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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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VITRONICS CORPORATION
(Name of Subject Company)
VITRONICS CORPORATION
(Name of Person Filing Statement)
COMMON STOCK, $0.01 PAR VALUE PER SHARE
(Title of Class of Securities)
928503101
(CUSIP Number of Class of Securities)
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JAMES J. MANFIELD, JR.
PRESIDENT & CHIEF EXECUTIVE OFFICER
VITRONICS CORPORATION
1 FORBES ROAD
NEWMARKET, NEW HAMPSHIRE 03857
(603) 659-6550
(Name, Address and Telephone Number of Persons Authorized
to Receive Notice and Communications on Behalf of the
Person Filing this Statement)
COPIES TO:
ROGER M. BARZUN, ESQ.
60 HUBBARD STREET
CONCORD, MASSACHUSETTS 01742
(508) 287-4275
AND
MICHAEL F. SWEENEY, ESQ.
DUFFY & SWEENEY
300 TURKS HEAD BUILDING
PROVIDENCE, RHODE ISLAND 02903
(401) 455-0700
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INTRODUCTION
This Solicitation/Recommendation on Schedule 14D-9 (this "SCHEDULE 14D-9")
relates to an offer by DTI Intermediate, Inc., a Delaware corporation, (the
"PURCHASER"), a wholly-owned subsidiary of Dover Technologies International,
Inc., a Delaware corporation, ("DOVER") (an indirect wholly-owned subsidiary of
Dover Corporation, a Delaware corporation) to purchase all of the shares of the
outstanding common stock of Vitronics Corporation, a Massachusetts corporation
(the "COMPANY"). Capitalized terms used in this Schedule 14D-9 and not otherwise
defined in it, shall have the meanings assigned to them in the Offer to Purchase
dated September 9, 1997, a copy of which is filed as Exhibit (a)(1) to this
Schedule 14D-9 (the "OFFER TO PURCHASE.")
ITEM 1. SECURITY AND SUBJECT COMPANY.
The subject company is Vitronics Corporation, a Massachusetts corporation,
which has a principal address of 1 Forbes Road, Newmarket, New Hampshire 03857
and this Schedule 14D-9 relates to the common stock $0.01 par value per share of
the Company (the "COMMON STOCK").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to the tender offer disclosed in the Tender
Offer Statement on Schedule 14D-1 dated September 9, 1997 filed with the
Securities and Exchange Commission by Dover Corporation, Dover and the Purchaser
relating to an offer by the Purchaser to purchase all of the outstanding shares
of the Company's Common Stock (the "SHARES") at $1.90 per share, net to the
seller in cash, without interest (the "OFFER PRICE") upon the terms and subject
to the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (which together with any amendments or supplements thereto
collectively constitute the "OFFER").
The principal executive offices of each of the Purchaser and Dover are
located at One Marine Midland Plaza, Sixth Floor, East Tower, Binghamton, New
York 13901-3280.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of September 3, 1997 (the "MERGER AGREEMENT") among the Company, Dover and the
Purchaser. A copy of the Merger Agreement is filed as Exhibit (c)(1) to this
Schedule 14D-9 and is incorporated herein by reference in its entirety. Pursuant
to the Merger Agreement, upon the satisfaction or waiver of certain conditions,
the Purchaser and the Company will consummate a merger (the "MERGER"). The
Merger Agreement is summarized in Item 3 of this Schedule 14D-9, below.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the person filing this Schedule 14D-9 is set
forth in Item 1, above.
(b) Set forth below is a description of (i) the Merger Agreement; (ii)
certain employment and stock option agreements and arrangements of certain
officers and directors of the Company; and (iii) the Company's
indemnification and insurance arrangements with respect to its officers and
directors. Except as described in this Schedule 14D-9, there are no material
contracts, agreements, arrangements or understandings or any potential or
actual conflicts of interest between the Company or its affiliates and (i)
the Company, (ii) Dover Corporation (iii) Dover, (iv) the Purchaser or (v)
any of their respective executive officers, directors or affiliates.
THE MERGER AGREEMENT.
The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement
wich is filed as Exhibit (c)(1) to this Schedule 14D-9
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and incorporated herein by reference thereto. The Merger Agreement may be
examined and copies may be obtained at the places and in the manner set forth in
Section 9 of the Offer to Purchase.
THE OFFER. The Merger Agreement provides that the Purchaser will (i)
commence the Offer and (ii) that subject to there being validly tendered and not
withdrawn prior to the expiration of the Offer the number of Shares which
represents at least sixty-six and two-thirds percent (66 2/3%) of the Shares
outstanding on a fully diluted basis (the "MINIMUM CONDITION") and the
satisfaction of the other conditions set forth in Section 14 to the Offer to
Purchase, will consummate the Offer in accordance with its terms. The Merger
Agreement also provides that without the written consent of the Company, the
Purchaser will not decrease the Offer Price, decrease the number of Shares
sought in the Offer, amend or waive the Minimum Condition or amend any condition
of the Offer in a manner adverse to the holders of Shares except that (x) the
Purchaser or Dover can waive the Minimum Condition without the written consent
of the Company, and (y) if on the initial scheduled expiration date of the
Offer, all conditions to the Offer have not been satisfied or waived, the
Purchaser may, from time to time without the consent of the Company extend the
expiration date for one or more periods totaling not more than thirty business
days. If immediately prior to the initial expiration date of the Offer (as it
may be extended), the Shares tendered and not withdrawn equal more than
seventy-five percent (75%) of the outstanding Shares, but less than 90% of the
outstanding Shares, the Purchaser may extend the Offer for a period not to
exceed twenty business days, notwithstanding that all conditions to the Offer
were satisfied as of the expiration date of the Offer. The Purchaser may also
extend the initial expiration date or any extension thereof to comply with any
legal or regulatory requirements. Notwithstanding the foregoing, the Offer may
not be extended beyond the date of termination of the Merger Agreement.
CONDITIONS TO THE OFFER. The Merger Agreement provides that notwithstanding
any other provisions of the Offer, and in addition to (and not in limitation of)
the Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser is
not required to accept for payment or, subject to any applicable rules and
regulations of the Securities and Exchange Commission ("SEC"), including Rule
14e-l(c) under the Securities Exchange Act of 1934, as amended, (the "EXCHANGE
ACT") (relating to the Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any tendered Shares, and may terminate or amend the
Offer as to any Shares not then paid for, if (i) any applicable waiting period
under the Hart-Scott-Rodino Anti Trust Improvements Act of 1976, as amended, and
the regulations thereunder (the "HSR ACT") has not expired or terminated, (ii)
the Minimum Condition has not been satisfied, or (iii) at any time on or after
the date of the Merger Agreement and before the time of acceptance for payment
for any Shares, any of the following events occur or are determined by the
Purchaser, in its judgment reasonably exercised, to have occurred:
(a) there shall be threatened or pending any suit, action or proceeding
by any court, arbitral tribunal, administrative agency or commission or
other governmental or regulatory authority or agency (a "GOVERNMENTAL
ENTITY") against the Purchaser, Dover, the Company or any subsidiary of the
Company (i) seeking to prohibit or impose any material limitations on
Dover's or the Purchaser's ownership or operation (or that of any of their
respective subsidiaries or affiliates) of all or a material portion of their
or the Company's businesses or assets, or to compel Dover or the Purchaser
or their respective subsidiaries and affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or
Dover and their respective subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Dover or the Purchaser of any Shares under
the Offer, seeking to restrain or prohibit the making or consummation of the
Offer or the Merger or the performance of any of the other transactions
contemplated by the Merger Agreement, or seeking to obtain from the Company,
Dover or the Purchaser any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (iii) seeking to impose
material limitations on the ability of the Purchaser, or render the
Purchaser unable, to accept for payment, pay for or purchase
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some or all of the Shares pursuant to the Offer and the Merger, (iv) seeking
to impose material limitations on the ability of the Purchaser or Dover
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all
matters properly presented to the Company's shareholders, or (v) which
otherwise is reasonably likely to have an effect materially adverse to the
Company and its subsidiaries, taken as a whole;
(b) any statute, rule, regulation, judgment, order or injunction
enacted, entered, enforced, promulgated, or deemed applicable, pursuant to
an authoritative interpretation by or on behalf of a Government Entity, to
the Offer or the Merger, or any other action is taken by any Governmental
Entity, other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any general suspension of trading in, or limitation on prices for,
securities on the New York Stock Exchange or the American Stock Exchange for
a period in excess of 24 hours (excluding suspensions or limitations
resulting solely from physical damage or interference with such exchanges
not related to market conditions); any decline in either the Dow Jones
Industrial Average or the Standard & Poor's Index of 400 Industrial
Companies or in the New York Stock Exchange Composite Index in excess of 15%
measured from the close of business on the trading day next preceding the
date of the Merger Agreement, (iii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States (whether
or not mandatory), (iv) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (v) any limitation (whether or not mandatory) by any United
States governmental authority on the extension of credit generally by banks
or other financial institutions, (vi) a change in general financial, bank or
capital market conditions which materially and adversely affects the ability
of financial institutions in the United States to extend credit or syndicate
loans or (vii) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening thereof;
(d) any events after the date of the Merger Agreement which, either
individually or in the aggregate, would have a material adverse effect on
the Company and its subsidiaries taken as a whole;
(e) the Board of Directors of the Company withdraws or adversely
modifies its approval or recommendation of the Offer, the Merger or the
Merger Agreement;
(f) the representations and warranties of the Company are not true and
correct;
(g) the Company fails to perform any obligation or to comply with any
agreement or covenant to be performed or complied with by it under the
Merger Agreement;
(h) any person acquires beneficial ownership of at least 25% of the
outstanding Common Stock of the Company;
(i) the Merger Agreement is terminated in accordance with its terms.
THE MERGER. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions of the Merger Agreement, at
the election of Dover (i) the Company will be merged with and into the Purchaser
and the separate corporate existence of the Company will thereupon cease, (ii)
the Purchaser will be the successor or surviving corporation in the Merger and
will continue to be governed by the laws of the State of Delaware, and (iii) all
the rights, privileges, immunities, powers and franchises of the Company will
vest in the surviving corporation and, except as otherwise provided for in the
Merger Agreement, all obligations, duties, debts and liabilities of the Company
will then be the obligations, duties, debts and liabilities of the surviving
corporation. In the alternative, at the election of Dover, (i) the Purchaser
will be merged with and into the Company and the separate corporate existence of
the Purchaser will cease, (ii) the Company will be the successor or surviving
corporation and will
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continue to be governed by the laws of the Commonwealth of Massachusetts, and
(iii) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises will continue unaffected by the
Merger. In any event, the charter of the surviving corporation will be the
charter of the surviving corporation immediately prior to the Effective Time,
until thereafter amended as provided therein and under the Delaware or
Massachusetts corporation law, as applicable, and the Bylaws of the surviving
corporation will be the Bylaws of the Purchaser, as in effect immediately prior
to the Effective Time.
The obligations of the parties to effect the Merger are subject to the
satisfaction on or prior to the Closing Date (as defined in the Merger
Agreement) of each of the following conditions, any and all of which may be
waived in whole or in part jointly by the Company and Dover to the extent
permitted by applicable law: (a) the Merger Agreement is approved and adopted by
the requisite vote of the holders of the Shares, if required by applicable law
in order to consummate the Merger; (b) no statute, rule or regulation has
enacted or promulgated by any governmental authority which prohibits the
consummation of the Merger; and there is no order or injunction of a court of
competent jurisdiction in effect precluding consummation of the Merger; (c)
Dover, the Purchaser or their affiliates have purchased Shares pursuant to the
Offer, except that this condition does not apply if Dover, the Purchaser or
their affiliates have failed to purchase Shares pursuant to the Offer in breach
of their obligations under the Merger Agreement; and (d) the applicable waiting
period under the HSR Act has expired or been terminated. In addition, the
obligations of Dover and the Purchaser to consummate the Merger are further
subject to the fulfillment of the condition that the Company has complied with
its obligations regarding stock options, described below.
The Merger becomes effective on the date on which a Certificate of Merger is
duly filed with the Secretary of State of the state of incorporation of the
surviving corporation or at such time as is agreed upon by the parties and
specified in the Certificate of Merger. That time is referred to as the
"EFFECTIVE TIME." At the Effective Time, as a result of the Merger and without
any action on the part of the holders of any Shares, each issued and outstanding
share of the Purchaser's common stock will be converted into and become one
fully paid and non-assessable share of common stock of the surviving
corporation.
Each issued and outstanding Share other than Shares which are held by
shareholders exercising appraisal rights under Massachusetts law will be
converted into the right to receive the Offer Price, without interest (the
"MERGER CONSIDERATION"), upon surrender of the certificate representing the
Share. The converted Shares will no longer be outstanding and will automatically
be canceled and retired and will cease to exist, and each holder of a
certificate representing any such Shares will cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon the
surrender of the certificate in accordance with the Merger Agreement, without
interest, or the right, if any, to receive payment from the surviving
corporation of the "fair value" of the Shares as determined in accordance with
Massachusetts law.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly upon the purchase of and payment for Shares by the Purchaser which
represent at least a majority of the outstanding Shares, Dover will be entitled
to designate such number of directors, rounded up to the next whole number, on
the Board of Directors of the Company as is equal to the product of the total
number of directors on the Board (giving effect to the directors designated by
Dover pursuant to this sentence) multiplied by the percentage that the number of
Shares so accepted for payment bears to the total number of Shares then
outstanding. Upon the request of Dover, the Company will use its best reasonable
efforts promptly either to increase the size of its Board of Directors,
including amending the Bylaws of the Company if necessary to so increase the
size of the Company's Board of Directors, or to secure the resignations of such
number of its incumbent directors, or both, as is necessary to enable Dover's
designees to be so elected to the Company's Board of Directors. At that time,
the Company will, if requested by Dover also cause persons designated by Dover
to constitute at least the same percentage (rounded up to the next whole number)
as is on the Company's Board of Directors of (i) each committee of the
5
Company's Board of Directors, (ii) each board of directors (or similar body) of
each subsidiary of the Company and (iii) each committee (or similar body) of
each such board.
Following the election or appointment of the Purchaser's designees and prior
to the earlier to occur of (i) the Effective Time or (ii) November 21, 1997, any
amendment or termination of the Merger Agreement, grant by the Company of any
extension for the performance or waiver of the obligations or other acts of the
Purchaser or Dover, waiver of the Company's rights under the Merger Agreement,
or action with respect to the Company's employee benefit plans or option
agreements, will require the concurrence of a majority of the Company's
directors then in office who were directors on the date of the Merger Agreement
or are directors (other than directors designated by the Purchaser) designated
by such directors to fill any vacancy (the "CURRENT DIRECTORS"). In addition,
following the election or appointment of the Purchaser's designees and prior to
the earlier to occur of (i) the Effective Time or (ii) November 21, 1997,
neither Dover, the Purchaser nor any such designee will cause the Company to
take any action or fail to take any action that would cause or result in any
obligation of the Company or condition under the Merger Agreement not being
satisfied without the concurrence of a majority of the Company's directors then
in office who are Current Directors. In addition, no Current Director will be
removed except for cause, and the Purchaser agrees to cause its designees to
vote for the election of any designee of the Current Directors to fill a vacancy
if any Current Director ceases to be a director.
SHAREHOLDERS' MEETING. The Merger Agreement provides that if required by
applicable law in order to consummate the Merger, the Company, acting through
its Board of Directors, will convene a special meeting of its shareholders (the
"SPECIAL MEETING") as promptly as practicable following the acceptance for
payment and purchase of Shares by the Purchaser pursuant to the Offer. The
Special Meeting will take action on the approval of the Merger and the adoption
of the Merger Agreement. The Company will also prepare, file with the SEC and
mail to its shareholders a proxy or information statement relating to the Merger
and the Merger Agreement to obtain the necessary approvals thereof. The proxy or
information statement will contain the recommendation of the Board of Directors
that shareholders of the Company vote in favor of the approval of the Merger and
the adoption of the Merger Agreement, and Dover will vote, or cause to be voted,
all of the Shares then owned by it, by the Purchaser or by any of its other
subsidiaries and affiliates in favor of the approval of the Merger and the
approval and adoption of the Merger Agreement. In the event that Dover, the
Purchaser and any other subsidiaries of Dover acquire in the aggregate at least
90% of the outstanding Shares of the Company pursuant to the Offer or otherwise,
the Company, Dover and the Purchaser agree that at the request of Dover and
subject to the conditions to the consummation of the Merger, they will take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the acquisition without a meeting of shareholders of the
Company, in accordance with Massachusetts law.
STOCK OPTIONS. The Merger Agreement provides that at the Effective Time,
each holder of a then outstanding option (collectively, the "OPTIONS") to
purchase Shares granted by the Company, whether or not then exercisable, will
receive for each Share subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Offer
Price and the per-Share exercise price of such Option. The Company has agreed
that prior to the Effective Time it will use reasonable efforts to obtain all
consents or releases from holders of Options to this treatment of their Options
that are required by the Company's option plans or the option agreements
themselves other than from holders of Options with a per-share exercise price in
excess of the Offer Price. The Company has also agreed to take all action
necessary to ensure that (i) the Company's 1995 Key Employees Stock Option Plan
(the "STOCK OPTION PLAN") will be terminated as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of the Company or
any of its subsidiaries will be canceled as of the Effective Time, and (ii)
following the Effective Time, (a) no participant in any Stock Option Plan or
other plans, programs or arrangements will have any right thereunder to acquire
equity securities of the Company, the surviving corporation or any subsidiary
thereof and all such plans will have been terminated, and (b) the Company will
not be bound by any convertible security, option, warrant, right or agreement
which would entitle any person to own any capital stock of the Company, the
surviving corporation or any of its subsidiaries.
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INTERIM OPERATIONS; COVENANTS. Pursuant to the Merger Agreement, the
Company has agreed that, except as expressly contemplated by the Merger
Agreement or as agreed to in writing by Dover, prior to the time the designees
of Dover constitute a majority of the Board of Directors of the Company (the
"APPOINTMENT DATE") --
(a) the business of the Company and its subsidiaries will be conducted
only in the ordinary and usual course (other than actions necessary to
consummate the transactions described in the Merger Agreement) and, to the
extent consistent therewith, each of the Company and its subsidiaries will
use its best efforts to preserve its business organization intact and
maintain its existing relations with customers, suppliers, employees,
creditors and business partners;
(b) the Company will not, directly or indirectly, (i) except upon
exercise of Options or other rights to purchase shares of Common Stock,
issue, sell, transfer or pledge or agree to sell, transfer or pledge any
treasury stock of the Company or any capital stock of any of its
subsidiaries beneficially owned by it, (ii) amend its Articles of
Incorporation or Bylaws or similar organizational documents; or (iii) split,
combine or reclassify the outstanding Shares or any outstanding capital
stock of any of the subsidiaries of the Company;
(c) neither the Company nor any of its subsidiaries will (i) declare,
set aside or pay any dividend or other distribution payable in cash, stock
or property with respect to its capital stock; (ii) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights
of any kind to acquire, any shares of capital stock of any class of the
Company or its subsidiaries, other than Shares reserved for issuance on the
date of the Merger Agreement pursuant to the exercise of Options outstanding
on the date of the Merger Agreement ; (iii) transfer, lease, license, sell
or dispose of any assets, or incur any indebtedness or other liability other
than in the ordinary course of business, or mortgage, pledge or encumber any
assets or modify any indebtedness; or (iv) redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(d) neither the Company nor any of its subsidiaries will (i) grant any
increase in the compensation payable to its executive officers or (ii) adopt
any new, or amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under any existing
bonus, incentive compensation, deferred compensation, severance, profit
sharing, stock option, stock purchase, insurance, pension, retirement or
other employee benefit plan, agreement or arrangement; or (iii) enter into
any employment or severance agreement with or, except in accordance with the
existing written policies of the Company, grant any severance or termination
pay to any officer, director or employee of the Company or any of its
subsidiaries;
(e) neither the Company nor any of its subsidiaries will permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without notice to Dover;
(f) neither the Company nor any of its subsidiaries will enter into any
contract or transaction relating to the purchase of assets other than in the
ordinary course of business;
(g) neither the Company nor any of its subsidiaries will change any of
the accounting methods used by it unless required by generally accepted
accounting principles ("GAAP"), neither the Company nor any of its
subsidiaries will make any material Tax election, change any material Tax
election already made, adopt any material Tax accounting method, change any
material Tax accounting method unless required by GAAP, enter into any
closing agreement, settle any Tax claim or assessment or consent to any Tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment; and
(h) neither the Company nor any of its subsidiaries will enter into any
agreement with respect to the foregoing or take any action with the intent
of causing any of the conditions to the Offer not to be satisfied.
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NO SOLICITATION. Pursuant to the Merger Agreement, the Company has agreed
that neither the Company nor any of its subsidiaries will (and the Company and
its subsidiaries will cause their respective officers, directors, employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Dover or any of its affiliates or representatives) concerning any
proposal or offer to acquire all or a substantial part of the business and
properties of the Company or any of its subsidiaries or any capital stock of the
Company or any of its subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transactions involving the Company or any
subsidiary, division or operating or principal business unit of the Company (an
"ACQUISITION PROPOSAL"), except that the Merger Agreement does not prohibit the
Company or the Company's Board of Directors from (i) taking and disclosing to
the Company's shareholders a position with respect to a tender or exchange offer
by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's shareholders as,
in the good faith judgment of the Board of Directors, after receiving advice
from outside counsel, is required under applicable law; provided that, except as
permitted under the Merger Agreement, neither the Board of Directors of the
Company nor any committee thereof will (x) approve or recommend or propose to
approve or recommend any Acquisition Proposal, (y) enter into any agreement with
respect to any Acquisition Proposal, or (z) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Dover or the Purchaser, the approval
or recommendation by the Board of Directors or by any such committee of the
Offer, the Merger Agreement or the Merger. The Company has also agreed to cease
any existing activities, discussions or negotiations with any parties conducted
prior to the date of the Merger Agreement with respect to any of the foregoing.
The Merger Agreement provides that notwithstanding the foregoing, prior to
the acceptance of Shares pursuant to the Offer constituting the Minimum
Condition, the Company may furnish information concerning its business,
properties or assets to any corporation, partnership, person or other entity or
group pursuant to appropriate confidentiality agreements, and may negotiate and
participate in discussions and negotiations with such entity or group concerning
an Acquisition Proposal if (x) such entity or group has on an unsolicited basis
submitted a bona fide written proposal to the Company relating to any such
transaction which the Board of Directors determines in good faith, after
receiving advice from Scott-Macon Securities, Inc. or a nationally recognized
investment banking firm, represents a superior transaction to the Offer and the
Merger and which the Board of Directors determines in good faith can be fully
financed and (y) in the opinion of the Board of Directors of the Company, only
after receipt of advice from outside legal counsel to the Company, the failure
to provide such information or access or to engage in such discussions or
negotiations could reasonably be expected to cause the Board of Directors to
violate its fiduciary duties to the Company's shareholders under applicable law
(an Acquisition Proposal which satisfies clauses (x) and (y) being referred to
herein as a "SUPERIOR PROPOSAL"). The Company will within one business day
following receipt of a Superior Proposal notify Dover of the receipt of the same
and will promptly provide to Dover any material non-public information regarding
the Company that has been provided to any other party which was not previously
provided to Dover. At any time after two business days following notification to
Dover of the Company's intent to do so (which notification will include the
identity of the bidder and a complete summary of the material terms and
conditions of the proposal) and if the Company has otherwise complied with the
terms of the Merger Agreement, the Board of Directors may withdraw or modify its
approval or recommendation of the Offer.
In the event of a Superior Proposal which (i) is to be paid entirely in cash
and (ii) is not subject to any financing condition or contingency, the Company
may enter into an agreement with respect to the Superior Proposal no sooner than
four days after giving Dover written notice of its intention to enter into such
agreement; provided that the Purchaser or Dover has not, prior to the expiration
of the four-day period, advised the Company of its intention to raise the Offer
Price to match the Superior Proposal. Upon expiration of the four-day period
without such action by the Purchaser or Dover, the Company may enter into an
agreement with respect to the Superior Proposal (with the bidder and on terms no
less favorable
8
than those specified in such notification), provided that concurrently with
entering into the agreement the Company pays or causes to be paid to Dover an
amount equal to the greater of $750,000, or an amount equal to Dover's actual,
reasonable and reasonably documented out-of-pocket fees and expenses incurred by
Dover and the Purchaser in connection with the Offer, the Merger, the Merger
Agreement, the consummation of the transactions contemplated under the Merger
Agreement and the financing therefor, provided that in no event will the Company
be obligated to pay any such fees and expenses in excess of $1,000,000.
INDEMNIFICATION. The Merger Agreement provides that for six years after the
Effective Time, Dover and the surviving corporation (or any successor to the
surviving corporation) agree jointly to indemnify, defend and hold harmless the
present and former officers and directors of the Company and its subsidiaries,
and persons who become any of the foregoing prior to the Effective Time against
all losses, claims, damages, liabilities, costs, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided that any such
settlement is effected with the written consent of Dover or the surviving
corporation which consent may not unreasonably be withheld)) arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent permissible under applicable Massachusetts law, the terms of the
Company's Articles of Incorporation or the Bylaws, as in effect at the date of
the Merger Agreement, provided that, in the event any claim or claims are
asserted or made within the six-year period, all rights to indemnification in
respect of any such claims will continue until they are disposed of.
REPRESENTATIONS & WARRANTIES. The Company has made customary
representations and warranties to Dover and the Purchaser pursuant to the Merger
Agreement with respect to, among other things, its organization, capitalization,
financial statements, public filings, conduct of business, employee benefit
plans, intellectual property, employment matters, compliance with laws, tax
matters, litigation, environmental matters, the vote required to approve the
Merger Agreement, undisclosed liabilities, information in the proxy or
information statement, and the absence of any material adverse effect on the
Company since December 31, 1996.
TERMINATION; FEES. The Merger Agreement may be terminated and the
transactions contemplated by the Merger Agreement may be abandoned at any time
prior to the Effective Time, whether before or after shareholder approval
thereof
(a) by the mutual written consent of Dover and the Company; or
(b) by either of the Company or Dover: (i) if (x) the Offer expires
without any Shares being purchased or (y) the Purchaser does not accept for
payment all Shares tendered pursuant to the Offer by November 17, 1997;
provided, however, that the right to terminate the Merger Agreement is not
available to any party whose failure to fulfill any obligation under the
Merger Agreement has been the cause of, or resulted in, the failure of Dover
or the Purchaser, as the case may be, to purchase the Shares pursuant to the
Offer on or prior to such date; or(ii) if any Governmental Entity issues an
order, decree or ruling or takes any other action (which order, decree,
ruling or other action the parties are obliged to use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares pursuant to
the Offer or the Merger and the order, decree, ruling or other action
becomes final and non-appealable; or
(c) by the Company (i) if Dover, the Purchaser or any of their
affiliates fail to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate the Merger Agreement if the
Company is at the time in breach of its obligations under the Merger
Agreement such as to cause a material adverse effect on the Company; or (ii)
if Dover or the Purchaser have breached in any material respect any of their
respective representations, warranties, covenants or other agreements
contained in the Merger Agreement, which breach cannot be or has not been
cured, in all material respects, within 30 days after the giving of written
notice to Dover or the Purchaser, as applicable; or (iii) in connection with
9
entering into a definitive agreement in accordance with a Superior Proposal,
provided it has complied with all provisions of the Merger Agreement,
including the notice provisions, and that it makes simultaneous payment of
an amount equal to the greater of $750,000 or an amount equal to Dover's
actual, reasonable and reasonably documented out-of-pocket fees and expenses
incurred by Dover and the Purchaser in connection with the Offer, the
Merger, the Merger Agreement, the consummation of the transactions
contemplated by the Merger Agreement and the financing therefor, provided
that in no event will the Company be obligated to pay any such fees and
expenses in excess of $1,000,000; or
(d) by Dover (i) if, due to an occurrence, not involving a breach by
Dover or the Purchaser of their obligations hereunder, which makes it
impossible to satisfy any of the conditions to the Offer set forth in
Section 14 of the Offer to Purchase, Dover, the Purchaser, or any of their
affiliates fails to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer; (ii) if
prior to the purchase of Shares pursuant to the Offer, the Company has
breached any representation, warranty, covenant or other agreement contained
in the Merger Agreement which (A) would give rise to the failure of a
condition set forth in paragraph (f) or (g) of Section 14 of the Offer to
Purchase hereto and (B) cannot be or has not been cured, in all material
respects, within 30 days after the giving of written notice to the Company;
or (iii) upon the occurrence of any event set forth in paragraph (e) of
Section 14 of the Offer to Purchase.
In accordance with the Merger Agreement, if (1) Dover terminates the Merger
Agreement pursuant to clause (d)(iii) of the immediately preceding paragraph,
(2) the Company terminates the Merger Agreement pursuant to clause (c)(iii) of
the immediately preceding paragraph, or (3) either the Company or Dover
terminates the Merger Agreement pursuant to clause (b)(i) of the immediately
preceding paragraph and prior thereto there shall have been publicly announced
another Acquisition Proposal or an event set forth in paragraph (h) of Section
14 of the Offer to Purchase has occurred, the Company will pay to Dover an
amount equal to the greater of $750,000 or an amount equal to Dover's actual,
reasonable and reasonably documented out-of-pocket fees and expenses incurred by
Dover and the Purchaser in connection with the Offer, the Merger, the Merger
Agreement, the consummation of the transactions contemplated by the Merger
Agreement and the financing therefor, provided that in no event will the Company
be obligated to pay any such fees and expenses in excess of $1,000,000.
The Merger Agreement also provides that if the Company terminates the Merger
Agreement pursuant to (1) clause (b), or (2) clause (c)(i) or clause (c)(ii) of
the immediately preceding paragraph, then Dover will pay to the Company an
amount equal to the Company's reasonable legal fees and expenses incurred, as of
the date of the termination, with respect to Merger Agreement and the
transactions contemplated in it.
EMPLOYMENT AND STOCK OPTION AGREEMENTS.
JAMES J. MANFIELD, JR. In March 1995, the Company renewed its March 2, 1992
employment agreement with James J. Manfield, Jr. for a one-year period. The
agreement is automatically renewed for additional one-year periods unless
terminated by the Company on notice given 90 days prior to the end of a
twelve-month period, in which event the Company will continue to pay him his
then current salary for a period of 12 months. If termination of his employment
is by the Company without cause or for disability, payment of salary is to
continue for a period of (i) 12 months if the termination occurs before a
"Change in Control" or an "Approved Change in Control" or after an Approved
Change in Control; (ii) 24 months if the termination occurs after a Change in
Control; (iii) 24 months if Mr. Manfield resigns his employment after a Change
in Control because his duties, responsibilities or conditions of employment are
materially reduced or because of a breach of his employment agreement by the
Company; or (iv) six months if after an Approved Change in Control, his duties,
responsibilities or conditions of employment are materially reduced, and if he
has not obtained employment within the first six months, up to an additional six
months
10
or until he finds employment, whichever occurs first. The agreement provides for
payment by the Company of a minimum annual base salary of $140,000.
A Change in Control is defined as a circumstance in which control (as
defined in the securities laws) of the Company has changed or the acquisition by
a person or entity of 50% or more of the voting power of the Company; or if the
persons who constitute a majority of the Board of Directors at the time the
agreement was executed no longer represent such majority other than by reason of
nominations made by such majority. An Approved Change in Control means a Change
in Control that is approved by such majority. The Change in Control that will
result from the consummation of the Offer to Purchase and the Merger would
constitute an Approved Change in Control of the Company. Mr. Manfield's
employment agreement and the renewal are filed as Exhibits (c)(2)(i) and (ii) to
this Schedule 14D-9.
Mr. Manfield currently holds five-year non-qualified stock options granted
to him in each of December 1992, 1993 and 1994 to purchase in the aggregate
125,000 shares of Common Stock at prices ranging from $0.56 to $1.31 per share.
The option shares become subject to purchase in installments of 20% of the
shares on the grant date and on each of the subsequent four anniversaries of the
grant date.
On September 3, 1997, Mr. Manfield and Dover entered into an employment
arrangement to come into effect only upon the Effective Time of the Merger. It
provides for the employment of Mr. Manfield at his current annual salary of
$157,000 for two years to assist (for a period not to exceed one year) the
President of Soltec International, N.V , a subsidiary of Dover, which is in the
same business as the Company ("SOLTEC"), in the transition and consolidation of
the two businesses. Under the arrangement, Mr. Manfield is eligible for an
increase in salary in early 1998 commensurate with salary increases given to
other senior executives of the consolidated entities if he is then still engaged
in the consolidation process. The arrangement also provides for the payment to
Mr. Manfield of a bonus for the nine months ended September 30, 1997 pursuant to
the Company's current bonus plan and a bonus in January 1999 of $50,000 provided
that he has not actively hindered the transition and consolidation process. If
the transition and consolidation process is completed prior to the expiration of
the two-year period of the arrangement, Mr. Manfield will be free to pursue
other interests, but for the balance of the two-year period will continue to
receive his salary and, unless and until he commences full-time employment, his
current health and other Company benefits. Mr. Manfield's employment arrangement
with Dover is filed as Exhibit (c)(2)(iii) to this Schedule 14D-9.
ALBERT J. CHANASYK. Mr. Chanasyk, Vice President of Research and
Development, currently holds six-year stock options granted to him in December
1995 and December 1996 to purchase 30,000 Shares at $2.37 per share and 10,000
shares at $1.00, respectively.
DANIEL J. SULLIVAN. Mr. Sullivan, Vice President-Controller of the Company,
entered into an employment agreement with the Company dated as of January 1,
1995. The agreement provides for an initial term of one year and automatic
annual renewals thereafter unless the Company gives Mr. Sullivan at least notice
of non-renewal at least ninety days prior to the expiration of the initial term
or any annual renewal term. In the event of a non-renewal, the Company is
obligated to pay him his then current salary for three months after the end of
the term or a renewal term, as the case may be. The agreement provides for the
payment of a minimum salary of $67,500. In the event that the Company terminates
his employment without cause, it is obligated to continue to pay him his then
current salary for three months unless termination occurs after a Change in
Control (which is not an Approved change in Control), in which event the Company
is obligated to continue to pay him his salary for an additional six months. Mr.
Sullivan may resign his employment if his duties, responsibilities or conditions
of employment are materially reduced or because of a breach of his employment
agreement by the Company. If he does so, the Company is obligated to continue to
pay him his then current salary for a period of twelve months if the resignation
occurs after a Change in Control or for three months and up to an additional
three months or until he finds employment (whichever occurs first) if such
resignation occurs after an Approved Change in Control. See the description of
Mr. Manfield's employment agreement, above, for the meaning of "Change in
Control" and "Approved Change in Control."
11
Mr. Sullivan also participates in the Company's health and other benefit
plans and at the discretion of the Chief Executive Officer and the Board of
Directors in a bonus plan. Mr. Sullivan's employment agreement is filed as
Exhibit (c)(3) to this Schedule 14D-9.
Mr. Sullivan currently holds a six-year incentive stock option granted to
him in August 1997 to purchase 25,000 shares of Common Stock at a price of $1.09
per share. The option shares become subject to purchase in installments of 20%
of the shares on each of the first five anniversaries of the grant date. The
option replaced several options that had expired at the time Mr. Sullivan
rejoined the Company after a short hiatus.
THOMAS F. NASH. The Company entered into an employment agreement with Mr.
Nash as of October 15, 1996 providing for employment through November 4, 1998
pursuant to which he is to serve as Vice President-Sales and Marketing. At the
expiration of the agreement, his employment is to continue on a month to month
basis. His salary under the agreement is $110,000 per year, he is entitled to
participate in the Company's health and other benefit plans and to participate
in a bonus plan at the discretion of the Chief Executive Officer and the
Compensation Committee of the Board of Directors. The severance arrangements for
Mr. Nash are the same as those described above to which Mr. Sullivan is
entitled. Mr. Nash's employment agreement is filed as Exhibit (c)(4) to this
Schedule 14D-9.
Mr. Nash currently holds a six-year incentive stock option granted to him in
November 1996 to purchase 25,000 shares of Common Stock at a price of $1.09 per
share. The option shares become subject to purchase in installments of 20% of
the shares on each of the first five anniversaries of the grant date.
Non-employee directors of the Company also currently hold non-qualified
stock options to purchase shares of Common Stock granted during the period from
December 1992 through December 1994, as follows: James R. Kanely, 20,000 at
$2.34 per share; Allen H. Keough, 30,000 shares at $1.31 per share; and David R.
A. Steadman, 65,000 shares in the aggregate at prices ranging from $0.56 to
$1.31 per share. The options have a duration of five to six years and vest over
the first five years of the option in equal installments.
Pursuant to the Company's option agreements, all unvested options will vest
in full upon the occurrence of certain events, including the change in control
of the Company that will occur upon consummation of the Tender Offer. The forms
of option agreement adopted by the Company for the 1987 and 1995 Stock Option
Plans are filed as Exhibits (c)(5) and (6) respectively.
In addition, pursuant to the Merger Agreement, upon the consummation of the
Merger, all officers, directors and employees, including those mentioned above,
will receive a cash payment equal to the difference, if any, between the $1.90
Offer price per share and his or her option exercise price per share multiplied
by the number of shares then subject to the option.
Dover has agreed to honor the Company's 1997 discretionary bonus plan in
accordance with the Company's past practice in which a bonus pool of 15% of
pre-tax profits is allocated 75% for the grant of bonuses to senior management
and 25% for the grant of bonuses to other employees (other than members of the
sales organization). The bonus pool will be computed for the period from the
beginning of the current year through September 30, 1997. Dover has also agreed
to honor the Company's existing severance policies with respect to any employee
whose employment is terminated as a result of the Merger.
THE COMPANY'S INDEMNIFICATION ARRANGEMENTS.
Article 6I of the Company's Articles of Incorporation provides that no
director of the Company shall be personally liable to the Company or its
shareholders for monetary damages for a breach of fiduciary duty as a director
notwithstanding any provision of law imposing such liability. Article 6I further
provides, however, that this limitation on the liability of a director does not
eliminate or limit any liability of a director (i) for any breach of the
director's duty of loyalty to the Company or its shareholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) for
12
distributions to one or more shareholders of the Company made in violation of
the Articles of Incorporation or that are made when the Company is insolvent or
that render it insolvent, if such distributions are not repaid, (iv) for loans
made to officers or directors of the Company that are not repaid, if the
director has voted for such loans and they have not been approve or ratified as
loans reasonably expected to benefit the Company by a majority of directors who
are not recipients of such loans or by the holders of a majority of voting
shares who are not are not recipients of such loans, or (v) for any transactions
from which the director derived an improper personal benefit. Article 6I of the
Company's Articles of Incorporation is filed as Exhibit (c)(7)(i) to this
Schedule 14D-9.
The Company's Bylaws provide that the Company shall to the fullest extent
provided by law indemnify directors who is made a party to any threatened or
pending action suit or proceeding, whether civil, criminal, administrative or
investigative (other than a suit by or on behalf of the Company itself) by
reason of his having served as a director or officer against costs and expenses
including attorneys' fees and judgements, fines, penalties and amounts paid in
settlement thereof if he acted in good faith in the belief that the action taken
or omitted was in the best interests of the Company or in the best interests of
participants and or beneficiaries of an employee benefit plan, if applicable and
with respect to a criminal action or proceeding had no reasonable cause to
believe his conduct was unlawful. Similar indemnification is provided with
respect to proceedings by or on behalf of the Company, unless he is adjudged
liable for misconduct in the performance of his duty to the Company or in
violation of state or federal securities laws and regulations. The Company is
also authorized to indemnify officers of the Company. Paragraph 9 of the
Company's Bylaws is filed as Exhibit (c)(7)(ii) of this Schedule 14D-9 and
incorporated by reference herein.
The Company carries officers and directors liability insurance in the amount
of $1,000,000 that insures both the Company's indemnity obligations described
above and the directors personally.
Pursuant to the Merger Agreement, for six years after the Effective Time,
Dover and the surviving corporation (or any successor to the surviving
corporation) agree jointly to indemnify, defend and hold harmless the present
and former officers and directors of the Company and its subsidiaries, and
persons who become any of the foregoing prior to the Effective Time against all
losses, claims, damages, liabilities, costs, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement. See "Merger Agreement --
Indemnification" in Item 3, above, of this Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors of the Company has unanimously approved the Offer and
the Merger and determined that the terms of the Offer and the Merger are fair
to, and in the best interests of, the shareholders of the Company. Accordingly,
the Board recommends that shareholders of the Company accept the Offer and
tender their Shares. A copy of a letter dated September 9, 1997 to all of the
shareholders of the Company communicating the recommendation of the Board is
attached to this Schedule 14D-9 as Exhibit (a)(5).
As set forth in the Offer, the Purchaser will purchase the Shares tendered
prior to the expiration of the Offer if the conditions to the Offer have been
satisfied. Shareholders considering not tendering their Shares in order to wait
for the Merger should note that if the Minimum Condition (as defined below) is
not satisfied or any of the other conditions to the Offer are not satisfied, the
Purchaser is not obligated to purchase any Shares and can terminate the Offer
and the Merger Agreement and not proceed with the Merger. If the Minimum
Condition to the Offer satisfied, the purchaser will have sufficient voting
power to cause the approval of the Merger without the affirmative vote of any
other shareholders.
The Offer is scheduled to expire on 12:00 midnight New York City Time on
Monday, October 6, 1997 unless the Purchaser in accordance with the terms of the
Merger Agreement elects to extend the period of time during which the Offer is
open. A copy of the press releases issued by each of the Company and Dover on
September 3, 1997 announcing the Merger and the Offer are filed as Exhibit
(a)(3) to this Schedule 14D-9 and are incorporated herein by reference in their
entirety.
13
BACKGROUND OF THE OFFER.
The following description was prepared by the Company and Dover. Information
about Dover and the Purchaser was provided by Dover. The Company takes no
responsibility for the accuracy or completeness of any information regarding
meetings or discussions in which the Company or its representatives did not
participate.
As early as June 1994, the Company's Board of Directors concluded that the
Company must either merge with or acquire another company in its industry in
order to expand its product offerings and its financial and customer base and to
maximize shareholder value. This conclusion was based on the determination by
the Board that the thermal processing equipment business, in which the Company
was a leader, was becoming more international in scope, more competitive and
more dependent for success on product innovation, price and delivery times. The
Board concluded that to remain a strong competitor in this environment, the
Company must achieve economies of scale by increasing in size and must have
access to greater resources. The Board did not and does not believe that
internal growth alone can accomplish these objectives. As a result, the Company
initiated merger and acquisition discussions through investment banking firms
with several companies in the industry. These discussions continued off and on
for many months and included due diligence investigations of the Company and of
the candidates, but none of the possible merger or acquisition proposals
involved a valuation of the Company that the Board believed was fair and in the
best interests of shareholders. Among these discussions were discussions between
the President of Dover, its subsidiary Soltec International B.V., the Chief
Executive Officer and the President of the Company and the Company's primary
investment banker, Scott-Macon, Ltd. of New York, New York ("SCOTT-MACON") that
commenced in April 1995 and which continued for several months. In May 1996,
Dover concluded that a combination of Soltec and the Company would not be
possible because the parties could not agree on valuation.
In April of 1997, the Company was contacted by one of the companies with
which it had had discussions in the past. As a result of this contact and the
ensuing negotiations and discussions, a second company made a contact with the
Company to express an interest in acquiring the Company for a cash price that
the Board believed was at the lower end of an acceptable range. Discussions
between Dover, Scott-Macon and officers of the Company commenced again in July
1997 and continued for several weeks. As a result of this contact, the Board
held a meeting on July 24, 1997 and reviewed the status of the discussions it
had had over the past three years. It was the consensus of the Board that
Scott-Macon should contact all of the companies with which the Company had had
discussions to request them to indicate the price, if any, at which they would
be interested in acquiring the Company.
During July and early August 1997, Scott-Macon received informal expressions
of interest (subject again to performing due diligence investigations of the
Company) from four companies at prices ranging from $1.35 per share in a
combination of stock and cash to an all-cash price of $1.75 per share.
On July 28, 1997, Dover's President met with the Company's Chief Executive
Officer and its Vice President-sales and Marketing regarding the current status
of the Company and on August 3, 1997 Soltec's President and the Company's Chief
Executive Officer met at Heathrow Airport in London to discuss more details of a
possible acquisition of the Company. On August 4, 1997 the Company received a
proposed price from Dover in the $1.50 per share range, subject, however to a
satisfactory due diligence review. On August 6, 1997 the Company's Board held a
meeting and decided to proceed with another candidate that had expressed
interest in an acquisition at a higher range. On August 7, 1997, the board of
directors of Dover Corporation, Dover's parent company, authorized Dover to
proceed to pursue the transaction.
The Company's Board met again on August 11, 1997 to discuss with Scott-Macon
the value of the cash and stock proposals. Since each of the interested
companies had expressed in one fashion or another a desire to have a chance to
improve their proposed prices, the Board determined that it should seek a higher
price than those already discussed. On August 15, Dover conferred with
Scott-Macon on the status of their proposal and concluded by improving their
proposal to the $2.00 per share range.
14
Because Dover's proposed price range was both significantly higher than
those proposed by others and because it was in the range the Board believed was
fair and adequate, the Company determined to grant to Dover an opportunity to
conduct its due diligence investigation, which Dover committed to complete on an
expedited basis.
During the week of August 18, 1997, members of Dover's staff and its counsel
visited the Company to do an examination (under the aegis of a confidentiality
agreement with the Company) of the operations, finances and legal (including
environmental) status of the Company. At the conclusion of this investigation
Dover proposed a firm non-contingent price of $1.90 per share subject only to
the negotiation, execution and delivery of a definitive agreement and plan of
merger with the Company. The first draft of the Merger Agreement was received on
August 23, 1997, and on August 27, 1997 the Board met to discuss its terms, to
provide the Company's counsel with direction as to the key business areas of the
Merger Agreement that needed improving and to discuss the effects of the
significant legal provisions, including the termination provisions and the
payment of a termination fee in certain circumstances.
On September 3, 1997, the Board held a meeting to review a final draft of
the Merger Agreement. Directors discussed merger terms that had changed since
prior drafts, including the Offer, the treatment of option holders, the
representations, warranties and covenants being made by the Company in the
Merger Agreement and the termination provisions. At this meeting, Scott-Macon
Securities, Inc., an affiliate of Scott-Macon, delivered to the Board of
Directors its opinion to the effect that the consideration to be received by the
Company's shareholders in the Offer and the Merger is fair to such shareholders
from a financial point of view. The opinion of Scott-Macon Securities, Inc. is
set forth in full in Exhibit (a)(4) to this Schedule 14D-9 and will be mailed to
shareholders.
At the conclusion of the meeting, the Board adopted formal resolutions by
which it stated its opinion that the terms of the Offer and Merger are fair and
in the best interests of the Company and its shareholders, and recommended to
shareholders that they accept the Offer and tender their Shares. In addition,
the Board authorized management to sign the Merger Agreement on behalf of the
Company; granted to management the authority to negotiate improvements in the
terms and conditions to the extent they are able to do so; and authorized the
filing of this Schedule 14D-9. Following the Board meeting on September 3, 1997,
each of the Company, Dover and the Purchaser executed and delivered to the other
parties the Merger Agreement and the Company and Dover each issued a press
release announcing the Offer and the Merger, copies of which are attached hereto
as Exhibit (a)(3).
REASONS FOR THE RECOMMENDATION.
As described above, on September 3, 1997, the Board of Directors of the
Company held a meeting at which directors unanimously (i) approved the Offer and
the Merger; (ii) determined that the terms of the Offer and the Merger are fair
to, and in the best interests of, the shareholders of, the Company; and (iii)
resolved to recommend that shareholders accept the Offer and tender their
Shares.
In arriving at a determination to recommend the Offer to shareholders, the
Board of Directors considered, among other things, (i) the terms and conditions
of the Merger Agreement; (ii) the approximately 38% premium represented by the
Offer Price over the market value of the Company's stock as last reported on the
American Stock Exchange on September 2, 1997, the last full trading day prior to
the announcement of the Offer and the 21% premium the Offer Price represents
over the highest closing price in the last twelve months; (iii) the all-cash
nature of the transaction; (iv) the Board's knowledge of the Company's business,
operations and properties and its assessment of the Company's future prospects;
(v) the fact that the Board's protracted and unsuccessful discussions and
negotiations with other interested parties over many months reduces the
likelihood that the Company will receive alternative offers on terms more
favorable to the Company and its shareholders that those contained in the Merger
Agreement; (vi) the potential effects of the transaction on the Company's
employees and customers; (vii) the likelihood that the proposed Merger will take
place as planned; (viii) the competitive and international nature of the
15
thermal processing equipment industry; (ix) the fact that under the Merger
Agreement, the Company is not prohibited from responding to any unsolicited
Acquisition Proposal (as defined in the Merger Agreement) by another company to
acquire the Company to the extent that the Board of Directors determines in good
faith, after receiving advice from Scott-Macon Securities, Inc. or a nationally
recognized investment banking firm, represents a superior transaction to the
Offer and the Merger and which the Board of Directors determines in good faith
can be fully financed and in the opinion of the Board of Directors of the
Company, only after receipt of advice from outside legal counsel to the Company,
the failure to provide such information or access or to engage in such
discussions or negotiations could reasonably be expected to cause the Board of
Directors to violate its fiduciary duties to the Company's shareholders under
applicable law; (x) the fact that shareholders who believe the Offer is
inadequate may exercise their rights to an appraisal of the value of their
Shares in accordance with the provisions of Chapter 156B of the Massachusetts
General Laws; and (xi) the opinion of Scott-Macon Securities, Inc., an affiliate
of Scott-Macon, that the $1.90 per Share in cash to be received by the holders
of Shares pursuant to the Offer and Merger Agreement is fair to such
shareholders from a financial point of view.
THE OPINION OF SCOTT-MACON SECURITIES, INC. CONTAINS A DESCRIPTION
OF THE FACTORS THAT IT CONSIDERED, THE ASSUMPTIONS THAT IT MADE
AND THE SCOPE OF REVIEW THAT IT UNDERTOOK IN RENDERING ITS
OPINION. THE FULL TEXT OF THE OPINION IS FILED AS EXHIBIT (a)(4)
TO THIS SCHEDULE 14D-9. SHAREHOLDERS ARE URGED TO READ THE OPINION
IN ITS ENTIRETY.
The Board of Directors also took into consideration the fact that the
consummation of the Offer and the Merger will deprive current shareholders of
the Company of the opportunity to participate in its future growth prospects.
Therefore, in reaching its conclusion to approve and recommend the Offer and the
Merger, the Board determined that the historical results of operations and
future prospects of the Company are adequately reflected in the Offer Price. In
addition, the Board considered the possibility that, in the unlikely event that
the Offer, but not the Merger is consummated, the number of shareholders could
be significantly reduced, which in turn could adversely affect the liquidity and
market value of the Shares. In reaching its conclusions, the Board did not
assign relative weights to the specific factors that it considered.
It is expected that if the Shares are not accepted for payment by the
Purchaser in the Offer and if the Merger is not consummated, the Company's
current management under the general direction of the Board of Directors will
continue to manage the Company as an on-going business. However, the Company may
under these circumstances continue to explore other possible strategic business
combinations.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
In June 1994 the Company first retained Scott-Macon to assist in identifying
possible acquisition or merger candidates. In August 1997, the Company revised
its agreement with Scott-Macon to relate specifically to any transaction arising
out of the discussions with possible merger partners that commenced in July
1997, as discussed above in Item 4 under the heading "BACKGROUND OF THE OFFER."
The revised agreement provides for a payment to Scott-Macon of a fee based on
the consideration to be paid for the Company. If all shares are purchased or
exchanged at the $1.90 Offer price, the Company will pay Scott-Macon a fee of
approximately $366,400. Effective August 28, 1997, the Company also retained
Scott-Macon Securities, Inc., an affiliate of Scott Macon to render to the Board
of Directors its opinion of the fairness of the Offer and Merger to the
Company's shareholders for a fee of $75,000.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the shareholders of the Company on its
behalf with respect to the Offer.
16
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past 60 days, no transaction in the Shares has been
effected by the Company or, to its knowledge, by any of its directors,
executive officers, affiliates or subsidiaries.
(b) To the best of the knowledge of the Company, pursuant to the Offer,
all directors and executive officers of the Company presently intend to
tender all Shares owned by them except for those Shares, if any, (i) held by
such persons which, if tendered, could cause such persons to incur liability
under Section 16(b) of the Securities Exchange Act of 1934, or (ii) with
respect to which any such person acts in a fiduciary or representative
capacity or is subject to the instructions of a third party.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, no negotiation is being
undertaken or is underway by the Company in response to the Offer that
relates to or would result in (i) an extraordinary transaction, such as a
merger or reorganization, involving the Company or any subsidiary of the
Company; (ii) a purchase, sale or transfer of a material amount of assets by
the Company or any subsidiary of the Company; (iii) a tender offer for or
other acquisition of securities by or of the Company; or (iv) any material
change in the present capitalization or dividend policy of the Company.
(b) Except as set forth in this Schedule 14D-9, there is no transaction,
board resolution, agreement in principle, or a signed contract in response
to the Offer that relates to or would result in one or more of the matters
referred to in Item 7(a), above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The information contained in all of the Exhibits referred to in Item 9,
below, is incorporated herein by this reference thereto.
17
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1)* Offer to Purchase dated September 9, 1997.
(a)(2)* Letter of Transmittal.
(a)(3) Joint press release of the Company and Dover dated September 3, 1997.
(a)(4)* Opinion of Scott-Macon Securities, Inc. dated September 3, 1997.
(a)(5) Letter to Shareholders dated September 9, 1997 containing the recommendation
of the Board of Directors of the Company regarding the Offer.
(c)(1) Agreement and Plan of Merger dated September 3, 1997 among the Company, Dover
and the Purchaser.
(c)(2)(i)+ Employment Agreement dated March 2, 1992 between the Company and James J.
Manfield, Jr. (filed as Exhibit 10.12 to the Company's Annual Report on Form
10-K for the year ended December 31, 1992.)
(c)(2)(ii)+ Amendment dated March 21, 1995 to Employment Agreement dated March 2, 1992
between the Company and James J. Manfield, Jr. (filed as Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.)
(c)(2)(iii) Employment arrangement between Dover Technologies International, Inc. and
James J. Manfield, Jr. dated September 3, 1997.
(c)(3) Employment Agreement dated as of January 1, 1995 between the Company and
Daniel J. Sullivan.
(c)(4) Employment Agreement dated as of October 15, 1996 between the Company and
Thomas F. Nash.
(c)(5)+ Form of stock option agreement adopted for the 1987 Stock Option Plan (filed
as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1987.)
(c)(6)+ Form of stock option agreement adopted for the 1995 Stock Option Plan (filed
as Exhibit 10.20 to the Company's Proxy Statement for the 1995 Annual Meeting
of Shareholders).
(c)(7)(i) Article 6I of the Company's Articles of Incorporation regarding the
limitation of liability of directors.
(c)(7)(ii) Article 5, Paragraph 9 of the Bylaws of the Company regarding the
indemnification of officers and directors of the Company.
- ------------------------
* Included in documents mailed to shareholders.
+ Incorporated herein by reference.
18
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
VITRONICS CORPORATION
Date: September 8, 1997 By: /s/ JAMES J. MANFIELD, JR.
-----------------------------------------
James J. Manfield, Jr.
PRESIDENT & CHIEF EXECUTIVE OFFICER
19
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ------------------ ---------------------------------------------------------------------------------------------
(a)(1) Offer to Purchase dated September 9, 1997.*
(a)(2) Letter of Transmittal.*
(a)(3) Press releases of the Company and Dover dated September 3, 1997.
(a)(4) Opinion of Scott-Macon Securities, Inc. dated September 3, 1997.
(a)(5) Letter to Shareholders dated September 9, 1997 containing the recommendation of the Board of
Directors of the Company regarding the Offer.
(c)(1) Agreement and Plan of Merger dated September 3, 1997 among the Company, Dover and the
Purchaser.
(c)(2)(i)+ Employment Agreement dated March 2, 1992 between the Company and James J. Manfield, Jr.
(filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992.)
(c)(2)(ii)+ Amendment dated March 21, 1995 to Employment Agreement dated March 2, 1992 between the
Company and James J. Manfield, Jr. (filed as Exhibit 10.12 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.)
(c)(2)(iii) Employment arrangement between Dover Technologies International, Inc. and James J. Manfield,
Jr. dated September 3, 1997.
(c)(3) Employment Agreement dated as of January 1, 1995 between the Company and Daniel J. Sullivan.
(c)(4) Employment Agreement dated as of October 15, 1996 between the Company and Thomas F. Nash.
(c)(5)+ Form of stock option agreement adopted for the 1987 Stock Option Plan (filed as Exhibit 10.5
to the Company's Annual Report on Form 10-K for the year ended December 31, 1987.)
(c)(6)+ Form of stock option agreement adopted for the 1995 Stock Option Plan (filed as Exhibit 10.20
to the Company's Proxy Statement for the 1995 Annual Meeting of Shareholders).
(c)(7)(i) Article 6I of the Company's Articles of Incorporation regarding the limitation of liability
of directors.
(c)(7)(ii) Article 5, Paragraph 9 of the Bylaws of the Company regarding the indemnification of officers
and directors of the Company.
- ------------------------
* Included in documents mailed to shareholders.
+ Incorporated herein by reference.
20