manufacturers who supplied the Milan plant.

86. Another Tower former employee added that Tower extended its vendor payment

period from 60 days to 90 days at the end of 2003 or early 2004. This former employee (“CW-12”)

worked as an Accounting Clerk for Active Tool and then for Tower until the end of 2004 when CW-

12 resigned. CW-12 worked in Tower’s facilities in Sebawaing, Rochester, and Clinton. (Tower

closed down the Sebawaing facility and consolidated it with Rochester, and then consolidated it

again with Novi). According to CW-12, “co-workers received an e-mail,” probably in late 2003,

regarding the change from 60 to 90 days. The e-mail came from Sally Baxter, head of the cash

department in Grand Rapids (the cash department later moved to Novi). In some instances, CW-12

said, Tower was paying vendors 50 to 90 days out, with some vendors demanding payment COD.

Starting in May or June 2004, the people responsible for accounts payable in Tower’s Clinton and

Elkton facilities “would put together a big report of accounts outstanding and send it to the corporate

office” in Grand Rapids, or later, Novi, which would then decide “what to pay.” These reports were

sent to the corporate office regularly. Tower would pay utility bills and priority accounts, but leave

the rest unpaid.

87. According to CW-13 -- a Business Unit Director at Tower’s Milan, Tennessee facility

from 2001 to 2004, it became Tower’s policy to push back payments to vendors from 30 days to 60

to 90 days. CW-13 stated that CW-13 received an e-mail in 2003 from one of Tower’s officers

(name not remembered, but it was “the guy who came from GE who was there before Ernie

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Thomas”), saying that vendor payments should be pushed back from 60 to 90 days. CW-13 believed

the e-mail was sent to others in CW-13’s position (business unit directors) and all controllers in all

Tower facilities. According to CW-13, the e-mail did not explain why payments were to be pushed

back, but CW-13 knew the Company was having financial trouble before this time.

88. According to CW-13, many of the local vendors could not afford to wait 60 to 90

days and tried to negotiate with Milan to get payments earlier. CW-13 thought these companies were

generally owed from $2,000 to $10,000 each. CW-13 could not think of any names of the

companies, but said they supplied Tower with things like lubricants, machine oil, “things you’d use

for maintenance.” The small vendors would call the Milan controller and say they needed some kind

of dispensation, and the controller would speak to CW-13 about it. There were two controllers at

Milan -- one left the Company and one was let go a few months before CW-13 left. CW-13 said the

payments could not be pushed out beyond 90 days because “no vendor would be willing to put up

with that,” although in some cases, vendors would make special arrangements with Tower in which

they would agree to be paid 120 days out in exchange for Tower’s promise to purchase a certain

amount from them. The larger vendors, such as the steel suppliers, were owed far more, perhaps in

the millions, and were paid out of Michigan. CW-13 believes some of the companies had

agreements with Tower in which Tower had promised to pay them before 60 days, and that Tower

got into arguments with them when they pushed the payments out.

89. There was also a problem paying tooling companies, which supplied Tower with two

types of products: prototypes and the large presses to make parts for frames. Tower would require

these companies to meet certain “milestones” before it would pay them, and it often made it very

hard for these milestones to be met because, CW-13 said, it was in financial difficulty and was

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looking for any excuse not to pay them. For example, there were disputes about “when a part was

actually ready” -- the tooling company might have constructed a part that had “run 1000 parts in pre-

production,” but then the part would “get a burr in it” and there would be a dispute about whether

the part was finished.

90. CW-13 identified CW-13’s immediate “boss” as Valkanoff. CW-13 had weekly

conference calls with Valkanoff’s boss in Michigan -- but could not think of his name. Valkanoff

reported directly to Tower headquarters in Michigan. CW-13 said there were three levels of

management between CW-13 and defendant Campbell when CW-13 arrived at Tower, and two

levels when CW-13 left. CW-13 would go to Novi each quarter and attend meetings with business

directors and controllers from all the other Tower facilities. They were given monthly financial

reports from the CEO and/or CFO, signed by Ernie Thomas. These statements contained the

numbers for Tower in general and for each Tower facility. The Milan facility “closed their own

monthly reports” and sent them off to Michigan, where they were signed off on by Thomas. These

quarterly meetings were headed by “the guy who reported to Ernie,” the same one, CW-13 believes,

was responsible for the vendor payment e-mail. At these meetings, this individual would tell them

“how dire things were.” The Milan plant was one of the few plants making any money; most of the

plants were not making a profit. CW-13 blamed this on “lack of modern equipment and failure to

include the cost of tooling and assembly machinery.”

91. Another sign of financial difficulty, according to CW-13, was in 2003, when Tower

was putting together a line for Nissan in Smyrna, TN. CW-13 stated they took “old, very worn

equipment” from the Milan plant and integrated them into the Smyrna plant. CW-13 and other co-

workers were surprised to hear this because they knew that “you couldn’t recondition something that

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worn.” They took it as a sign that Tower was in an “emergency situation.” Tower had $100 million

of old equipment in the Milan plant and did not want to spend money on new equipment. CW-13

believes the decision to re-use old equipment came from “program people in Michigan.”

92. According to another former employee of Tower who worked as a Senior Quality

Engineer at Tower from November 2000 to February 2005, who also worked at Novi headquarters

approximately one year before leaving Tower (“CW-16”), beginning in February 2004 the practice

of “rotating payment was implemented.” CW-16 stated that this began soon after CW-16 started

work at the Corydon plant. According to CW-16, on a “month-by-month basis” the Corydon facility

would decide which vendors to pay “based on who would shut them down” -- meaning that “if

certain vendors were threatening that this would be their last shipment, Tower would pay them.”

According to CW-16, if the companies did not threaten to stop supplying Tower, Tower would “just

invoice them” and not pay them. This practice was still in place when CW-16 left Tower in February

2005. As an example, CW-16 cited Commerce Industries, based in Michigan, which did “prototype

work for the Ford Explorer Sportstrack” and supplied Corydon with other “service parts.” Tower

did not pay this company’s bills because it had already supplied Tower with what it needed. CW-16

had ordered parts from Commerce Industries and received phone calls “on a weekly basis” from

them complaining about non-payment. The amount due to Commerce Industries was “in the tens

of thousands of dollars” and CW-16 believed “they still haven’t been paid.” As another example,

CW-16 cited Acemco. This was another company that was not getting paid; it supplied production

parts. Another company, CW-16 stated, was Corydon Machine, which made “small tooling parts,”

but “refused to do business” with Tower without first getting payment. CW-16 stated Corydon

Machine “demanded payment up front,” meaning that the company would not supply Tower until

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“the money was in their accounts.” CW-16 stated that the decision not to pay vendors “was a

corporate decision” because it was in the nature of the position of the Corydon plant manager and

materials manager at Corydon to get instructions from Tower headquarters.

93. On April 13, 2005 after the close of the Class Period, FTI Consulting, Inc. filed a

declaration in the Tower bankruptcy proceeding. (Declaration of Jeffery J. Stegenga in Support of

the Debtor’s Objection to the Motion of the Automotive Supplier Creditors for Entry of an Order

Appointing an Official Committee of Automotive Supplier Creditors). FTI Consulting, Inc. is the

financial advisor for Tower in the bankruptcy. Its declaration stated:

Based on the accounts payable balances to the various AutomotiveSupplier Creditors set forth in the Debtors’ recently filed schedulesand statements of financial affairs, it appears that in the aggregate theAutomotive Supplier Creditors hold approximately $44.7 million(4%) of the Debtors’ liquidated, unsecured liabilities subject tocompromise. [¶10].

E. Undisclosed Adverse Information Regarding Tower’s Plans for Bankruptcy

94. Defendants discussed and planned for Tower’s bankruptcy well in advance of

Tower’s announcement on February 2, 2005 that it had filed a bankruptcy petition. As early as

October 2004, defendants were working on “contingency plans” -- bankruptcy -- even though

defendants were telling the public that the Company had a “solution” to the liquidity crisis that

developed when Tower’s factoring arrangement came to an end.

95. Ligocki testified at her deposition taken in connection with a related adversary

proceeding in bankruptcy court, when defendants sought to stay this action, as follows:

Q. How many hours a week do you work presently?

A. Probably 80 to 100.

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Q. And before the bankruptcy, how many hours a week did youwork?

A. I would say in 2004, probably 80 and as we got toward the end ofthe year, the same 80 to 100.

Q. This was before the bankruptcy; correct?

MR. SILVERMAN [defense counsel]: When you say “before thebankruptcy,” you mean the filing or before the planning for thebankruptcy?

Q. Well, first let’s do it the easy way and let’s say before the filing?

A. Immediately in the couple months before the filing it was about80 to 100 hours a week, because the Company was becoming morefragile, we were working contingency plans as well as normaloperating plans. Before that, so before perhaps October [2004], itwould have been about 80 hours a week.

(Ligocki Tr. at 26).

* * * *

Q. * * *First, do you know who Christopher Hatto is?

A. I do.

Q. Who is Mr. Hatto?

A. He is the controller for Tower Automotive.

Q. Do you know when he became the controller at TowerAutomotive?

A. I don’t remember the exact date. It was spring of ‘04.

Q. Was it after you joined the Company?

A. It was.

Q. Did you hire Mr. Hatto?

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A. Jim Mallak, my CFO, hired Mr. Hatto.

Q. Does Mr. Hatto report to you or to Mr. Mallak?

A. Mr. Mallak.

Q. When did Mr. Mallak join the Company; do you know?

A. In January of 2004.

Q. Did you hire Mr. Mallak?

A. I did.

Q. Mr. Mallak reports to you; right?

A. Correct.

Q. Do you know how much time Mr. Hatto spends on thebankruptcy?

A. Yes, approximately 50 percent of his time.

Q. And how long has that been true?

A. I would say since -- at least since January of this year, the monthbefore we were filing with the contingency plan and clearly since thefiling on February 2 .nd

(Ligocki Tr. at 28-29).

* * * *

Q. Do you know how many hours a week Mr. Hatto works?

A. About 70 or 75.

Q. How do you know that?

A. I asked him and I -- and he works in the same office area, so ...

Q. How many hours a week did Mr. Hatto work before the Companyfiled for bankruptcy?

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A. I would say less hours in the early part of ‘04 and, again, as wegot to the end of ‘04, probably the same hours as he is working now.

Q. How do you know that?

A. He works right down the hall from me, so just witnessing hisworking hours.

(Ligocki Tr. at 30).

96. According to Ligocki, as the controller of Tower, Hatto was “responsible for the

financials.” (Ligocki Tr. at 32).

97. Defendant Mallak submitted a declaration in the Tower bankruptcy proceeding in

support of debtor-in-possession financing. Mallak stated: “I was involved in the Debtors’ efforts to

secure debtor in possession financing prior to the filing of the Chapter 11 Cases.” (Mallak Decl.,

¶5, sworn to 2/28/05) (emphasis added).

III. Materially False and Misleading Statements and Omissions During the Class Period

A. Defendants’ False Statements and Omissions Regardingthe Success of Tower’s Integration of its Acquisitions

98. The Class Period begins on December 21, 2000. On that date, Tower filed a Form

S-4/A, Amendment No. 3 with the SEC in connection with the exchange offer of Euro dollars

150,000,000 for Tower 9.25% Senior Notes due 2010, signed by defendants Johnson, Campbell,

Barone and Rued. It stated: “We possess a strong track record of accretive acquisitions and have

proven our consolidation abilities by successfully integrating multiple acquisitions and extracting

significant cost savings and synergies.” (12/21/01 Form S-4A, Am. No.3, at 45). Tower’s stock

price rose on the news and continued rising thereafter. Tower’s stock closed at $7.25 on December

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21, 2000, up from its $7.19 closing price on December 20, 2000. Tower’s stock price rose over the

next seven trading days to close at $9.81 on January 4, 2001.

99. On January 9, 2001, Tower repeated the identical language about “successfully

integrating multiple acquisitions and extracting significant cost savings and synergies.” (1/9/01

Form 424B3 at p.43). The Company’s stock price continued to rise over the next several months,

closing at $11.65 on March 6, 2002.

100. The foregoing statements were materially false and misleading. As alleged above,

Tower has never integrated its acquired companies successfully or extracted meaningful cost savings

and synergies from them. See ¶¶26-28; 32-33; 38-44 above. As a result, Tower’s profits declined

from year to year, leading to the liquidity crisis that caused its bankruptcy.

101. On September 21, 2001, Tower filed a Form S-3 Registration Statement for the sale

of 3,636,400 shares of common stock by certain selling shareholders, signed by defendants

Campbell, Barone and Rued. With respect to Tower’s acquisitions, the September 21, 2001 Form

S-3 stated:

Since our inception in April 1993, our revenues and earnings beforeinterest, taxes and depreciation and amortization, or EBIDTA, havegrown rapidly through a focused strategy of internal growth and ahighly disciplined acquisition program. We have successfullycompleted 14 acquisitions and established joint ventures in China,Mexico, Korea, Japan and the United States.

102. Tower made identical disclosures in its amendments to the Form S-3: the November

6, 2001 Form S-3/A; November 28, 2001 Form S-3/A and the December 21, 2001 Form S-3/A. In

addition, Tower repeated the identical representation in each of its annual reports on Form 10-K, as

follows: 2001 Form 10-K, filed March 25, 2002 (the “2001 Form 10-K”); 2002 Form 10-K, filed

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March 19, 2003 (the “2002 Form 10-K”); and 2003 Form 10-K, filed March 8, 2004 (the “2003

Form 10-K”).

103. The statement quoted above was false and misleading because it failed to disclose that

Tower had not integrated these 14 acquisitions, as alleged above in ¶¶26-28; 32-33; 38-44. As a

result, Tower was not obtaining cost savings needed to offset the price decreases built into its long-

term supply contracts, as disclosed in Tower’s bankruptcy filing and as alleged above in ¶¶26-28;

32-33; 38-44.

104. On July 29, 2003, Tower issued a press release announcing that defendant Campbell

had retired, and that Ligocki would succeed him. In announcing Campbell’s departure, Johnson

stated in the press release:

Dug Campbell has been instrumental over the past 10 years ingrowing a small regional stamping supplier into the largestautomotive metal structures company in the world. His commitmentto building a values-based enterprise was total, as this culture becamea key ingredient in the integration of 17 acquisitions and partnershipsworldwide. Dug will be working with Kathleen Ligocki over the nextfew months in this positive transition of leadership responsibilities.

105. Johnson’s foregoing statement was false and misleading for the reasons set forth

above in ¶¶26-28; 32-33; 38-44. Johnson was a member of the board which met four times per year

(Ligocki Tr. at 167), and indirectly received huge fees for the work his company Hidden Creek did

for Tower to manage its operations, as alleged below, and was thus knowledgeable about Tower’s

integration efforts.

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B. Defendants’ False Statements and Omissions RegardingTower’s Factoring Arrangements with GE and the OEMs

106. On August 3, 2001, Tower filed its Form 10-Q with the SEC for the quarterly period

ended June 30, 2001 (the “June 30, 2001 Form 10-Q), signed by defendant Barone. The June 30,

2001 Form 10-Q reflected “cash and cash equivalents” of approximately $11,185,000 as of June 30,

2001. It also touted Tower’s “aggressive working capital management,” stating: “Net reduction of

debt totaled $160.8 million (inclusive of debt associated with interests in joint ventures) during the

first six months of 2001 due in large part to the Company’s aggressive working capital

management.”

107. Discussing the Company’s cash from operations and liquidity, the June 30, 2001

Form 10-Q stated:

During the first six months of 2001, the Company generated $300.4million of cash from operations compared with generating $73.3million in the 2000 period.

*****The Company believes the borrowing availability under its creditagreement, together with funds generated by operations, shouldprovide liquidity and capital resources to pursue its business strategyfor the foreseeable future, with respect to working capital, capitalexpenditures, and other operating needs. The Company estimates its2001 net capital expenditures will approximate between $150 millionand $175 million. Under present conditions, management does notbelieve access to funds will restrict its ability to pursue its businessstrategy.

108. The June 30, 2001 Form 10-Q also disclosed a new securitization arrangement under

which Tower sold approximately $180.7 million of net accounts receivable in exchange for $54.0

million of cash and a retained subordinated interest in the receivables sold of approximately $126.7

million, as follows:

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During the quarter ended June 30, 2001 the Company entered into anagreement whereby the domestic operating units will sell eligiblecustomer receivables on an ongoing basis to a newly formed specialpurpose entity (the “SPE”). Upon recording the sale, the operatingunits recognize a loss representing the difference between thecarrying value of the eligible receivables and the net sales proceedsreceived. The loss consists of the effects of yield adjustments andprojected credit losses associated with the receivables pool. The SPErecords its ownership in the net receivables purchased from theoperating units. The SPE subsequently sells its interest in receivablesto a third party funding agent in exchange for cash and a subordinatedinterest in the unfunded receivables transferred. The Company acts asan administrative agent in the management and collection of accountsreceivable sold. The Company remits all cash collected fromdomestic receivables to the SPE. The SPE records a liability foramounts due to the funding agent along with any funding costs andapplies any excess collections to reduce its subordinated interest inreceivables sold. Cash collected by the SPE in excess of amounts duethe funding agent and its net subordinated interest in the receivablespool are recorded as investment income by the SPE. This incomerepresents an offset of the yield adjustments and credit lossesrecorded by the operating units upon sale in adjusting the carryingvalue of receivables sold. The net impact of the yield loss and creditloss adjustment is not material.

During the quarter ended June 30, 2001, the Company soldapproximately $180.7 million of net accounts receivable in exchangefor $54.0 million of cash and a retained subordinated interest in thereceivables sold of approximately $126.7 million. The proceeds fromthe sale were used to pay down borrowings under the Company’srevolving credit facility. * * * *

109. The June 30, 2001 Form 10-Q was false and misleading because, although it disclosed

this securitization arrangement, it did not disclose that Tower had entered into an “Early Pay”

program with its U.S.-based OEMs to improve and sustain Tower’s liquidity. Under these “Early

Pay” or “Fast Pay” programs, Tower was actually selling its receivables to a third party -- GE -- at

a discount. In turn, the U.S.-based OEMs guaranteed payment of the accounts receivable to GE. In

this way, Tower was just barely able to meet its operating cash needs. Tower, however, only

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disclosed the existence of this factoring arrangement in October 2004 -- near the end of the Class

Period, when Tower’s bankruptcy was imminent, and even then gave few details.

110. The June 30, 2001 Form 10-Q was also materially false and misleading because it

failed to disclose that factoring transactions had materially improved the Company’s reported

operating cash flows for the six months ended June 30, 2001 by approximately $42 million, or

approximately 16.3%, and allowed Tower to report a positive June 30, 2001 “cash and cash

equivalents” balance of approximately $11,185,000, instead of a negative number. (These figures

are based on Tower’s later disclosure on November 27, 2001 that accelerated collections of account

receivables decreased working capital by $42 million.

111. Moreover, the financial statements and MD&A disclosures in the June 30, 2001 Form

10-Q were materially false and misleading because they failed to disclose the (a) nature and

magnitude of Tower’s factoring arrangement with GE; (b) the general nature of the risk associated

with concentrations in the volume of business transacted with GE; and (c) Tower’s vulnerability to

a severe impact if GE were to discontinue the existing factoring arrangement.

112. On August 6, 2001, Tower filed an amendment to its Form 10-Q for the quarterly

period ended June 30, 2001 (“the June 30, 2001 Form 10-Q/A), signed by defendant Barone. Aside

from minor changes, the June 30, 2001 Form 10-Q/A was substantially identical to the June 30, 2001

Form 10-Q; it was materially false and misleading for the same reasons stated for the falsity of the

June 30, 2001 Form 10-Q, and for the reasons stated above in ¶¶45-62.

113. On October 18, 2001, Tower announced its operating results for the third quarter and

nine months ended September 30, 2001 in a press release. Revenues were $558 million, a 4%

increase over the same year period in 2000. The net loss for the third quarter of 2001 was $1 million

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or 3¢ per diluted share versus net income of $10 million or 21¢ per share in the comparable 2000

period. Defendant Campbell, commenting on the results, stated: “Despite the sales and earnings

shortfall relative to 2000 we have continued to reduce debt through effective management of

working capital and the successful completion of the $40 million private placement of our common

stock and the $126 million operating lease financing for the Dodge Ram frame assembly completed

during the quarter. This statement about the Company’s “effective management of working capital”

was materially false and misleading because it failed to disclose the factoring arrangements with GE

and their effect on Tower’s liquidity as alleged above in ¶45-62.

114. On November 14, 2001, Tower filed a Form 10-Q with the SEC for the quarterly

period ended September 30, 2001 (“the September 30, 2001 Form 10-Q”), signed by defendant

Barone. It reflected “cash and cash equivalents” of approximately $15,960,000 as of September 30,

2001:

During the nine months ended September 30, 2001, working capitaldecreased by approximately $313 million. This decrease is comprisedof the effects of the accounts receivable securitization, whichdecreased working capital by approximately $41 million; a change inthe accounts payable payment terms, which decreased working capitalby approximately $70 million; accelerated collections of amountsdue from customers, which decreased working capital byapproximately $110 million; the receipt of amounts due from lessors,which decreased working capital by approximately $88 million; andother net changes in the components of working capital ofapproximately $4 million.

*****During the first nine months of 2001, the Company generated $426.5million of cash from operations compared to $137.2 million in the2000 period.

*****

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The Company believes the borrowing availability under its creditagreement, together with funds generated by operations, shouldprovide sufficient liquidity and capital resources to pursue itsbusiness strategy for the foreseeable future, with respect to workingcapital, capital expenditures, and other operating needs.

115. The September 30, 2001 Form 10-Q was materially false and misleading because it

failed to disclose that factoring transactions had materially improved the Company’s reported

operating cash flows for the nine months ended September 30, 2001 by approximately $110 million,

or approximately 32.5%, and allowed Tower to report a positive September 30, 2001 “cash and cash

equivalents” balance of approximately $15,960,000, instead of a negative number. The financial

statements and MD&A disclosures contained within the September 30, 2001 Form 10-Q were

materially false and misleading because they failed to disclose: (a) the existence, nature, and

magnitude of Tower’s factoring arrangement with GE; (b) the impact of Tower’s factoring

transactions on Tower’s liquidity; (c) the general nature of the risk associated with concentrations

in the volume of business transacted with GE; and (d) Tower’s vulnerability to a severe impact if GE

were to discontinue the factoring arrangement.

116. In addition, the statement that the Company’s “borrowing availability under its credit

agreement, together with funds generated by operations, should provide sufficient liquidity and

capital resources to pursue its business strategy for the foreseeable future, with respect to working

capital, capital expenditures, and other operating needs” was materially false and misleading when

made because Tower could not sustain its operations without the cash from its factoring arrangement

with GE.

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117. On November 27, 2001, Tower filed a second amended Form 10-Q for the quarterly

period ended June 30, 2001 (“the second amended June 30, 2001 Form 10-Q/A”), signed by

defendant Barone. It contained a revised representation of Tower’s working capital, which stated:

During the six months ended June 30, 2001, working capitaldecreased by approximately $198 million. This decrease is comprisedof the effects of the accounts receivable securitization, whichdecreased working capital by approximately $54 million; a change inthe accounts payable payment terms, which decreased working capitalby approximately $70 million; accelerated collections of accountsreceivable, which decreased working capital by approximately $42million; collections of tooling receivables, which decreased workingcapital by approximately $23 million; and other net changes in thecomponents of working capital of approximately $9 million.

118. With respect to the Company’s cash from operations and liquidity, the second

amended June 30, 2001 Form 10-Q/A stated:

During the first six months of 2001, the Company generated $300.4million of cash from operations compared with generating $73.3million in the 2000 period.

*****The Company believes the borrowing availability under its creditagreement, together with funds generated by operations, shouldprovide liquidity and capital resources to pursue its business strategyfor the foreseeable future, with respect to working capital, capitalexpenditures, and other operating needs.

119. The second amended June 30, 2001 Form 10-Q/A was materially false and misleading

for the same reasons that the June 30, 2001 Form 10-Q was materially false and misleading as

discussed above. In addition, the disclosure concerning $42 million of “accelerated collections of

accounts receivable” when read together with the statement regarding “aggressive working capital

management” falsely led the investment community to believe that the Company had been improving

its billing and collection methods when, in fact, Tower had obtained $42 million by factoring

Xerox Corp. agreed to restate its financial results, conduct a special review of its3

accounting controls, and pay a $10 million fine. SEC Litigation Release No. 17465 (April 11,2002) (www.sec.gov/litigation/litreleases/lr17465.htm).

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receivables. Although Tower was obligated to disclose its receivables factoring agreement with GE

(see SEC v. Xerox Corp., Civil Action No. 02-272789 at ¶¶72-75 (S.D.N.Y.) (failure to disclose

factoring transactions in 1999 financial statements) (available at www.sec.gov/litigation/

complaints/complr17465.htm)), but failed to do so.3

120. The foregoing statements were also false and misleading for the reasons stated above

in ¶¶45-62.

121. On January 25, 2002, Tower issued a press release announcing results for the fourth

quarter of 2001. Revenues were $639 million, and adjusted net income was $3 million. Revenues

for the full year 2001 were $2,467,000,000, a 3% decrease compared with $2,532,000,000 in 2000.

Defendant Campbell commented that “2001 proved to be a challenging year for us.” Campbell,

however, stated: “we achieved significant reduction in debt through effective working capital

management and financing activities.” Tower’s stock price rose from $8.19 on January 25, 2002 to

a closing price of $9.17 on January 28, 2002, and thereafter continued to rise, reaching $13.00 on

March 22, 2002. The foregoing statement was false and misleading and known by Campbell to be

so, as alleged above in ¶¶45-62.

122. On March 25, 2002, Tower filed a Form 10-K with the SEC for the year ended

December 31, 2001 (“the 2001 Form 10-K”), signed by defendants Campbell, Johnson, Barone, and

Rued. It reflected a “cash and cash equivalents” balance of approximately $21,767,000 as of

December 31, 2001, and discussed the Company’s working capital, cash from operations, and

liquidity, as follows:

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The Company’s principal sources of cash are cash flow fromoperations, commercial borrowings and capital markets activities.During the year ended December 31, 2001, the Company generated$513.8 million of cash from operations. This compares with $92.6million generated during the same period in 2000. Net income beforedepreciation and amortization, deferred income taxes, extraordinaryloss, equity in joint venture earnings, and restructuring and assetimpairment charges was $178.1 million and $256.7 million for 2001and 2000, respectively. Operating cash flow was reduced by $21.5million in 2001 and $11.5 million in 2000 for cash restructuringpayments, and was increased by net tax refunds of $12.9 million in2001 and decreased as a result of net tax payments of $18.8 millionin 2000. In total, working capital and other operating items increasedoperating cash flow by $335.7 million during 2001 and decreasedoperating cash flow by $164.1 million during 2000.

*****The Company’s most recent objective has been to reduceindebtedness by maximizing cash flow. Several initiatives, such asextending its accounts payable terms to coincide with prevailingindustry practices and accelerating collections from customers tookplace in 2001. As a result, and as described in more detail belowunder “Liquidity and Capital Resources,” the Company was able tosignificantly reduce its indebtedness in 2001 by making netrepayments of $335 million, despite last year’s downturn in theautomotive industry.

*****During the year ended December 31, 2001, working capital decreasedby approximately $458.5 million. During that year, the Companyfocused specifically on working capital improvement in executing itsobjectives of reducing indebtedness by maximizing free cash flow. Inaddition to the items listed above, several key initiatives wereutilized, the results of which contributed to the working capitaldecrease during the year and resulted in the significant improvementin cash generated from operations. Approximately $120.5 million ofthe decrease in working capital was comprised of an increase inaccounts payable by renegotiating terms with key suppliers to termsthat are more reflective of industry norms. A decrease of accountsreceivable of approximately $74.5 million resulted primarily fromthe Company’s participation in specific receivable programs withkey customers. These programs allow for accelerated collection ofreceivables from key customers, subject to interest charges ranging

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from 7.25 percent to 8.5 percent at an annualized rate. Workingcapital also decreased as a result of the collection of toolingreceivables and the receipt of proceeds from certain operating leasearrangements that were finalized in 2001 but pertained to dedicatedcapital costs incurred in 2000 in anticipation of the completion ofthose leases. The Company also emphasized the maintenance of lowinventory levels.

The Company expects to continue to maintain a low working capitalposition through a continuation of the efforts discussed above andcontinued focus on minimizing the length of the cash flow cycle. TheCompany believes that the available borrowing capacity under itscredit agreement, together with funds generated by operations,should provide sufficient liquidity and capital resources to pursueits business strategy for the foreseeable future, with respect toworking capital, capital expenditures, and other operating needs.

123. The foregoing statements were materially false and misleading because they failed

to disclose that factoring transactions had materially improved the Company’s reported operating

cash flows for the year ended December 31, 2001 by approximately $75 million, or approximately

51.8%, allowing Tower to report a positive December 31, 2001 “cash and cash equivalents” balance

of approximately $21,767,000, instead of a negative number, and for the reasons previously cited

in ¶¶45-62 above.

124. Tower’s disclosure that it had participated “in specific receivable programs with key

customers” which allowed “for accelerated collection of receivables from key customers, subject to

interest charges ranging from 7.25 percent to 8.5 percent at an annualized rate” falsely led the

investment community to believe that Tower had provided a discount to certain key customers for

early payments (i.e., similar to the 2/10 net/30 discount common in many merchandising businesses).

In fact, Tower was subject to the elaborate factoring arrangement described above. Receivables from

Ford, DaimlerChrysler, Hyundai/Kia and GM represented 41% of total accounts receivable at

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December 31, 2001 and 57% of total accounts receivable at December 31, 2000. (Id. at 67).

(Hyundai/Kia accounted for 12% of Tower’s revenues in 2001 and 4% in 2000. Id.).

125. Tower continued to issue financial statements that failed to disclose its dependence

on its factoring arrangement with GE. Tower filed the following financial statements containing

substantially the same representations about “working capital” and the Company’s belief that its

“available borrowing capacity under its credit agreement, together with funds generated by

operations, should supply sufficient liquidity and capital resources to pursue its business strategy for

the foreseeable future,” as follows:

! March 31, 2002 Form 10-Q, signed by Barone, filed May 15, 2002;

! June 30, 2002 Form 10-Q, signed by Barone, filed August 12, 2002;

! September 30, 2002 Form 10-Q, signed by Barone, filed November 13, 2002;

! March 31, 2003 Form 10-Q, signed by Thomas, filed May 9, 2003;

! June 30, 2003 Form 10-Q, signed by Thomas, filed August 12, 2003;

! September 30, 2003 Form 10-Q, signed by Kathleen Johnston (non-defendant), filed

November 12, 2003.

126. The foregoing statements were false and misleading because the financial statements

and MD&A disclosures contained in these filings failed to disclose the factoring arrangement with

GE and its impact on Tower’s liquidity and Tower’s vulnerability to a severe impact if these early

payments were discontinued, as alleged above in ¶¶45-62.

127. On October 18, 2002, Tower held a conference call in which Barone and Campbell

participated. During the call, the following conversation took place:

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OPERATOR: Our next question comes from Kirk Ludke (ph). Pleasego ahead with your question.

KIRK LUDKE (ph): Hello guys. Good afternoon. Tony, if you wereto look back over the last couple of years, it seems as though a lot ofthe car makers have accelerated receivables, the payment of supplierreceivables over that period of time and I'm curious if I know a lot haschanged, your business has really grown. So this probably isn't aneasy question to answer, but why do you think that one (ph) thebenefit is that you've received an aggregate over that period of timefrom the acceleration of those payments? And then secondly, do youhave any concerns that they might go the other way if their situationsdeteriorated?

ANTHONY BARONE: Yes, we have received benefit on theacceleration of payment of accounts receivable from the big three.And if I had to pick a number that we've benefited by, I'd put it at $50million of cash improvement. So if it went away, initially it wouldcost 50 million. The backstop that we have in terms of the cash flowis that we have a $60 million receivables securitization facility, andwe've never been able, really, to access more than 25 million underthat facility because of the concentration limiters relative to whatreceivables are being sold.

If we had the disappearance of the acceleration programs from Ford,Chrysler, and General Motors, then losing 50, we would pick up tooffset that 35 or 40. So the net impact in terms of us on cash flowwould not be that great. [Fair Disclosure Transcript of 10/18/02Conference Call at 14].

128. The foregoing statements were false and misleading because as Barone then knew,

or recklessly disregarded, Tower’s securitization of accounts receivable would never be sufficient

in itself to make up the shortfall in cash flow if the early pay programs “went away.” As Barone

knew, as of September 30, 2002, Tower’s total receivables aggregated $273,386,000. But Tower

only received cash equal to approximately 20% of the gross receivables sold. (3/31/03 Form 10-Q:

$130.3 million receivables sold for proceeds of $28.9 million cash). Thus, even if Tower were able

to sell all of its receivables as of September 30, 2002 in a securitization, it might have received $60

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million, but then there would be minimal cash flow for months thereafter because there would be

minimal collections on its receivables.

129. Tower also conducted an analyst conference call on the morning of February 14, 2003

in connection with its operating results announcement. On the call were Campbell, Thomas, Barone

and David Tuitt. With respect to the Company’s accounts receivable, the following exchange took

place.

KIRK LUTKI (Ph): Then a couple housekeeping items. The currentmaturities on the balance sheet at year end, are those outstanding onthe revolver or what are those? It’s $120 million.

ANTHONY BARONE: The primarily the current maturities at yearend are borrowings in Korea. It’s --

KIRK LUTKI (ph): That’s right.

ANTHONY BARONE: Those loans are on a 364 day basis. Weexpect them to renew them. The argument could be made to classifythem as long term but there’s nothing in regards to maturity relativeto the revolver until 2005.

KIRK LUTKI (ph): Okay. I remember this. This is the case everyquarter, isn’t it?

ANTHONY BARONE: That’s correct.

KIRK LUTKI (ph): And then the accelerated receivables at year end,do you know how much those were offhand?

ANTHONY BARONE: The securitization balance was $17.5 million,and then the relativity of accelerated receivables from Ford DaimlerChrysler and General Motors have not changed from December 31,2001 to December 31, 2002. If I had to estimate that today I’d say it’sabout 35 to $40 million and one of the items that we’ve commentedon previously is the reason we are unable to use much more of oursecuritization facility which is 60 million of capacity is because ofthose pull-ahead, we don’t have the necessity. But then again it doesserve as back up in the event those programs discontinued.

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130. The foregoing statements were false and misleading for the reasons set forth above

in ¶128.

131. On March 19, 2003, Tower filed a Form 10-K with the SEC for the year ended

December 31, 2002 (“the 2002 Form 10-K”), signed by defendants Campbell, Johnson, Thomas, and

Rued. It reflected a “cash and cash equivalents” balance of approximately $13,699,000, and made

disclosure about the Company’s working capital, cash from operations, and liquidity, as follows:

The Company’s most recent objective during 2001 and 2002 has beento reduce indebtedness by maximizing cash flow. Several cashmanagement initiatives, such as extending its accounts payable termsto coincide with prevailing industry practices and acceleratingcollections from customers have resulted in significant negativeworking capital levels for the Company of $305 million and $380million as of December 31, 2002 and 2001, respectively.

*****The Company’s principal sources of cash are cash flow fromoperations, commercial borrowings and capital markets activities.During the year ended December 31, 2002, the Company generated$131.0 million of cash from operations. This compares with $513.8million generated during the same period in 2001, which was a yearof significant focus by the Company on working capitalimprovement. Net income before depreciation and amortization,deferred income taxes, gain on sale of plant, equity in joint ventureearnings, restructuring and asset impairment charges, and cumulativeeffect of change in accounting principle was $198.6 million and$178.1 million for 2002 and 2001, respectively. Operating cash flowwas reduced by $37.1 million in 2002 and $21.5 million in 2001 forcash restructuring payments, and was increased by net tax refunds of$19.8 million in 2002 and $12.9 million in 2001. Operating cash flowwas also reduced in the 2002 period by $32.9 million for requiredpension contributions. No pension contributions were made by theCompany in the 2001 period. Expected pension contribution fundingrequirements of the Company for 2003 are approximately $27million. In total, working capital and other operating items decreasedoperating cash flow by $67.6 million during 2002 and increasedoperating cash flow by $335.7 million during 2001.

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*****The Company maintained significant negative levels of workingcapital of $305.5 million and $379.8 million as of December 31, 2002and 2001, respectively, as a result of its continuing focus onminimizing the cash flow cycle. The $74.3 million net increase inworking capital in 2002 was due to a $33.6 million increase inaccounts receivable and a $20.5 million increase in inventoriesattributable to the significant sales and production increases inDecember 2002 relative to December 2001, a $36.5 milliontiming-related increase in tooling, and $37.1 million in restructuringreserve payments made during 2002, offset by a $39.7 millionincrease in accounts payable and other current liabilities resultingfrom the increase in production volumes, in addition to a $13.7million decrease in other current assets. The Company’smanagement of its accounts receivable includes participation inspecific receivable programs with key customers which allow foraccelerated collection of receivables, subject to interest chargesranging from 4.5 percent to 6.5 percent at an annualized rate.

The Company expects to continue its focus on maintaining a largenegative working capital position through a continuation of the effortsdiscussed above and continued focus on minimizing the length of thecash flow cycle. The Company believes that the available borrowingcapacity under its credit agreement, together with funds generated byoperations, should provide sufficient liquidity and capital resourcesto pursue its business strategy for the foreseeable future, with respectto working capital, capital expenditures, and other operating needs.

132. The foregoing statement was false and misleading for the reasons set forth above in

¶¶45-62; 128.

133. On March 24, 2003, Tower announced that defendant Barone was leaving Tower.

Tower noted that Barone had been CFO of Tower from 1995 until late 2002. By August 2003,

Campbell, Thomas and Rued had left Tower.

134. On April 22, 2003, Tower had a conference call with analysts to discuss Tower’s first

quarter 2003 earnings. On the call were defendants Campbell and Thomas. Campbell made

introductory remarks, and told analysts: “The next area is liquidity. That seems to be on everybody’s

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mind and they’re worried about it. But don’t. We had $117 million availability at the end of the first

quarter and we will be in compliance throughout the year.” (Fair Disclosure Transcript 4/22/03, at

2).

135. The foregoing statement was false and misleading. Defendant Ligocki testified that:

“The Company was very tight on cash when I joined [in August 2003]” and “[a]t the time the

company was fragile, we were extremely short of cash ... .” (Ligocki Tr. at 13 & 15).

136. On December 18, 2003, Tower issued a press release announcing the appointment

of James A. Mallak as Chief Financial Officer of the Company. Mallak reported directly to Ligocki

(Ligocki Tr. at 29), and was responsible for Tower’s financial reports. (Ligocki Tr. at 31-32).

137. On March 8, 2004, Tower filed a Form 10-K with the SEC for the year ended

December 31, 2003 (“the 2003 Form 10-K”), signed by defendants Johnson, Ligocki, and Mallak.

It reflected a “cash and cash equivalents” balance of approximately $16,899,000 and made

representations regarding the Company’s working capital, cash from operations, and liquidity, as

follows:

The Company’s principal sources of cash are cash flow fromoperations, commercial borrowings and capital markets activities.During the year ended December 31, 2003, the Company generated$184.8 million of cash from operations. This compares with $131.0million generated during the same period in 2002. Net income beforedepreciation and amortization, deferred income taxes, gain on sale ofplant, equity in joint venture earnings, restructuring and assetimpairment charges, write-down of joint-venture investment tomarket value, customer recovery related to program cancellation, andcumulative effect of change in accounting principle was $175.9million and $194.5 million for 2003 and 2002, respectively.Operating cash flow was reduced by $14.5 million in 2003 and $37.1million in 2002 for cash restructuring payments, and was increased bynet tax refunds of $19.8 million in 2002. Operating cash flow wasalso reduced in the 2003 and 2002 periods by $26.8 million and $32.9

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million, respectively, for required pension contributions. Expectedpension contribution funding requirements of the Company for 2004are approximately $38 million under currently enacted pensionfunding relief legislation. In total, working capital and other operatingitems increased operating cash flow by $8.9 million during 2003 anddecreased cash flow by $63.5 million during 2002.

*****The Company’s objectives are to strengthen its balance sheet andreduce indebtedness by maximizing cash flow. Several cashmanagement initiatives, such as extending its accounts payable termsto coincide with prevailing industry practices and acceleratingcollections from customers have resulted in significant negativeworking capital levels for the Company of $377 million and $305million as of December 31, 2003 and 2002, respectively. As a resultof these actions, a sale-leaseback transaction in April 2002 and anequity offering in May 2002, as described in more detail below under“Liquidity and Capital Resources,” the Company was able to reduceits indebtedness in 2002 by making net repayments of $159 million.This 2002 debt reduction by the Company is incremental to thesignificant reduction of indebtedness in 2001 in which net repaymentswere $335 million. In June 2003, the Company completed a seniornote offering which provided net proceeds of $244 million which,subject to final negotiations with the Company’s senior lenders, willbe utilized to refund the Company’s $200 million convertiblesubordinated notes by August 1, 2004. The $183 million in netborrowings in 2003 primarily represents this incremental debt as ofDecember 31, 2003 (most of which is residing in the $161 million ofcash and cash equivalents as of December 31, 2003).

*****The Company maintained significant negative levels of workingcapital of $377.3 million and $305.5 million as of December 31, 2003and 2002, respectively, as a result of its continuing focus onminimizing the cash flow cycle. The $71.8 million net decrease inworking capital in 2003 was due to the combined effects of a $3.1million decrease in inventory, a $9.3 million decrease in prepaidtooling and other current assets, a $179.1 million increase in currentmaturities primarily due to the reclassification of the $200 millionConvertible Subordinated Notes to current maturities, and a $103.8million net increase in accounts payable and accrued liabilities atDecember 31, 2003, offset by a $147.2 million increase in cashattributable to net proceeds of approximately $244 million related to

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the senior note offering completed in June 2003 and a $76.3 milliontiming-related increase in accounts receivable. The Company’smanagement of its accounts receivable includes participation inspecific receivable programs with key customers that allow foraccelerated collection of receivables, subject to interest chargesranging from 4.3 percent to 6.0 percent at an annualized rate. TheCompany expects to continue its focus on maintaining a largenegative working capital position through the efforts discussed aboveand continued focus on minimizing the length of the cash flow cycle.

The Company believes that funds generated by operations, togetherwith cash on hand and available borrowing capacity under its creditagreement, should provide sufficient liquidity and capital resourcesto pursue its business strategy for the foreseeable future, with respectto working capital, capital expenditures, and other operating needs.The Company anticipates that it will meet its liquidity requirementsthrough the prudent use of its cash resources, effective managementof operating working capital and capital expenditures and alsoemploying other potential financing and strategic alternatives, asrequired. Certain assumptions underlie this belief, including amongothers, that there will be no material adverse developments in theCompany’s business, the automotive market in general, or theCompany’s anticipated activities and costs associated with its newprogram launches scheduled for the next twelve months.

138. The foregoing statements were false and misleading for the reasons set forth above

in ¶¶45-62; 128.

139. Discussing the Company’s accounts receivable securitizations, the 2003 Form 10-K

stated:

SUBORDINATED INTEREST IN ACCOUNTS RECEIVABLE:

In June 2001, the Company entered into a financing agreementwhereby its domestic operating units sell eligible customerreceivables on an ongoing basis to a newly formed, fullyconsolidated, financing entity. The financing entity subsequently sellsits interest in the receivables to a third party funding agent inexchange for cash and a subordinated interest in the unfundedtransferred receivables. The Company acts as an administrative agentin the management and collection of accounts receivable sold, such

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that the amount received from the funding agent is treated as anadvance and recorded in accrued liabilities in the consolidatedbalance sheet.

During December 2003, the Company sold approximately $83.9million of net accounts receivable, retaining a subordinated interestin all of the receivables. The receivables sold represented amountsowed to the Company from customers as of November 30, 2003. Themajority of such receivables were collected in December 2003 and asa result, the Company’s retained interest in accounts receivable is notsignificant as of December 31, 2003 and is not presented separatelyfrom accounts receivable. As of December 31, 2003, the Companyhas not received collections from customers that are required to beremitted to the funding agent, and as a result, there are no amountsdue to the funding agent as of December 31, 2003. Settlement of anyamounts due to the funding agent, as well as the cost of funding at arate of approximately 2.42 percent, occurs during the monthsubsequent to the sale of the receivables.

140. The foregoing disclosure, made as of March 8, 2004, was materially false and

misleading because it failed to disclose that Tower’s financing agreement was terminated during

February 2004.

141. Tower continued to file false and misleading quarterly reports in 2004, failing to

disclose the magnitude and adverse future impact of its factoring arrangement. Tower issued the

following false and misleading Form 10-Qs during 2004, containing substantially the same

disclosures as quoted above in Tower’s prior Form 10-Q filings:

! March 31, 2004 Form 10-Q, signed by Mallak, filed May 10, 2004; significantly, the

March 31, 2004 Form 10-Q also stated:

In June 2001, the Company entered into a financing agreementwhereby its domestic operating units sold eligible customerreceivables on an ongoing basis to a fully consolidated financingentity. In February 2004, the financing agreement was terminated.During the first quarter of 2004, no customer receivables were sold.

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! June 30, 2004 Form 10-Q, signed by Mallak, filed August 9, 2004.

142. The March 31, 2004 Form 10-Q was also materially false and misleading because it

falsely stated that “no customer receivables were sold” during the first quarter of 2004 when, in fact

receivables were sold to GE through Tower’s factoring arrangement with GE.

143. The foregoing statements in these two quarterly filings were false and misleading for

the reasons set forth above in ¶¶45-62; 128.

144. On July 27, 2004, Ligocki and Mallak conducted a conference call with analysts. The

following exchange took place:

ADRIAN DALE (ph): Could you give me your balance on your earlypayment program?

JIM MALLAK: We really have not given that out. We are on a -- inNorth America, on the accelerated programs with most of the OEs,but we have never really given that amount out.

ADRIAN DALE (ph): Okay. Could you give me the proportion,though, at least, for the programs with Chrysler and GM, versus theothers?

JIM MALLAK: All of our business with Chrysler, Ford, and GM,is on the accelerated programs.

ADRIAN DALE (ph): Okay. And I’m just trying to get a sense for --I’ve heard that GE is going pull their support of that program, and Iwas just wondering [if] you could give us any color on that, for whatyou’re thinking there.

JIM MALLAK: We have not been notified of that. We have heardthat. We do have some other alternatives that we could pursue tooffset that, so we are working on some other initiatives that, if thatdid come about, where we could-off set that impact to us.

ADRIAN DALE (ph): And can you give me any color on thoseinitiatives?

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JIM MALLAK: Not at this time.

145. Although defendant Mallak admitted that all of Tower “business with Chrysler, Ford,

and GM, is on the accelerated programs” defendant Mallak refused to disclose and concealed: (a)

the nature and magnitude of Tower’s factoring arrangement with GE; (b) its impact on Tower’s

liquidity; (c) the general nature of the risk associated with concentrations in the volume of business

transacted with GE; and (d) Tower’s vulnerability to a severe impact if GE were to cancel the

factoring arrangement, or if the OEMs were to stop guaranteeing payment of Tower’s invoices to

GE.

146. On October 20, 2004, Tower filed a Form 8-K with the SEC, signed by defendant

Hatto, stating:

United States based automotive original equipment manufacturers(“OEMs”) developed off-balance sheet payment plans in 2001 to helpprovide liquidity to their suppliers. Tower Automotive, Inc. (“TowerAutomotive”) has participated in these plans. OEMs are cancelingthese programs. In response to this development, Tower Automotiveis pursuing a securitization of its accounts receivable. TowerAutomotive’s senior secured credit facility (the “Credit Facility”)permits the securitization of up to $50,000,000 of certain accountsreceivable. Tower Automotive is in the process of requesting anamendment to the Credit Facility so that it may securitize additionalamounts of accounts receivable.

*****The US based OEMs developed off-balance sheet payment plans in2001 to help their supplier group deal with the liquidity impact of theindustry downturn and terrorism related volatility in the financialmarkets. Tower Automotive has participated in these plans since theywere made available.

Although facilitated by third parties, the programs legallyconstituted a discount by the supplier for early payment. The GAAPimpact on the balance sheet was a reduced Accounts Receivable

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balance. The discount was booked as Interest Expense. The OEMs arecanceling the programs.

*****The approximate liquidity impact by customer will be: Ford $80Million GM $25 Million DCX $35 Million. The Senior Refinancingplan financials did not contemplate a reversion in customer terms.Tower Automotive has secured a solution to offset the one timeliquidity impact of the plan termination. A term sheet has beennegotiated and due diligence has been completed.

147. The October 20, 2004 Form 8-K was materially false and misleading because it

mischaracterized the nature of Tower’s factoring arrangement with GE and because it led the

investment community to believe that Tower had “secured a solution to offset the one time liquidity

impact” of GE’s cessation of its factoring arrangement. As alleged below, Tower had no solution

to replace the upfront cash it had been obtaining through its factoring arrangement with GE. Tower

also falsely stated that the programs with its U.S.-based OEMs “legally constituted a discount by the

supplier,” even though “facilitated by third parties.” Tower did not identify the program as a

factoring arrangement to avoid being in violation of the New Senior Credit Facility. Under the New

Senior Credit Facility, a “factoring arrangement” constituted a sale of receivables. (Definition of

“Permitted Receivables,” New Senior Credit Facility, at p.28).

148. In addition, Tower’s disclosure about its accounting treatment for its factoring

arrangement with GE was false and misleading. According to GAAP (paragraphs 9 and 82 of FASB

Statement No. 125; paragraphs 9 and 112 of FASB Statement No. 140), Tower’s transfer of

receivables to GE (which put these receivables beyond the reach of creditors, even in bankruptcy)

was required to be accounted for as a sale (“A transfer of financial assets ... in which the transferor

surrenders control over those financial assets shall be accounted for as a sale ... .”). Moreover,

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GAAP (paragraph 11 of FASB Statement No. 125; paragraph 11 of FASB Statement No. 140)

required Tower to “recognize in earnings any gain or loss on the sale.” Tower neither accounted for

its transfers of receivables to GE (transfers in which it completely surrendered control over the

receivables to GE; factoring transactions) as sales, nor recognized in earnings any gain or loss (all

of Tower’s transfers to GE resulted in a loss) on the sales. Instead, Tower:

a. disguised its sales of receivables to its factor (GE) as accelerated remittances

from OEMs of amounts billed to them;

b. refused, when asked, to disclose critical information concerning these

“accelerated” remittances (“We don’t - we don’t share that information.” Campbell, April 22, 2003

conference call; “We have not given that out,” Mallak, July 27, 2004 conference call), despite the

fact that they continued to grow exponentially; and

c. concealed its deceptive accounting by failing to comply with disclosure

requirements mandated by GAAP (APB Opinion No. 21 and Statement of Position 94-6).

149. On October 28, 2004, Tower conducted a conference call wherein the following

conversation took place:

JIM MALLAK: [A]t the end of the quarter, we began winding downcertain customers’ accelerated pay programs. While this wind downdid not materially impact the quarter, it will impact us going forward.We are diligently working at replacing the accelerated programs asthey wind down. We are currently seeking an amendment to ourcredit agreement, that will allow us to replace the accelerated payprogram with in our accounts receivable securitization program in theU.S.

At a minimum, we will be going forward with a $50m ARsecuritization program, for which we have room in our creditagreement. And we will continue to work with our customers on thisissue.

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150. On November 8, 2004, Crain’s Detroit Business published an article, “End of fast-pay

program puts some suppliers in crunch” by Terry Kosdrosky which stated, in relevant part:

A program that gave suppliers early payments from automakers isending, sending some with a cash crunch scrambling to find analternative.

Tower Automotive Inc., for example, is trying to get its lenders to letit sell more receivables. Novi-based Tower, which is strugglingfinancially, needs to replace $80 million from Ford Motor Co. earlyreceivables, thanks to the program’s end.

GE Capital - which manages payments to suppliers from GeneralMotors Corp., Ford and the Chrysler Group - is ending the so-called “fast-pay” tool it has used for some suppliers since 1999.Under the program, suppliers accept a slightly lower payment inreturn for getting paid in 10 days. This improves cash flow becauseit bypasses the monthly billing cycle.

Ford and Chrysler will end the program this year. GM said it will endit at the end of 2005. Chrysler and GM said they had about 300supplier locations on the program.

It’s another problem for some suppliers already dealing with highraw-material prices and lower automotive production.

“The way it impacts (suppliers) is they’ll get their cash moreslowly,” said Shelly Lombard, a senior bond analyst at New YorkCity-based Gimme Credit. “They need other sources of liquidity likebank revolvers or accounts receivable securities.”

Tower, a supplier of automotive structures and stampings, alreadyused its bank revolver, Lombard said. Instead, the company plansto sell $50 million in receivables. That’s the maximum allowedunder its bank agreement, but Tower wants to do more.

“We’re working on a couple of packages,” Tower CFO JamesMallak told investors and analysts during the company’s third-quarter conference call. “Right now, we’re still in negotiations. Wehope to have that finalized within the next two to three weeks.”

Mallak said the end of the fast-pay program will “impact us goingforward.” Tower reported a net loss of $10.9 million or 19 cents a

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share on revenue of $2.3 billion through the first nine months of theyear. Last year Tower reported $2.9 billion in revenue.

Suppliers with unused bank revolvers and cash on hand are in a betterposition to deal with the change, Lombard said. Dura AutomotiveSystems Inc. in Rochester Hills said the change won’t affect cashflow even though its exposure on the program is about $12 millionwith Ford and $15 million to $18 million with GM and Chryslercombined.

Dura said it won’t have to sell receivables to make up the shortfall.

“We will cover the incremental working-capital requirement with the$175 million of cash we have on hand,” said Scott Ocholik, Duradirector of finance.

151. Mallak’s statements during the October 20, 2004 conference call and reported in the

November 8, 2004 Crain’s Detroit Business article were materially false and misleading because they

failed to state that Tower’s failure to replace the GE factoring arrangement with another source of

short term liquidity would result in Tower’s bankruptcy. (Indeed, as alleged above, Mallak, Ligocki

and Hatto were already planning for Tower’s bankruptcy).

152. On November 9, 2004, Tower filed a Form 10-Q with the SEC for the quarterly

period ended September 30, 2004 (“the September 30, 2004 Form 10-Q”), signed by Hatto. It

contained representations regarding the Company’s working capital, cash from operations, and

liquidity which stated, in relevant part:

At September 30, 2004, the Company had negative working capitalof $189.5 million... . At September 30, 2004, we had no availabilityto borrow additional amounts under our revolving loan commitment.Our ability to satisfy our liquidity requirements with cash flows fromoperations has been negatively impacted by a decline in our operatingperformance during the most recently completed quarter. During thethird quarter of 2004, certain of the Company’s customers notifiedthe Company that they were terminating their accelerated paymentprograms for all of their suppliers, including the Company. The

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Company is currently in discussions with these customers as to thetiming of such terminations and believes, based on suchdiscussions, that most programs will be terminated by the end of2005. The termination of these programs will have a materialadverse impact on the Company’s liquidity position. To offset thisnegative impact, the Company is in negotiations with third parties toestablish an accounts receivable securitization facility. The Companyis presently permitted by its credit agreement to securitize up to $50million of accounts receivable, which will offset a portion (but notall) of the reduced liquidity as a result of the termination of theaccelerated payment programs. The Company is currently takingactions to amend its credit agreement to increase the amount of theaccounts receivable securitization to $200 million. The Company haspreviously submitted this amendment to its lenders for approval butwithdrew it after receiving notice that more than 50% of the secondlien lenders opposed it as written. The Company is currently makingstructural changes to the amendment in order to gain the lenders’consent. The Company continues to pursue other alternativespermitted by the Company’s credit agreement to improve liquidity.These actions include, but are not limited to, the lease of certainequipment which will provide $40.0 million of additional liquidity;and an accounts receivable factoring agreement in its Europeanoperations, which will provide an additional $30.0 million ofliquidity. The Company believes that the combination of theseactions, plus the $50.0 million accounts receivable securitizationcurrently permitted by the Company’s credit agreement, willprovide sufficient liquidity to replace the liquidity provided by theaccelerated payment programs terminated by the Company’scustomers. In addition, the Company currently has trade accountspayable outstanding an average of 74 days. The Company’s paymentterms with its vendors average 60 days for purchases of productivematerial and other services. These amounts exclude amountsoutstanding for tooling and capital purchases which have paymentterms which are dependent on the tooling or capital meeting certaintechnical and performance requirements and generally requireprogress payments during construction. * * * * The Companybelieves that funds generated by operations, together with cash onhand and the impact of the actions permitted by the Company’s creditagreement, identified above, will be sufficient to permit the Companyto meet its liquidity and capital resources requirements for theforeseeable future. Certain significant assumptions underlie thisbelief, including among others, that the Company will be successfulin replacing the liquidity from the termination of the OEMS’accelerated payment programs, that there will be no material

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adverse developments in the Company’s business or operatingperformance, the automotive market in general, or the Company’santicipated activities and costs associated with its new programlaunches scheduled for the remainder of 2004. The credit agreementand the 12% senior notes contain a number of covenants thatsignificantly restrict our operating flexibility. In addition, the 9.25%senior notes restrict our ability to incur liens and other encumbrancesand engage in certain sale and lease-back transactions. * * * *

153. The September 30, 2004 Form 10-Q was materially false and misleading because it

re-presented the previously issued September 30, 2003 financial statements and incorporated the

2003 Form 10-K by reference, and failed to correct the non-disclosures and materially false and

misleading disclosures therein, and because it stated that:

a. “our ability to satisfy our liquidity requirements with cash flows from

operations has been negatively impacted by a decline in our operating performance during the most

recently completed quarter” when, in fact, Tower’s ability to satisfy its liquidity requirements with

cash flows from operations had been negatively impacted by its factoring arrangement with GE.

b. “most [of the factoring] programs will be terminated by the end of 2005”

when, in fact, most of the factoring programs had been terminated or were in the process of being

terminated.

c. “the Company believes that funds generated by operations, together with cash

on hand and the impact of the actions permitted by the Company’s credit agreement...will be

sufficient to permit the Company to meet its liquidity and capital resources requirements for the

foreseeable future” when, in fact, there was little likelihood that the Company would be able to meet

its liquidity and capital resources requirements for the foreseeable future.

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154. On December 6, 2004, Tower filed a Form 8-K with the SEC, signed by Hatto. It

stated:

As previously announced, Tower Automotive is currently pursuing anumber of actions to offset the adverse impact to its short-termliquidity position from the termination of the early payment programscurrently in place at certain of the company’s North Americanautomotive OEM customers. Based on recent conversations with itscustomers, the company believes that these programs will be phasedout over the next couple of months. Tower Automotive’s principalfocus in this regard has been to pursue an accounts receivablesecuritization facility and has obtained a commitment from athird-party to provide it with such a facility. This commitment issubject to a number of conditions and, in addition, the company needsan amendment to its existing credit agreement to implement thisfacility. The company previously submitted this amendment to itslenders but withdrew it after receiving notice that more than 50percent of the second lien lenders opposed it as written. Since then,the company has been negotiating with its lender group and expectsto make a formal presentation to its lenders regarding the terms andexpected benefits of the amendment in the near future.

As a contingency plan, Tower Automotive is also actively pursuinga smaller accounts receivable securitization facility, a Europeanfactoring program, and other actions to improve short-term liquidity,all of which the company believes can be implemented under itsexisting financing arrangements. The deferral of the dividend on thetrust preferred securities of approximately $4.4 million improves thecompany’s short-term liquidity position and preserves the company’soptions until either the amendment approval is achieved or thecontingency plan is in place early next year.

Tower Automotive has retained the services of Rothschild, Inc. tosupport the company in the negotiations for the credit agreementamendment. Rothschild brings significant capital markets experience,strong banking relationships, and global mergers and acquisitionbreadth as Tower Automotive works to improve the capital structure,de-lever the balance sheet, and enhance liquidity options over thenext months.

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155. The statements made in the December 6, 2004 Form 8-K were materially false and

misleading because Tower failed to disclose that its failure to replace the GE factoring arrangement

with another source of short term liquidity would result in Tower’s bankruptcy.

156. On January 4, 2005, Tower issued a press release announcing that it had obtained a

$50 million accounts receivable securitization facility through GE Commercial Finance:

Tower Automotive today announced it has obtained a $50 millionaccounts receivable securitization facility through GE CommercialFinance. The facility, which closed on December 30, is a criticalcomponent of Tower Automotive’s strategy to offset the adverseimpact to its short-term liquidity from the termination of the earlypayment programs at certain of the company’s North Americanautomotive OEM customers. Upon closing, Tower Automotivereceived net proceeds of approximately $44 million.

As part of that strategic plan, Tower Automotive has worked with itscustomers to find additional solutions to deal with the elimination ofthe early payment programs. Additionally, Tower Automotive willcontinue to pursue a European factoring facility, and expects tocomplete this later in the first quarter of 2005.

As previously announced on December 3, 2004, Tower Automotivedeferred the dividend payment of approximately $4.4 million on the6 3/4% trust convertible preferred securities issued by the TowerAutomotive Capital Trust that would have otherwise been paid onDecember 31. Deferring those payments and obtaining the accountsreceivable securitization facility improves the company’s short-termliquidity position and helps bring liquidity in line with itsprojections for December 31, 2004 that the company outlined in itsthird-quarter earnings review.

157. The statements made in the January 4, 2005 press release were materially false and

misleading because they led the investment community to believe that Tower was on track to achieve

its liquidity goals when, in fact, it was teetering on bankruptcy.

158. On January 20, 2005, Tower announced that holiday shutdowns at certain key

customers would reduce liquidity by $40 million during the first quarter of 2005:

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As previously announced, Tower Automotive has taken a number ofinitiatives to improve its liquidity position. Specifically, aspreviously announced on December 3, 2004, Tower Automotivedeferred the dividend payment of approximately $.4 million on the 6-3/4% trust convertible preferred securities issues by the TowerAutomotive Capital Trust that would otherwise have been paid onDecember 31, 2004. Also, as previously announced on January 4,2005, Tower Automotive obtained a $50 million accounts receivablesecuritization facility through GE Commercial Finance. That facilityyielded net proceeds of approximately $44 million.

These and other initiatives were taken to address the eliminationof early payment programs from the company’s customers. ForJanuary, those changes in payments terms will adversely impactliquidity by approximately $17 million.

Despite Tower Automotive’s efforts and the continuing cooperationof its loyal customers and dedicated suppliers, the company continuesto face significant challenges in meeting its ongoing liquidityrequirements. Tower Automotive is continuing to work with itscustomers and suppliers to address its liquidity issues. In addition,Tower Automotive is continuing to pursue a European factoringfacility, the possible sale of certain equipment and other liquidityinitiatives.

C. Defendants’ False Statements and OmissionsRegarding Tower’s Long-Term Supply Contracts

159. Defendants made numerous false statements and omitted material information about

Tower’s long-term supply contracts, under which Tower made auto body parts and other auto

components, for OEMs.

160. Tower’s 2000 Form 10-K also described the Company’s business, including Tower’s

long-term supply contracts with OEM’s, as follows:

Tower Automotive, Inc. and its subsidiaries (collectivelyreferred to as the “Company or “Tower Automotive”) is a leadingglobal designer and producer of structural components and assembliesused by every major automobile original equipment manufacturers

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(“OEMs”), including Ford, DaimlerChrysler, General Motors, Honda,Toyota, Nissan, Fiat, Kia, Hyundai, BMW, and Volkswagen.

* * * *OEMs typically award contracts that cover parts to be

supplied for a particular car model. Such contracts range from oneyear to over the life of the model, which is generally three to ten yearsand do not require the purchase by the customer of any minimumnumber of parts. The Company also competes for new business tosupply parts for successor models and therefore is subject to the riskthat the OEM will not select the Company to produce parts on asuccessor model. [2000 Form 10-K, at 9].

* * * *In certain instances, the Company is committed under

existing agreements to supply product to its customers at sellingprices that are not sufficient to cover the direct costs to producesuch parts. The Company is obligated to supply these products toits customers for the life of the related vehicles, three to ten years.[Id. at 21].

161. The foregoing statement was false and misleading because it omitted to disclose that

“many” of Tower’s long-term supply contracts had mandatory price decreases built into them,

requiring a 3% to 5% price drop annually, as discussed above in ¶¶63-68. These price declines

continued over the life of the contracts -- three to ten years -- and created a high risk of bankruptcy,

if Tower could not achieve cost savings and synergies from its numerous automotive acquisitions,

which as alleged above, Tower never did.

162. Tower continued to make similar disclosures about its long-term supply contracts in

other SEC filings during the Class Period, but altered them to state only that Tower may be

committed to price decreases “in certain instances,” when in fact Tower was contractually obligated

to reduce its prices annually:

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! 2001 Form 10-K, signed by Campbell, Johnson, Barone and Rued, filed March 25,

2002 at 29 & 46 (“In certain instances, the Company may be committed under

existing agreements to supply product to its customers at selling prices which are not

sufficient to cover the direct cost to produce such product”);

! 2002 Form 10-K, signed by Campbell, Johnson, Thomas and Rued, and filed March

19, 2003 at 31, 51 (identical disclosure as above);

! 2003 Form 10-K, signed by Johnson, Ligocki and Mallak, and filed March 8, 2004,

at 29 & 51 (identical disclosure as above).

163. The foregoing statements are false and misleading for the reasons set forth above in

¶¶63-68.

D. Defendants’ False Statements and OmissionsRegarding Tower’s Inability to Pay its Vendors

164. Tower’s lack of cash began to impact its ability to pay its vendors, as early as 2002.

Tower omitted material information during the Class Period regarding its accounts payable. Tower

told investors that it had extended its accounts payable terms “to coincide with prevailing industry

practices,” when in fact, Tower had done so due to its liquidity problems and lack of cash, as several

former employees have attested. By the end of 2003 and into 2004 and 2005, Tower had stopped

paying many of its vendors altogether. Defendants failed to disclose this material information which

bore directly on Tower’s liquidity. Defendants made the following false statements and omissions

in this regard:

! 2001 Form 10-K, signed by Campbell, Johnson, Barone and Rued, filed March 25,

2002 (“Several initiatives, such as extending its accounts payable terms to coincide

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with prevailing industry practices and accelerating payments from customers took

place in 2001”). Following the filing of the 2001 Form 10-K, Tower’s stock price

began to rise, from $12.45 on March 25, 2002 to $13.10 on March 26, 2002.

Thereafter, Tower’s price continued to rise -- to $14 on March 27, 2002, and higher

in the ensuing weeks into April 2002;

! 2002 Form 10-K, signed by Campbell, Johnson, Thomas and Rued, filed March 19,

2003 (“Several cash management initiatives, such as extending its accounts

receivable terms to coincide with prevailing industry practices ... have resulted in

significant negative capital levels for the Company ... .”);

! 2003 Form 10-K, signed by Johnson, Ligocki and Mallak, filed March 8, 2004

(“Several cash management initiatives, such as extending the accounts payable terms

to coincide with prevailing industry practices ... have resulted in significant negative

capital levels for the Company ... .”).

165. The foregoing statements were false and misleading for the reasons stated above in

¶¶69-93.

E. Defendants’ False Statements and OmissionsRegarding Tower’s Plan for Bankruptcy

166. Defendants also failed to disclose their plans to take Tower into bankruptcy.

Defendants Ligocki, Mallak and Hatto were planning to take Tower into bankruptcy in late 2004,

while they told the marketplace Tower had found a “solution” to the loss of its factoring

arrangements. In this regard, defendants made false statements and omissions set forth in the

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following documents or communications disseminated to the marketplace, and set forth in relevant

part above, as follows:

a. Tower’s October 28, 2004 conference call;

b. Tower’s Form 8-K, filed December 6, 2004, signed by Hatto;

c. Tower’s January 4, 2005 press release;

d. Tower’s January 20, 2005 press release.

167. The foregoing statements were false and misleading for the reasons set forth above

in ¶¶94-97.

THE TRUTH IS REVEALED

168. On February 2, 2005, Tower announced in a press release that it and certain of its

subsidiaries had filed a voluntary petition in the United States Bankruptcy Court for the Southern

District of New York seeking reorganization under the provisions of Chapter 11 of the U.S.

Bankruptcy Code. (Case Nos. 05-10576 through and including 05-10601). According to the press

release, the bankruptcy petition was filed “to address liquidity needs and facilitate a debt

restructuring.” Tower’s stock price fell from $0.77 to $0.34 on the news, and fell further in the

ensuing ninety days after this announcement.

169. Ligocki stated in the February 2, 2005 press release:

‘Over the past twelve months, we have been focused on launching oursignificant new business backlog while taking actions necessary toimprove profitability and restore long-term financial strength toTower so that we can continue to grow and meet our customers’needs. Like many companies in the automotive sector, Tower hasbeen affected by lower production volumes on key auto makerplatforms and increased steel prices. Additionally, the recenttermination of the early pay programs at certain auto makers hasadversely affected our liquidity. These factors, combined with a

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complex and restrictive capital structure and an unsustainable debtload have made it clear that a financial reorganization was necessaryto resolve these issues. By reducing our debt to more manageablelevels and simplifying our capital structure, we will be better able torespond to changes in the market place, satisfy the needs of ourcustomers and help ensure our long-term viability.’

170. Ligocki thereafter testified that: “One of [the] reasons that we ended up having to file

for Chapter 11 was the amount of debt in the Company, and this Chapter 11 should allow us to

address that in the process.” (Ligocki Tr. at 148).

171. On February 14, 2005, Crain’s Detroit Business published an article, Finance

Companies Step Up to Help Suppliers with Receivables by Terry Kosdrosky, stating, in relevant

part:

Finance companies are filling a void left by automakers that endedprograms allowing auto suppliers to get cash for their receivables.

GMAC Commercial Finance has developed an Internet-based toolthat allows suppliers to view their receivables and choose specificones to be paid immediately. The discount rate charged by GMAC isposted with the receivable... . The programs are sorely needed, saidNeil De Koker, president of the Troy-based Original EquipmentSuppliers Association. Many companies, large and small, used “fastpay” to help with cash flow.

Only General Motors Corp. still has a fast-pay program, and it’sphasing that out this year.

“More people used fast-pay than I thought. And for cash-flowpurposes, it was critical,” De Koker said. “Suppliers say there’s aneed for something else, and they’re looking at these sourcesseriously.”

Cash flow is critical to suppliers who must keep up with launch costs,research and development and debt service. That’s easier said thandone because the automakers demand annual price cuts and raw-material prices have skyrocketed this past year. Couple that with the

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low production volume early this year, and the end of fast-pay comesat a bad time.

The absence of fast-pay exacerbated a cash crunch at Novi-basedTower Automotive Inc. that led to the company’s recent Chapter 11filing.

The automakers and GE Capital dropped the fast-pay programbecause new Securities and Exchange Commission guidelines wouldhave required them to book the early payments as debt.

GMAC’s system works differently, said Don Morrison, managingdirector of Southfield-based GMAC Commercial Finance. TheSupplier Early Payment Program doesn’t require any guaranteesfrom the client. The client chooses which suppliers will have accessto the program.

Suppliers can then see all of their receivables via a password-protected Web site. Suppliers pay nothing up front and are notrequired to choose any early payments. Each invoice is listed with thepayment due date and the discount rate if paid early.

If a supplier picks early payment, GMAC pays the discounted amountand then is paid in full by the client in the normal billing cycle.Suppliers can select individual invoices for early payment or can runa query to find the cheapest way to fund a set amount.

172. Defendants not only failed to make the GAAP and SEC required disclosures as

discussed above, they falsely represented that the Company’s periodic filings with the SEC, and the

financial statements contained therein, were in full compliance with GAAP and SEC disclosure

requirements in each Class Period certification pursuant to the requirements of the Sarbanes-Oxley

Act of 2002.

ADDITIONAL SCIENTER ALLEGATIONS

173. As alleged herein, defendants acted with scienter in that defendants knew that the

public documents and statements issued or disseminated in the name of the Company were

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materially false and misleading; knew that such statements or documents would be issued or

disseminated to the investing public; and knowingly and substantially participated or acquiesced in

the issuance or dissemination of such statements or documents as primary violations of the federal

securities laws. As set forth elsewhere herein in detail, defendants, by virtue of their receipt of

information reflecting the true facts regarding Tower, their control over, and/or receive and/or

modification of Tower’s allegedly materially misleading misstatements and/or their associations with

the Company which made them privy to confidential proprietary information concerning Tower,

participated in the fraudulent scheme alleged herein.

174. Defendants were further motivated to engage in this course of conduct in order to:

(i) secure approximately $240.8 million in net proceeds from an offering of senior unsecured notes;

(ii) complete a convertible debt offering in which the Company received $125 million in gross

proceeds; (iii) close on new senior credit facilities on more favorable terms than it would have had

the truth been known; and (iv) obtain a $50 million accounts receivable securitization facility.

175. Johnson, Campell and Rued had a strong motive to lie. They made money on every

Tower acquisition from acquisition-related consulting “fees” Tower paid to Hidden Creek. Johnson

was the founder, CEO and President of Hidden Creek; Campbell “served as a consultant to Hidden

Creek,” and Rued “served as Executive Vice President and Chief Financial Officer of Hidden Creek

since January 1994 and served as its Vice President – Finance and Corporate Development from

1989 through 1993.” (1999 Form 10-K, filed March 30, 2000, at 23). Johnson was CEO of Hidden

Creek from 1989 to May 2001; since May 2001, he has been Chairman of Hidden Creek. (J. L.

French 2002 Form 10-K at 30). Since May 2001, Rued has been CEO and President of Hidden

Creek. From 1994 to May 2001, Rued was Executive V.P. and CFO of Hidden Creek. (Id. at 29).

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Hidden Creek’s partners are Johnson, Rued, John C. Read, J. Reid Porter, Mary L. Johnson, Carl E.

Nelson, David J. Huls, Kenneth W. Hager, Daniel F. Moorse and Judith A. Vijums. (Bostrom PLC -

Offer by CVS for Bolstrom Plc, The Regulator, September 5, 2000). Hidden Creek provided

strategic, financial and acquisition services to Tower; certain employees of Hidden Creek served as

non-employee officers of Tower Automotive. (Form S-3, filed 4/30/02 at 50). Tower paid Hidden

Creek approximately $20,000 per month for general management consulting services, plus

reimbursement of expenses, and retained them as advisers for strategic, financial, and acquisition

services, for which Tower paid Hidden Creek negotiated fees. (Id.).

176. With respect to Tower’s investment in J. L. French, the 2001 Form 10-K disclosed

that: “During the fourth quarter of 2001, the Company evaluated its investment in J. L. French and

determined it was impaired and therefore recorded a charge of $46.3 million to write off the entire

investment in J. L. French.” At all relevant times, Johnson and Campbell knew of J. L. French’s

problems by virtue of their seats on the J. L. French board of directors. Johnson was a director of

J. L. French since April 1999; Campbell was a director of J. L. French since May 1999. (2002 J. L.

French Form 10-K at 30). In addition, Rued served as a director of J. L. French since April 2001.

(Id. at 29). (Tower never disclosed the reason for the impairment). According to Rued: “French had

problems after its 1999 acquisition of Nelson Metal Products Corp.” (Milwaukee Journal Sentinel,

Nov. 18, 2002, “Sheboygan Plant to Refinance Loans”).

177. For “acquisition” and “due diligence,” “contract negotiation,” and “various other

management services,” Tower paid Hidden Creek: $333,000 in 1994 and $750,500 in 1996. (Form

424B1 filed 4/15/97, at 48); $3.1 million during 1999; $2.9 million during 1998 and $3.3 million

during 1997. (1999 Form 10-K); (Form DEF 14A, filed April 7, 2000); $4.5 million in 2000 (Form

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DEF 14A, filed April 20, 2001); $600,000 in 2001 (Form DEF 14A, filed April 3, 2002); $600,000

in 2002 (Form DEF 14A, filed April 23, 2003); and $800,000 in 2003 (Form DEF 14A, filed April

16, 2004).

178. On March 30, 2001, Tower filed its Form 10-K with the SEC for the year ended

December 31, 2000, signed by defendants Johnson, Campbell, Rued, and Barone, among others.

With respect to J.L. French, the 2000 Form 10-K stated:

In October 1999, the Company loaned $30.0 million to J.L. Frenchin exchange for a convertible subordinated promissory note dueOctober 14, 2009. The note bears interest at 7.5 percent annuallywith interest payable on the last day of each calendar quarterbeginning December 31, 1999. In November 2000, the Companyexercised its option to convert the note into 7,124 shares of Class A“1" Common Stock of J.L. French, which has a 7.5 percent pay-in-kind dividend right. Additionally, in November 2000, the Companyinvested $2.9 million in J.L. French through the purchase of ClassP Common Stock, which has an 8 percent pay-in-kind dividend right.In May 2000, the Company invested $11.0 million in J.L. Frenchthrough the purchase of Class A common stock. At December 31,2000, the Company has an ownership interest of approximately 16percent in J.L. French. [2000 Form 10-K at 21].

179. Tower’s 2000 Form 10-K (and Forms 10-K for 2001, 2002, and 2003, which

contained similar representations), were each materially false and misleading because in violation

of GAAP -- FASB Statement No. 57, Related Party Disclosures, they failed to disclose that Hidden

Creek (a related party according to Tower’s 1999 Form 10-K), owned a controlling interest in J.L.

French, and that the purported “loan” and “investment” that defendants caused Tower to make to

J.L. French, were de facto gifts. J2R Partners III owned shares of J. L. French and had entered into

a stockholders agreement with Onex American Holdings LLC and other J. L. French shareholders

to vote their shares in the same manner as Onex. Johnson and Rued were also signatories to this

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agreement. (J. L. French 2002 Form 10-K at 32-33; 2000 10-K at 28-29). The general partners of

J2R III were listed in the J. L. French SEC filings as the following: Johnson, Campbell, Karl F.

Storrie, Rued, Carl E. Nelson, David J. Huls, Mary L. Johnson, Judith A. Vijums and Daniel Moorse.

(J. L. French 2000 Form 10-K, at p.29 n.3). Johnson and Campbell had been directors of J. L.

French since May 1999; Rued became a director of J. L. French beginning April 2001. (J. L. French

2002 Form 10-K at 29-30). On March 25, 2002, Tower disclosed that “During the fourth quarter

of 2001, the Company evaluated its investment in J.L. French and determined that it was impaired

and therefore recorded a charge of $46.3 million to write off the entire investment in J.L. French.”

APPLICABILITY OF PRESUMPTION OF RELIANCE:FRAUD-ON-THE-MARKET DOCTRINE

180. At all relevant times, the market for Tower’s common stock and other securities,

including the Preferred Securities was an efficient market for the following reasons, among others:

a. Tower’s common stock met the requirements for listing, and was listed and

actively traded under the ticker symbol “TWR” on the New York Stock Exchange, a highly efficient

market;

b. The Preferred Securities traded on the over-the-counter market, an efficient

market, under the symbol “TWRCP;”

c. As a regulated issuer, Tower filed periodic public reports with the SEC;

d. Tower’s stock was followed by securities analysts employed by major

brokerage firms who wrote reports which were distributed to the sales force and certain customers

of their respective brokerage firms. Each of these reports was publicly available and entered the

public marketplace;

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e. Tower regularly issued press releases which were carried by national

newswires. Each of these releases was publicly available and entered the public marketplace.

181. As a result, the market for Tower securities promptly digested current information

with respect to Tower from all publicly-available sources and reflected such information in Tower’s

stock price. Under these circumstances, all purchasers of Tower securities during the Class Period

suffered similar injury through their purchase of securities at artificially inflated prices and a

presumption of reliance applies.

LOSS CAUSATION ALLEGATIONS

182. Throughout the Class Period, defendants made false statements to the marketplace

and omitted material information about: (a) Tower’s success in integrating its numerous corporate

acquisitions; (b) Tower’s liquidity and exposure to long-term supply contracts that mandated regular

price decreases of 3%-5% per year; (c) Tower’s factoring of its receivables with GE and the payment

guarantees provided by Ford, DaimlerChrysler and GM; (d) Tower’s inability to make basic

payments to its own vendors (which would have alerted investors to Tower’s grave risk of

bankruptcy); and (e) Tower’s plans for bankruptcy. As a result of these false statements and

omissions (as particularized elsewhere in this Complaint), Tower hid its true financial condition, lack

of liquidity and exposure to bankruptcy, and its stock price was artificially inflated as a result. That

stock price later fell when the truth was revealed, causing economic losses to plaintiffs and other

class members.

183. Tower made a series of partial disclosures, ending in the full revelation of the truth

on February 2, 2005, as follows:

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(a) October 23, 2003: In conjunction with its release of third quarter financial

results, the Company admitted (during the “overall assessment” segment of a slide show

presentation) that it has been “prevented ... from leveraging economies of scale” and that

“[i]nsufficient focus [was] given to post-merger integration, financial discipline and operational

excellence.” During the same segment of the presentation, the Company also acknowledged that it

was “highly levered.” Reacting to this news, shares in Tower dipped from a high of $4.36, on

October 23, 2003; to a low of $3.48, on the following day (a decline of 20%); and to low of $3.12,

on next day of trading (a further decline of over 10%). Thus, in just the first two days of trading

following these announcements, Tower stock lost nearly a third of its value.

(b) March 8, 2004: On that date, the Company filed with the SEC its annual

report on Form 10-K for the period ended December 31, 2003. The Company reported an “$83.6

million decrease in available liquidity.” Shares in Tower promptly fell from a high of $5.94, on

March 8, 2004; to low of $5.21, on the following day (a decline of over 13%); and to low of $4.95

on next day of trading (a further decline of 5%). Thus, within only two days of these disclosures,

shares in Tower were down almost 20%. And, over the next two weeks, the stock shed another 15%,

trading as low as $4.19 on March 23, 2004.

(c) April 29, 2004: As alleged above, on April 29, 2004, after Ligocki took over

as CEO, she told analysts that Tower was still focusing on ‘the integration of our operations into a

greater whole.’ Ligocki noted that in this regard: ‘we’ve just begun.’” Thereafter, shares in Tower

began a steady downward march. In just seven days of trading, Tower stock had declined over 27%-

-from a high of $5.60 on April 29, 2005, to a low of $4.11 on May 10, 2005.

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(d) July 27, 2004: In an analyst conference call convened on this day, defendant

Mallak admitted for the first time that Tower was unusually dependent on factoring arrangements.

Specifically, Mallak revealed that “[a]ll of our business with Chrysler, Ford, and GM, is on the

accelerated [i.e., ‘fast pay’] programs.” After opening at $3.40, shares of Tower slipped almost 15%,

to a low of $2.90, in the wake of the analyst call.

(e) January 20, 2005: Tower issued a press release wherein it shocked the market

with the news that, just during the first quarter of 2005, its liquidity would be impaired by $40

million. The next day (January 21, 2005), shares in Tower common stock closed at 75 cents, a

decline of $1.61 per share, or almost 70%, from the January 19, 2005, close.

(f) February 2, 2005: Tower files for bankruptcy, and in a press release, cites

liquidity needs and the termination of the fast pay program as driving forces behind the filing.

Tower’s stock price fell over 55% -- from 77 to 34 cents per share. In the ensuing 90 days, the

bleeding continued, with shares in Tower closing below 10 cents per share toward the end of that

period.

184. In addition, Tower stated that its “unsustainable debt” load was a factor in bringing

about the bankruptcy filing. As alleged above, defendants failed to disclose during the Class Period

that Tower was burdened with many long-term supply contracts that required regular price decreases

of 3% to 5%, which meant that Tower would definitely lose money on these contracts. Tower’s

stated method of salvaging profits from these “loss contracts” was through its supposedly-successful

integration of its numerous roll-ups, which Tower said allowed it to extract “significant cost savings

and synergies.” Ligocki flatly debunked this statement when she noted that Tower never integrated

its acquisitions post-merger.

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185. A review of the stock price chart for both the common stock and Preferred Securities

shows the price drops in Tower’s securities as alleged above:

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TOWER’S DECEPTIVE ACCOUNTING AND FINANCIAL REPORTING

186. SEC Regulation S-X requires that financial statements filed with the SEC conform

with GAAP; if not, they are presumed to be misleading or inaccurate. 17 C.F.R. §210.401(a)(1).

Tower’s financial statements, disseminated to the investing public during the Class Period were false

and misleading for the reasons alleged above and failed to conform to GAAP, contrary to Tower’s

representations.

187. The Company’s financial statements were not prepared in accordance with GAAP

as Regulation S-X requires because, among other things, the following GAAP were violated:

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a. The principle that financial reporting should provide information that is useful

to present and potential investors and creditors and other users in making rational investment, credit

and similar decisions (FASB Statement of Concepts No. 1).

b. The principle that financial reporting should provide information about the

economic resources of an enterprise, the claims to those resources, and the effects of transactions,

events, and circumstances that change resources and claims to those resources (FASB Statement of

Concepts No. 1).

c. The principle that financial reporting should provide information about how

management of an enterprise has discharged its stewardship responsibility to owners (stockholders)

for the use of enterprise resources entrusted to it. To the extent that management offers securities of

the enterprise to the public, it voluntarily accepts wider responsibilities for accountability to

prospective investors and to the public in general (FASB Statement Concepts No. 1).

d. The principle that financial reporting should provide information about an

enterprise’s financial performance during a certain time period. Investors and creditors often use

information about the past to help in assessing the prospects of an enterprise. Thus, although

investment and credit decisions reflect investors’ expectations about future enterprise performance,

those expectations are commonly based at least partly on evaluations of past enterprise performance

(FASB Statement of Concepts No. 1).

e. The principle that the quality of reliability and, in particular, of

representational faithfulness leaves no room for accounting representations that subordinate

substance to form. (Statement Of Financial Accounting Concepts No. 2).

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f. The principle that financial reporting should be reliable in that it represents

what it purports to represent. That information should be reliable as well as relevant is a notion that

is central to accounting. (FASB Statement of Concepts No. 2).

g. The principle of completeness, which means that nothing is left out of the

information that may be necessary to insure that it validly represents underlying events and

conditions. (FASB Statement of Concepts No. 2).

h. The principle that conservatism be used as a prudent reaction to uncertainty

to try to ensure that uncertainties and risks inherent in business situations are adequately considered.

The best way to avoid injury to investors is to try to ensure that what is reported represents what it

purports to represent. (FASB Statement of Concepts No. 2).

i. The principle that disclosure of accounting policies should identify and

describe the accounting principles followed by the reporting entity and the methods of applying those

principles that materially affect the financial statements. (APB Opinion No. 22).

188. Tower’s financial statements contained within its press releases and filings with the

SEC as particularized above also failed to conform with GAAP (AU Section 411) because:

a. the accounting principles selected and applied in the preparation of the

Company’s financial statements did not have general acceptance or they were not appropriate in the

circumstances. In this regard, for example, the Company’s financial statements failed to reflect sales

of receivables as required by GAAP (FASB Statement No. 125 and FASB Statement No. 140).

b. the Company’s financial statements, including the related notes, were not

informative of matters that affected their use, understanding, and interpretation. In this regard, for

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example, the Company’s financial statements failed to disclose the nature of the risks associated with

the Company's factoring activities as required by GAAP (SOP 94-6).

189. Due to the Company’s continuous factoring activities, their import to Tower’s

survival, and the magnitude of the amounts involved, defendants could not have avoided knowing

of them and the fact that they were concealed through fraudulent accounting.

190. As a minimum, the Company’s financial statements failed to comply with GAAP

because they failed to provide disclosure of the GE factoring arrangement and the nature of the risks

associated with its potential end. Tower’s financial statements also failed to comply with GAAP

(APB Opinion No. 28) because they did not comment on the effects of these factoring arrangements

on Tower’s interim financial results.

191. In addition, to conceal their financial statement fraud, the director and officer

defendants completely ignored GAAP-mandated disclosures as outlined in SOP 94-6. Such

disclosure is intended to clarify the investment community's understanding of the operations of the

Company. As stated by the SEC in its Accounting Series Release No. 173: “it is important that the

overall impression created by the financial statements be consistent with the business realities of the

company's financial position and operations... .”

192. Factoring transactions between the Company and GE were concealed and deceptively

reported as “accelerated payments.” In accounting for these transactions, the economic substance

of the transactions were ignored, and the overall impression was inconsistent with the business

realities of the company's financial position and operations. In so doing, defendants violated GAAP

(Statement Of Financial Accounting Concepts No. 2) which states that: “The principle that the

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quality of reliability and, in particular, of representational faithfulness leaves no room for accounting

representations that subordinate substance to form.”

193. Certain of the defendants also falsely represented that the Company’s financial

statements were in full compliance with GAAP by signing certifications pursuant to the requirements

of the Sarbanes-Oxley Act of 2002.

194. Defendants also had to blatantly disregard SEC MD&A disclosure mandates. On

May 18, 1989, the SEC issued an interpretive release (Securities Act Release No. 6835 -May 18,

1989) which stated, in relevant part:

The MD&A requirements are intended to provide, in one section ofa filing, material historical and prospective textual disclosureenabling investors and other users to assess the financial conditionand results of operations of the registrant, with particular emphasis onthe registrant's prospects for the future. As the Concept Releasestates:

The Commission has long recognized the need for anarrative explanation of the financial statements,because a numerical presentation and briefaccompanying footnotes alone may be insufficient foran investor to judge the quality of earnings and thelikelihood that past performance is indicative of futureperformance. MD&A is intended to give the investoran opportunity to look at the company through theeyes of management by providing both a short andlong-term analysis of the business of the company.The Item asks management to discuss the dynamics ofthe business and to analyze the financials.

As the Commission has stated, “[i]t is the responsibility ofmanagement to identify and address those key variables and otherqualitative and quantitative factors which are peculiar to andnecessary for an understanding and evaluation of the individualcompany.”

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195. SEC Staff Accounting Bulletin No. 101 (“SAB 101”), drawing from Regulation S-K,

Article 303, and Financial Reporting Release No. 36 (“FRR 36”), also reiterated the importance of

MD&A in financial statements: “Management’s Discussion & Analysis (MD&A) requires a

discussion of liquidity, capital resources, results of operations and other information necessary of

a registrant's financial condition, changes in financial condition and results of operations.”

196. Under these standards, management of a public corporation must disclose in its

periodic reports filed with the SEC, “known trends or any known demands, commitments, events

or uncertainties” that are reasonably likely to have a material impact on a company's sales revenues,

income or liquidity, or cause previously reported financial information not to be indicative of future

operating results. 17 C.F.R. § 229.303(a)(l)-(3) and Instruction 3.

197. As described above, Tower’s periodic filings with the SEC during the Class Period

failed to comply with MD&A disclosure requirements because the MD&A in each of these filings

with the SEC: (1) failed to disclose that its liquidity was materially contingent upon the existence

and continuation of a factoring arrangement with GE; and (2) concealed the true nature of a material

portion of the Company’s funds.

198. Despite the SEC mandate about MD&A disclosures, defendants failed to cause

Tower’s SEC filings to disclose that material “loss contracts,” calling for regular price decreases in

future years, “might reasonably be expected” to have an unfavorable material effect on future

revenue.

199. Concealment of the GE factoring arrangement and the loss contracts deprived Tower

shareholders of the ability to assess the tenuousness of Tower’s liquidity and the likelihood that

Tower’s future revenue stream might be materially diminished in the future. For this reason the SEC

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in SAB 101, citing FRR 36, explained that the MD&A should “give investors an opportunity to look

at the registrant through the eyes of management by providing a historical and prospective analysis

of the registrant's financial condition and results of operations, with a particular emphasis on the

registrant's prospects for the future.”

200. Similarly, under Regulation S-K Item 303, disclosure should focus specifically on

material events and uncertainties known to management that would cause reported financial

information not to be necessarily indicative of future operating results or of future financial

condition.

PLAINTIFFS’ CLASS ACTION ALLEGATIONS

201. Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all persons who purchased or otherwise

acquired Tower securities between December 1, 2000 and February 1, 2005, inclusive (the “Class

Period”), and who were damaged thereby. Excluded from the Class are defendants, members of the

immediate family of each of the Individual Defendants, any subsidiary or affiliate of Tower and the

directors, officers and employees of Tower or its subsidiaries or affiliates, or any entity in which any

excluded person has a controlling interest, and the legal representatives, heirs, successors and assigns

of any excluded person.

202. The members of the Class are so numerous that joinder of all members is

impracticable. While the exact number of Class members is unknown to plaintiffs at this time and

can only be ascertained through appropriate discovery, plaintiffs believe that there are thousands of

members of the Class located throughout the United States. As of February 27, 2004, there were

reportedly more than 57.3 million shares of Tower common stock outstanding, and millions of shares

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of Preferred Securities and other Tower securities. Throughout the Class Period, Tower common

stock was actively traded on the New York Stock Exchange (an open and efficient market) under the

symbol “TWR.” (The Preferred Securities were traded on the OTC market under the symbol

“TWRCP”). Record owners and other members of the Class may be identified from records

maintained by Tower and/or its transfer agents and may be notified of the pendency of this action

by mail, using a form of notice similar to that customarily used in securities class actions.

203. Plaintiffs’ claims are typical of the claims of the other members of the Class as all

members of the Class were similarly affected by defendants’ wrongful conduct in violation of federal

law that is complained of herein.

204. Plaintiffs will fairly and adequately protect the interests of the members of the Class

and have retained counsel competent and experienced in class and securities litigation.

205. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

a. whether the federal securities laws were violated by defendants’ acts and

omissions as alleged herein;

b. whether defendants participated in and pursued the common course of conduct

complained of herein;

c. whether documents, press releases, and other statements disseminated to the

investing public and the Company’s shareholders during the Class Period misrepresented material

facts about the business, finances, financial condition and prospects of Tower;

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d. whether statements made by defendants to the investing public during the

Class Period misrepresented and/or omitted to disclose material facts about the business, finances,

value, performance and prospects of Tower;

e. whether the market price of Tower securities during the Class Period was

artificially inflated due to the material misrepresentations and failures to correct the material

misrepresentations complained of herein; and

f. the extent to which the members of the Class have sustained damages and the

proper measure of damages.

206. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the

damages suffered by individual Class members may be relatively small, the expense and burden of

individual litigation make it impossible for members of the Class to individually redress the wrongs

done to them. There will be no difficulty in the management of this suit as a class action.

NO SAFE HARBOR

207. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this complaint. The

specific statements pleaded herein were not identified as “forward-looking statements” when made.

Nor was it stated with respect to any of the statements forming the basis of this complaint that actual

results “could differ materially from those projected.” To the extent there were any forward-looking

statements, there were no meaningful cautionary statements identifying important factors that could

cause actual results to differ materially from those in the purportedly forward-looking statements.

Moreover, to the extent defendants made statements “in connection with a “roll-up” transaction,”

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those statements are exempt from the statutory safe harbor protections. 15 U.S.C. §78u-5(b)(1)(D).

Alternatively, to the extent that the statutory safe harbor does apply to any forward-looking

statements pleaded herein, defendants are liable for those false forward-looking statements because

at the time each of those forward-looking was made the particular speaker knew that the particular

forward-looking statement was false, and/or the forward-looking statement was authorized and/or

approved by an executive officer of Tower who knew that those statements were false when made.

COUNT I

Against All Defendants Except Hidden Creek and J2R for Violations of Section 10(b) OfThe Exchange Act And Rule 10b-5(b)

208. Plaintiffs repeat and reallege each and every allegation contained above. The Count

is brought against all defendants except Hidden Creek and J2R.

209. Each of the defendants: (a) knew or recklessly disregarded material adverse non-

public information about Tower’s financial results and then existing business conditions, which was

not disclosed; and (b) participated in drafting, reviewing and/or approving the misleading statements,

releases, reports and other public representations of and about Tower.

210. During the Class Period, defendants, with knowledge of or reckless disregard for the

truth, disseminated or approved the false statements specified above, which were misleading in that

they contained misrepresentations and failed to disclose material facts necessary in order to make

the statements made, in light of the circumstances under which they were made, not misleading.

211. Defendants have violated § 10(b) of the Exchange Act and Rule 10b-5(b)

promulgated thereunder because they made untrue statements of material facts or omitted to state

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material facts necessary in order to make statements made, in light of the circumstances under which

they were made, not misleading.

212. Plaintiffs and the Class have suffered damage in that, in reliance on the integrity of

the market, they paid artificially inflated prices for Tower securities. Plaintiffs and the Class would

not have purchased Tower securities at the prices they paid, or at all, if they had been aware that the

market prices had been artificially and falsely inflated by defendants’ false and misleading

statements.

COUNT II

Against Defendants Johnson, Rued, Hidden Creek and J2R for Violations of Section 10(b)Of the Exchange Act and Rule 10b-5 (a) & (c) Promulgated Thereunder

213. Plaintiffs repeat and reallege paragraphs 22-36, 38-44, 46, 58-50, 61, 64, 66-67, 69-93

set forth above as if fully set forth herein. This Count is asserted against defendants Johnson, Rued,

Hidden Creek and J2R (hereinafter the “Hidden Creek Defendants”).

214. During the Class Period, the Hidden Creek Defendants carried out a plan, scheme and

course of conduct that was intended to and did: (i) deceive the investing public, including Plaintiffs

and other Class members, as alleged herein; (ii) artificially inflate the market price of Tower

securities, and (iii) cause Plaintiffs and other Class members to purchase Tower securities at

artificially inflated prices.

215. In furtherance of this unlawful plan, scheme and course of conduct, the Hidden Creek

Defendants employed devices, schemes and artifices to defraud and engaged in acts, practices and

a course of business which operated as a fraud and deceit upon the investing public, in connection

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with the purchase of Tower securities, in violation of Section 10(b) of the Exchange Act and Rule

10b-5(a) and (c) promulgated thereunder.

216. It was a part of this scheme and artifice to defraud that the Hidden Creek Defendants:

(a) took Tower public; (b) acquired numerous companies at Hidden Creek’s direction and control

to build up a large revenue stream and inflate Tower’s stock price, for which acquisitions Hidden

Creek Defendants also received substantial fees; (c) knew or recklessly ignored that Tower had not

integrated these acquired companies; was laboring under numerous “loss contracts;” and was thus

on a course for a severe financial crisis or bankruptcy; (d) cashed all their stock out of Tower in 1996

and 1997 in secondary public offerings paid for by Tower and from which the Hidden Creek

Defendants made millions of dollars; (e) continued to suck fees and expenses out of Tower during

the Class Period; and (f) siphoned approximately $46 million from Tower to invest in the Hidden

Creek Defendant’ own company, J. L. French, an undisclosed related party, which the Hidden Creek

Defendants knew or recklessly ignored had severe financial problems.

217. Factual Allegations Pursuant to Rule 404(b), Fed. R. Evid. The Hidden Creek

Defendants’ scheme alleged herein was not an accident or the result of innocent mismanagement.

The Hidden Creek Defendants engaged in a similar scheme with respect to Dura Automotive

Systems, Inc. (“Dura”), a manufacturer of mechanical assemblies and integrated systems for the

automotive industry. The Hidden Creek Defendants formed Dura in 1990 to acquire certain

operating divisions from the Wickes Manufacturing Company. (Dura 2004 Form 10-K). The

Hidden Creek Defendants assisted Dura to build up its size through 19 acquisitions between 1994

and 2003. (Id. at 4) For that work and other “advice,” Dura paid the Hidden Creek Defendants

substantial fees, as follows: $3.7 million in 1998; $9.5 million in 1999; $2.1 million in 2000; $1.6

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million in 2001; $2.5 million in 2002; $1.1 million in 2003; $0.3 million in 2004. (Sources: various

Dura SEC filings). Johnson served as Chairman of Dura from 1990 to April 2002, and was a

director until 2004; Rued served as a Director of Dura since April 2002, and from November 1990

to April 2002, Rued served as Dura’s Vice-President. The Hidden Creek Defendants “divested their

remaining Class B common stock in 2004 and are no longer affiliated with Dura.” (Dura 2004 Form

10-K). The Hidden Creek Defendants derived substantial sums from these sales. The Hidden Creek

Defendants divested themselves of Dura’s stock while it was trading at a relatively high price.

Dura’s stock is depressed and now trades at approximately $4 per share.

218. The Hidden Creek Defendants acted knowingly or with deliberate recklessness and

for the purpose and effect of artificially inflating the price of the Company’s securities.

219. The members of the Class reasonably relied upon the integrity of the market in which

the Company’s securities traded.

220. Plaintiffs and the other members of the Class were ignorant of the Hidden Creek

Defendants’ fraudulent scheme and unlawful course of conduct. Had Plaintiffs and the other

members of the Class known of the Hidden Creek Defendants’ unlawful scheme and unlawful course

of conduct, they would not have purchased or otherwise acquired Tower securities or if they had,

they would not have purchased or otherwise acquired them at the artificially inflated prices they paid

for such securities.

221. Plaintiffs and the members of the Class were injured because the risks that

materialized were risks of which they were unaware as a result of the Hidden Creek Defendants’

scheme to defraud as alleged herein.

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222. By virtue of the foregoing, the Hidden Creek Defendants violated Section 10(b) of

the Exchange Act and Rule 10b-5(a) and (c) promulgated thereunder.

223. As a direct and proximate result of the Hidden Creek Defendants’ scheme to defraud

and their unlawful course of conduct, Plaintiffs and the other members of the Class suffered damages

in connection with their purchases of Tower securities in an amount to be proven at trial.

224. This Count is brought solely and exclusively under the provisions of Rule 10b-5 (a)

and (c). Accordingly, Plaintiffs need not allege or prove that Tower, or any defendant made any

misrepresentations or omissions of material fact for which they may also be liable under Rule 10b-

5(b) and/or any other provisions of law.

COUNT III

Against All Defendants Except J2RFor Violation of Section 20(a) Of The Exchange Act

225. Plaintiffs repeat and reallege each and every allegation contained above. This Count

is against all defendant except J2R.

226. The Individual Defendants acted as controlling persons of Tower within the meaning

of Section 20(a) of the Exchange Act. By reason of their senior executive and/or Board positions

they had the power and authority to cause Tower to engage in the wrongful conduct complained of

herein.

227. With respect to defendant Johnson, defendant Ligocki gave the following testimony:

Q. Do you recognize the name S. A. Johnson?

A. Yes.

Q. Who is that?

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A. Tony Johnson is the current Chairman of Tower Automotive.

Q. Is Mr. Johnson an employee of Tower Automotive at all?

A. He is chairman of the board.

Q. Is he employed by Tower?

A. Can I ask something?

Q. Sure.

THE WITNESS: Is he technically employed?

A. No, he is not technically employed.

Q. How long has been chairman of the board?

A. Since Tower’s inception in ‘93 to ‘94 time frame, I would assume.

Q. Do you know how much time he spends on Tower Automotivematters?

A. Yes. We did interview the current board members, all but one.Tony spends about 20 hours a month on the Chapter 11 process forTower Automotive.

Q. You are reading from some handwritten notes in front of you?

A. I am. I interviewed all but one of the current board of directors inpreparation for this deposition.

Q. And the notes you are reading from are your handwritten notes?

A. They are.

Q. Are you able to recall the information that is set forth in thosenotes without referring to the notes?

A. I would prefer to refer to them.

Q. Can we get a copy of the notes, please, and we will mark that asan exhibit?

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A. Sure. [Ligocki Tr. at 56-57].

(A copy of Ligocki’s handwritten notes are annexed hereto as Ex. C).

* * * *

Q. Do you know how many hours a month Mr. Johnson anticipatesspending on Tower matters over the next, say, nine months?

A. Yes, about the same over the next nine months.

Q. How many hours a month was Mr. Johnson spending on Towermatters before the bankruptcy?

A. About the same. About 20 hours.

Q. So Mr. Johnson’s time spent on Tower matters has not changedas a result of the bankruptcy?

A. Not to my knowledge.

228. With respect to Hidden Creek Industries, Inc., Tower stated repeatedly during the

Class Period that Hidden Creek Industries, Inc. was owned and managed by defendants Johnson and

Rued and that Tower had paid substantial fees to Hidden Creek in 2000, 2001, 2002, and 2003 for

various “management services.” (See, e.g., 2002 Form 10-K at 80).

229. Tower’s SEC disclosures reveal the following about Hidden Creek’s activities:

a. Johnson is the Founder, Chief Executive Officer and President of Hidden

Creek, a private industrial management company based in Minneapolis which has provided certain

management and other services to Tower Automotive. (2001 DEF 14A at 5). This same

representation was repeated in Tower’s proxy statements (DEF14As) throughout the Class Period.

b. Tower’s April 3, 2002, Form S-3 stated the following about Hidden Creek:

Two of our directors, Messrs. S.A. Johnson and Scott Rued, arepartners in Hidden Creek. Tower Automotive was formed in April

-106-

1993 at the direction of Hidden Creek to acquire R. J. TowerCorporation in a leveraged transaction. The principal equity investorsin such acquisition were Onex Corporation, a publicly owned holdingcompany based in Canada (“Onex”), and J2R, an investmentpartnership formed by the partners of Hidden Creek. Onex and J2Rsold substantially all of their Tower Automotive common stock in1996 and 1997 and, as a result, do not have a material economicinterest in any of the securities or capital stock of Tower Automotive.Since 1993, Hidden Creek has provided certain strategic, financialand acquisition opportunities, conducting due diligence and contractnegotiations, and assisting in financing activities. To facilitate suchservices, certain employees of Hidden Creek serve as non-employee officers of Tower Automotive. We currently pay HiddenCreek approximately $20,000 per month for general managementconsulting fees, plus reimbursement of expenses, and in the past wehave retained them as advisers for certain strategie, financial, andacquisition services, for which we pay them negotiated fees. [4/3/02Form S-3 at 50].

230. By reason of such wrongful conduct, Tower and the Individual Defendants are liable

pursuant to §20(a) of the Exchange Act. As a direct and proximate result of these defendants’

wrongful conduct, plaintiffs and the other members of the Class suffered damages in connection with

their purchases of Tower securities during the Class Period.

WHEREFORE, plaintiffs pray for relief and judgment, as follows:

A. Determining that this action is a proper class action and certifying plaintiffs as class

representatives under Rule 23 of the Federal Rules of Civil Procedure;

B. Awarding compensatory damages in favor of plaintiffs and the other Class members

against all defendants, jointly and severally, for all damages sustained as a result of defendants’

wrongdoing, in an amount to be proven at trial, including interest thereon;

C. Awarding plaintiffs and the Class their reasonable costs and expenses incurred in this

action, including counsel fees and expert fees; and

-107-

D. Such other and further relief as the Court may deem just and proper.

JURY TRIAL DEMANDED

Plaintiffs hereby demand a trial by jury.

DATED: September 30, 2005SHALOV STONE & BONNER LLP

By: /s/ Thomas G. Ciarlone Lee S. Shalov (LS-7118)Thomas G. Ciarlone, Jr. (TC-3881)

485 Seventh AvenueNew York, NY 10018Tel: 212-239-4340Fax: 212-239-4310

VIANALE & VIANALE LLPKenneth J. Vianale (KV-4607)Julie Prag Vianale (JV-4718)(Members of the Bar of this Court)2499 Glades Road, Suite 112Boca Raton, FL 33431Tel: (561) 392-4750Fax: (561) 392-4775

Lead Counsel for Lead Plaintiffs and theClass

-108-

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on September 30, 2005, I electronically filed the foregoing withthe Clerk of the Court by using the CM/ECF system which will send a notice of electronic filing tothe following:

Daniele L. Chineadchinea@paulweiss.com

Robert N. Kravitzrkravitz@paulweiss.com

Moses Silvermanmsilberman@paulweiss.com

Eric J. Belfiebelfi@murrayfrank.com

Lee S. Shalovlshalov@lawssb.com

Thomas G. Ciarlone, Jr.tciarlone@lawssb.com

Kenneth J. Vianalekvianale@vianalelaw.com

Julie P. Vianalejvianale@vianalelaw.com

I FURTHER CERTIFY that I mailed the foregoing document and the notice of electronicfiling by first-class mail to the following non-CM/ECF participants:

N/A

/s/ Thomas G. Ciarlone (TC-3881)Shalov Stone & Bonner485 Seventh AvenueNew York, NY 10018Tel: 212-239-4340Fax: 212-239-4310

()

Vianale & Vianale LLP5355 Town Center Road, Suite 801Boca Raton, FL 33486Tel: 561-391-4900/ Fax: 561-368-9274

CERTIFICATION OF PLAINTIFFPURSUANT TO FEDERAL SECURITIES LAWS

Re: TOWER AUTOMOTIVE. INC.

I, NATHAN F. BRAND, hereby declare:

1. I have reviewed the complaint and authorized its filing. I retain the law firm of Viana Ie &Vianale LLP and such co-counsel it deems appropriate to associate with to pursue such action on acontingent fee basis.

2. I did not purchase the security that is the subject of this action at the direction of counselorin order to participate in this private action or any other litigation under the federal securities laws.

3. I am willing to serve as a representative party on behalf of the class, including providingtestimony at deposition and trial, if necessary.

4. I have made no transaction(s) during the Class Period in the debt or equity securities that arethe subject of this action except those set forth below: (use a separate sheet if necessary)

Date Transaction # of Shares Price

Type

SEE ATTACHED SCHEDULE

5. During the three years prior to the date of this Certificate, I have sought to serve or servedas a representative party for a class in the following actions filed under the federal securities laws: N/A

6. I will not accept any payment for serving as a representative party on behalf of the classbeyond a pro rata share of any recovery, except such reasonable costs and expenses (including lost wages)directly relating to the representation of the class as ordered or approved by the court.

q/1_! -:d;clare under penalty of perjury that the foregoing is true and correct. Executed this L day ofr'~""'" ,2005.

Signed:

-2-

NATHAN F. BRAND6.75% Convertible Preferred (Tower Automotive)

Date No. of Shares Transaction Price Per Share

1/2/01 20,000 Buy 24

1/8/01 30,000 Buy 23.875

1/8/01 30,000 Buy 23.875

1/8/01 20,000 Buy 23.875

1/9/01 25,000 Buy 24.25

1/16/01 10,000 Buy 24.125

1/18/01 20,000 Buy 23.625

1/18/01 20,000 Buy 23.5

1/18/01 20,000 Buy 23.5

3/8/01 45,000 Buy 27.5

3/8/01 10,000 Buy 27.75

5/31/01 20,000 Buy 25.875

6/25/01 20,000 Buy 25.5

9/28/01 20,000 Buy 23

10/1/01 8,000 Buy 22.875

10/19/01 10,000 Buy 19.5

10/22/01 10,000 Buy 19

10/23/01 10,000 Buy 19.5

10/25/01 20,000 Buy 19

10/31/01 20,000 Buy 18.875

11/6/01 20,000 Buy 19.875

12/10/01 18,000 Buy 22.5

1/16/03 14,000 Buy 22.6

8/18/03 4,700 Buy 24.5

-3-

3/8/04 10,000 Buy 27.04

6/8/04 10,000 Buy 24.9

6/8/04 10,000 Buy 24.5

7/2/04 2,500 Buy 23.375

8/17/04 1,900 Buy 18

8/19/04 10,000 Buy 18

9/22/04 10,000 Buy 16.75

12/3/04 41,900 Sell 10.15

-4-

NATHAN F. BRANDBASIC ACCOUNT6.75% Convertible Preferred (Tower Automotive)

Date No. of Shares Transaction Price Per Share

1/05/01 16,000 Buy 24.375

10/12/01 4,000 Buy 21.50

10/26/01 300 Buy 21.50

-5-

NATHAN F. BRANDIRA ACCOUNT6.75% Convertible Preferred (Tower Automotive)

Date No. of Shares Transaction Price Per Share

10/26/01 700 Buy 21.50

-6-

NATHAN F. BRANDCommon Stock (Tower Automotive)

Date No. of Shares Transaction Price Per Share

12/20/99 10,000 Buy 13.625

10/21/02 10,000 Buy 5.12

10/23/02 10,000 Buy 5.10

10/25/02 30,000 Buy 5.05

10/29/02 10,000 Buy 5.05

12/19/02 20,000 Buy 4.47

12/19/02 10,000 Buy 4.33

1/14/03 10,000 Buy 3.99

1/13/03 20,000 Buy 4.11

1/15/03 20,000 Buy 3.91

1/30/03 10,000 Buy 3.41

2/10/03 20,000 Buy 2.82

2/3/03 20,000 Buy 3.36

12/22/04 10,000 Sell 1.78

-I

Vianale & Vianale LLP5355 Town Center Road, Suite 801Boca Raton, FL 33486Tel: 561-391-4900/ Fax: 561-368-9274

CERTIFICATION OF PLAINTIFFPURSUANT TO FEDERAL SECURITIES LAWS

Re: TOWER AUTOMOTIVE. INC.

I, DOROTHEA C. BRAND hereby declare:

1. I have reviewed the complaint and authorized its filing. I retain the law firm of Vianale &Vianale LLP and such co-counsel it deems appropriate to associate with to pursue such action on acontingent fee basis.

2. I did not purchase the security that is the subject of this action at the direction of counselorin order to participate in this private action or any other litigation under the federal securities laws.

3. I am willing to serve as a representative party on behalf of the class, including providingtestimony at deposition and trial, if necessary.

4. I have made no transaction(s) during the Class Period in the debt or equity securities that arethe subject of this action except those set forth below: (use a separate sheet if necessary)

Date Transaction # of Shares Price

Type

SEE ATTACHED SCHEDULE

5. During the three years prior to the date of this Certificate, I have sought to serve or servedas a representative party for a class in the following actions filed under the federal securities laws: N/A

6. I will not accept any payment for serving as a representative party on behalf of the classbeyond a pro rata share of any recovery, except such reasonable costs and expenses (including lost wages)directly relating to the representation of the class as ordered or approved by the court.

.sr-I declare under penalty of perjury that the foregoing is true and correct. Executed this L-day of

A-f-ri I ,2005.

Signed: f ~.,4 .t;.tJ,,;It., ("I.&.JNath F. Brand under Power of Attorn/yFor Dorothea C. Brand

-2-

DOROTHEA C. BRAND6.75% Convertible Preferred (Tower Automotive)

Date No. of Shares Transaction Price Per Share

1/9/01 20,000 Buy 24.00

1/11/01 10,000 Buy 23.875

1/17/01 10,000 Buy 23.875

3/12/01 20,000 Buy 27.75

1/16/03 10,000 Buy 22.60

7/13/04 6,000 Buy 22.50

7/14/04 20,000 Buy 22.625

8/5/04 100 Buy 19.25

8/6/04 7,000 Buy 19.25

8/10/04 1,600 Buy 19.25

8/11/04 1,000 Buy 19.25

12/3/04 35,700 Sell 10.15

-3-

DOROTHEA C. BRANDCommon Stock (Tower Automotive)

Date No. of Shares Transaction Price Per Share

12/20/99 10,000 Buy 13.625

10/25/02 20,000 Buy 5.05

10/29/02 10,000 Buy 5.02

12/3/02 10,000 Sell 5.35

12/23/04 30,000 Sell 1.95

Vianale & Vianale LLP5355 Town Center Road, Suite 801Boca Raton, FL 33486Tel: 561-3914900/ Fax: 561-368-9274

CERTIFICATION OF PLAINTIFFPURSUANT TO FEDERAL SECURITIES LAWS

Re: TOWER AUTOMOTIVE. INC.

TOMBSTONE LIMITED PARTNERSHIP hereby declares:

1. I have reviewed the complaint and authorized its filing. I retain the law firm of Viana Ie &Vianale LLP and such co-~ounsel it deems appropriate to associate with to pursue such action on acontingent fee basis.

2. I did not purchase the security that is the subject of this action at the direction of counselorin order to participate in this private action or any other litigation under the federal securities laws.

3. I am willing to serve as a representative party on behalf of the class, including providingtestimony at deposition and trial, if necessary.

4. I have made no transaction(s) during the Class Period in the debt or equity securities that arethe subject of this action except those set forth below: (use a separate sheet if necessary)

Date Transaction # of Shares Price

Type

SEE ATTACHED SCHEDULE

5. During the three years prior to the date of this Certificate, I have sought to serve or servedas a representative party for ~ class in the following actions filed under the federal securities laws: N/A

6. I will not accept any payment for serving as a representative party on behalf of the classbeyond a pro rata share of any recovery, except such reasonable costs and expenses (including lost wages)directly relating to the representation of the class as ordered or approved by the court.

.J..:r'I declare under penalty of perjury that the foregoing is true and correct. Executed this L day ofA-~,.; t ,2005.

TO RTNERSHIP

By: b~J( I'~.~~); J

ner

I,

-2-

TOMBSTONE LIMITED PARTNERSHIP6.75% Convertible Preferred (Tower Automotive)

Date No. of Shares Transaction Price Per Share

6/8/04 10,000 Buy 24.50

6/14/04 800 Buy 24.20

6/18/04 10,200 Buy 24.19

10/15/04 6,900 Sell 8.05

10/18/04 14,100 Sell 7.98

-3-

TOMBSTONE LIMITED PARTNERSHIPCommon Stock (Tower Automotive)

Date No. of Shares Transaction Price Per Share

3/14/03 50,000 Buy 2.15

3/17/03 10,000 Buy 2.17

12/6/04 60,000 Sell 2.01

v

Vianale & Vianale LLP5355 Town Center Road, Suite 801Boca Raton, FL 33486Tel: 561-391-4900/ Fax: 561-368-9274

CERTIFICATION OF PLAINTIFFPURSUANT TO FEDERAL SECURITIES LAWS

Re: TOWER AUTOMOTIVE. INC.

I, FREDERIC E. MOHS, hereby declare:

1. I have reviewed the complaint and authorized its filing. I retain the law firm of Vianale &Vianale LLP and such co-counsel it deems appropriate to associate with to pursue such action on acontingent fee basis.

2. I did not purchase the security that is the subject of this action at the direction of counselorin order to participate in this private action or any other litigation under the federal securities laws.

3. I am willing to serve as a representative party on behalf of the class, including providingtestimony at deposition and trial, if necessary.

4. I have made no transaction(s) during the Class Period in the debt or equity securities that arethe subject of this action except those set forth below: (use a separate sheet if necessary)

Date Transaction # of Shares Price

Type

SEE ATTACHED SCHEQULE

5. During the three years prior to the date of this Certificate, I have sought to serve or servedas a representative party for a class in the following actions filed under the federal securities laws: N/ A

6. I will not accept any payment for serving as a representative party on behalf of the classbeyond a pro rata share of any recovery, except such reasonable costs and expenses (including lost wages)directly relating to the representation of the class as ordered or approved by the court.

~rI declare under pena1ty of perjury that the foregoing is true and correct. Executed this -L day of

A-~ (,'( ,2005.

-2-

FREDERIC E. MOHS6.75% Convertible Preferred (Tower Automotive)

Date No. of Shares Transaction Price Per Share

6/25/01 20,000 Buy 25.50

11/6/01 20,000 Buy 19.88

1/8/01 20,000 Buy 23.88

-3-

FREDERIC E. MOHSCommon Stock (Tower Automotive)

Date No. of Shares Transaction Price Per Share

8/13/02 450 Buy 7.40

8/13/02 6,100 Buy 7.80

8/13/02 200 Buy 7.60

Vianale & Vianale LLP5355 Town Center Road, Suite 801Boca Raton, FL 33486Tel: 561-391-4900/ Fax: 561-368-9274

CERTIFICATION OF PLAINTIFFPURSUANT TO FEDERAL SECURITIES LAWS

Re: TOWER AUTOMOTIVE. INC.

I, PAULA A. MOHS, hereby declare:

1. I have reviewed the complaint and authorized its filing. I retain the law firm of Vianale &Vianale LLP and such co-counsel it deems appropriate to associate with to pursue such action on acontingent fee basis.

2. I did not purchase the security that is the subject of this action at the direction of counselorin order to participate in this private action or any other litigation under the federal securities laws.

3. I am willing to serve as a representative party on behalf of the class, including providingtestimony at deposition and trial, if necessary.

4. I have made no transaction(s) during the Class Period in the debt or equity securities that arethe subject of this action except those set forth below: (use a separate sheet if necessary)

Date Transaction # of Shares Price

Type

SEE ATTACHED SCHEQULE

5. During the three years prior to the date of this Certificate, I have sought to serve or servedas a representative party for ~ class in the following actions filed under the federal securities laws: N/ A

6. I will not accept any payment for serving as a representative party on behalf of the classbeyond a pro rata share of any recovery, except such reasonable costs and expenses (including lost wages)directly relating to the representation of the class as ordered or approved by the court.

s~I declare under penalty of perjury that the foregoing is true and correct. Executed this ~ aay of

Apt; I ,2005.

ey

-,IIZ1;':tt;~~/1

-2-

PAULA A. MOHSCommon Stock (Tower Automotive)

Date No. of Shares Transaction Price Per Share

10/14/04 6,000 Buy 8.60

Exhibit 99.2

Third Quarter 2003 Earnings Review October 23, 2003

Page 2 of 29exv99w2

9/27/2005http://www.sec.gov/Archives/edgar/data/925548/000095013703005371/c80285exv99w2.htm

Overall Assessment Tower was one of few successful roll-ups of the 1990's in the automotive sector Resulting culture of decentralization has prevented Tower from leveraging economies of scale Insufficient focus given to post-merger integration, financial discipline and operational excellence Significant strength in backlog of newly booked business -- $1.5B (roughly $1B net). Growth will drive customer and geographic diversification in Company's most profitable segments Complex capital structure and highly levered; yet, liquidity strengthened through high yield bond offering On Tower Automotive's Business

Page 5 of 29exv99w2

9/27/2005http://www.sec.gov/Archives/edgar/data/925548/000095013703005371/c80285exv99w2.htm

Morgan Stanley Global Automotive Conference

April 7, 2004

Page 5

New Management AssessmentNew Management AssessmentTower Strengths

• Largest segment dedicated supplier with global reach

• Revenue growth 12-15% per year with 20-25% conversion on value-add backlog

• Technical competence in complex metal structures design / manufacturing

• Values-based culture

Tower Areas for Improvement

• Previously insufficient focus given to post-merger integration, financial disciplines, operational excellence

• Uneven launch record; poor predictability

• Complex capital structure; highly levered

• Must deliver the top line to the bottom line

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