SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------
CLARK EQUIPMENT COMPANY
(Name of Subject Company)
CLARK EQUIPMENT COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $7.50 PER SHARE
(Including the Associated Preferred Stock Purchase Rights)
(Title of Class of Securities)
181396 10 2
(CUSIP Number of Class of Securities)
BERNARD D. HENELY, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CLARK EQUIPMENT COMPANY
100 NORTH MICHIGAN STREET
SOUTH BEND, INDIANA 46634
(219) 239-0100
(Name, address and telephone number of person authorized to receive notice and
communications on
behalf of the person(s) filing statement)
COPY TO:
WILLIAM F. WYNNE, JR., ESQ.
WHITE & CASE
1155 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 819-8200
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Clark Equipment Company, a Delaware
corporation (the "Company"), and the address of its principal executive offices
is 100 North Michigan Street, South Bend, Indiana 46634. The title of the class
of equity securities to which this statement relates is the common stock, par
value $7.50 per share, of the Company (the "Common Stock"), and the associated
preferred stock purchase rights (the "Rights" and, together with the Common
Stock, the "Shares") issued pursuant to the Rights Agreement dated March 10,
1987, as amended and restated as of August 14, 1990, and as amended as of April
10, 1995 (the "Rights Agreement") between the Company and Harris Trust and
Savings Bank, as Rights Agent (the "Rights Agent").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the revised tender offer disclosed in a Tender
Offer Statement on Schedule 14D-1 dated April 3, 1995 as amended through the
date hereof (as so amended, the "Schedule 14D-1"), of CEC Acquisition Corp., a
Delaware corporation (the "Purchaser"), and a wholly-owned subsidiary of
Ingersoll-Rand Company, a New Jersey corporation ("Ingersoll-Rand"), to purchase
all of the outstanding Shares at a price of $86 per Share net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated April 3, 1995, as amended by the First Supplement thereto dated
April 12, 1995 (as so amended, the "Offer to Purchase"), and the related Letter
of Transmittal and any supplement thereto (which together constitute the
"Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger among
Ingersoll-Rand, the Purchaser and the Company dated April 9, 1995 (the "Merger
Agreement"). The Merger Agreement provides that, upon the terms and subject to
the conditions contained therein, as promptly as practicable after the purchase
of Shares pursuant to the Offer and, if required by the General Corporation Law
of the State of Delaware ("Delaware Law"), the approval and adoption by the
affirmative vote of the shareholders of the Company in accordance with Delaware
Law and the Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation"), the Purchaser will be merged with and into the Company (the
"Merger") and each then outstanding Share (other than Shares held in the
treasury of the Company, Shares owned by Ingersoll-Rand or the Purchaser or any
other direct or indirect wholly owned subsidiary of Ingersoll-Rand or the
Company and any Shares held by Dissenting Shareholders (as such term is defined
in the Merger Agreement)), will be converted automatically into the right to
receive $86 in cash.
According to the Schedule 14D-1, the address of the principal executive
offices of the Purchaser and Ingersoll-Rand is 200 Chestnut Ridge Road,
Woodcliff Lake, New Jersey 07675.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this statement, are set forth in Item 1 above.
(b)(1) Certain information with respect to certain contracts, agreements,
arrangements or understandings between the Company and certain of its directors,
executive officers and affiliates is set forth in the sections entitled
"Director Compensation Arrangements," "Stock Acquisition Plan for Non-Employee
Directors," "Report of Human Effectiveness Committee on Executive Compensation -
Compensation Policies," "Compensation Actions in 1994," "Executive
Compensation," "Executive Employment Contracts," "Retirement Program,"
"Performance Graph" and "Security Ownership of Certain Beneficial Owners and
Management" in the Company's Proxy Statement, dated March 27, 1995, for the
Company's 1995 Annual Meeting of Stockholders (the "Proxy Statement"). A copy of
pages 1 through 24 of the Proxy Statement is filed as Exhibit 1 hereto and
incorporated herein by reference.
2
At a meeting of the Company's Board of Directors (the "Board") held on April
9, 1995, the Board determined that it was in the best interests of the Company
and its stockholders to (i) amend the Company's FlexPlan (the "FlexPlan") as
described below, (ii) amend the Company's Corporate Office Reduction-in-Force
Policy (the "Policy") as described below, (iii) amend the Clark Equipment
Company Supplemental Executive Retirement Trust and the Clark Equipment Company
Deferred Benefit Trust, as described below, (iv) exempt the Merger Agreement and
the transactions contemplated thereby from Delaware Law Section 203, (v)
postpone indefinitely the Company's 1995 annual meeting, (vi) exempt the Merger
Agreement and the transactions contemplated thereby from the supermajority
voting provisions of the Certificate of Incorporation and (vii) amend the Rights
Agreement to render the Rights Agreement inapplicable to the transactions
contemplated by the Merger Agreement. The items described in Clauses (iv)
through (vii) are described in more detail in Item 8 hereof.
The FlexPlan provides medical, dental and life insurance benefits to certain
employees and retirees of the Company and participating subsidiaries and their
dependents and surviving spouses. The amendments to the Company's FlexPlan
provide that following a "Change in Control" of the Company (i) employees of the
Company who have retired on or after August 1, 1986 and prior to such Change in
Control and who were eligible for retiree benefits coverage under the FlexPlan
immediately prior to such Change in Control ("Original Benefits Coverage") will
continue to receive benefits coverage which is no less than the Original
Benefits Coverage for the life of such employee and (ii) the Company's
contribution to the costs of such coverage will be made at the same percentage
as in effect immediately prior to such Change in Control. The lifetime
continuation of retiree medical coverage also extends to such employee's
dependents who would be eligible to receive medical coverage under the terms of
the FlexPlan in effect immediately prior to the Change in Control.
"Change in Control" under the FlexPlan means (i) the acquisition of
beneficial ownership of 25% or more of the Shares by or for any person (as such
term is defined in Section 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including for purposes of calculating such
person's ownership, all Shares beneficially owned by the affiliates and
associates (as such terms are defined in Rule 12b-2 under the Exchange Act) of
such person, provided, however, that the term "person" shall not include any of
the following: the Company, any subsidiary of the Company, any employee benefit
plan or employee stock plan of the Company or of any subsidiary of the Company,
any dividend reinvestment plan of the Company, any person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan, or any person which becomes the beneficial owner of 25% or more of such
Shares then outstanding solely as a result of the acquisition by the Company or
any employee benefit plan of the Company of Shares, provided that such person
does not thereafter acquire any Shares, or (ii) during any period of 24
consecutive months, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute a majority thereof, unless the
election, or nomination for election by the Company's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period or (iii) the
Company's stockholders approve (a) the merger or consolidation of the Company
with or into another corporation and the Company shall not be the surviving
corporation or (b) an agreement to sell or otherwise dispose of all or
substantially all of the Company's assets (including a plan of liquidation).
The amendments to the FlexPlan further provide that following a Change in
Control, the FlexPlan, as so amended, may not be terminated or amended in any
manner if such termination or amendment could have an adverse effect on the
rights of a retiree eligible for the benefits described above or his or her
eligible dependents or surviving spouse under the FlexPlan without the express
written consent of such retiree, dependent or surviving spouse, as the case may
be. The Purchaser's purchase of Shares pursuant to the Offer will constitute a
"Change in Control" under the FlexPlan.
3
The foregoing description is qualified in its entirety by reference to the
resolution of the Board, dated as of April 9, 1995, in which the FlexPlan was
amended, a copy of which is filed as Exhibit 2 hereto and incorporated herein by
reference.
The Company maintains the Policy to provide uniform procedures for
administering eligible salaried employee reductions. The amendments to the
Policy provide that upon a "Change in Control" of the Company (defined in the
same manner as in the FlexPlan), any appendix to the Policy that the Board has
adopted prior to such Change in Control modifies and amends the Policy to the
extent set forth in such appendix. In connection therewith, the Board adopted an
appendix to the Policy (the "Appendix") that ensures that each corporate office
salaried employee employed by the Company at the time of a Change in Control
(the "Participant"), is generally provided with the following benefits (the
"Benefits"), if any such Participant (i) is terminated without "Cause" (as
defined in the Appendix) or (ii) terminates within six months of any "Good
Reason" (as defined in the Appendix) (any event described in clauses (i) and
(ii) being a "Termination Event"), in either case within 24 months of a Change
in Control; provided, however, that with respect to Participants who are
corporate officers of the Company at its corporate office at the vice president
level and above immediately prior to a Change in Control, the term "Termination
Event" shall mean not only the events described in clauses (i) and (ii), but
shall also mean any termination of employment "other than for cause" (as defined
in such officer's employment agreement with the Company as in effect immediately
prior to such Change in Control) following a Change in Control:
(i) A lump sum amount equal to three weeks of separation pay (based on
such Participant's base annual salary ("Salary")) for each year of completed
service with the Company plus three additional weeks of separation pay (such
lump sum amount referred to herein as the "Severance Benefit"), subject to a
minimum Severance Benefit of one times Salary and a maximum of two times
Salary; provided that, any Participant who is a participant in the Company's
Incentive Compensation Plan for Corporate Office Management or who is a
bonus employee, is entitled to a Severance Benefit equal to two times such
Participant's Salary;
(ii) Continuation for a limited period of time of welfare benefit
coverage at levels of coverage no less than those which existed immediately
prior to the Change in Control and at a cost to such Participant that is no
greater than the cost to such Participant immediately prior to the Change in
Control; and
(iii) Payment of the cost of certain outplacement services
("Outplacement Services") up to a maximum total amount of 15% of such
Participant's Salary.
Notwithstanding the above, the Appendix provides that any corporate officer
of the Company at its corporate office at the vice-president level or above
immediately prior to such Change in Control is not eligible to receive the
Severance Benefit or Outplacement Services described above.
The Appendix also provides that if a Participant has attained at least age
50 and has at least four years of service with the Company or any affiliate or
subsidiary of the Company on the date immediately prior to the Change in
Control, such Participant is eligible (i) for the welfare benefits described
above if such Participant is terminated without Cause or terminates for Good
Reason at any time on or after such Change in Control and before such
Participant attains age 55; and (ii) subject to certain terms and conditions,
the extension of such welfare benefits coverage until such Participant attains
age 55; and (iii) certain retiree medical and life insurance coverage when such
Participant attains age 55.
Moreover, the Appendix provides that if a Participant has attained at least
age 50 and has at least four years of service with the Company or any affiliate
or subsidiary of the Company on the date immediately prior to a Change in
Control, such Participant is eligible for retiree medical and life insurance
benefits based on provisions set forth in the Company's FlexPlan, if such
Participant's
4
employment is terminated with the Company for any reason at any time on or after
such Participant attains age 55.
Notwithstanding the above, the Appendix provides that if any payment to a
Participant (whether under the Policy, the Appendix or otherwise) (a "Payment")
by the Company or any affiliate or subsidiary of the Company would be subject to
the limitations in Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") (which limits the Company's Federal income tax deductions with
respect to certain "parachute payments"), then the aggregate present value of
amounts payable as a Severance Benefit to such Participant will generally be
reduced to avoid the nondeductibility of any such Payment to the extent
possible.
The Appendix provides further that with respect to a Participant who has
attained at least the age 53 but not age 55 at or before such Participant
terminates for Good Reason or such Participant's employment is terminated by the
Company without Cause at any time after a Change in Control, such Participant
will be deemed to continue to be an employee (in lay-off status) for a period of
up to two years following such termination for purposes of determining such
Participant's eligibility for early retirement benefits under the Company's
Retirement Program for Salaried Employees.
Upon or after a Change in Control, the benefits described above and in the
Policy may not be amended and the Policy may not be terminated if such amendment
or termination could adversely affect the rights of any Participant or any
dependent or surviving spouse eligible for benefits under the Policy unless such
Participant, dependent or surviving spouse, as the case may be, expressly
consents in writing to such amendment or termination. The Purchaser's purchase
of Shares pursuant to the Offer will also constitute a "Change in Control" for
purposes of the Policy and the Appendix.
The foregoing description is qualified in its entirety by reference to the
resolution of the Board, dated as of April 9, 1995, in which the Policy was
amended and the Appendix thereto adopted, a copy of which is filed as Exhibit 3
and incorporated herein by reference.
At a special meeting of the Board held on April 9, 1995, the Board, in order
to ensure the continued dedication and objectivity of certain key personnel who
serve as business unit Presidents in the event of a threat of a change in
control of the Company, authorized Change in Control Severance Agreements for
William D. Anderson, David D. Hunter, James D. Kertz and John J. Reynolds
("Severance Agreements"), copies of which are filed as Exhibit 4 and
incorporated herein by reference. The Severance Agreements became effective
following their execution on April 11, 1995.
The Severance Agreement for Mr. Anderson provides for the following benefits
(as described below) if his employment is terminated by the Company "Other Than
For Cause" following a "Change in Control" defined in the same manner as in the
FlexPlan of the Company:
(i) a lump sum payment equal to two times the sum of his base salary and
his target bonus, such target bonus being the difference between average
total compensation and average base salary as determined from the Hay
Compensation Report for Industrial Management for the last year preceding
the year in which such termination occurs, for the number of Hay Client
Points of his position at the time of such termination, but in any event for
not less than the number of Hay Client Points of his position on the date of
the Severance Agreement;
(ii) the continuation of (A) health care benefits to Mr. Anderson and
his dependents of the type and in the amounts in effect immediately prior to
any termination by the Company "Other Than For Cause" and (B) life insurance
coverage to Mr. Anderson in the amount of two times his salary, in each case
until the earlier of the date on which he obtains suitable employment or the
second anniversary of the date of such termination; and
5
(iii) payment for the cost of professional Outplacement Services,
selected by Mr. Anderson in his sole discretion, to obtain new employment;
provided, however, that the total cost of such services by the Company will
not exceed 15% of his base salary as of the date of his termination.
Mr. Anderson would also be reimbursed for all legal and accounting fees and
expenses incurred by him with respect to any dispute arising out of or relating
to his Severance Agreement.
The Severance Agreement for Mr. Hunter provides the same benefits as the
Severance Agreement for Mr. Anderson except that the Company has agreed to
provide Mr. Hunter or his beneficiary with supplemental retirement benefits to
the extent that the benefits which would otherwise be provided to Mr. Hunter or
his beneficiary under the Company's Retirement Program for Salaried Employees
(a) do not reflect certain cash bonuses received by him from the Company, and
(b) are limited under certain provisions of the Code.
The Severance Agreement for Mr. Kertz provides the same benefits as the
Severance Agreement for Mr. Anderson except that Mr. Kertz will not receive
benefits (ii) and (iii) above.
The Severance Agreement of Mr. Reynolds provides the same benefits as the
Severance Agreement for Mr. Anderson except that (A) Mr. Reynolds will not
receive benefit (iii) above and (B) benefit (ii) above continues until the
second anniversary of the date of his termination and is supplemented by the
following benefit: if at the end of such two year period of coverage Mr.
Reynolds has not attained the age of 65, he is entitled to continue such health
care and life insurance coverages at his own expense until he attains the age of
65; upon attaining age 65, the Company will provide Mr. Reynolds with the group
life and health care benefits (under the same terms) which would have been
provided to him under the Company's FlexPlan as in effect immediately prior to
the Change in Control of the Company if he had retired from employment with the
Company at age 65 and with ten years of service on that date.
For purposes of the Severance Agreements, a termination of employment is
Other Than For Cause if (i) the employee voluntarily terminates his employment
within two years subsequent to a Change in Control within six months after the
occurrence of (A) a change in the location of his employment, (B) a reduction in
the nature and scope of his employment responsibilities or duties with respect
to his business unit, or (C) any reduction in his compensation, benefits or
perquisites, either separately or in the aggregate, or (ii) the termination is
for any reason other than wilful misconduct by the employee that has
substantially prejudiced the interests of the Company or its subsidiaries. The
purchase of Shares by the Purchaser pursuant to the Offer will also constitute a
"Change in Control" under the Severance Agreements.
At a meeting of the Human Effectiveness Committee of the Board, which
committee is comprised of independent directors (the "Committee") held on
February 14, 1995, Mr. Leo J. McKernan, Chairman, President and Chief Executive
Officer of the Company, informed the Committee that he would soon be
recommending that the Committee approve grants of stock options, performance
units or other long-term incentive compensation awards to Company officers and
other management employees. He explained that details of the proposed grants
were being formulated and that a special meeting of the Committee would be
called as soon as the details were finalized. The Committee agreed that it was
appropriate to award such grants and that a special Committee meeting should be
called to approve such grants as soon as the details were completed. Following
the meeting of the Board on March 27, 1995, where the Board unanimously
determined that the Ingersoll-Rand proposal was wholly inadequate and that the
Company was not for sale and should remain independent, the Committee approved
the grant of 89,700 stock options and 149,100 performance units to certain of
its employees all at a grant price of $52.625 per Share or unit. The following
table sets forth the performance units granted to
6
the Company's executive officers and directors at the March 27, 1995 meeting (no
stock options were granted to the executive officers and directors):
NUMBER OF PERFORMANCE
NAME: UNITS GRANTED:
- ------------------------------------------------------- ---------------------
[S] [C]
Leo J. McKernan........................................ 59,900
James D. Kertz......................................... 16,100
Frank M. Sims.......................................... 13,500
William N. Harper...................................... 12,900
John J. Reynolds....................................... 12,400
Bernard D. Henely...................................... 9,000
Paul R. Bowles......................................... 8,800
Thomas L. Doepker...................................... 8,700
David D. Hunter........................................ 7,800
--------
Total.................................................. 149,100
At its March 27, 1995 meeting, the Committee also approved, effective as of
March 28, 1995, amendments to employment agreements that the Company had
previously entered into with the following current and former employees: Thomas
C. Clarke, Thomas L. Doepker, William N. Harper, Bernard D. Henely, Leo J.
McKernan, Frank M. Sims and Robert N. Spolum (the "Employment Agreements"). The
Employment Agreements describe the retirement, severance and other benefits to
which such individual parties may become entitled. Under the Employment
Agreements, a particular interest rate published from time to time by the
Pension Benefit Guaranty Corporation (the "PBGC Rate") is used for certain
calculations. The amendments to the Employment Agreements were technical in
nature so as to make a direct reference to such PBGC Rate for the purpose of
such calculations.
The foregoing description is qualified in its entirety by reference to the
amendments to the Employment Agreements, copies of which are filed as Exhibit 5
and incorporated herein by reference.
Under the Clark Equipment Company Supplemental Executive Retirement Plan
("SERP 1") and the Clark Equipment Company Supplemental Retirement Income Plan
For Certain Executives ("SERP 2") (collectively, the "SERPs"), certain benefits
are provided to certain participants in the Company's Retirement Program for
Salaried Employees (the "Qualified Plan") to the extent that benefits which
would otherwise be provided under the Qualified Plan to such participants are
limited under certain provisions of the Code. The Committee approved certain
technical amendments, which were effective February 15, 1995, to the SERPs
providing for direct references to the PBGC Rate in the same manner as the
corresponding amendments to the Employment Agreements, discussed above. As
permitted by the Merger Agreement, if all the participants and beneficiaries of
SERP 2 (other than the retired participants) consent to an amendment to such
plan to permit either Ingersoll-Rand, the Company or any of their respective
subsidiaries to make a one-time withdrawal of assets from the Clark Equipment
Company Deferred Benefit Trust (the "SERP 2 Trust") to the extent such assets
exceed 100% of the "Plan benefit value" (as such term is used in Section 3 of
the Retirement Income Plan), such funding level to be first certified by the
actuary for the Company's tax-qualified Plan, the Company intends to contribute
an additional $23 million to the Retirement Income Plan.
The Committee also approved an amendment, which was effective as of February
15, 1995, to the Supplemental Executive Retirement Plan deleting a restriction
which had excluded Frank M. Sims from participating in such plan. The SERPs were
also amended so that certain benefits otherwise provided to Mr. Sims under an
employment agreement between Mr. Sims and the Company would be provided under
such plans.
The Supplemental Executive Retirement Plan provides that certain cash
bonuses received by certain participants are included for purposes of
calculating benefits to be provided to such participants
7
under the plan. Previously, bonuses paid to participants who were not officers
of the Company were excluded for purposes of calculating benefits payable under
the plan to such participants. The Committee approved an amendment, effective as
of March 27, 1995, to the Supplemental Executive Retirement Plan which provides
that this restriction will be applied to participants whose employment with the
Company terminated prior to March 1, 1995, rather than to participants who are
not officers of the Company. The Committee also approved an amendment to the
Supplemental Executive Retirement Plan, effective as of March 27, 1995, which
provides that such plan may not be amended or terminated without the consent of
participants and beneficiaries adversely affected by such amendment or
termination. Prior to such amendment, the Supplemental Executive Retirement Plan
could not be amended or terminated unless all participants and beneficiaries
affected by such amendment or termination gave their consent thereto.
The foregoing description is qualified in its entirety by reference to the
amendments to the SERPS, copies of which are filed as Exhibit 6 and incorporated
herein by reference.
At a meeting of the Board held on April 9, 1995, the Board amended the Clark
Equipment Company Supplemental Executive Retirement Trust (the "SERP 1 Trust")
and the SERP 2 Trust (collectively, the "Rabbi Trusts"). The Rabbi Trusts were
established by the Company and certain of its affiliates (the "Employers") in
order to provide a method for the orderly accumulation of assets that may be
used to make certain payments to participants under certain supplemental
retirement plans maintained by the Employers. The amendments to the Rabbi Trusts
provide that following a "Change in Control" of the Company (defined in the same
manner as in the FlexPlan), the trust funds (the "Trust Funds") established
under each of the Rabbi Trusts may only be invested in certain enumerated types
of assets. The amendments to the Rabbi Trusts further provide that the amount of
benefits payable to participants pursuant to the related supplemental retirement
plans shall be determined by a reputable, independent actuarial or consulting
firm retained by the committee that is responsible for administration of the
Rabbi Trusts (the "Trust Committee"). Under the amendment, such firm will
provide to the Trust Committee, the Employer and the affected participant a
written statement with respect to the benefits so determined. Finally, the
amendments clarify that the Rabbi Trusts may not be amended to provide for
distributions from either of the Trust Funds for any purpose other than payment
of an Employer's obligations to its creditors, including participants, in
accordance with the insolvency provisions of the Rabbi Trusts.
The Purchase of Shares by the Purchaser pursuant to the Offer will also
constitute a "Change of Control" under the SERPs.
The foregoing description is qualified in its entirety by reference to the
amendment to the Rabbi Trusts, copies of which are filed as Exhibit 7 and
incorporated herein by reference.
MERGER AGREEMENT
The following is a summary of the Merger Agreement. Defined terms used below
and not defined herein have the respective meanings assigned to those terms in
the Merger Agreement. Such summary is qualified in its entirety by reference to
the Merger Agreement, a copy of which is filed as Exhibit 8 hereto and is
incorporated by reference.
The Offer. In the Merger Agreement, the Purchaser has agreed subject to
certain conditions to, among other things, amend the Offer (i) to extend the
Offer to May 5, 1995, (ii) to increase the purchase price offered to $86.00 per
share of Common Stock (and associated Right) and (iii) to modify the conditions
of the Offer to conform to the Tender Offer Conditions. The obligations of the
Purchaser to accept for payment and promptly to pay for any shares of Common
Stock tendered will be subject only to the Tender Offer Conditions any of which
may be waived; provided, however, that, without the consent of the Company, the
Purchaser will not waive the Minimum Condition (as defined below). Without the
consent of the Company, the Purchaser will not (i) reduce the number of Shares
to be
8
purchased in the Offer, (ii) reduce the Offer Price, (iii) impose conditions to
the Offer in addition to the Tender Offer Conditions, (iv) change the form of
consideration payable in the Offer, or (v) amend any other term of the Offer
(including the Tender Offer Conditions) in a manner materially adverse to the
holders of the Common Stock. Subject to the terms and conditions of the Merger
Agreement, and unless the Company otherwise consents in writing, Ingersoll-Rand
and the Purchaser agree that the Purchaser will accept for payment and pay for
Common Stock as soon as it is permitted to do so under applicable law, provided
that the Purchaser will have the right, in its sole discretion, to extend the
Offer from time to time for up to a maximum of 10 additional business days,
notwithstanding the prior satisfaction of the Tender Offer Conditions.
Pursuant to the Merger Agreement, the Company has approved of and consented
to the Offer and represented and warranted that (i) its Board (at a meeting duly
called and held on April 9, 1995) has (1) determined by the unanimous vote of
the Directors that the Offer and the Merger are fair to and in the best
interests of the holders of Common Stock, (2) approved the Merger Agreement, the
Offer and the Merger, and determined that the consummation of the Offer and the
Merger will not constitute a "Change In Control" for purposes of Section 9.2 of
the Clark Equipment Company Leveraged Employee Stock Option Plan (the "LESOP"),
(3) resolved to recommend acceptance of the Offer by the stockholders of the
Company and approval and adoption of the Merger Agreement and the Merger by the
stockholders of the Company, (4) taken all other action necessary to render (A)
Section 203 of the Delaware Law, (B) the Rights Agreement and (C) Article SIXTH,
paragraph 6, of the Certificate of Incorporation inapplicable to the Offer and
the Merger; provided, however, that such recommendation or other action may be
withdrawn, modified or amended at any time if a majority of the Board of the
Company determines, in its good faith judgment, based on the opinion of
independent outside legal counsel to the Company, that failing to take such
action would constitute a breach of such Board's fiduciary obligations under
applicable law; and (ii) CS First Boston Corporation ("CS First Boston") has
delivered to the Board of the Company its opinion that the consideration to be
received by the holders of Common Stock (other than Ingersoll-Rand and the
Purchaser) pursuant to the Offer and the Merger is fair to the holders of Common
Stock from a financial point of view.
The Merger. The Merger Agreement provides that at the Effective Time the
Purchaser will be merged with the Company. By virtue of the Merger, at the
Effective Time, each outstanding share of Common Stock (other than (i) any
shares of Common Stock which are held by any subsidiary of the Company or in the
treasury of the Company, or which are held, by Ingersoll-Rand or any of its
subsidiaries (including the Purchaser), all of which will be cancelled, and (ii)
shares of Common Stock held by dissenting stockholders), will be cancelled and
converted into the right to receive an amount in cash, without interest, equal
to the price paid for each share of Common Stock pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof less any required
withholding taxes. At the Effective Time, each share of outstanding common stock
of the Purchaser will become one share of common stock of the Company (the
"Surviving Corporation"). For a description of certain rights available to
stockholders upon consummation of the Offer or the Merger, see Section 11 of the
Offer to Purchase.
Agreements of the Company, the Purchaser and Ingersoll-Rand. In the Merger
Agreement, the Company has agreed that during the period from the date of the
Merger Agreement to the Effective Time, except as otherwise approved in writing
by Ingersoll-Rand, the Company and each of its subsidiaries will conduct their
respective operations only in the ordinary course of business consistent with
past practice and will use their reasonable best efforts to preserve intact
their respective business organization, keep available the services of their
officers and employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients and others having business relationships with
them.
9
The Merger Agreement provides that neither the Company nor any of its
subsidiaries (other than VME Group, N.V.) will (i) make any amendment to its
Certificate of Incorporation or By-Laws (or comparable governing documents);
(ii) issue or sell any shares of its capital stock (other than in connection
with the exercise of currently outstanding stock options) or any of its other
securities (including stock appreciation rights or phantom stock), or issue any
securities convertible into, or options, warrants or rights to purchase, or
enter into any arrangement or contract with respect to the issuance or sale of,
any shares of its capital stock or any of its other securities, or make any
other changes in its capital structure; (iii) sell or pledge any stock owned by
it in any of its subsidiaries; (iv) declare or pay any dividend or other
distribution or payment with respect to, or split, combine, redeem, reclassify
or purchase any shares of its capital stock; (v) other than in the ordinary
course of business consistent with past practice, transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of, encumber or subject to any lien
any material assets or incur or modify any indebtedness other than any
indebtedness incurred in connection with the acquisition of Club Car, Inc. or
other liability or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for the obligations of any
person; (vi) make any tax election or settle or compromise any material tax
liability; (vii) make any material change in its method of accounting; (viii)
(A) acquire (by merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization or division thereof; (B)
enter into any contract or agreement other than in the ordinary course of
business consistent with past practice that would be material to the Company and
its subsidiaries taken as a whole; (C) to the extent not included in the
Company's capital budget for 1995 previously approved by the Board, for 150 days
after the date of the Merger Agreement, authorize any single capital expenditure
in excess of $1.5 million or capital expenditures of $10 million in the
aggregate; or (D) enter into or materially amend any agreement, commitment or
arrangement with respect to any of the matters set forth in this clause (viii);
(ix) except to the extent required under existing employee and director benefit
plans, agreements or arrangements as in effect on the date of the Merger
Agreement, increase the compensation or fringe benefits of any of its directors,
officers or employees, except for increases in salary or wages of employees of
the Company or its subsidiaries who are not officers of the Company in the
ordinary course of business in accordance with past practice, or grant any
severance or termination pay not currently required to be paid under existing
severance plans or enter into any employment, consulting or severance agreement
or arrangement with any present or former director, officer or other employee of
the Company or any of its subsidiaries (other than employment contracts with
certain individuals), or establish, enter into or amend or terminate any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any directors, officers or employees; (x)
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries (other than the Merger); (xi) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in the financial
statements of the Company or incurred in the ordinary course of business and
consistent with past practice; or (xii) agree to take any of the foregoing
actions. However, the Merger Agreement permits the Company to fully fund,
through the Rabbi Trusts all amounts which may become payable to employees of
the Company and its subsidiaries upon a change in control of the Company
(including additional amounts (up to a maximum of $23 million) required to be
paid to such employees to gross up such payments for any income or other taxes
incurred with respect thereto).
Pursuant to the Merger Agreement, the Company will not, and will not permit
any of its subsidiaries other than VME Group, N.V. to, (i) take any action,
engage in any transaction or enter into any agreement which would cause any of
the representations or warranties set forth therein to be untrue as of the
Effective Time, or (ii) purchase or offer to purchase any shares of capital
stock of the Company.
10
The Merger Agreement provides that promptly after the consummation of the
Offer, if required by the Delaware Law in order to consummate the Merger, the
Company will convene a meeting of the holders of Common Stock for the purpose of
voting upon the Merger Agreement and the Merger. The Company will use its
reasonable best efforts to solicit from its stockholders proxies and, subject
always to the fiduciary obligations of the Company's directors under applicable
law, will take all other action necessary and advisable to secure the vote of
stockholders required by applicable law to obtain the approval of the Merger
Agreement and the Merger. Subject always to the fiduciary obligations of the
Company's directors under applicable law, the Company has agreed to include in
the Proxy Statement the recommendation of its Board that holders of Common Stock
approve and adopt the Merger Agreement and approve the Merger. For a description
of the short-form merger provisions of the Delaware Law, which under certain
circumstances could be applicable to the Merger, see Section 11 of the Offer to
Purchase.
The Merger Agreement provides that, if required by law, as promptly as
practicable after the consummation of the Offer, the Company will prepare and
file a preliminary Proxy Statement with the Commission and will use its
reasonable best efforts to have it cleared by the Securities and Exchange
Commission (the "Commission") at the earliest practicable time.
Pursuant to the Merger Agreement, promptly following the purchase by the
Purchaser of Shares pursuant to the Offer, the Purchaser will be entitled to
designate up to such number of directors, rounded up to the next whole number,
of the Company as will give the Purchaser representation on the Board equal to
the product of the total number of directors on the Board (giving effect to the
directors elected pursuant to the Merger Agreement) multiplied by the percentage
that the aggregate number of shares of Company Common Stock beneficially owned
by the Purchaser and its affiliates bears to the total number of shares of
Company Common Stock then outstanding. At such times, the Company will use its
best efforts to cause persons designated by the Purchaser to constitute the same
percentage as is on the Board of (i) each committee of the Board, (ii) each
board of directors of each domestic subsidiary of the Company and (iii) each
committee of each such board. Until the Purchaser acquires a majority of the
outstanding Shares on a fully diluted basis, the Company will use its best
efforts to ensure that all the members of the Board and such boards and
committees as of the date of the Merger Agreement who are not employees of the
Company will remain members of the Board and such boards and committees.
Annex I attached hereto sets forth information with respect to the possible
designation by the Purchaser, pursuant to the Merger Agreement, of persons to be
elected to the Board. The information contained in Annex I concerning the
Purchaser and Ingersoll-Rand has been furnished to the Company by
Ingersoll-Rand, and the Company assumes no responsibility for the accuracy,
completeness or fairness of such information. The Purchaser currently intends to
choose the designees to the Board which it has the right to designate pursuant
to the Merger Agreement from among the directors and officers of Ingersoll-Rand
listed in Schedule I to the Offer to Purchase.
The Company has agreed to take all actions required pursuant to Section
14(f) and Rule 14f-1 under the Exchange Act in order to fulfill its obligations
under the Merger Agreement described in the preceding paragraph and will include
in the Schedule 14D-9 or a separate Rule 14f-1 information statement provided to
stockholders such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations thereunder. Pursuant to the Merger Agreement, Ingersoll-Rand or the
Purchaser will supply to the Company any information with respect to either of
them and their nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1 under the Exchange Act.
Following the appointment of the Purchaser's designees as described above
and prior to the Effective Time, any amendment of the Merger Agreement, the
Certificate of Incorporation or By-Laws of the Company, any termination of the
Merger Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of the Purchaser or
11
waiver of any of the Company's rights thereunder, and any other consent or
action by the Board thereunder, will require the concurrence of a majority of
the directors of the Company then in office who are neither designated by the
Purchaser nor are employees of the Company.
Pursuant to the Merger Agreement, from the date of the Merger Agreement to
the Effective Time, the Company will afford Ingersoll-Rand and its
representatives and advisors reasonable access to the employees, properties,
offices, plants and other facilities and to all books and records of the Company
and its subsidiaries in order that they may have the opportunity to make such
investigations as they desire of the affairs of the Company and its
subsidiaries.
Under the Merger Agreement, the Company, its affiliates and their respective
officers, directors, employees, representatives and agents will immediately
cease any existing discussions or negotiations with any parties conducted
heretofore with respect to any acquisition or exchange of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries (except pursuant to the VME Sale Agreement) or any business
combination with the Company or any of its subsidiaries. The Company, its
subsidiaries, directors, employees, representatives and agents may furnish
information and access, in each case only in response to a request made after
the date of the Merger Agreement for such information or access, to any person
which was not initiated, solicited or knowingly encouraged by the Company or any
of its affiliates or any of its or their respective officers, directors,
employees, representatives or agents after the date of the Merger Agreement
(with respect to confidential information, pursuant to appropriate
confidentiality agreements), and may participate in discussions and negotiate
with such entity or group concerning any merger, sale of assets, sale of shares
of capital stock or similar transaction (including an exchange of stock or
assets) involving the Company or any subsidiary or division of the Company, if
such entity or group has submitted a bona fide proposal to the Board relating to
any such transaction and if a majority of the Board of the Company determines,
in its good faith judgment, based on the opinion of independent outside legal
counsel to the Company, that failing to take such action would constitute a
breach of such Board's fiduciary obligations under applicable law. The Company
will promptly notify Ingersoll-Rand if any proposal or offer, or any inquiry or
contact with any person with respect thereto, is made and will indicate in
reasonable detail the identity of the offeror and the terms and conditions of
any proposal or offer, or any such inquiry or contact. The Company will keep
Ingersoll-Rand promptly advised of all developments which could reasonably be
expected to culminate in the Board withdrawing, modifying or amending its
recommendation of the Offer and the Merger. Except as set forth in the
provisions described in this paragraph, neither the Company or any of its
affiliates, nor any of its or their respective officers, directors, employees,
representatives or agents, will, directly or indirectly, knowingly 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 Ingersoll-Rand and the Purchaser, any affiliate or associate
of Ingersoll-Rand and the Purchaser, or any designees of Ingersoll-Rand or the
Purchaser) concerning any merger, sale of assets, sale of shares of capital
stock or similar transactions (including an exchange of stock or assets)
involving the Company or any subsidiary or division of the Company; provided,
that none of the foregoing will prevent the Company or the Board from taking,
and disclosing to the Company's stockholders, a position contemplated by Rules
14d-9 and 14e-2 promulgated under the Exchange Act with regard to any tender
offer or from making such disclosure to the Company's stockholders which, as
advised in an opinion of counsel, is required under applicable law; provided,
further, that the Board will not recommend that the stockholders of the Company
tender their Shares in connection with any such tender offer unless the Board by
a majority vote determines in its good faith judgment, based on the opinion of
independent outside legal counsel to the Company, that failing to take such
action would constitute a breach of the Board's fiduciary duty under applicable
law.
In the Merger Agreement, the Company has agreed that it will not amend the
Rights Agreement except as expressly contemplated by the Merger Agreement.
12
The Merger Agreement provides that each of the Company, Ingersoll-Rand and
the Purchaser will cooperate and use their respective reasonable best efforts to
take all appropriate action to consummate the Merger, including cooperation in
the preparation and filing of the Offer Documents, the Schedule 14D-9, the Proxy
Statement, any required filings under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended (the "HSR Act"), Regulation (EEC) No.
4064/89 of the European Community or other foreign filings and obtaining all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Company and
its subsidiaries as are necessary for consummation of the Merger and fulfillment
of the conditions to the Offer and the Merger.
Certain Employee Benefits Matters. Under the Merger Agreement,
Ingersoll-Rand has agreed that, during the period commencing at the Effective
Time and ending on December 31, 1996, the employees of the Company and its
subsidiaries (other than those employees covered by a collective bargaining
agreement) will continue to be provided with employee benefit plans which in the
aggregate are substantially comparable to those currently provided by the
Company and its subsidiaries to such employees (other than plans involving or
related to the securities of the Company except the Melroe Savings and
Investment Plan and the Clark Equipment Company Savings and Investment Plan
(each as in effect on April 3, 1995 and disregarding the effect of the Offer and
the Merger on such plans)). Employees covered by collective bargaining
agreements will be provided with such benefits as will be required under the
terms of any applicable collective bargaining agreement.
Under the Merger Agreement, Ingersoll-Rand has agreed to cause the Surviving
Corporation to honor and continue to perform all benefit obligations (including
to employees who have retired from the Company and its subsidiaries before the
Effective Time), contracts and agreements (including employment, consulting and
severance obligations and agreements, but excluding any Stock Plans) of the
Company or any of its subsidiaries authorized by the Company or any of its
subsidiaries on or prior to the date of the Merger Agreement which apply to any
current or former employee or current or former director of the Company or any
of its subsidiaries. Ingersoll-Rand has agreed that after the Effective Time the
Surviving Corporation or its subsidiaries will pay all amounts provided under
all agreements of the Company and its subsidiaries and all benefit obligations
of the Company and its subsidiaries, including the change in control agreements
entered into between the Company and its subsidiaries and their officers (the
"Change in Control Agreements") (or honor the provisions of the Change in
Control Agreements in the case where no payment by the Surviving Corporation or
its subsidiaries is required) conditioned on a change in control of the Company,
in accordance with the terms of such Change in Control Agreements (or will cause
any related trusts to make such payments in the case of funded plans).
Notwithstanding anything described in this section to the contrary, neither
Ingersoll-Rand nor the Surviving Corporation will be prevented from terminating
the employment of any person.
For purposes of all employee benefit plans, programs and arrangements
maintained by or contributed to by Ingersoll-Rand and its subsidiaries
(including the Surviving Corporation), Ingersoll-Rand will cause each such plan,
program or arrangement to treat the prior service with the Company and its
subsidiaries of each person who is an employee of the Company or its
subsidiaries a ("Clark Employee") (to the same extent such service is recognized
under analogous plans, programs or arrangements of the Company or its
subsidiaries prior to the Effective Time) as service rendered to Ingersoll-Rand
or its subsidiaries for purposes of eligibility to participate and for all
benefits and vesting thereunder; provided, however, that any benefits provided
under Ingersoll-Rand Plans (as defined below) will be reduced by benefits in
respect of the same years of service under analogous plans, programs and
arrangements maintained by or contributed to by the Company, the Surviving
Corporation or their subsidiaries.
Each Clark Employee who becomes an employee of Ingersoll-Rand or any of its
subsidiaries (other than the Surviving Corporation and its subsidiaries)
following the Effective Time (each a "Continued
13
Employee") will be entitled, as an employee of Ingersoll-Rand or of any of its
subsidiaries (other than the Surviving Corporation and its subsidiaries), to
participate in whatever employee benefit plans or nonqualified employee benefit
or deferred compensation plans, stock option, bonus or incentive plans or other
employee benefit or fringe benefit programs that may be in effect generally for
employees of Ingersoll-Rand or its subsidiaries from time to time ("Parent
Plans") if such Continued Employee will be eligible for participation therein
and otherwise will not be participating in a similar plan which continues to be
maintained by the Surviving Corporation and its subsidiaries. Ingersoll-Rand or
Ingersoll-Rand's subsidiaries will cause their respective tax-qualified defined
benefit pension plans in which any Continued Employee will become a participant
on or after the Effective Time to be amended to recognize, for purposes of
vesting, eligibility and benefit accrual thereunder, each Clark Employee's
compensation and term of service with the Company and its subsidiaries to the
same extent recognized under analogous plans of the Company and its subsidiaries
prior to the Effective Time; provided, however, that any benefits under such
plans will be reduced by benefits in respect of the same years of service under
analogous plans, programs and arrangements maintained by or contributed to by
the Company, the Surviving Corporation or their subsidiaries. Subject to the
above-described provisions, Continued Employees will be eligible to participate
on the same basis as similarly-situated employees of Ingersoll-Rand or its
subsidiaries. All such participation will be subject to such terms of such plans
as may be in effect from time to time.
Pursuant to the Merger Agreement, at all times after the Effective Time,
notwithstanding anything to the contrary in SERP 1, the SERP 1 Trust, SERP 2 or
the SERP 2 Trust, the terms (i) "committee," as used in the SERP 1 Trust and
SERP 2 Trust, (ii) "Administrator," as used in the SERP 1 and SERP 2, (iii)
"Chief Executive Officer" as used in Section 2.3 of the SERP 1 and SERP 2, and
(iv) "Company" as used in Section 4.2 of the SERP 1 and SERP 2, will in each
instance mean Ingersoll-Rand's benefits committee.
The Company has agreed that as soon as practicable after the execution of
the Merger Agreement it will use its best efforts to obtain the requisite
consents of all participants and beneficiaries of the Rabbi Trusts so that the
Company may amend SERP 1 and SERP 2 to permit either Ingersoll-Rand, the Company
or any of their respective subsidiaries to make a one-time withdrawal of assets
from the Rabbi Trusts to the extent such assets exceed 100% of the "Plan benefit
value" (as such term is used in Section 3 of each of SERP 1 and SERP 2), such
funding level to be first certified by the actuary for the Company's
tax-qualified Plan. After such withdrawal, the right to withdraw amounts from
either such Rabbi Trust will continue as in effect prior to such amendments.
Directors' and Officers' Insurance; Indemnification. The Merger Agreement
provides that the certificate of incorporation and the by-laws of the Surviving
Corporation will contain provisions with respect to indemnification and
exculpation from liability no less favorable than those set forth in the
Company's Certificate of Incorporation and By-Laws on the date of the Merger
Agreement, which provisions will not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who on or prior to the
Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
For six years from the Effective Time, the Surviving Corporation will either
(x) maintain in effect the Company's current directors' and officers' liability
insurance covering those persons who are currently covered on the date of the
Merger Agreement by the Company's directors' and officers' liability insurance
policy (the "Indemnified Parties"); provided, however, that in no event will
Ingersoll-Rand be required to expend in any one year an amount in excess of 175%
of the annual premiums currently paid by the Company for such insurance and if
the annual premiums of such insurance coverage exceed such amount, the Surviving
Corporation will be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount; provided further, that the
Surviving
14
Corporation may substitute, for such Company policies, policies with at least
the same coverage containing terms and conditions which are no less advantageous
and provided that said substitution does not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time or (y)
cause Ingersoll-Rand directors' and officers' liability insurance then in effect
to cover those persons who are covered on the date of the Merger Agreement by
the Company's directors' and officers' liability insurance policy with respect
to those matters covered by the Company's directors' and officers' liability
policy.
Disposition of Litigation. In the Merger Agreement, the Company has agreed
to dismiss without prejudice Clark Equipment Company v. Ingersoll-Rand Company,
Civil Action Docket No. 95 CIV 2130 (CSH) (S.D.N.Y. 1995). The Company agreed
that it will not settle any litigation currently pending, or commenced after the
date of the Merger Agreement, against the Company or any of its directors by any
stockholder of the Company relating to the Offer or the Merger Agreement without
the prior written consent of Ingersoll-Rand.
The Merger Agreement provides that the Company will not voluntarily
cooperate with any third party which has sought or may hereafter seek to
restrain or prohibit or otherwise oppose the Offer or the Merger and will
cooperate with Ingersoll-Rand and the Purchaser to resist any such effort to
restrain or prohibit or otherwise oppose the Offer or the Merger.
Proxy Contests. Pursuant to the Merger Agreement, Ingersoll-Rand and the
Purchaser have agreed to withdraw and rescind (i) the notice, dated April 3,
1995, pursuant to Article II, Section 10 of the Company's By-Laws and (ii) the
Schedule 14A filed with the Commission, in each case relating to the nomination
of the persons named in such notice for election to the Board at the annual
meeting of the Company's stockholders.
From the date of the Merger Agreement until the earlier of (i) the Effective
Time and (ii) the termination of the Merger Agreement, neither Ingersoll-Rand
nor the Purchaser nor any of their affiliates or associates (as such terms are
defined in Rule 12b-2 promulgated under the Exchange Act) will, except as
otherwise expressly permitted or required by the Merger Agreement, directly or
indirectly, alone or through or with others, in any manner (i) solicit, make, or
in any way participate in, directly or indirectly, any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Commission
promulgated pursuant to Section 14a-11 of the Exchange Act) from the
stockholders of the Company, become a "participant" in any "election contest"
(as such terms are defined or used in Rule 14a-11 promulgated under the Exchange
Act) with respect to the Board of the Company, solicit or execute any written
consent in lieu of a meeting of holders of voting securities except to support
the nominees or directors of the Board or any affiliate thereof or call or seek
to have called any meeting of the stockholders of the Company or any affiliate
thereof, or (ii) except as provided in the Merger Agreement, otherwise seek
election to or seek to place a representative on the Board or any affiliate
thereof, or seek the removal of any member of the Board or any affiliate
thereof.
Postponement of Annual Meeting. The Company has agreed to postpone
indefinitely its annual meeting of stockholders currently scheduled for May 9,
1995, and will take no action unless compelled by legal process to reschedule
such annual meeting or to call a special meeting of stockholders of the Company
except in accordance with the Merger Agreement, unless and until the Merger
Agreement has been terminated in accordance with its terms.
Sale of VME. The Company has agreed to use its reasonable best efforts to
take or cause to be taken all such action necessary (i) to consummate the
transactions contemplated by the VME Sale Agreement (which agreement is
described in the Company's Current Report on Form 8-K filed with the Commission
on March 6, 1995) prior to the completion of the Offer, including selling its
50% interest in VME Group N.V. for cash proceeds of not less than $573 million,
or (ii) failing such consummation, to prevent cancellation or termination of the
VME Sale Agreement or any amendment of such agreement
15
in a manner that would reasonably be expected to have a material adverse affect
on the Company, or any other event which will cause the VME Sale Agreement to no
longer remain in full force and effect.
Representations and Warranties. The Merger Agreement contains customary
representations and warranties with respect to the Company, including that the
Board has approved the Merger Agreement and the Offer and the Merger so as to
render inapplicable thereto Section 203 of the Delaware Law and the
supermajority stockholder voting requirements of Article SIXTH, paragraph 6, of
the Company's Certificate of Incorporation; the accuracy of the Company's
documents and reports filed with the Commission; with respect to the Company's
financial statements and financial condition; the absence of certain changes of
events which individually or in the aggregate would reasonably be expected to
have a material adverse effect on the business, assets, financial condition or
results of operations of the Company and its subsidiaries taken as a whole; the
absence of certain litigation; with respect to the Company's employee benefit
plans, tax matters, environmental matters; that the Company has taken all
necessary action so that none of the execution of the Merger Agreement, the
making of the Offer, the acquisition of Shares pursuant to the Offer or the
consummation of the Merger will cause the Rights to become exercisable, cause
any person to become an Acquiring Person or give rise to a Distribution Date
or a Triggering Event; and that since December 31, 1994, no event has occurred
and no circumstance has arisen which would reasonably be expected to result in
a failure to satisfy any of the conditions to the Offer.
In the Merger Agreement, Ingersoll-Rand and the Purchaser have made
customary representations and warranties, including that Ingersoll-Rand has a
commitment to provide the financing for, and will provide the Purchaser with,
the funds necessary to consummate the Offer and the Merger and the transactions
contemplated thereby in accordance with the terms thereof.
Conditions to Merger. The respective obligations of Ingersoll-Rand, the
Purchaser and the Company to effect the Merger are subject to the satisfaction
or waiver (subject to applicable law) at or prior to the Effective Time of each
of the following conditions: (i) to the extent required by applicable law, the
Merger Agreement and the Merger will have been approved and adopted by holders
of a majority of the Common Stock of the Company in accordance with applicable
law and the Certificate of Incorporation and By-Laws; (ii) any waiting period
(and any extension thereof) under the HSR Act applicable to the Merger will have
expired or been terminated; (iii) no preliminary or permanent injunction or
other order will have been issued by any court or by any governmental or
regulatory agency, body or authority which prohibits the consummation of the
Offer or the Merger and which is in effect at the Effective Time, provided,
however, that, in the case of any such decree, injunction or other order, each
of the parties to the Merger Agreement will have used reasonable best efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any decree, injunction or other order that may be entered;
(iv) no statute, rule, regulation, executive order, decree or order of any kind
will have been enacted, entered, promulgated or enforced by any court or
governmental authority which prohibits the consummation of the Offer or the
Merger or has the effect of making the purchase of the Common Stock illegal; and
(v) the Purchaser will have accepted for payment and paid for the shares of
Common Stock tendered pursuant to the Offer; provided, that the foregoing will
not be a condition to Ingersoll-Rand's and the Purchaser's obligation to
consummate the Merger if the Purchaser's failure to purchase Shares of Common
Stock violates the terms of the Offer.
Termination. The Merger Agreement may be terminated and the transactions
contemplated thereby may be abandoned, at any time prior to the Effective Time,
whether before or after approval of the Merger by the Company's stockholders:
(a) by mutual written consent of the Company, IngersollRand and the Purchaser;
(b) by either Ingersoll-Rand or the Company, if any governmental or regulatory
agency located or having jurisdiction within the United States or any country or
economic region in which either the Company or Ingersoll-Rand has material
assets or operations will have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise
16
prohibiting the acceptance for payment of, or payment for, shares of Common
Stock pursuant to the Offer or the Merger and such order, decree or ruling or
other action will have become final and nonappealable; provided, that
Ingersoll-Rand will, if necessary to prevent the taking of such action, or the
enaction, enforcement, promulgation, amendment, issuance or application of any
statute, rule, regulation, legislation, interpretation, judgment, order or
injunction, offer to accept an order to divest such of the Company's or
Ingersoll-Rand's assets and businesses as may be necessary to forestall such
injunction or order and to hold separate such assets and business pending such
divestiture, but only if the amount of such assets and businesses is not
material to the assets or profitability of Ingersoll-Rand and its subsidiaries
taken as a whole; (c) by Ingersoll-Rand or the Company, if due to an occurrence
or circumstance which would result in a failure to satisfy any of the Tender
Offer Conditions, the Purchaser will have failed to pay for Shares pursuant to
the Offer on or prior to the Outside Date, unless such failure has been caused
by or results from the failure of the party seeking to terminate the Merger
Agreement to perform in any material respect any of its respective covenants
contained in the Merger Agreement. The term "Outside Date" will mean the latest
(not to exceed 150 days) of (A) 60 days following the date of the Merger
Agreement, (B) the date on which either the applicable waiting period under the
HSR Act will have expired or been terminated or the final terms of a consent
decree between Ingersoll-Rand and the Antitrust Division of the Department of
Justice (the "Antitrust Division") (the "Consenting Parties"), with respect to
the Offer and the Merger have been agreed to by the Consenting Parties, or an
order of a Federal District Court adjudging that the Merger does not violate the
Federal antitrust laws will have been issued or the Antitrust Division will have
otherwise authorized Ingersoll-Rand to acquire Shares pursuant to the Offer, or
(C) 10 business days following the conclusion of any ongoing proceedings before
the European Commission in connection with its review of the transactions
contemplated by the Merger Agreement or any similar delay pursuant to any other
material antitrust or competitive law or regulation; (d) by Ingersoll-Rand or
the Company, if the Offer is terminated or expires in accordance with its terms
without the Purchaser having purchased any Common Stock thereunder due to a
failure of any of the conditions to the Offer to be satisfied, unless such
termination or expiration has been caused by or results from the failure of the
party seeking to terminate the Merger Agreement to perform in any material
respect any of its respective covenants contained in the Merger Agreement; (e)
by the Company, if the Board of the Company determines that a proposal for a
Third Party Acquisition is a Superior Proposal and a majority of the Board of
the Company determines, in its good faith judgment, based on the opinion of
independent legal outside counsel to the Company, that a failure to terminate
the Merger Agreement would constitute a breach of such Board's fiduciary
obligations under applicable law; provided, that any such termination by the
Company under the provisions described in this clause (e) will not be effective
until the Company has made payment of the full fee and expense reimbursement
described below under "Fees and Expenses"; (f) prior to the consummation of the
Offer, by the Company, if (i) any of the representations and warranties of
Ingersoll-Rand or the Purchaser contained in the Merger Agreement were incorrect
in any material respect when made or have since become, and at the time of
termination remain, incorrect in any material respect, or (ii) Ingersoll-Rand or
the Purchaser will have breached or failed to comply in any material respect
with any of their respective obligations under the Merger Agreement, which
breach will not have been cured prior to the earlier of (A) 10 days following
notice of such breach and (B) two business days prior to the date on which the
Offer expires; or (g) by Ingersoll-Rand prior to the purchase of Shares pursuant
to the Offer, if (i) there will have been a breach of any representation or
warranty on the part of the Company contained in the Merger Agreement which
would reasonably be expected to have a material adverse effect on the business,
assets, financial condition or results of operations of the Company and its
subsidiaries taken as a whole or which would reasonably be expected to prevent
(or materially delay) the consummation of the Offer, (ii) there will have been a
breach of any covenant on the part of the Company contained in the Merger
Agreement which would reasonably be expected to have a material adverse effect
on the business, assets, financial condition or results of operations of the
Company and its subsidiaries taken as a whole or which would reasonably be
expected to prevent (or materially delay) the consummation of the Offer, which
will not have been cured prior to the earlier of (A) 10 days following notice of
such breach and (B) two business days prior to the date on which the
17
Offer expires, (iii) the Board will have withdrawn or modified in a manner
adverse to the Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger and will not have reinstated such approval or
recommendation within three business days thereof, will have approved or
recommended another offer or transaction, or will have resolved to effect any of
the foregoing, or (iv) the Minimum Condition will not have been satisfied by the
expiration date of the Offer and on or prior to such date (A) any person (other
than Ingersoll-Rand or the Purchaser) will have made a proposal or public
announcement or communication to the Company with respect to a Third Party
Acquisition at a price in excess of $86.00 per Share or (B) any person
(including the Company or any of its affiliates or subsidiaries), other than
Ingersoll-Rand or any of its affiliates, will have become the beneficial owner
of more than 20.0% of the Shares.
"Third Party Acquisition" is defined in the Merger Agreement as the
occurrence of any of the following events: (i) the acquisition of the Company by
merger, tender offer or otherwise by any person other than Ingersoll-Rand, the
Purchaser or any affiliate (a "Third Party"); (ii) the acquisition by a Third
Party of 20.0% or more of the assets of the Company and its subsidiaries taken
as a whole; (iii) the acquisition by a Third Party of more than 20.0% of the
outstanding Shares; (iv) the adoption by the Company of a plan of liquidation or
the declaration or payment of an extraordinary dividend; or (v) the repurchase
by the Company or any of its subsidiaries of 20.0% or more of the outstanding
Shares.
"Superior Proposal" is defined in the Merger Agreement as a bona fide
proposal made by a Third Party to acquire all of the outstanding Shares pursuant
to a tender offer or a merger, or to purchase all or substantially all of the
assets of the Company, on terms which a majority of the members of the Board of
the Company determines in its good faith reasonable judgment (based on the
advice of its financial and legal advisors) to be more favorable to the Company
and its stockholders than the Offer and the Merger.
In the event of the termination of the Merger Agreement, the Merger
Agreement will forthwith become void and there will be no liability on the part
of any party thereto subject to limited exceptions; provided, however, that
nothing therein will relieve any party from liability for any breach hereof.
Fees and Expenses. Under the Merger Agreement, if: (i) Ingersoll-Rand
terminates the Merger Agreement pursuant to the provisions described in clause
(g)(iv)(A) under "Termination" above and within twelve months thereafter: (A)
the Company enters into an agreement with respect to a Third Party Acquisition,
or a Third Party Acquisition occurs, involving any party (or any affiliate or
associate thereof) (x) with whom the Company (or its agents) had any discussions
with respect to a Third Party Acquisition, (y) to whom the Company (or its
agents) furnished information with respect to or with a view to a Third Party
Acquisition or (z) who had submitted a proposal or expressed any interest
publicly or to the Company in a Third Party Acquisition, in the case of each of
clauses (x), (y) and (z) prior to such termination; or (B) the Company enters
into an agreement with respect to a Third Party Acquisition, or a Third Party
Acquisition occurs, that contemplates a direct or indirect consideration (or
implicit valuation) for Shares (including the value of any stub equity) in
excess of $86.00 per Share; or (ii) the Company terminates the Merger Agreement
pursuant to the provisions described in clause (e) under "Termination" above or
Ingersoll-Rand terminates the Merger Agreement pursuant to the provisions
described in clause (g)(iii) or (g)(iv)(B) under "Termination" above; then the
Company must pay to Ingersoll-Rand and the Purchaser, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with any termination contemplated by the
provisions described in clause (ii) above, a cash fee of $35 million, provided,
however, that the Company will in no event be obligated to pay more than one
such fee with respect to all such agreements and occurrences and such
termination.
18
Except as otherwise specifically provided therein, all costs and expenses
incurred in connection with the Merger Agreement and the consummation of the
transactions contemplated thereby will be paid by the party incurring such costs
and expenses.
Amendment and Modification. Subject to the terms of the Merger Agreement and
applicable law, the Merger Agreement may be amended, modified and supplemented
in writing by the parties thereto in any and all respects before the Effective
Time (notwithstanding any stockholder approval of the Merger), by action taken
by the respective Boards of Directors of Ingersoll-Rand, the Purchaser and the
Company or by the respective officers authorized by such Boards of Directors,
provided, however, that after any such stockholder approval, no amendment will
be made which by law requires further approval by such stockholders without such
further approval.
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser shall not be
required to accept for payment or subject to any applicable rules and
regulations of the Commission, including Rule 14e-1c under 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 any Shares
tendered and may terminate or amend the Offer in accordance with the Merger
Agreement and may postpone the acceptance of, and payment for, Shares, if (i)
there shall not have been validly tendered and not withdrawn prior to the
expiration of the Offer a number of Shares which, together with Shares owned by
Ingersoll-Rand and the Purchaser, represent a majority of the total voting power
of all Shares outstanding on a fully diluted basis on the date of purchase (the
"Minimum Condition"), (ii) subject to the proviso contained in paragraph (a)
below, any applicable waiting period under the HSR Act or under any applicable
foreign statutes or regulations in a jurisdiction where Ingersoll-Rand or the
Company, directly or indirectly, has material operations or a material amount of
assets shall not have expired or been terminated or (iii) at any time on or
after the date of the Merger Agreement and at or before the time of payment for
any such Shares (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer) any of the following shall occur:
(a) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended, issued or deemed applicable to the Offer, by
any legislative body, court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer or
to the Merger, that would reasonably be expected to: (i) make illegal or
otherwise prohibit or materially delay consummation of the Offer or the
Merger or seek to obtain material damages or make materially more costly the
making of the Offer, (ii) prohibit or materially limit the ownership or
operation by Ingersoll-Rand or the Purchaser of all or any material portion
of the business or assets of the Company or any of its subsidiaries taken as
a whole or compel Ingersoll-Rand or the Purchaser to dispose of or hold
separately all or any material portion of the business or assets of
Ingersoll-Rand or the Purchaser or the Company or any of its subsidiaries
taken as a whole, or seek to impose any material limitation on the ability
of Ingersoll-Rand or the Purchaser to conduct its business or own such
assets, (iii) impose material limitations on the ability of Ingersoll-Rand
or the Purchaser effectively to acquire, hold or exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or owned by the Purchaser or Ingersoll-Rand on all
matters properly presented to the Company's stockholders, or (iv) require
divestiture by Ingersoll-Rand or the Purchaser of any Shares; provided, that
Ingersoll-Rand shall, if necessary to prevent the taking of such action, or
the enaction, enforcement, promulgation, amendment, issuance or application
of any statute, rule, regulation, legislation, interpretation, judgment,
order or injunction, offer to accept an order to divest such of the
Company's or Ingersoll-Rand's assets and businesses as may be necessary to
forestall such injunction or order and to hold separate such assets and
business
19
pending such divestiture, but only if the amount of such assets and
businesses is not material to the assets or profitability of Ingersoll-Rand
and its subsidiaries taken as a whole;
(b) there shall have occurred any development that has, or would
reasonably be expected to have, a material adverse effect on the business,
assets, financial condition or results of operations of the Company and its
subsidiaries taken as a whole;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange (the
"NYSE"), (ii) any decline in the Standard & Poor's 500 in excess of 25%
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, (iv)
any material limitation by any U.S., federal or state government or
governmental, administrative or regulatory authority or agency on the
extension of credit by banks or other lending institutions, or (v) a
commencement or escalation of a war or armed hostilities or other national
or international calamity directly or indirectly involving the United States
and having a material adverse effect on the business, assets, financial
condition or results of operations of the Company and its subsidiaries taken
as a whole or materially adversely affecting (or materially delaying) the
consummation of the Offer.
(d)(i) it shall have been disclosed or the Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 20% of the outstanding Shares has been acquired by any
corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), other than Ingersoll-Rand or any of
its affiliates, or (ii)(A) the Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Ingersoll-Rand or the Purchaser
the approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any takeover proposal or any other
acquisition of Shares other than the Offer and the Merger, (B) any
corporation, partnership, person or other entity or group shall have entered
into a definitive agreement or an agreement in principle with the Company
with respect to a tender offer or exchange offer for any Shares or a merger,
consolidation or other business combination with or involving the Company or
any of its subsidiaries, or (C) the Board or any committee thereof shall
have resolved to do any of the foregoing;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct, or any such representations and warranties that are not so
qualified shall not be true and correct in any respect which would
reasonably be expected to have a material adverse effect on the business
assets, results of operations or financial condition of the Company and its
subsidiaries taken as a whole, in each case as if such representations and
warranties were made at the time of such determination except as to any such
representation or warranty which speaks as of a specific date, which must be
untrue or incorrect in the foregoing respects as of such specific date;
(f) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
20
(g)(x) the Company shall not have consummated the sale of its 50%
interest in VME Group N.V. for cash proceeds of not less than $573 million
and (y) the definitive agreement to sell such interest to AB Volvo of Sweden
described in the Company's Current Report on Form 8-K filed with the
Commission on March 6, 1995 shall have been cancelled or terminated, or
shall have been amended in a manner that is materially adverse to the
Company, or shall otherwise no longer remain in full force and effect; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of the Purchaser, in any such case and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions (including those set forth in clauses (i)-(iii)
above) are for the sole benefit of the Purchaser and may be asserted by the
Purchaser, or may be waived by the Purchaser, in whole or in part at any time
and from time to time in its sole discretion. The failure by the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
The Company has agreed to take all actions required pursuant to Section
14(f) and Rule 14f-1 in order to fulfill its obligations under Section 4.13 of
the Merger Agreement. Annex I to this Schedule 14D-9 fulfills the Company's
obligation in this regard under the Merger Agreement. Pursuant to the Merger
Agreement, Ingersoll-Rand or the Purchaser will supply to the Company and be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
To the best of the knowledge of the Company, except as described above,
there are no material contracts, agreements, arrangements or understandings and
no actual or potential conflicts of interest between the Company or its
affiliates and (i) its executive officers, directors or affiliates or (ii) the
Purchaser or Ingersoll-Rand, its executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) At a meeting of the Board held on April 9, 1995, the Board met with its
financial and legal advisors to review the business, financial condition and
prospects of the Company, the terms and conditions of the Offer and various
matters related thereto, including reports by the Company's financial advisor,
CS First Boston, on the financial condition and performance and potential value
of the Company. Based on the proposed terms of the draft Merger Agreement
presented to the Board on April 9, 1995, which among other things, substantially
increased the price offered per Share, in light of and subject to the terms and
conditions set forth in the Merger Agreement and after receiving advice from
management of the Company ("Management"), CS First Boston and its legal
advisors, the Board unanimously determined that the Offer and Merger Agreement
are fair to, and in the best interest of, the shareholders of the Company.
AT THE APRIL 9, 1995 MEETING, THE BOARD UNANIMOUSLY DETERMINED THAT BOTH THE
OFFER AND MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT
ALL HOLDERS OF SHARES ACCEPT THE OFFER AND MERGER AGREEMENT AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
A copy of a letter to stockholders communicating the recommendation of the
Board is filed as Exhibit 9 and is incorporated herein by reference.
(b) In reaching its determination and recommendations with respect to the
Offer, as indicated above, the Board reviewed in detail the Offer and the
various alternative transactions reviewed by Management and its financial
advisors, and deliberated extensively with its legal and financial advisors
21
regarding the foregoing. At the end of the meeting, the Board determined by
unanimous vote that the Offer, as revised, is fair to, and in the best interests
of, the Company, its shareholders and its other constituencies and authorized
the execution and delivery of the Merger Agreement. Numerous factors were taken
into account including, among other things, the following:
(i) The terms and conditions of the Offer and the Merger Agreement.
(ii) Presentation by Management at the March 27, 1995 meeting regarding
the financial condition, results of operations, business and prospects of
the Company, including the prospects of the Company were it to remain
independent.
(iii) The Board's belief, based on the advice and analysis of CS First
Boston presented to the Board at the meetings held on April 2 and April 9,
1995, that alternative financial transactions, such as a leveraged
recapitalization, payment of a substantial dividend, or leveraged buy-out,
were not likely to provide values to the shareholders of the Company
superior to the $86 per Share Offer.
(iv) The fact that since March 28, 1995, the date Ingersoll-Rand first
publicly announced its proposal to acquire the Company, no person other than
Ingersoll-Rand had made an offer or proposal to acquire the Company, and the
Board was not confident that an offer superior to the Offer would be
forthcoming either prior to the annual meeting on May 9, 1995 or any
reasonable postponement thereof, at which meeting the Board faced the
prospect that the Ingersoll-Rand nominees would be elected as directors of
the Company pursuant to the proxy solicitation launched by Ingersoll-Rand
and such new directors would then approve the $77 offer.
(v) The trading price of the Shares over the past three years and that
the $86 per Share Offer price represents a premium of approximately 63% over
the closing sales price of $52 5/8 for the Shares on the NYSE on March 27,
1995, the last trading day prior to the public announcement by
Ingersoll-Rand of its interest in acquiring the Company, and a premium of
approximately 70% over the closing price of $50 1/2 for the Shares on the
NYSE on March 14, 1995, the last trading date prior to the initial telephone
conversation concerning the acquisition of the Company by Ingersoll-Rand
between Mr. Leo J. McKernan, Chairman, President and Chief Executive of the
Company, and Mr. James E. Perrella, Chairman, President and Chief Executive
Officer of Ingersoll-Rand.
(vi) The prices paid in other recent comparable acquisition
transactions.
(vii) The recommendation of Management that the Offer and Merger be
approved.
(viii) The presentation of CS First Boston, financial advisor to the
Company, at the April 9, 1995 Board meeting and their written opinion (the
"CS First Boston Opinion") dated April 9, 1995 that, based upon and subject
to the information contained therein, as of the date of the opinion, the
consideration to be received by the stockholders of the Company (other than
Ingersoll-Rand and the Purchaser) in the Offer and the Merger is fair to
such stockholders from a financial point of view.
(ix) The Merger Agreement permits the Company to terminate the Merger
Agreement, if any person shall have made a bona fide proposal to acquire the
Company on terms which a majority of the Board determines in its good faith
judgment, based on the opinion of independent legal outside counsel to the
Company, that a failure to terminate the Merger Agreement would constitute a
breach of the Board's fiduciary obligations under applicable law.
The Board did not assign relative weights to the foregoing factors or
determine that any factor was of particular importance. Rather, the Board viewed
its position and recommendations as being based on the totality of the
information presented and considered by it.
22
The full text of the CS First Boston Opinion, which sets forth the
assumptions made, the matters considered and the limitations on the review
undertaken by CS First Boston, is filed herewith as Exhibit 10 and is
incorporated herein by reference. The Company's stockholders are urged to read
the attached CS First Boston Opinion in its entirety.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement, dated as of March 22, 1995 (the "March 22
Agreement"), the Company retained CS First Boston to render general financial
advisory services to the Company with respect to, among other things, responding
to any business combination proposals received by the Company. Pursuant to a
letter agreement, dated as of April 6, 1995 (the "April 6 Agreement" and,
together with the March 22 Agreement, the "Letter Agreements"), the Company
retained CS First Boston to act as the Company's financial advisor with respect
to the Offer. Pursuant to the March 22 Agreement, the Company paid CS First
Boston an advisory fee of $75,000.
The Company has agreed with CS First Boston that if within twelve months
following the April 6 Agreement, a transaction involving the acquisition by a
third party of at least a majority of the total number of outstanding voting
securities of the Company on a fully diluted basis, a merger or consolidation
involving the Company and a third party in which the Company is acquired, or the
transfer of all or substantial portion of the assets of the Company to a third
party (an "Acquisition") is consummated, the Company will pay to CS First Boston
at the closing of such Acquisition a transaction fee equal to 1% of the
aggregate consideration received by the Company's stockholders pursuant to such
Acquisition (the "Transaction Fee"). Consummation of the Offer in accordance
with its terms will constitute an Acquisition.
Pursuant to the Letter Agreements, the Company has also agreed to reimburse
CS First Boston for its reasonable out-of-pocket expenses, including the fees
and expenses of legal counsel. In addition, the Company has agreed to indemnify
CS First Boston against certain liabilities in connection with its engagement.
The Company previously retained D.F. King & Co., Inc. ("D.F. King") to
assist the Company in connection with ongoing communications with its
stockholders, including with respect to the Offer and related matters. Such firm
will receive customary compensation for its services and reimbursement of
out-of-pocket expenses in connection therewith.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to stockholders with respect to the Offer.
23
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as described below, to the knowledge of the Company, there have
been no transactions in Shares which were effected during the past 60 days by
the Company, or by any executive officer, director, affiliate or subsidiary of
the Company.
Between February 7, 1995 and March 15, 1995 the Company repurchased in the
open market an aggregate of 305,000 Shares pursuant to its stock repurchase
program announced on February 3, 1995. The prices paid for such Shares ranged
between $49.75 and $55.00 per Share. The aggregate purchase price for such
Shares was $16,245,150 (including commissions).
Under the Stock Purchase Program for Officers (the "Plan"), which is
described in the Report of the Human Effectiveness Committee in the Proxy
Statement, officers may contribute up to 15% of their base salary and incentive
compensation into the Plan. The Company contributes into the Plan an amount
equal to 2/3 of the participant's contribution. Pursuant to the Plan, the
Company and the Company's executive officers contributed the following amounts
to the Plan toward the purchase of Shares on March 1, 1995, calculated on the
basis of the closing price of $54.25 per Share for the Company's Shares on March
1, 1995:
SHARES OF SHARES OF RESTRICTED
EMPLOYEE STOCK PURCHASED WITH COMPANY'S STOCK PURCHASED WITH TOTAL
NAME CONTRIBUTION EMPLOYEE CONTRIBUTION MATCH COMPANY MATCH SHARES
- ------------------------- ------------ --------------------- ----------- -------------------- ------
Leo J. McKernan.......... $ 198,970.35 3667 $132,655.94 2445 6112
Frank M. Sims............ $ 48,858.24 900 $ 32,573.76 600 1500
William N. Harper........ $ 48,583.15 895 $ 32,407.00 597 1492
James D. Kertz........... $ 36,327.42 669 $ 24,210.09 446 1115
Bernard D. Henely........ $ 32,947.11 607 $ 21,996.12 405 1012
Paul R. Bowles........... $ 32,685.84 602 $ 21,780.85 401 1003
Thomas L. Doepker........ $ 32,645.61 601 $ 21,769.16 401 1002
John J. Reynolds......... $ 23,552.84 434 $ 15,681.35 289 723
David D. Hunter.......... $ 14,083.90 259 $ 9,407.74 173 432
(b) To the best of the Company's knowledge, all of the Company's executive
officers, directors and affiliates currently intend to tender all Shares held of
record or beneficially owned by them pursuant to the Offer, except for those
Shares held by such persons which, if tendered, would cause such persons to
incur liability under the provisions of Section 16(b) of the Exchange Act. The
foregoing does not include any Shares over which, or with respect to which, any
such executive officer, director or affiliate acts in a fiduciary or
representative capacity or is subject to the instructions of a third party with
respect to such tender.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) On March 15, 1995, Mr. Leo J. McKernan, Chairman, President and Chief
Executive Officer of the Company, had a telephone conversation with Mr. James E.
Perrella, Chairman, President and Chief Executive Officer of Ingersoll-Rand. Mr.
Perrella proposed that Ingersoll-Rand acquire the Company in an all-cash merger
transaction in which the stockholders of the Company would receive between
$75.00 and $77.00 in cash per Share. Mr. McKernan informed Mr. Perrella that the
Company was not interested in such a transaction.
24
On March 15, 1995, Mr. McKernan and each of the Company's directors received
the following letter from Mr. Perrella:
March 15, 1995
Mr. Leo J. McKernan
Chairman, President and Chief Executive Officer
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Dear Leo:
I was disappointed that you did not give me the chance to explain fully
our proposal when we spoke today. I would have much preferred to convey
to you personally everything that I wanted to say, but since I was
unable to do so, I am sending this letter to set forth our specific
proposal.
Ingersoll-Rand Company proposes to acquire Clark Equipment Company in a
merger transaction in which Clark's stockholders would receive between
$75.00 and $77.00 in cash for each share of outstanding Clark common
stock. We think the lower end of that range is the appropriate price,
but I would like to meet with you to give you the opportunity to
convince us that the higher end of the range is justified.
We believe our proposal presents an extremely attractive opportunity for
Clark's stockholders, who at $75.00 per share would receive a premium of
50% over today's closing market price of Clark common stock. We and our
financial advisors believe that Clark's stockholders will
enthusiastically support our proposal.
We have been studying Clark for some time and we are extremely impressed
with the businesses you have so ably built up and the manner in which
they complement Ingersoll-Rand's businesses. We believe the
complementary aspects of our two companies' products, customers and
distribution capabilities would enable the combined entity to be an even
more effective competitor in the global marketplace.
Our proposal visualizes the negotiation and execution of a mutually
acceptable definitive merger agreement, the operation of Clark in the
ordinary course of business and the taking of the various actions by
Clark's Board necessary to facilitate the completion of the transaction.
Our proposal also assumes Clark's consummation of the sale of its 50%
interest in VME to Volvo on substantially the terms previously
announced. Our antitrust counsel has studied the two companies'
businesses and we do not believe that our proposal gives rise to any
meaningful antitrust concerns. We are confident that any antitrust
issues would readily be resolved. Finally, based on our discussions with
Ingersoll-Rand's principal senior lender, we are also confident that the
necessary financing for this transaction can easily be arranged.
We hope that you and your Board of Directors will view this proposal as
we do - a unique opportunity for Clark's stockholders to realize full
value for their shares in a transaction that can quickly be consummated.
We are prepared to meet with you and your advisors to answer any
questions that you may have about our proposal and to proceed
expeditiously to negotiate a definitive merger agreement with you.
My purpose in sending this letter is to provide you and your fellow
directors with information about our proposal and to express our sincere
desire to work together with you to reach agreement on a transaction
that can be presented to Clark's stockholders as the joint effort of
25
Ingersoll-Rand's and Clark's Boards of Directors and management. At this
point, therefore, we hope that our discussions can remain a private
matter between us.
Needless to say, it is important that we hear from you as soon as
practicable as to your Board's views about our proposal.
Sincerely,
James E. Perrella
Chairman, President and Chief Executive Officer
cc: Members of the Board of Directors of Clark Equipment Company
On March 20, 1995, Mr. McKernan telephoned Mr. Perrella and informed him
that the Company would give serious consideration to Ingersoll-Rand's proposal,
and that he intended to convene a meeting of the Board on March 27, 1995,
subject to final confirmation of the availability of the Company's directors, to
consider the proposal.
On March 21, 1995, Mr. McKernan received the following letter from Mr.
Perrella:
March 21, 1995
Mr. Leo J. McKernan
Chairman, President and Chief Executive Officer
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Dear Leo:
I appreciated your phone call yesterday. I think it would be in our
mutual best interests for us to continue to stay in touch with each
other as events unfold.
We hope you will be able to convene your Board as soon as possible this
week since time is so important. But we certainly hope that Monday would
be the latest possible date for your Board meeting.
When it does meet, we hope that your Board will view this proposal as we
do-as an unusual opportunity for Clark's stockholders to realize full
value for their shares in a transaction that will create a company that
will be uniquely positioned in the global marketplace.
I want to stress my desire to meet with you to discuss our proposal and
answer any questions that you may have about it. I would like to give
you the opportunity to show us how the higher end of the range that I
mentioned in my March 15 letter might be justified.
Thanks again for your call.
Sincerely,
James E. Perrella
On March 23, 1995, Mr. McKernan telephoned Mr. Perrella to report that the
Company's Board would be meeting on Monday, March 27, 1995 to consider
Ingersoll-Rand's proposal.
26
On March 27, 1995 a special meeting of the Board was held to consider
Ingersoll-Rand's proposal as contained in Mr. Perrella's March 15th letter to
Mr. McKernan. The Board carefully considered together with the advice of its
legal and financial advisors the Ingersoll-Rand proposal. As a result of such
review, the Board unanimously determined that the Ingersoll-Rand proposal was
wholly inadequate and that the Company was not for sale, and authorized and
instructed Mr. McKernan to decline the Ingersoll-Rand proposal and send the
following letter to Mr. Perrella:
March 27, 1995
Mr. James E. Perrella
Chairman, President and Chief Executive Officer
Ingersoll-Rand Company
200 Chestnut Ridge Road
Woodcliff Lake, NJ 07675
Dear Mr. Perrella:
The Board of Directors of Clark Equipment Company met today to consider
your letter of March 15, 1995. During the meeting, we considered the
views of our financial and legal advisors and other issues we deemed
appropriate.
Although the Board of Directors appreciates your interest in Clark
Equipment Company as a strategic acquisition, the Board of Directors
unanimously reaffirmed its long-standing position that the Company is
not for sale. We therefore decline your proposal.
The management team at Clark, with the full support of the Board, has
been successfully implementing a strategic plan which has benefited our
shareholders materially. As a result of our efforts, Clark Equipment
Company enjoys an outstanding reputation with its shareholders,
customers and the financial community. The management and Board of
Directors of Clark believe that our shareholders will continue to
benefit materially from our commitment to stay the course of our
strategic plan.
Thank you again for your expression of interest in Clark. The Board of
Directors requests that this letter remain confidential and that it
shall serve as an appropriate final response to your inquiry.
Sincerely,
Leo J. McKernan
Following receipt of Mr. McKernan's letter, Mr. McKernan received a
telephone call from Mr. Perrella on March 28, 1995, during which Mr. Perrella
asked Mr. McKernan and the Company's Board to reconsider the Ingersoll-Rand
proposal. Mr. McKernan reiterated the Board's position that the Company was not
for sale. Later that day, Mr. McKernan received the letter set forth below and
Ingersoll-Rand issued the following press release:
Woodcliff Lake, N.J. (March 28, 1995) Ingersoll-Rand Company
announced today that it had submitted a proposal to Clark Equipment
Company for the acquisition of Clark in a merger transaction in which
Clark's stockholders would receive between $75 and $77 in cash per
share.
27
A letter sent today by James E. Perrella, Chairman, President and
Chief Executive Officer of Ingersoll-Rand, to Clark's Chairman is
attached.
Ingersoll-Rand first submitted its acquisition proposal to Clark on
March 15, 1995. Clark advised Ingersoll-Rand today that at a meeting
held on March 27, 1995 Clark's Board had rejected Ingersoll-Rand's
proposal.
Here is the full text of Ingersoll-Rand's letter:
March 28, 1995
Mr. Leo J. McKernan
Chairman, President and Chief Executive Officer
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Dear Leo:
We are surprised and disappointed that Clark Equipment Company's Board
has rejected our acquisition proposal and "reaffirmed its long-standing
position that the Company is not for sale." We would have thought that
an acquisition proposal at a 50% premium over the price at which Clark
common stock has recently been trading-and a price exceeding Clark's all
time high stock price-would have led to a more constructive dialogue
between us. But as I have mentioned to you, we have proposed a
transaction that is so compelling for the stockholders of both of our
companies that we feel obligated to pursue it notwithstanding your
Board's rejection. Because we are confident that Clark's stockholders
will enthusiastically support our proposal, we are sending this letter
to you and also releasing it publicly.
Ingersoll-Rand Company proposes to acquire Clark in a merger transaction
in which Clark's stockholders would receive between $75.00 and $77.00 in
cash for each share of outstanding Clark common stock. We think the
lower end of that range is the appropriate price, but as you know we
have repeatedly offered to meet with you to give you the opportunity to
convince us that the higher end of that range is justified.
We have been studying Clark for some time and we are extremely impressed
with the businesses you have so ably built up and the manner in which
they complement Ingersoll-Rand's businesses. We believe the
complementary aspects of our two companies' products, customers and
distribution capabilities would enable the combined entity to be an even
more effective competitor in the global marketplace.
Our offer is subject to the negotiation and execution of a mutually
acceptable definitive merger agreement, the operation of Clark in the
ordinary course of business, the taking of the various actions by
Clark's Board necessary to facilitate the completion of the transaction
and the absence of any actions by Clark's Board which would frustrate
our offer. Our proposal also assumes Clark's consummation of the sale of
its 50% interest in VME to Volvo on substantially the terms previously
announced or, if not consummated, the continued effectiveness of Clark's
announced agreement with Volvo without any change in its terms.
Our antitrust counsel has studied the two companies' businesses and we
do not believe that our proposal gives rise to any meaningful antitrust
concerns. We are confident that any antitrust issues would readily be
resolved. Finally, based on our discussions with our senior lenders, we
are also confident that the necessary financing for the transaction can
easily be arranged.
28
I still would like to meet with you at your earliest convenience to
discuss our proposal and to proceed with negotiations leading to the
execution of a definitive merger agreement.
We believe that your Board of Directors should reconsider our proposal
and view it as we do - as a unique opportunity for Clark's stockholders
to realize full value for their shares in a transaction that can quickly
be consummated.
We hope to hear from you promptly.
Sincerely, James E. Perrella
Later on March 28, 1995, the Company issued the following press release:
South Bend, Ind. (March 28, 1995)-Clark Equipment Company said today
that its Board of Directors met on March 27, 1995 to review a letter
received from Ingersoll-Rand proposing an acquisition of the company.
After consulting with Clark's financial and legal advisors, the Board of
Directors unanimously determined to decline Ingersoll-Rand's unsolicited
proposal. The Board reaffirmed its long standing position that Clark is
not for sale and its commitment to implement successfully its strategic
plan. This plan has included the recent acquisitions of Club Car and
Blaw-Knox and the impending divestiture of its 50 percent interest in
VME Group for $573 million.
Clark Chairman Leo J. McKernan stated that Ingersoll-Rand's proposal is
entirely inadequate. "Clark's share price reached a high of $71 only
five months ago. I believe this is an opportunistic attempt to buy Clark
during a temporary decline in the price of Clark's shares," added Mr.
McKernan. (A copy of Mr. McKernan's letter to James E. Perrella,
Chairman, President and CEO of Ingersoll-Rand, declining the offer
follows.)
The Company's press release then included the text of the March 27th Letter
from Mr. McKernan to Mr. Perrella set forth above.
On March 29, 1995, the Company filed an action against Ingersoll-Rand in the
United States District Court for the Southern District of New York. The
complaint alleged that Ingersoll-Rand's proposed acquisition of the Company
would substantially lessen competition in the market for asphalt pavers and tend
to create a monopoly in such market and that therefore the proposed acquisiton
of the Company by Ingersoll-Rand would violate Section 7 of the Clayton Act and
Section 2 of the Sherman Act. The lawsuit is more fully described in Item 8
below.
On March 31, 1995, Ingersoll-Rand sent to the Company a demand under
Delaware Law for the Company's list of stockholders and security position
listings.
At a meeting held on April 2, 1995, with certain members of the Board
participating by conference telephone, management of the Company and CS First
Boston presented the preliminary results of their analysis of alternative
financial transactions, including a leveraged recapitalization of the Company,
payment of a substantial dividend, and a leveraged buy-out of the Company.
Management and CS First Boston then discussed contacts with and a list of other
potential acquirors of the Company. The Board also reviewed Ingersoll-Rand's
statements of its intention to commence a tender offer for all the Shares of the
Company for between $75 and $77 per Share and to conduct a proxy solicitation to
remove the Board at the annual meeting on May 9, 1995. The Board discussed the
prospect that if the Company conducted a search for another offeror at the end
of which no offer superior to Ingersoll-Rand's $75 to $77 per Share offer were
forthcoming, and if Ingersoll-Rand was successful in its proxy solicitation
either at the annual meeting on May 9, 1995 or any reasonable postponement of
such meeting, then the Company would have little leverage to negotiate an
increase in the $75 to $77 per Share offer from Ingersoll-Rand. In such event,
the Company's shareholders might have no alternative to Ingersoll-
29
Rand's $75 to $77 per Share offer. The Board also took note of the fact that the
market price of the Company's shares substantially exceeded Ingersoll-Rand's
proposal of $75 to $77 per Share. Desiring to use the market price of the
Company's Shares to the shareholders' advantage, the Board authorized the
Management to open discussions with Ingersoll-Rand.
On April 3, 1995, the Purchaser filed its tender offer documents with the
Commission on Schedule 14D-1 and commenced the Offer. On the same day,
Ingersoll-Rand delivered a notice to the Company nominating seven individuals
for election as directors at the Company's annual meeting of stockholders
previously scheduled for May 9, 1995. On April 3, 1995, Mr. Perrella also sent
the following letter to Mr. McKernan:
April 3, 1995
Mr. Leo J. McKernan
Chairman, President and Chief Executive Officer
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Dear Leo:
Over the past two and a half weeks, Ingersoll-Rand has made repeated
efforts to meet with Clark in an attempt to negotiate the terms of a
merger transaction that could be presented to Clark's stockholders as
the joint effort of both companies' Boards and managements. But rather
than recognize its fiduciary responsibility to explore further a
possible transaction on the basis we have proposed, the only response
from Clark has been to state its longstanding position that Clark is not
for sale and to file a lawsuit against us.
The Company's actions leave us with only one alternative. Today we are
commencing a tender offer to acquire all outstanding shares of Clark
common stock at $77.00 in cash per share and we are sending a letter
notifying you that we are nominating seven individuals for election as
directors of Clark at Clark's May 9 annual meeting of stockholders.
We regret that we have to resort to these actions; we would have greatly
preferred to enter into negotiations with you in an effort to reach
agreement on a merger transaction. But even though we have commenced a
tender offer, we continue to be interested in meeting with you to
negotiate the terms of a transaction that can be approved by your Board.
When your Board recognizes that its fiduciary duties require
consideration of the sale of Clark, please call me.
Sincerely,
James E. Perrella
Chairman, President and Chief Executive Officer
During the week of April 3, 1995, the respective financial advisors to
Ingersoll-Rand and the Company discussed the possibility of a modified Offer on
terms, including an increased price per Share, which the Management might be
prepared to recommend to the Board and pursuant to which the Company might be
willing to enter into a merger agreement with Ingersoll-Rand. These discussions
were concluded on April 6, 1995 with the two financial advisors each
recommending to their respective clients that it might be productive for the
Chairmen of Ingersoll-Rand and the Company to meet to see
30
if they could reach agreement on the terms of a transaction which each Chairman
would be willing to recommend to his company's board of directors.
In the early evening on April 7, 1995, Mr. Perrella met with Mr. McKernan in
New York City. At that meeting the two Chairmen reached agreement on the
principal terms of a merger between the Company and Ingersoll-Rand. Starting
that same evening, other representatives and advisors of Ingersoll-Rand and the
Company met separately to conduct negotiations regarding the other terms of the
Merger Agreement. These discussions continued on Saturday, April 8, 1995 and
Sunday, April 9, 1995 and on Sunday, April 9, 1995 an agreement was reached
between the representatives of the two companies on all of the terms of the
Merger Agreement.
On April 9, 1995, the Boards of Directors of Ingersoll-Rand and the
Purchaser approved the Merger Agreement and the Board approved the Merger
Agreement and took other action to render the Rights and the supermajority
charter provision inapplicable to the Offer and the Merger. Later that
afternoon, the Merger Agreement was executed and Ingersoll-Rand and the Company
issued the following joint press release:
Woodcliff Lake, N.J. and South Bend, Indiana (April 9,
1995)--Ingersoll-Rand Company and Clark Equipment Company jointly
announced today that they have entered into a definitive merger
agreement under which Ingersoll-Rand will acquire Clark for $86.00 per
share in cash. The Boards of Directors of both companies have
unanimously approved the agreement.
Ingersoll-Rand's pending tender offer is being amended to increase
the offering price to $86.00 per share and extend the expiration date to
midnight New York time on Friday, May 5, 1995.
"We're delighted to add Clark's strong businesses and fine people to
our own," said James E. Perrella, Chairman, President and Chief
Executive Officer of Ingersoll-Rand. "This is a great fit. Clark's
businesses complement Ingersoll-Rand's and, like ours, are well-managed
leaders in their sectors."
Clark's Chairman, President and Chief Executive Officer, Leo J.
McKernan, said "This merger delivers fair value to our shareholders and
also provides our employees with excellent opportunities within the
framework of a fine company like Ingersoll-Rand."
Consummation of the merger is subject to customary terms and
conditions, including regulatory approvals.
On April 9, 1995, the Company postponed indefinitely its annual meeting of
stockholders scheduled for May 9, 1995; on April 10, 1995, Ingersoll-Rand
withdrew its April 3, 1995 nomination of director candidates for election at the
annual meeting; and on April 11 the Company filed with the court in the
Antitrust Litigation a notice of dismissal of all claims against Ingersoll-Rand
(all pursuant to the Merger Agreement).
During the discussions between the financial advisors to Ingersoll-Rand and
the Company during the week of April 3, 1995, Ingersoll-Rand's financial advisor
made inquiries of the Company's financial advisor concerning the Company's
expectations as to its operating performance in 1995 and 1996. Although the
Company's financial advisor gave Ingersoll-Rand's financial advisor no specific
information in that regard, following conversations between the financial
advisors regarding publicly available analysts' estimates of the Company's 1995
and 1996 earnings, Ingersoll-Rand's financial advisor concluded, based upon,
among other things, the Company's financial advisor's comments on such analysts'
estimates (which comments the Company authorized), that the Company currently
expects its
31
consolidated net income for this year and next to fall within the following
approximate ranges: 1995-- between $95 and $105 million; 1996--between $110 and
$120 million.
Any forecasts of future net income are inherently unreliable due to the
numerous uncertainties associated with forecasts and the various assumptions on
which they must necessarily be based. But because the expected consolidated net
income figures referred to above with respect to the Company (the "Projections")
were not prepared by management of the Company or by the Company's financial
advisor, such data is necessarily far more speculative and far less reliable
than if it had actually been prepared by the management of the Company or by the
Company's financial advisor. The Projections are set forth herein solely because
they were developed by Ingersoll-Rand's financial advisor on the basis of
limited information regarding the Company's expected net income in 1995 and 1996
indicated by the Company's financial advisor.
In light of the uncertainties inherent in forecasts of any kind, and
particularly in view of the manner in which the Projections were developed by
Ingersoll-Rand's financial advisor as noted above, the inclusion of the
Projections should not be regarded as a representation by Ingersoll-Rand, the
Purchaser, the Company or any other person that such Projections will be
achieved. HOLDERS OF SHARES ARE THEREFORE CAUTIONED NOT TO PLACE ANY RELIANCE ON
THE PROJECTIONS.
The Projections were not developed with a view to public disclosure or
compliance with the published guidelines of the Commission regarding forecasts,
nor were they prepared in accordance with the guidelines established by the
American Institute of Certified Public Accountants for preparation and
presentation of financial forecasts.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Restated Certificate of Incorporation
Article SIXTH, paragraph (6)(a) of the Certificate of Incorporation provides
that the affirmative vote or consent of the holders of four-fifths of all
classes of stock of the Company entitled to vote in elections of directors is
required (i) for the adoption of any agreement for the merger or consolidation
of the Company with or into any other corporation, or (ii) to authorize any sale
or lease of all or any substantial part of the assets of the Company to, or any
sale or lease to the Company or any subsidiary thereof in exchange for
securities of the Company of any assets (except assets having an aggregate fair
market value of less than $10,000,000) of, any other corporation, person or
other entity, if, in either case, as of the record date for the determination of
the stockholders of the Company entitled to notice thereof and to vote thereon
or consent thereto such other corporation, person or entity is the beneficial
owner, directly or indirectly, of more than 10% of the outstanding shares of
stock of the Company entitled to vote in elections of directors.
Article SIXTH, paragraph (6)(d) provides that paragraph (6)(a) is not
applicable to (i) any merger or consolidation of the Company with or into any
other corporation, or any sale or lease of all or any substantial part of the
assets of the Company to, or any sale or lease to the Company or any subsidiary
thereof in exchange for securities of the Company of any assets of, any
corporation if the Board shall by resolution have approved a memorandum of
understanding or a letter of intent with such other corporation with respect to
and substantially consistent with such transaction prior to the time that such
other corporation shall have become a holder or more than 10% of the outstanding
shares of stock of the Company entitled to vote in elections of directors; or
(ii) any merger or consolidation of the Company with, or any sale or lease to
the Company or any subsidiary thereof of any of the assets of, any corporation
of which a majority of the outstanding shares of all classes of stock entitled
to vote in elections of directors is owned of record or beneficially by the
Company and its subsidiaries.
A copy of Article SIXTH, paragraph (6) of the Certificate of Incorporation
is filed herewith as Exhibit 11 and is incorporated herein by reference, and the
foregoing summary is qualified in its entirety by reference thereto.
32
On April 9, 1995, the Board adopted resolutions approving, among other
things (the "April 9 Resolutions"), a Letter of Intent, dated as of April 9,
1995 (the "Letter of Intent"), by and between the Company and Ingersoll-Rand, in
connection with the Offer and the Merger Agreement. Pursuant to Article SIXTH,
paragraph (6)(d) of the Certificate of Incorporation, the supermajority voting
provisions of Article SIXTH, paragraph (6)(a) described above were rendered
inapplicable to the transactions contemplated by the Merger Agreement as a
result of the execution of the Letter of Intent and the Board's resolution
approving the Letter of Intent. A copy of the Letter of Intent is filed herewith
as Exhibit 12. A copy of the April 9 Resolutions is filed herewith as Exhibit
13.
Rights Agreement
As provided in the Merger Agreement, the Company has amended the Rights
Agreement (the "Rights Amendment") to provide that no transaction undertaken by
Ingersoll-Rand or any of its Affiliates (as defined in the Rights Agreement) or
Associates (as defined in the Rights Agreement) pursuant to the Merger Agreement
shall (A) trigger the exercisability of the Rights (as defined in the Rights
Agreement), (B) cause the separation of the Rights from the certificates
representing Shares to which they are attached, (C) cause the occurrence of a
Distribution Date (as defined in the Rights Agreement) or (D) cause
Ingersoll-Rand, Purchaser or any of Ingersoll-Rand's subsidiaries or affiliates
to be deemed an Acquiring Person (as defined in the Rights Agreement).
A copy of the Rights Amendment is filed herewith as Exhibit 14, and is
incorporated herein by reference, and the foregoing summary is qualified in its
entirety by reference thereto.
Section 203
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of Delaware Law. Section 203 would prevent an "Interested Stockholder"
(generally defined as a person beneficially owning 15% or more of a
corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an Interested Stockholder unless: (i) before such
person became an Interested Stockholder, the board of directors of the
corporation approved the transaction in which the Interested Stockholder became
an Interested Stockholder or approved the Business Combination, (ii) upon
consummation of the transaction which resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for purposes of determining the number of
shares of outstanding stock held by directors who are also officers and by
employee stock ownership plans that do not allow plan participants to determine
confidentially whether to tender shares), or (iii) following the transaction in
which such person became an Interested Stockholder, the Business Combination is
(x) approved by the board of directors of the corporation and (y) authorized at
a meeting of shareholders by the affirmative vote of the holders of at least
66-2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder. In accordance with the provisions of the Company's
Certificate of Incorporation and Section 203, the Board of the Company has
approved the Merger Agreement and the Purchaser's acquisition of Shares pursuant
to the Offer and the Merger and the transactions contemplated thereby and,
therefore, the restrictions of Section 203 are inapplicable to the Offer, the
Merger and the related transactions.
Antitrust
HSR Act. Under the HSR Act, and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division and the FTC and certain waiting period
requirements have been satisfied. The acquisition of Shares by the Purchaser
pursuant to the Offer is subject to such requirements.
Pursuant to the requirements of the HSR Act, Ingersoll-Rand filed the
required Premerger Notification and Report Forms (the "Forms") with the
Antitrust Division and the FTC on April 3,
33
1995. The Company intends to file the required Forms with the Antitrust Division
and the FTC as promptly as practicable. In the Merger Agreement, the Company has
agreed to file the forms with the FTC and the Antitrust Division by the close of
business on April 13, 1995, and to use its reasonable best efforts to respond as
promptly as practicable to all inquiries received from the FTC or the Antitrust
Division for additional information or documentation. The applicable provisions
of the HSR Act impose a fifteen-calendar day waiting period following
Ingersoll-Rand's filing. That waiting period is scheduled to expire at 11:59
P.M., New York City time, on Tuesday, April 18, 1995, unless early termination
of the waiting period is granted or Ingersoll-Rand and the Company receive a
request for additional information of documentary material prior thereto. If
such a request is made, the waiting period will be extended until 11:59 P.M.,
New York City time, on the tenth day after substantial compliance by
Ingersoll-Rand with such request. Thereafter, such waiting periods can be
extended only by court order.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could,
notwithstanding termination of the waiting period, take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or
seeking divestiture of the Shares so acquired or divestiture of substantial
assets of Ingersoll-Rand or the Company. Private parties may also bring legal
actions under the antitrust laws. The Company previously instituted an antitrust
action against Ingersoll-Rand seeking to enjoin the acquisition of Shares but
that action has been voluntarily dismissed. See discussion under Antitrust
Litigation below. There can be no assurance that a further challenge to the
Offer on antitrust grounds will not be made, or if such a challenge is made,
what the result will be.
EEA Merger Regulations. Under Regulation (EEC) No. 4064/89 (the "Merger
Regulation") and Article 57 of the European Economic Area ("EEA") Agreement,
notices of concentrations with a "Community dimension" must be provided to the
European Commission for review and advance approval for compatibility with the
common market. On April 5, 1995, Ingersoll-Rand filed its Form CO Relating to
the Notification of a Concentration Pursuant to Council Regulation (EEC) No.
4064/89 with the European Commission. Under the Merger Regulation, an automatic
three week suspension period commences upon receipt of the notification. That
period is scheduled to expire on April 27, 1995, unless the European Commission
decides to extend the suspension period for such period as it finds necessary to
make a final decision on the legality of the transaction.
Postponement of Annual Meeting
Pursuant to the Merger Agreement, and by way of a resolution adopted by the
Board in the April 9 Resolutions, the Company has indefinitely postponed its
annual meeting of stockholders scheduled for May 9, 1995. The Company has
further agreed to take no action unless compelled by legal process to reschedule
the annual meeting or to call a special meeting of stockholders of the Company
except in accordance with the Merger Agreement unless and until the Merger
Agreement is terminated in accordance with its terms.
Litigation
(a) Delaware Shareholder Lawsuit
On March 29, 1995, Ralph Dietsche, a purported stockholder of the Company,
filed a purported class action in Delaware Chancery Court against the Company
and Leo J. McKernan, James C. Chapman, Donald N. Frey, James A.D. Geier, Gaynor
N. Kelley, Ray B. Mundt and, Frank M. Sims, all of whom are directors of the
Company. The complaint alleges that the individual defendants have breached
fiduciary and common law duties which they owe to the Company's public
stockholders by, among other things, failing to maximize shareholder value,
failing to adequately consider an offer for the Company's shares which was
proposed by Ingersoll-Rand and carrying out a preconceived plan to entrench
management to the detriment of the Company's stockholders. The complaint seeks
injunctive
34
and declaratory relief, an unspecified amount of compensatory damages, and
attorney's fees. A copy of the complaint is attached hereto as Exhibit 15.
Pursuant to the Merger Agreement, the Company has agreed that it will not
settle any litigation currently pending, or commenced after April 9, 1995,
against the Company or any of its directors by any stockholder of the Company
relating to the Offer or the Merger Agreement, without the prior written consent
of Ingersoll-Rand.
In addition, the Company has agreed that it will not voluntarily cooperate
with any third party which has sought or may hereafter seek to restrain or
prohibit or otherwise oppose the Offer or the Merger and will cooperate with
Ingersoll-Rand and Purchaser to resist any such effort to restrain or prohibit
or otherwise oppose the Offer or the Merger.
(b) Antitrust Litigation
On March 29, 1995, the Company filed an action against Ingersoll-Rand in the
United States District Court for the Southern District of New York (the
"Antitrust Litigation"). The complaint alleged that Ingersoll-Rand's proposed
acquisition of the Company would substantially lessen competition in the market
for asphalt pavers and tend to create a monopoly in such market and that
therefore the proposed acquisition of the Company by Ingersoll-Rand would
violate Section 7 of the Clayton Act and Section 2 of the Sherman Act. The
lawsuit requested that the court issue a judgment declaring that the proposed
acquisition of the Company by Ingersoll-Rand would violate the federal antitrust
laws and that the court enter preliminary and permanent injunctions prohibiting
Ingersoll-Rand from proceeding with the transaction. A copy of the complaint is
attached hereto as Exhibit 16. Pursuant to the Merger Agreement, on April 11,
1995, the Company voluntarily filed a Notice of Dismissal dismissing the
complaint without prejudice. A copy of the Notice of Dismissal is attached
hereto as Exhibit 17.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
Exhibit 1 --Pages 1 through 24 of the Company's Proxy Statement dated March 27, 1995, for
its Annual Meeting of Stockholders.
Exhibit 2 --The Board Resolution in which the FlexPlan was amended, dated as of April 9,
1995.
Exhibit 3 --The Board Resolution in which the Corporate Office Reduction in Force Policy
was amended and the Appendix thereto adopted, dated as of April 9, 1995.
Exhibit 4 --The Change in Control Severance Agreements for William D. Anderson, David D.
Hunter, James D. Kertz, and John J. Reynolds, all dated as of April 11, 1995.
Exhibit 5 --The amendments to the Employment Agreements, dated as of March 28, 1995.
Exhibit 6 --The amendments to the SERPs, dated as of February 15, 1995 and March 27, 1995.
Exhibit 7 --The amendments to the Clark Equipment Company Supplemental Executive Retirement
Trust and the Clark Equipment Company Deferred Benefit Trust, dated as of April
9, 1995.
Exhibit 8 --Agreement and Plan of Merger, dated as of April 9, 1995, among the Company,
Ingersoll-Rand and the Purchaser.
Exhibit 9 --Letter to Stockholders communicating the recommendation of the Board, dated as
of April 12, 1995.
Exhibit 10 --Opinion of CS First Boston Corporation, dated April 9, 1995.
Exhibit 11 --Article SIXTH, paragraph (6) of the Company's Restated Certificate of
Incorporation, dated as of August 14, 1969.
Exhibit 12 --Letter of Intent, dated as of April 9, 1995.
Exhibit 13 --Board Resolutions, dated as of April 9, 1995.
Exhibit 14 --The amendment to the Rights Agreement, dated as of April 9, 1995.
Exhibit 15 --Complaint in Dietsche, et al., v. Clark Equipment Company, et al.
Exhibit 16 --Complaint in Clark Equipment Company v. Ingersoll-Rand Company.
Exhibit 17 --Notice of Dismissal in Clark Equipment Company v. Ingersoll-Rand Company.
35
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.
CLARK EQUIPMENT COMPANY
By: /s/ Bernard D. Henely
..................................
Name: Bernard D. Henely
Title: Vice President and General
Counsel
Dated: April 12, 1995
36
ANNEX I
CLARK EQUIPMENT COMPANY
100 NORTH MICHIGAN STREET
SOUTH BEND, INDIANA 46634
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about April 12, 1995, as
part of Clark Equipment Company's (the "Company") Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") with respect to the revised
tender offer by CEC Acquisition Corp. (the "Purchaser") to the holders of record
of the Company's Common Stock, $7.50 par value ("Common Stock"). Capitalized
terms used and not otherwise defined herein shall have the meaning set forth in
the Schedule 14D-9. You are receiving this Information Statement in connection
with the possible election of persons designated by the Purchaser to a majority
of the seats on the Board. The Merger Agreement provides that the Purchaser,
upon purchase of Shares pursuant to the Offer, shall be entitled to designate up
to such number of directors, rounded up to the next whole number, on the Board
as will give the Purchaser representation on the Board equal to the product of
the total number of directors on the Board (after giving effect to the directors
to be elected pursuant to the Merger Agreement) and the percentage that the
aggregate number of shares of Common Stock beneficially owned by the Purchaser
or any affiliate bears to the total number of outstanding shares of Common Stock
of the Company then outstanding, and that the Company promptly take all action
necessary to cause Purchaser's designees to be so elected including, either
increasing the size of the Board or securing the resignation of such number of
directors, or both. The Merger Agreement further provides that, at such times
and subject to the agreement set forth in the next sentence, the Company will
use its best efforts to cause persons designated by the Purchaser to constitute
the same percentage as is on the Board of (i) each committee of the Board, (ii)
each board of directors of each domestic subsidiary of the Company and (iii)
each committee of each such board, in each case only to the extent permitted by
law. The Merger Agreement further provides that, notwithstanding the foregoing,
the Company shall use its best efforts to ensure that all members of the Board
and such boards and committees as of the date of the Merger Agreement who are
not employees of the Company shall remain members of the Board until the
Purchaser acquires a majority of the outstanding shares. This Information
Statement is required by Section 14(f) of the Securities Exchange Act of 1934,
as amended, and Rule 14f-1 thereunder.
YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE NOT,
HOWEVER, REQUIRED TO TAKE ANY ACTION.
Pursuant to the Merger Agreement, on April 12, 1995, the Purchaser revised
its Offer to Purchase dated April 3, 1995. The Offer is scheduled to expire at
12:00 midnight, New York City time, on May 5, 1995, at which time, if all
conditions to the Offer have been satisfied or waived, the Purchaser has
informed the Company that it intends to purchase all of the Shares validly
tendered pursuant to the Offer and not properly withdrawn.
Information with respect to the Company and certain of its directors,
executive officers and affiliates is set forth in the Company's Proxy Statement,
dated March 27, 1995, for the Company's 1995 Annual Meeting of Stockholders (the
"Proxy Statement"). A copy of pages 1 through 24 of the Proxy Statement is filed
as Exhibit 1 hereto and incorporated herein by reference.
The information contained in this Information Statement concerning the
Purchaser and Ingersoll-Rand has been furnished to the Company by Ingersoll-Rand
and the Company assumes no responsibility for the accuracy, completeness or
fairness of any such information.
Ingersoll-Rand has advised the Company that it currently intends to
designate one or more of the Persons listed in Schedule I to Ingersoll-Rand's
Offer to Purchase, a copy of which is being mailed to
stockholders, to serve as directors of the Company. The information with respect
to such directors or officers in Schedule I is hereby incorporated herein by
reference in its entirety. As of April 12, 1995, the ages of each of such
directors and officers are as follows: Donald J. Bainton--63, Theodore H.
Black-- 66, Brendan T. Byrne--71, Joseph P. Flannery--63, Constance J.
Horner--53, Alexander H. Massad--71, James E. Perrella--59, John E. Phipps--62,
Donald E. Procknow--71, Cedric E. Ritchie-- 67, William G. Mulligan--64, J.
Frank Travis--59, Thomas F. McBride--59, William J. Armstrong-- 53, Paul L.
Bergren--45, Frederick W. Hadfield--58, Daniel E. Kletter--56, Patricia
Nachtigal--48, Allen M. Nixon--55, James R. O'Dell--56, Donald H. Rice--51,
Larry H. Pitsch--54, Gerald E. Swimmer--50, R. Barry Uber--49, Ronald G.
Heller--48. Ingersoll-Rand has advised the Company that all such persons have
consented to act as directors of the Company if so designated.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------
Exhibit 1 Pages 1 through 24 the Company's Proxy Statement dated March 27, 1995, for its
Annual Meeting of Stockholders.
Exhibit 2 The Board Resolution in which the Flex Plan was amended, dated as of April 9,
1995.
Exhibit 3 The Board Resolution in which the Corporate Office Reduction-in-Force Policy was
amended and the Appendix thereto adopted, dated as of April 9, 1995.
Exhibit 4 The Change in Control Severance Agreements for William D. Anderson, David D.
Hunter, James D. Kertz, and John J. Reynolds, all dated as of April 11, 1995.
Exhibit 5 The amendments to the Employment Agreements, dated as of March 28, 1995.
Exhibit 6 The amendments to the SERPs, dated as of February 15, 1995 and March 27, 1995.
Exhibit 7 The amendments to the Clark Equipment Company Supplemental Executive Retirement
Trust and the Clark Equipment Company Deferred Benefit Trust, dated as of April
9, 1995.
Exhibit 8 Agreement and Plan of Merger, dated as of April 9, 1995, among the Company,
Ingersoll-Rand and the Purchaser.
Exhibit 9 Letter to Stockholders communicating the recommendation of the Board, dated as
of April 12, 1995.
Exhibit 10 Opinion of CS First Boston Corporation, dated April 9, 1995.
Exhibit 11 Article SIXTH, paragraph (6) of the Company's Restated Certificate of
Incorporation, dated as of August 14, 1969.
Exhibit 12 Letter of Intent, dated as of April 9, 1995.
Exhibit 13 Board Resolutions, dated as of April 9, 1995.
Exhibit 14 The amendment to the Rights Agreement, dated as of April 9, 1995.
Exhibit 15 Complaint in Dietsche, et al., v. Clark Equipment Company, et al.
Exhibit 16 Complaint in Clark Equipment Company v. Ingersoll-Rand Company.
Exhibit 17 Notice of Dismissal in Clark Equipment Company v. Ingersoll-Rand Company.