Filed Pursuant to Rule 424(b)(3)
Registration No. 333-71642
INGERSOLL-RAND COMPANY INGERSOLL-RAND COMPANY LIMITED
[LOGO]
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PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS OF
INGERSOLL-RAND COMPANY
PROSPECTUS FOR UP TO 168,374,485 CLASS A COMMON SHARES
OF INGERSOLL-RAND COMPANY LIMITED
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The board of directors of Ingersoll-Rand Company (which we refer to as
IR-New Jersey) has unanimously approved a corporate reorganization that will
result in IR-New Jersey changing its domicile from New Jersey to Bermuda.
Ingersoll-Rand Company Limited, a Bermuda company that we recently formed (which
we refer to as IR-Limited), will become the parent holding company of IR-New
Jersey. The reorganization will be accomplished through a merger of a
newly-formed merger subsidiary into IR-New Jersey. IR-New Jersey will be the
surviving company and continue to exist as an indirect, wholly-owned subsidiary
of IR-Limited. After completion of the reorganization, IR-Limited and its
subsidiaries will continue to conduct the businesses now conducted by IR-New
Jersey and its subsidiaries.
If the merger is completed, the shares of IR-New Jersey common stock that
you own will automatically become IR-Limited Class A common shares. The number
of IR-Limited Class A common shares you will own will be the same as the number
of shares of IR-New Jersey common stock that you own immediately prior to the
completion of the merger, and your proportionate ownership and relative voting
rights will remain unchanged.
We believe that reorganizing as a Bermuda company will enable us to realize
a variety of potential business, financial and strategic benefits. We also
believe the reorganization will allow us to implement our business strategy more
effectively. Specifically, the reorganization should help enhance our business
growth and cash flow and reduce our worldwide effective tax rate. Additionally,
we believe IR-Limited will be a more attractive investment alternative to a
wider range of investors.
IR-New Jersey common stock is currently traded on the New York Stock
Exchange under the symbol "IR." Immediately following the merger, IR-Limited
Class A common shares will be traded on the New York Stock Exchange under the
same symbol.
Generally, for U.S. federal income tax purposes, shareholders who are U.S.
persons will recognize gain, if any, but not loss, on the receipt of IR-Limited
Class A common shares in the merger. WE URGE YOU TO CONSULT YOUR OWN TAX
ADVISORS REGARDING YOUR PARTICULAR TAX CONSEQUENCES.
This proxy statement/prospectus provides you with detailed information
about the reorganization and the special meeting of shareholders. We encourage
you to carefully read this entire document and the documents incorporated by
reference. YOU SHOULD ALSO CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE
14.
The reorganization cannot be completed unless at least a majority of votes
cast by holders of shares present in person or represented by proxy at the
special meeting and entitled to vote as of October 31, 2001 approve the merger.
Your board of directors has unanimously approved the Agreement and Plan of
Merger and recommends that you vote "FOR" its adoption.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROXY STATEMENT/PROSPECTUS IS DATED NOVEMBER 2, 2001, AND IS FIRST
BEING MAILED TO IR-NEW JERSEY SHAREHOLDERS ON OR ABOUT NOVEMBER 2, 2001.
TABLE OF CONTENTS
<Table>
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PAGE
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CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS.......... 1
QUESTIONS AND ANSWERS ABOUT THE
REORGANIZATION...................... 2
SUMMARY............................... 6
Risk Factors.......................... 6
Parties to the Merger................. 6
The Reorganization.................... 7
Reasons for the Reorganization........ 8
Conditions to Consummation of the
Merger.............................. 8
Effective Time........................ 8
Income Tax Consequences of the
Reorganization...................... 8
Rights of Shareholders................ 9
Stock Compensation Plans.............. 9
Dividend Reinvestment Plan............ 9
Shareholder Rights Plan............... 9
Stock Exchange Listing................ 10
Market Price.......................... 10
Rights of Dissenting Shareholders..... 10
Accounting Treatment of the
Reorganization...................... 10
Special Meeting....................... 10
Recommendation of the Board of
Directors........................... 10
Required Vote for the Merger.......... 11
Voting Your Shares and Changing Your
Vote................................ 11
SELECTED HISTORICAL CONSOLIDATED
FINANCIAL DATA...................... 12
SUMMARY PRO FORMA FINANCIAL
INFORMATION......................... 13
RECENT DEVELOPMENTS................... 13
RISK FACTORS.......................... 14
THE REORGANIZATION.................... 17
Structure of the Reorganization....... 17
Reasons for the Reorganization........ 17
The Merger Agreement.................. 19
Conditions to Consummation of the
Merger.............................. 19
Effective Time........................ 19
Amendment or Termination.............. 19
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<Table>
<Caption>
PAGE
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Automatic Share Conversion............ 20
Management of IR-Limited.............. 20
Required Vote for the Merger.......... 20
Rights of Dissenting Shareholders..... 21
Dividends............................. 21
Stock Compensation Plans.............. 21
Dividend Reinvestment Plan............ 21
Shareholder Rights Plan............... 22
Stock Exchange Listing................ 22
Accounting Treatment of the
Reorganization...................... 22
Recommendation of the Board of
Directors........................... 22
SPECIAL MEETING....................... 23
When and Where the Special Meeting
Will be Held........................ 23
What Will be Voted Upon............... 23
Only IR-New Jersey Shareholders of
Record as of October 31, 2001 Are
Entitled to Vote.................... 23
Majority of Outstanding Shares Must be
Represented for a Vote to be
Taken............................... 23
Required Vote for the Merger.......... 23
Voting Your Shares and Changing Your
Vote................................ 24
How Proxies Are Counted............... 24
Cost of Solicitation.................. 25
DESCRIPTION OF AUTHORIZED SHARES OF
IR-LIMITED.......................... 26
Authorized Share Capital.............. 26
Voting................................ 26
Changes to Rights of a Class or
Series.............................. 27
Quorum for General Meetings........... 27
Dividend Rights....................... 27
Rights Upon Liquidation............... 27
Liability for Further Calls or
Assessments; No Sinking Fund........ 27
Pre-Emptive Rights.................... 27
Redemption, Repurchase and
Conversion.......................... 27
Restrictions on Transfer.............. 28
Stock Exchange Listing................ 28
Other Classes or Series of Shares..... 29
Compulsory Acquisition of Shares Held
by Minority Holders................. 29
Transfer Agent........................ 30
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<Caption>
PAGE
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Anti-Takeover Provisions.............. 30
Preference Shares..................... 31
Shareholder Rights Plan............... 32
COMPARISON OF RIGHTS OF
SHAREHOLDERS........................ 35
Shareholder Meetings.................. 35
Board of Directors.................... 39
Amendments to Organizational
Documents........................... 41
Issuance of Preference Shares/Stock... 42
Distributions and Dividends........... 42
Repurchases and Redemptions........... 42
Shareholder Approval for Certain
Actions............................. 43
Shareholder Rights Plan............... 46
Other Corporate Governance
Provisions.......................... 46
INCOME TAX CONSEQUENCES OF THE
REORGANIZATION...................... 48
U.S. Federal Income Tax Consequences
of the Reorganization............... 48
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<Table>
<Caption>
PAGE
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Bermuda Tax Consequences of the
Reorganization...................... 52
SHAREHOLDER PROPOSALS AND
NOMINATIONS......................... 53
EXPERTS............................... 53
LEGAL MATTERS......................... 53
WHERE YOU CAN FIND MORE INFORMATION... 53
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE........................... 54
</Table>
<Table>
AGREEMENT AND PLAN OF MERGER.......... ANNEX I
MEMORANDUM OF ASSOCIATION OF INGERSOLL-RAND
COMPANY LIMITED..................... ANNEX II
AMENDED AND RESTATED BYE-LAWS OF INGERSOLL-RAND
COMPANY LIMITED..................... ANNEX III
</Table>
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS
DOCUMENT. SUCH INFORMATION IS AVAILABLE WITHOUT CHARGE TO OUR SHAREHOLDERS UPON
WRITTEN OR ORAL REQUEST. SUCH REQUEST SHOULD BE MADE TO INGERSOLL-RAND COMPANY,
200 CHESTNUT RIDGE ROAD, WOODCLIFF LAKE, NEW JERSEY 07677, ATTN: VICE PRESIDENT
AND SECRETARY, TELEPHONE NUMBER (201) 573-0123. TO OBTAIN TIMELY DELIVERY, YOU
MUST REQUEST SUCH INFORMATION NO LATER THAN FIVE BUSINESS DAYS BEFORE THE DATE
THAT YOU MUST MAKE YOUR INVESTMENT DECISION. YOU MUST REQUEST THIS INFORMATION
BY DECEMBER 7, 2001.
ii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains or incorporates by reference
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to the reorganization and our
financial condition, results of operations and business. This Act protects
public companies from liability for forward-looking statements in private
securities litigation if the forward-looking statement is identified and is
accompanied by meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from the forward-looking
statements. Forward-looking statements by their nature involve a degree of risk
and uncertainty, including, but not limited to, the risks and uncertainties
referred to under "Risk Factors" and elsewhere herein or in the documents
incorporated by reference. All statements regarding the expected benefits of the
reorganization are forward-looking statements. The forward-looking statements
may include statements for the period following completion of the
reorganization. You can find many of these statements by looking for words such
as "believes," "expects," "anticipates," "estimates," "continues," "may,"
"intends," "plans" or similar expressions in this proxy statement/prospectus or
in the documents incorporated by reference. You should be aware that any
forward-looking statements in this proxy statement/prospectus only reflect
current expectations and are not guarantees of performance. Actual results may
differ materially from those expressed or implied by forward-looking statements.
As you make your decision how to vote, please take into account that
forward-looking statements speak only as of the date of this proxy
statement/prospectus or, in the case of documents incorporated by reference, the
date of any such document.
We have identified factors that could cause actual plans or results to
differ materially from those included in any forward-looking statements. These
factors include, but are not limited to, the following:
- an inability to realize expected benefits of the reorganization within
the anticipated time frame, or at all;
- changes in tax laws, tax treaties or tax regulations or the
interpretation or enforcement thereof, including taxing authorities not
agreeing with our assessment of the effects of such laws, treaties and
regulations;
- an inability to execute our business strategy;
- costs or difficulties related to the merger and related reorganization
transactions, which could be greater than expected;
- changes in the rate of economic growth in the U.S. or in other major
international economies;
- significant changes in trade, monetary or fiscal policies worldwide,
including changes in interest rates;
- currency fluctuations between the U.S. dollar and other currencies;
- demand for products and services;
- distributor inventory levels;
- performance issues with key suppliers or subcontractors;
- failure to achieve our productivity targets;
- costs and effects of unanticipated legal and administrative proceedings;
and
- competitive actions, such as unanticipated pricing actions or cost
reduction strategies and entry into direct product line competition.
1
QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION
WHAT AM I BEING ASKED TO VOTE ON?
You are being asked to vote in favor of a merger by which IR-New Jersey
will become a wholly-owned, indirect subsidiary of a new holding company,
IR-Limited. Your shares of IR-New Jersey common stock will automatically become
an identical number of IR-Limited Class A common shares.
HOW WILL THE MERGER BE ACCOMPLISHED?
Changing IR-New Jersey's domicile from New Jersey to Bermuda involves the
merger and related reorganization transactions. To effect the merger, a New
Jersey company, which is a newly-formed subsidiary of IR-Limited and which has
been formed specifically for the merger, will merge into IR-New Jersey. IR-New
Jersey will be the surviving company in the merger and become a wholly-owned,
indirect subsidiary of IR-Limited. As a result of the merger, each currently
outstanding share of IR-New Jersey common stock will automatically become an
IR-Limited Class A common share. This procedure will result in you becoming a
shareholder in IR-Limited, the new Bermuda parent company of the entire
Ingersoll-Rand group. After this merger, you will own an interest in a Bermuda
holding company that, together with its subsidiaries, will continue to conduct
the same businesses that IR-New Jersey and its subsidiaries now conduct. Your
proportionate ownership and relative voting rights will not change as a result
of the reorganization. The steps in the reorganization are more fully described
in "The Reorganization -- Structure of the Reorganization" on page 17.
WHAT ARE THE BENEFITS TO IR-NEW JERSEY OF COMPLETING THIS REORGANIZATION?
We believe that reorganizing as a Bermuda company will enable us to realize
a variety of potential business, financial and strategic benefits, including,
but not limited to, some or all of the following:
- enhancement of our business growth;
- creation of a more favorable corporate structure for expansion of our
current business;
- improvement in expected cash flow for use in investing in further
earnings growth, including by developing higher-growth product lines and
acquiring complementary higher-growth businesses;
- improvement in expected cash flow for use in reducing the amount of our
debt;
- reduction in our worldwide effective tax rate;
- implementation of our business strategy more effectively; and
- expansion of our investor base as IR-Limited's shares may become more
attractive to non-U.S. investors.
See "The Reorganization -- Reasons for the Reorganization" on page 17.
WILL THE REORGANIZATION DILUTE MY OWNERSHIP INTEREST?
No. The reorganization will not dilute your ownership interest. Immediately
after the reorganization is completed, you will own the same percentage of
IR-Limited Class A common shares as you own of IR-New Jersey common stock
immediately prior to the completion of the reorganization. In connection with
the reorganization, IR-Limited will issue a special class of non-voting shares,
Class B common shares. Only IR-New Jersey and other wholly-owned subsidiaries of
IR-Limited will own IR-Limited Class B common shares. IR-Limited Class B common
shares that are held by IR-New Jersey or other IR-Limited subsidiaries
immediately following the merger will not dilute your ownership interest because
IR-New Jersey and those subsidiaries will be wholly-owned, indirect subsidiaries
of IR-Limited. See "The Reorganization -- Structure of the Reorganization" on
page 17 and "Comparison of Rights of Shareholders -- Shareholder Meetings --
Voting Rights" on page 35.
2
WHY ARE WE PROPOSING THE REORGANIZATION?
The objective of the reorganization is to enhance shareholder value.
However, we cannot predict what impact, if any, the reorganization will have in
the long-term in light of the fact that the achievement of our objectives
depends on many factors, including our ability to react to any changes in tax
laws, treaties and regulations in the various jurisdictions in which we operate.
WILL IR-NEW JERSEY SHAREHOLDERS BE TAXED AS A RESULT OF THE MERGER OR THE
RELATED REORGANIZATION TRANSACTIONS?
Generally, for U.S. federal income tax purposes, shareholders who are U.S.
persons will recognize gain, if any, but not loss, on the receipt of IR-Limited
Class A common shares in the merger. Such a holder will generally recognize gain
equal to the difference, if any, between the fair market value of IR-Limited
Class A common shares received in exchange for IR-New Jersey common stock in the
merger and the holder's adjusted tax basis in the holder's shares of IR-New
Jersey common stock exchanged therefor. Generally, any such gain will be capital
gain. Shareholders will not be permitted to recognize any loss realized on the
exchange of their shares of IR-New Jersey common stock in the merger, but their
aggregate adjusted tax basis in IR-Limited Class A common shares received would
equal the aggregate adjusted tax basis of their shares of IR-New Jersey common
stock. Thus, any loss would be preserved.
WE URGE YOU TO CONSULT YOUR OWN TAX ADVISORS REGARDING YOUR PARTICULAR TAX
CONSEQUENCES.
WILL IR-NEW JERSEY BE TAXED AS A RESULT OF THE MERGER OR THE RELATED
REORGANIZATION TRANSACTIONS?
Very likely not. We believe that IR-New Jersey will not incur significant
U.S. federal income or withholding tax as a result of the merger or the related
reorganization transactions.
HAS THE INTERNAL REVENUE SERVICE RENDERED AN OPINION ON THE MERGER OR THE
RELATED REORGANIZATION TRANSACTIONS?
No. We are not requesting any ruling from the Internal Revenue Service.
WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
We hope to complete the merger shortly after the special meeting of IR-New
Jersey shareholders, assuming that it is approved by the shareholders at that
meeting.
WILL I BE ABLE TO TRADE MY SHARES DURING THE TIME BETWEEN THE DATE OF THIS PROXY
STATEMENT/PROSPECTUS AND THE EFFECTIVE TIME OF THE MERGER?
Yes. You will be able to trade your shares during the time between the date
of this proxy statement/ prospectus and the effective time of the merger.
WHY WAS BERMUDA SELECTED AS THE DOMICILE OF THE NEW PARENT COMPANY?
We chose Bermuda for its political stability, legal framework and
business-friendly environment. The first international (i.e., not locally-owned)
company was incorporated in Bermuda in the 1930s, and there are currently many
companies, which have chosen Bermuda for their domicile, that are publicly
traded on U.S. and European markets. Bermuda has an established screening policy
to formally check on the ownership of companies that request domicile there.
Under current Bermuda law, a Bermuda company is not required to pay taxes in
Bermuda on either income or capital gains. In addition, despite certain
differences, the corporate legal system, based on English law, is such that your
rights as an IR-Limited shareholder will be substantially the same as your
rights as a shareholder in IR-New Jersey. We encourage you to read the section
entitled "Comparison of Rights of Shareholders" beginning on page 35 for a more
detailed description of the differences between your rights under New Jersey law
and Bermuda law.
3
WILL THE PROPOSAL AFFECT CURRENT OPERATIONS? WHAT ABOUT THE FUTURE?
The reorganization should have no material impact on how we conduct
day-to-day operations. The location of future operations will depend on the
needs of the business, independent of our legal domicile.
WHAT VOTE IS REQUIRED TO APPROVE THE MERGER?
In order to have a quorum, the holders of record of the shares entitled to
cast a majority of the IR-New Jersey votes must be represented in person or by
proxy at the special meeting. The affirmative vote of at least a majority of the
votes cast by holders of shares present in person or represented by proxy at the
special meeting and entitled to vote as of the record date on the merger is
required to approve the merger. Abstentions are counted as "shares present" at
the special meeting for the purposes of determining whether a quorum exists.
However, since abstentions are not votes cast in favor or against the merger,
they will not affect the outcome of the vote. Proxies submitted by brokers that
do not indicate a vote because brokers do not have discretionary voting
authority and have not received instructions as to how to vote (so-called
"broker non-votes") are also considered "shares present," but also will not
affect the outcome of any vote. See "Special Meeting -- Required Vote for the
Merger" on page 23.
HOW DO I VOTE IF MY SHARES ARE REGISTERED IN MY NAME?
You may vote by any one of the following methods:
1. CALL (866) 246-8472 (toll free) to vote by telephone anytime up to
5:00 p.m., New York time, on December 13, 2001;
2. GO TO THE WEBSITE: http://www.proxyvotenow.com/irc to vote over the
Internet anytime up to 5:00 p.m., New York time, on December 13, 2001; or
3. MARK, SIGN, DATE AND MAIL your proxy card in the enclosed
postage-prepaid envelope; if you are voting by telephone or by the
Internet, please do not return your proxy card.
Please vote as soon as possible even if you currently plan to attend the
special meeting in person, so that your shares may be represented and voted at
the special meeting.
HOW DO I VOTE IF MY BROKER HOLDS MY SHARES IN "STREET NAME?"
You should follow the voting instructions provided by your broker or
complete and return the enclosed proxy card.
IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY SHARES FOR
ME?
NO. IF YOU FAIL TO INSTRUCT YOUR BROKER ON HOW TO VOTE YOUR "STREET NAME"
SHARES, YOUR BROKER WILL NOT BE PERMITTED TO VOTE YOUR SHARES. You should
instruct your broker on how to vote your shares or complete and return the
enclosed proxy card.
WHAT DO I DO IF I WANT TO CHANGE MY VOTE?
There are three ways in which you may revoke your proxy and change your
vote:
1. you may send a written notice to our proxy solicitor, Georgeson
Shareholder Communications, Inc., stating that you would like to revoke
your proxy; this notice must be received prior to the special meeting;
2. you may complete and submit a new, later-dated proxy by any of the
three methods described above; the latest dated proxy actually received by
IR-New Jersey prior to the special meeting will be the one that is counted,
and all earlier proxies will be revoked; or
3. you may attend the special meeting and vote in person; however,
simply attending the special meeting will not revoke your proxy.
4
If you have instructed a bank, broker or other nominee to vote your shares,
you must follow the directions you receive from that person to change or revoke
your proxy.
DO I HAVE TO EXCHANGE MY STOCK CERTIFICATE(S)?
No. After the merger is completed, your stock certificate(s) will
automatically represent the same number of IR-Limited Class A common shares. For
further information, please see "The Reorganization -- Automatic Share
Conversion" on page 20.
WHOM DO I CONTACT WITH FURTHER QUESTIONS?
You should contact:
<Table>
IR-New Jersey: Ingersoll-Rand Company
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07677
(201) 573-0123
Attn: Vice President and Secretary
the Proxy Solicitor: Georgeson Shareholder Communications, Inc.
17 State Street
New York, New York 10004
(212) 440-9800 (banks and brokers -- call collect)
(800) 223-2064 (all other inquiries)
</Table>
5
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus. It does not contain all of the information that is
important to you. The proposed reorganization includes the merger and related
reorganization transactions. To understand the reorganization more fully, and
for a more complete legal description of the merger, you should carefully read
the entire proxy statement/prospectus, including the annexes and the other
documents to which we have referred you. See also "Where You Can Find More
Information" on page 53. The Agreement and Plan of Merger is attached as Annex I
to this proxy statement/ prospectus. The memorandum of association and bye-laws
that will govern IR-Limited are attached as Annex II and Annex III,
respectively. In this document, "we," "us," and "our" refer to IR-New Jersey and
its subsidiaries or IR-Limited and its subsidiaries, as the context requires,
and "you" refers to the shareholders of IR-New Jersey or the shareholders of
IR-Limited, as the context requires. In addition, as the context requires,
references to IR-New Jersey common stock and IR-Limited Class A common shares
include the associated IR-New Jersey preference stock purchase rights and
IR-Limited preference share purchase rights, respectively.
RISK FACTORS
SEE PAGE 14 FOR CERTAIN RISKS THAT SHOULD BE CONSIDERED RELATING TO THE
REORGANIZATION.
PARTIES TO THE MERGER
INGERSOLL-RAND COMPANY
IR-New Jersey was organized in 1905 under the laws of the State of New
Jersey as a consolidation of Ingersoll-Sergeant Drill Company and the Rand Drill
Company, whose businesses were established in the early 1870s. Over the years,
additional products that have been developed internally or obtained through
acquisition have supplemented the original businesses.
IR-New Jersey is a leading provider of climate control, industrial
productivity, infrastructure and security and safety products and services. In
each of these markets, IR-New Jersey offers a diverse product portfolio that
includes well-recognized industrial and commercial brands.
Climate Control. Climate Control offers a range of temperature-control
products for protecting food and other perishables. These products include:
Thermo King transport temperature control units for truck trailers, small trucks
and seagoing containers, air conditioning for buses, and Hussmann refrigerated
display cases for supermarkets, delicatessens and other commercial and
institutional refrigeration applications.
Industrial Productivity. Industrial Productivity has a diverse group of
businesses offering products and services to enhance industrial efficiency.
These products and services include: Ingersoll-Rand air compressors and
components for compressed-air systems, tools and material handling equipment,
fluid handling products, Club Car golf cars and utility vehicles and Torrington
bearings, components and motion-control technologies. In addition, this segment
includes the Independent Power business which focuses on identifying, developing
and marketing alternative-power and energy-management solutions and includes
IR-New Jersey's PowerWorks microturbine technologies.
Infrastructure. Infrastructure supplies products and services for all
types of construction projects and industrial and commercial development,
including Bobcat compact equipment and Ingersoll-Rand road pavers, compactors,
portable-power products and drilling equipment.
Security and Safety. Security and Safety markets architectural hardware
and access-control products and services for residential, commercial and
institutional buildings. Led by the familiar Schlage brand, products include
locks and locksets, door closers, exit devices, steel doors and frames,
power-operated doors, architectural columns and biometric and electronic access
control technologies.
INGERSOLL-RAND COMPANY LIMITED
IR-Limited is a newly-formed Bermuda company and is currently wholly-owned
by IR-New Jersey. IR-Limited has no significant assets or capitalization and has
not engaged in any business or other activities
6
other than in connection with its formation and the merger and related
reorganization transactions. As a result of the reorganization, IR-Limited will
become the indirect parent holding company of IR-New Jersey.
IR MERGER CORPORATION
IR Merger Corporation (which we refer to as IR-Merger Sub) is a
newly-formed New Jersey company and a wholly-owned, indirect subsidiary of
IR-Limited. IR-Merger Sub was formed to accomplish the proposed merger. It has
no significant assets or capitalization and has not engaged in any business or
other activities except in connection with its formation and the merger and
related reorganization transactions.
The principal executive offices of IR-New Jersey, IR-Limited and IR-Merger
Sub are located at 200 Chestnut Ridge Road, Woodcliff Lake, New Jersey 07677.
The telephone number of each party at that address is (201) 573-0123. The
principal registered office of IR-Limited is located at Clarendon House, 2
Church Street, Hamilton HM 11, Bermuda.
THE REORGANIZATION (SEE PAGE 17)
IR-New Jersey's board of directors has unanimously approved, and recommends
that you adopt, the Agreement and Plan of Merger that effectively changes our
domicile from New Jersey to Bermuda. The terms of the merger are set forth in
the Agreement and Plan of Merger attached as Annex I to this proxy statement/
prospectus. As a result of the merger, your shares of IR-New Jersey common stock
will automatically become IR-Limited Class A common shares so that you will own
shares in a Bermuda company rather than a New Jersey company. In addition, the
preference stock purchase rights associated with your IR-New Jersey common stock
will expire and you will receive an equal number of equivalent preference share
purchase rights with each IR-Limited Class A common share. For a more detailed
description of the major differences between your rights under New Jersey law
and Bermuda law, please see "Comparison of Rights of Shareholders" on page 35.
After completion of the reorganization, IR-Limited and its subsidiaries will
continue to conduct the same businesses that IR-New Jersey and its subsidiaries
now conduct.
The reorganization will involve the following steps:
1. IR-Merger Sub will merge into IR-New Jersey. IR-New Jersey will be
the surviving company and become a wholly-owned, indirect subsidiary of
IR-Limited.
2. In the merger, the outstanding shares of IR-New Jersey common stock
will automatically become IR-Limited Class A common shares, and the current
shareholders of IR-New Jersey will own exactly the same number of
IR-Limited Class A common shares as they currently own of IR-New Jersey
common stock. For a description of the terms of IR-Limited Class A common
shares, please see "Description of Authorized Shares of IR-Limited" on page
26.
3. As part of the reorganization, IR-New Jersey and certain of its
subsidiaries will transfer shares of certain existing subsidiaries of
IR-New Jersey (the "Transferred Assets") and issue certain debt (the
"Debt") to IR-Limited in exchange for which IR-Limited will issue that
number of IR-Limited Class B common shares that has an aggregate value
equal to the fair market value of the Transferred Assets and the amount of
the Debt. For a description of the terms of IR-Limited Class B common
shares, please see "Description of Authorized Shares of IR-Limited" on page
26.
4. The number of IR-Limited Class B common shares owned by IR-New
Jersey and other IR-Limited subsidiaries will reflect the fair market
values as of the effective time of the merger of the Transferred Assets and
IR-New Jersey, based on the market value of IR-New Jersey common stock at
that time. We currently estimate the aggregate number of IR-Limited Class B
common shares to be issued for the Transferred Assets and for the Debt to
be approximately 140,000,000 shares.
IR-New Jersey shareholders will not be required to exchange their stock
certificate(s) as a result of the merger. Each outstanding stock certificate
representing shares of IR-New Jersey common stock will automatically represent
the same number of IR-Limited Class A common shares. Following the merger,
7
certificates bearing the name of "Ingersoll-Rand Company Limited" will be issued
in the normal course upon surrender of certificates bearing the name of
"Ingersoll-Rand Company" for exchange or transfer.
REASONS FOR THE REORGANIZATION (SEE PAGE 17)
We believe that reorganizing as a Bermuda company will enable us to realize
a variety of potential business, financial and strategic benefits.
1. The reorganization should help enhance our business growth and cash
flow. We also believe the reorganization will allow us to implement our
business strategy more effectively. Growth through acquisitions and
investments in higher-growth product lines are important parts of our
strategy, and we believe significant growth opportunities currently exist
in the marketplace. Any improvement in our cash flow should help us to
develop higher-growth product lines and to acquire higher-growth
businesses. Increased cash flow would also put us in a better position to
reduce the amount of our debt.
2. We anticipate that the reorganization will reduce our worldwide
effective tax rate and may facilitate tax savings through a more flexible
corporate structure. However, we cannot give any assurance as to the amount
of taxes we will pay as a result of or after the reorganization. The amount
of taxes we will pay will depend in part on our treatment by the taxing
authorities in the jurisdictions in which we operate.
3. We also believe that the reorganization may increase IR-Limited's
attractiveness to non-U.S. investors.
THE REORGANIZATION WILL EXPOSE US AND YOU TO SOME RISKS. FOR A DISCUSSION
OF RISK FACTORS ASSOCIATED WITH THE REORGANIZATION, PLEASE SEE THE DISCUSSION
UNDER "RISK FACTORS" ON PAGE 14.
CONDITIONS TO CONSUMMATION OF THE MERGER (SEE PAGE 19)
The consummation of the merger is conditioned on several factors, including
the affirmative vote of at least a majority of the votes cast by holders of
shares present in person or represented by proxy at the special meeting and
entitled to vote as of the record date, and that none of the parties to the
Agreement and Plan of Merger are subject to any governmental or regulatory
authority that prohibits the consummation of the reorganization. For additional
factors, please see "The Reorganization -- Conditions to Consummation of the
Merger" on page 19.
EFFECTIVE TIME (SEE PAGE 19)
If the Agreement and Plan of Merger is adopted by the requisite vote of
IR-New Jersey's shareholders, the merger will become effective pursuant to a
certificate of merger filed with the Treasurer of the State of New Jersey in
accordance with New Jersey law. IR-New Jersey expects to file the certificate of
merger following the special meeting and cause the merger to become effective as
soon as possible thereafter in accordance with the certificate of merger.
In the event the conditions to the merger are not satisfied, the merger may
be abandoned or delayed even after the Agreement and Plan of Merger has been
adopted by our shareholders. In addition, the merger may be abandoned or delayed
for any reason by the board of directors of IR-New Jersey or IR-Limited, in
their sole discretion, at any time prior to its becoming effective, even though
the Agreement and Plan of Merger has been adopted by our shareholders and all
conditions to the merger have been satisfied. For additional details, please see
"The Reorganization -- Amendment or Termination" on page 19.
INCOME TAX CONSEQUENCES OF THE REORGANIZATION (SEE PAGE 48)
Generally, for U.S. federal income tax purposes, shareholders who are U.S.
persons will recognize gain, if any, but not loss, on the receipt of IR-Limited
Class A common shares in the merger. Such a holder will generally recognize gain
equal to the difference, if any, between the fair market value of the IR-Limited
Class A common shares received in exchange for IR-New Jersey common stock in the
merger and the
8
holder's adjusted tax basis in the holder's shares of IR-New Jersey common stock
exchanged therefor. Generally, any such gain will be capital gain. Shareholders
will not be permitted to recognize any loss realized on the exchange of their
shares of IR-New Jersey common stock in the merger, but their aggregate adjusted
tax basis in the IR-Limited Class A common shares received would equal the
aggregate adjusted tax basis of their shares of IR-New Jersey common stock.
Thus, any loss would be preserved.
WE ENCOURAGE YOU TO READ THE SECTION ENTITLED "INCOME TAX CONSEQUENCES OF
THE REORGANIZATION" ON PAGE 48 FOR A MORE DETAILED DESCRIPTION OF THESE TAX
CONSEQUENCES. WE ALSO URGE YOU TO CONSULT YOUR OWN TAX ADVISORS REGARDING YOUR
PARTICULAR TAX CONSEQUENCES.
RIGHTS OF SHAREHOLDERS (SEE PAGES 26 AND 35)
The principal attributes of IR-New Jersey common stock and IR-Limited Class
A common shares will be similar. However, there are differences between your
rights as a shareholder under New Jersey law and Bermuda law, which is modeled
after English law. In addition, there are differences between our current
certificate of incorporation and by-laws and IR-Limited's memorandum of
association and bye-laws. We encourage you to read the sections entitled
"Description of Authorized Shares of IR-Limited" on page 26 for a more detailed
description of IR-Limited Class A common shares and "Comparison of Rights of
Shareholders" on page 35 for a more detailed discussion of these differences.
STOCK COMPENSATION PLANS (SEE PAGE 21)
As part of the reorganization, IR-New Jersey's stock-based compensation and
equity incentive plans will be amended as necessary to give effect to the
reorganization including to provide that IR-Limited Class A common shares will
thereafter be issued, held, available or used to measure benefits, as
appropriate, under the plans in lieu of IR-New Jersey common stock, including
upon the exercise of any options issued under the plans. As part of the
reorganization, certain of IR-New Jersey's stock-based compensation and equity
incentive plans will also be adopted and assumed by IR-Limited. Shareholder
approval of the Agreement and Plan of Merger will also constitute any required
shareholder approval of the plan amendments and the adoption and assumption by
IR-Limited of the plans it assumes as part of the reorganization. For additional
details, please see "The Reorganization -- Stock Compensation Plans" on page 21.
DIVIDEND REINVESTMENT PLAN (SEE PAGE 21)
As part of the reorganization, IR-New Jersey's dividend reinvestment plan
will be amended to provide that IR-Limited will assume all the rights and
obligations of IR-New Jersey under the plan and such plan will be deemed to
provide for the issuance or purchase of, or otherwise relate to, IR-Limited
Class A common shares. Shareholder approval of the Agreement and Plan of Merger
will also constitute any required shareholder approval of the amendments to
IR-New Jersey's dividend reinvestment plan and shall constitute any required
shareholder approval of the adoption and assumption of the dividend reinvestment
plan by IR-Limited.
SHAREHOLDER RIGHTS PLAN (SEE PAGE 22)
IR-New Jersey has adopted a shareholder rights plan under which preference
stock purchase rights have been issued to shareholders of IR-New Jersey at the
rate of one right for each outstanding share of IR-New Jersey common stock. In
connection with the merger, the IR-New Jersey shareholder rights plan will be
amended to provide that the existing rights will expire immediately prior to the
effective time of the merger. This amendment of the IR-New Jersey shareholder
rights plan will not result in the issuance of any preference stock pursuant to
the rights or trigger redemption of the rights and will effectively terminate
the IR-New Jersey shareholder rights plan. Shareholder approval of the Agreement
and Plan of Merger will also constitute any required shareholder approval of the
amendment to the IR-New Jersey shareholder rights plan.
The board of directors of IR-Limited has adopted a plan substantially
similar to the IR-New Jersey shareholder rights plan, which plan provides for
the issuance of new preference share purchase rights that are equivalent to the
IR-New Jersey preference stock purchase rights. The IR-Limited shareholder
rights plan
9
will expire on the original expiration date of the IR-New Jersey shareholder
rights plan. Initially, the new rights will attach to all IR-Limited Class A
common shares issued on or after the effective time of the merger.
For additional details, please see "The Reorganization -- Shareholder
Rights Plan" on page 22 and "Comparison of Rights of Shareholders -- Shareholder
Rights Plan" on page 46.
STOCK EXCHANGE LISTING (SEE PAGE 22)
Immediately following the merger, IR-Limited Class A common shares will be
listed on the New York Stock Exchange under the symbol "IR," the symbol under
which IR-New Jersey common stock is currently listed. Since IR-Limited Class B
common shares will be held only by IR-New Jersey and other wholly-owned
subsidiaries of IR-Limited, they will not be registered with the Securities and
Exchange Commission or pursuant to any foreign securities laws and will not be
publicly traded. IR-New Jersey is currently included in the S&P 500 Index. We
have been advised by Standard & Poor's that the company's status as a member of
the S&P 500 Index will not be affected by the pending change of domicile to
Bermuda.
MARKET PRICE
The closing price per share of IR-New Jersey common stock on the New York
Stock Exchange was US$39.84 on October 15, 2001, the last trading day before the
public announcement of the reorganization. The high and low sales prices of
IR-New Jersey's common stock on the New York Stock Exchange were US$39.95 and
US$39.11 on October 15, 2001. We urge you to check current stock prices before
you make any decision about the merger.
RIGHTS OF DISSENTING SHAREHOLDERS (SEE PAGE 21)
Shareholders voting against the Agreement and Plan of Merger will not be
eligible for dissenters' rights.
ACCOUNTING TREATMENT OF THE REORGANIZATION (SEE PAGE 22)
The reorganization will be accounted for as a reorganization of entities
under common control that will not result in changes in our historical
consolidated carrying amount of assets, liabilities and shareholders' equity.
SPECIAL MEETING (SEE PAGE 23)
TIME, DATE AND PLACE
The special meeting of shareholders will be held at 2:00 p.m., local time,
on December 14, 2001, at 200 Chestnut Ridge Road, Woodcliff Lake, New Jersey.
RECORD DATE
Only IR-New Jersey shareholders of record at the close of business on
October 31, 2001, as shown in our records, will be entitled to vote, or to grant
proxies to vote, at the special meeting.
QUORUM
In order to have a quorum, the holders of record of the shares entitled to
cast a majority of the IR-New Jersey votes must be represented in person or by
proxy at the special meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF IR-NEW JERSEY HAS UNANIMOUSLY APPROVED THE
AGREEMENT AND PLAN OF MERGER AND RECOMMENDS THAT YOU VOTE "FOR" ITS ADOPTION.
10
REQUIRED VOTE FOR THE MERGER (SEE PAGE 20)
In order to approve the merger, the Agreement and Plan of Merger must be
adopted by the affirmative vote of at least a majority of the votes cast by the
holders of shares present in person or represented by proxy at the special
meeting and entitled to vote as of the record date. Abstentions will be counted
as "shares present" at the special meeting for the purposes of determining
whether a quorum exists. However, since abstentions are not votes cast in favor
or against the merger, they will not affect the outcome of the vote. Proxies
submitted by brokers that do not indicate a vote because brokers do not have
discretionary voting authority and have not received instructions as to how to
vote (so-called "broker non-votes") are also considered "shares present," but
also will not affect the outcome of any vote. As of October 31, 2001, the record
date, there were 167,986,731 shares of IR-New Jersey common stock outstanding
and entitled to vote. As of the record date, our directors and executive
officers and their affiliates owned and were entitled to vote, in the aggregate,
approximately 73,000 shares of IR-New Jersey common stock, which represents less
than 1% of the outstanding IR-New Jersey common stock. These persons have
informed us that they intend to vote their shares in favor of the proposal to
adopt the Agreement and Plan of Merger.
VOTING YOUR SHARES AND CHANGING YOUR VOTE (SEE PAGE 24)
GENERAL
Shareholders of record may vote by any one of the following methods:
1. CALL (866) 246-8472 (toll free) to vote by telephone anytime up to
5:00 p.m., New York time, on December 13, 2001;
2. GO TO THE WEBSITE: http://www.proxyvotenow.com/irc to vote over the
Internet anytime up to 5:00 p.m., New York time, on December 13, 2001; or
3. MARK, SIGN, DATE AND MAIL your proxy card in the enclosed
postage-prepaid envelope; if you are voting by telephone or by the
Internet, please do not return your proxy card.
If you hold your shares of IR-New Jersey common stock in the name of a
bank, broker or other nominee, you should follow the instructions provided by
your bank, broker or nominee when voting your shares.
You may be receiving these materials because of shares held for you in
certain stock-based compensation plans of IR-New Jersey in which you
participate. In that case, you may use the enclosed proxy card to instruct the
plan trustees of those plans how to vote your shares, or give those instructions
over the telephone or the Internet. They will vote the shares in accordance with
your instructions and the terms of the applicable plan. If you do not provide
voting instructions for shares held for you in any of these plans, the plan
trustees will vote these shares in the same ratio as the shares for which voting
instructions are provided.
To be effective, a form of proxy must be received by us prior to the
beginning of voting at the special meeting.
REVOCATION
There are three ways in which you may revoke your proxy and change your
vote:
1. you may send a written notice to our proxy solicitor, Georgeson
Shareholder Communications, Inc., stating that you would like to revoke
your proxy; this notice must be received prior to the special meeting;
2. you may complete and submit a new later-dated proxy by any of the
three methods described above; the latest dated proxy actually received by
IR-New Jersey prior to the special meeting will be the one that is counted,
and all earlier proxies will be revoked; or
3. you may attend the special meeting and vote in person; however,
simply attending the special meeting will not revoke your proxy.
If you have instructed a bank, broker or other nominee to vote your shares,
you must follow the directions you receive from that person to change or revoke
your proxy.
11
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data of IR-New Jersey in the
table below was derived from IR-New Jersey's audited consolidated financial
statements as of and for the five years ended December 31, 2000, IR-New Jersey's
unaudited interim consolidated financial statements as of and for the six months
ended June 30, 2001 and 2000 and IR-New Jersey's Current Report on Form 8-K
dated September 30, 2001. In IR-New Jersey management's opinion, the unaudited
interim consolidated financial statements have been prepared on the same basis
as the audited consolidated financial statements and include all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
results of operations and financial position of IR-New Jersey for the periods
presented. This data should be read in conjunction with the audited and
unaudited interim consolidated financial statements of IR-New Jersey, including
the notes to the financial statements and the Form 8-K referred to above,
incorporated by reference into this proxy statement/ prospectus.
We have not included data for IR-Limited or IR-Merger Sub because such
entities did not conduct business during any of the periods discussed below.
<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
--------------------- -----------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
--------- --------- --------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE FIGURES)
INCOME STATEMENT DATA:
Revenues................................. $ 4,763.3 $ 4,649.0 $ 9,621.6 $7,842.6 $7,540.2 $6,374.2 $5,973.5
Income from continuing operations...... $ 112.2 $ 309.4 $ 546.2 $ 563.1 $ 481.6 $ 367.6 $ 342.3
Income from discontinued operations,
net of taxes......................... -- 2.0 123.2 28.0 27.5 12.9 15.7
Net income............................. $ 112.2 $ 311.4 $ 669.4 $ 591.1 $ 509.1 $ 380.5 $ 358.0
INCOME PER COMMON SHARE DATA:
Basic:
Income from continuing operations...... $ 0.69 $ 1.92 $ 3.39 $ 3.44 $ 2.94 $ 2.25 $ 2.12
Income from discontinued operations,
net of taxes......................... -- 0.01 0.76 0.17 0.17 0.08 0.10
Net income............................. $ 0.69 $ 1.93 $ 4.15 $ 3.61 $ 3.11 $ 2.33 $ 2.22
Diluted:
Income from continuing operations...... $ 0.69 $ 1.90 $ 3.36 $ 3.40 $ 2.91 $ 2.23 $ 2.11
Income from discontinued operations,
net of taxes......................... -- 0.01 0.76 0.17 0.17 0.08 0.10
Net income............................. $ 0.69 $ 1.91 $ 4.12 $ 3.57 $ 3.08 $ 2.31 $ 2.21
BALANCE SHEET DATA (at period end)
Total assets............................. $10,984.6 $11,596.7 $10,944.4 $8,390.4 $7,918.1 $8,026.7 $5,235.6
Long-term debt, excluding current
maturities............................. 2,992.5 1,676.1 1,540.4 2,113.3 2,166.0 2,528.0 1,163.8
Shareholders' equity..................... 3,841.0 3,221.1 3,481.2 3,073.2 2,721.8 2,357.7 2,098.9
Cash dividends per common share.......... $ 0.34 $ 0.34 $ 0.68 $ 0.64 $ 0.60 $ 0.57 $ 0.52
</Table>
12
SUMMARY PRO FORMA FINANCIAL INFORMATION
A pro forma condensed consolidated balance sheet for IR-Limited is not
presented in this proxy statement/prospectus because there would be no
significant pro forma adjustments required to be made to the historical
consolidated balance sheet of IR-New Jersey as of December 31, 2000 and June 30,
2001. That balance sheet is included in IR-New Jersey's Quarterly Report on Form
10-Q for the six months ended June 30, 2001 and IR-New Jersey's Current Report
on Form 8-K dated September 30, 2001, which are incorporated by reference
herein.
A pro forma condensed consolidated income statement for IR-Limited is not
presented in this proxy statement/prospectus because there would be no
significant pro forma adjustments required to be made to income from operations
in the historical consolidated income statements of IR-New Jersey for the year
ended December 31, 2000 or the six months ended June 30, 2001. Those income
statements are included in IR-New Jersey's Annual Report on Form 10-K for the
year ended December 31, 2000, IR-New Jersey's Quarterly Report on Form 10-Q for
the six months ended June 30, 2001 and IR-New Jersey's Current Report on Form
8-K dated September 30, 2001, which are incorporated by reference herein.
Costs incurred in connection with the reorganization are not expected to be
material and will be expensed as incurred.
RECENT DEVELOPMENTS
On October 18, 2001, we reported our results for the third quarter and nine
months ended September 30, 2001. All amounts reported include the results of
Dresser-Rand Company on a fully consolidated basis since acquisition.
Revenues from continuing operations in the third quarter were $2,383.1
million, a decrease of 5% compared to the third quarter of 2000. Revenues for
the first nine months of 2001 were $7,146.4 million, a slight decrease from the
$7,160.9 million reported for the comparable period in 2000.
Reported net earnings for the third quarter of 2001 were $33.9 million or
diluted earnings per share ("DEPS") of 20 cents. Net earnings were $76.3
million, excluding charges related to restructuring and productivity
investments, or DEPS of 45 cents. Reported continuing net earnings for the third
quarter of 2000 were $130.7 million or DEPS of 80 cents. Third-quarter 2000 net
earnings from continuing operations were $139.6 million, or DEPS of 86 cents,
excluding one-time gains related to the sale of Ingersoll-Dresser Pump Company
and the compression services business of Dresser-Rand Company, as well as
charges related to restructuring and productivity investments.
Reported net earnings for the nine months ended September 30, 2001 were
$146.1 million or DEPS of 89 cents. For the nine months, net earnings excluding
restructuring and productivity investments, were $249.2 million, or DEPS of
$1.51. Reported continuing net earnings for the nine months ended September 30,
2000 were $440.1 million or DEPS of $2.70. For the first nine months of 2000,
net earnings from continuing operations excluding one-time gains, restructuring
and productivity investments, were $449.0 million, or DEPS of $2.76.
13
RISK FACTORS
THE REORGANIZATION AND RELATED TRANSFERS OF ASSETS COULD RESULT IN A TAXABLE
GAIN.
In connection with the reorganization, IR-New Jersey and certain of its
subsidiaries intend to transfer the Transferred Assets and issue the Debt to
IR-Limited in exchange for which IR-Limited will issue IR-Limited Class B common
shares to IR-New Jersey and those subsidiaries. There is a possibility of U.S.
withholding tax if the Internal Revenue Service successfully disputes the value
of the Transferred Assets. Therefore, while we believe that IR-New Jersey (and
IR-Limited) will not incur significant U.S. federal income or withholding taxes
as a result of the transfer of the Transferred Assets, our projections will not
be binding on the Internal Revenue Service. There can be no assurance that our
anticipated tax costs with respect to the Transferred Assets will be borne out,
that the Internal Revenue Service will not contest our determination, or that
the Internal Revenue Service will not succeed in any such contest.
CERTAIN SHAREHOLDERS OF IR-LIMITED MAY BE SUBJECT TO ADDITIONAL TAX IF
IR-LIMITED OR ANY OF ITS NON-U.S. SUBSIDIARIES IS CONSIDERED A "CONTROLLED
FOREIGN CORPORATION" OR "CFC" UNDER CURRENT U.S. TAX LAWS.
A non-U.S. corporation (a "foreign corporation"), such as IR-Limited, will
constitute a "controlled foreign corporation" or "CFC" for U.S. federal income
tax purposes if U.S. shareholders owning (directly, indirectly, or
constructively) 10% or more of the foreign corporation's total combined voting
power collectively own (directly, indirectly, or constructively) more than 50%
of the total combined voting power or total value of the foreign corporation's
stock. Following the merger, IR-New Jersey will be deemed for tax purposes,
through its ownership of the non-voting Class B common shares, to own up to
approximately 45% of the total value of the shares of IR-Limited. As a
consequence, any Class A common shareholder who is considered to own 10% of the
voting power in IR-Limited could cause the foreign subsidiaries of IR-Limited or
(if the Internal Revenue Service successfully takes the position that the Class
B common shares held by IR-New Jersey in IR-Limited are voting stock) IR-Limited
itself to be treated as a CFC.
If IR-Limited or any of its foreign subsidiaries is treated as a CFC, this
status should have no adverse effect on any shareholder of IR-Limited who does
not own (directly, indirectly, or constructively) 10% or more of the total
combined voting power of all classes of stock of IR-Limited or any of its
foreign subsidiaries. See "Comparison of Rights of Shareholders -- Shareholder
Meetings -- Voting Rights" on page 35. If, however, IR-Limited or any of its
foreign subsidiaries is treated as a CFC for an uninterrupted period of 30 days
or more during any taxable year, any U.S. shareholder who owns (directly,
indirectly, or constructively) 10% or more of the total combined voting power of
all classes of stock of IR-Limited or the subsidiary on any day during the
taxable year and who directly or indirectly owns any stock in the corporation on
the last day of such year in which it is a CFC will have to include in its gross
income for U.S. federal income tax purposes its pro rata share of the
corporation's "subpart F income" relating to the period during which the
corporation is a CFC.
In addition, gain on the sale of stock in IR-Limited, if treated as a CFC,
realized by such a shareholder would be treated as ordinary income to the extent
of the shareholder's proportionate share of the undistributed earnings and
profits of IR-Limited and its CFC subsidiaries accumulated during the
shareholder's holding period of the stock while IR-Limited is a CFC.
If the U.S. shareholder is a corporation, however, it may be eligible to
credit against its U.S. tax liability with respect to these potential inclusions
foreign taxes paid on the earnings and profits associated with the included
income. A disposition of shares by a U.S. shareholder may result in termination
of the CFC status of IR-Limited or its foreign subsidiaries. See "Income Tax
Consequences of the Reorganization -- U.S. Federal Income Tax Consequences of
the Reorganization -- Controlled Foreign Corporation Considerations" on page 50.
14
THE INTERNAL REVENUE SERVICE AND NON-U.S. TAXING AUTHORITIES MAY NOT AGREE WITH
OUR TAX TREATMENT OF VARIOUS ITEMS.
We believe that the reorganization will help enhance our business growth
and cash flow and reduce our worldwide effective tax rate. However, we cannot
give any assurance as to the amount of taxes we will pay as a result of or after
the reorganization. The amount of taxes we will pay will depend in part on our
treatment by the taxing authorities in the jurisdictions in which we operate.
IR-LIMITED MAY BECOME SUBJECT TO U.S. CORPORATE INCOME TAX, WHICH WOULD REDUCE
IR-LIMITED'S NET INCOME.
IR-New Jersey is currently subject to U.S. corporate income tax on its
worldwide income. After the reorganization, the earnings of IR-New Jersey and
its U.S. subsidiaries will continue to be subject to U.S. corporate income tax.
IR-Limited believes that after the reorganization its non-U.S. operations will
generally not be subject to U.S. tax other than withholding taxes. However, if
the Internal Revenue Service successfully contends that IR-Limited or any of its
non-U.S. affiliates is engaged in a trade or business in the U.S., IR-Limited or
that non-U.S. affiliate would, subject to possible income tax treaty exemptions,
be required to pay U.S. corporate income tax and/or branch profits tax on income
that is effectively connected with such trade or business.
TAX LAW CHANGES COULD ADVERSELY AFFECT IR-LIMITED, ITS SUBSIDIARIES AND ITS
SHAREHOLDERS.
Changes in tax laws, treaties or regulations or the interpretation or
enforcement thereof could adversely affect the tax consequences of the
reorganization to IR-Limited, its subsidiaries and its shareholders. In
addition, if the Internal Revenue Service or other taxing authorities do not
agree with our assessment of the effects of such laws, treaties and regulations,
this could have a material adverse effect on the tax consequences of the
reorganization.
ANTI-TAKEOVER PROVISIONS IN IR-LIMITED'S BYE-LAWS AND ITS SHAREHOLDER RIGHTS
PLAN WILL MIRROR CERTAIN EXISTING ANTI-TAKEOVER PROVISIONS IN EFFECT WITH
RESPECT TO IR-NEW JERSEY.
Provisions in IR-Limited's bye-laws and shareholder rights plan, which
mirror certain provisions in IR-New Jersey's certificate of incorporation,
by-laws and shareholder rights plan and of the New Jersey Business Corporation
Act (the "NJBCA"), could discourage unsolicited takeover bids from third parties
or the removal of incumbent management. As a result, it may be less likely that
you will receive premium prices for your shares in an unsolicited takeover by
another party. These provisions include:
- a classified board of directors;
- the possible dilution of a potential acquiror's interest in IR-Limited as
a result of the operation of the IR-Limited shareholder rights plan; and
- a requirement that 80% of all shareholders approve a business combination
with any interested shareholder (generally, a 10% or greater shareholder)
if a majority of the board of directors has not previously approved the
transaction.
Similar to the authority of IR-New Jersey's board of directors, the board
of directors of IR-Limited also may issue preference shares and determine their
rights and qualifications. The issuance of preference shares may delay, defer or
prevent a merger (referred to under Bermuda law as an "amalgamation"), tender
offer or proxy contest involving IR-Limited. This may cause the market price of
IR-Limited Class A common shares to significantly decrease. See "Description of
Authorized Shares of IR-Limited -- Anti-Takeover Provisions" on page 30,
"-- Shareholder Rights Plan" on page 32 and "Comparison of Rights of
Shareholders -- Issuance of Preference Shares/Stock" on page 42.
15
THE ENFORCEMENT OF JUDGMENTS IN SHAREHOLDER SUITS AGAINST IR-LIMITED MAY BE MORE
DIFFICULT.
IR-Limited is a Bermuda company. IR-Limited has been advised by its Bermuda
counsel, Conyers Dill & Pearman, that a judgment for the payment of money
rendered by a court in the U.S. based on civil liability would not be
automatically enforceable in Bermuda. IR-Limited has also been advised by
Conyers Dill & Pearman that with respect to a final and conclusive judgment
obtained in a court of competent jurisdiction in the U.S. under which a sum of
money is payable (other than a sum of money payable in respect of multiple
damages, taxes or other charges of a like nature or in respect of a fine or
other penalty), a Bermuda court would be expected to enforce a judgment based
thereon, provided that (a) such courts had proper jurisdiction over the parties
subject to such judgment, (b) such courts did not contravene the rules of
natural justice of Bermuda, (c) such judgment was not obtained by fraud, (d) the
enforcement of the judgment would not be contrary to the public policy of
Bermuda, (e) no new admissible evidence relevant to the action is submitted
prior to the rendering of the judgment by the courts of Bermuda and (f) there is
due compliance with the correct procedures under the laws of Bermuda.
As a result, it may be difficult for a shareholder to effect service of
process within the U.S. or to enforce judgments obtained against IR-Limited in
U.S. courts. IR-Limited will irrevocably agree that it may be served with
process with respect to actions based on offers and sales of securities made in
the U.S. by having Ingersoll-Rand Company, 200 Chestnut Ridge Road, Woodcliff
Lake, New Jersey 07677, be IR-Limited's U.S. agent appointed for that purpose.
A Bermuda court may impose civil liability on IR-Limited or its directors
or officers in a suit brought in the Supreme Court of Bermuda against IR-Limited
or such persons with respect to a violation of U.S. federal securities laws,
provided that the facts surrounding such violation would constitute or give rise
to a cause of action under Bermuda law.
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THE REORGANIZATION
STRUCTURE OF THE REORGANIZATION
IR-New Jersey's board of directors has unanimously approved, and recommends
that you adopt, the Agreement and Plan of Merger that effectively changes our
domicile from New Jersey to Bermuda. The terms of the merger are set forth in
the Agreement and Plan of Merger attached as Annex I to this proxy statement/
prospectus. As a result of the merger, your shares of IR-New Jersey common stock
will automatically become the same number of IR-Limited Class A common shares so
that you will own shares in a Bermuda company rather than a New Jersey company.
In addition, the preference stock purchase rights associated with your IR-New
Jersey common stock will expire and you will receive an equal number of
equivalent preference share purchase rights with each IR-Limited Class A common
share. After completion of the reorganization, you will own an interest in a
Bermuda holding company which, through IR-New Jersey and IR-Limited's other
subsidiaries, will continue to conduct the same businesses that IR-New Jersey
and its subsidiaries now conduct.
The reorganization will involve the following steps:
1. IR-Merger Sub will merge into IR-New Jersey. IR-New Jersey will be
the surviving company and become a wholly-owned, indirect subsidiary of
IR-Limited.
2. In the merger, the outstanding shares of IR-New Jersey common stock
will automatically become IR-Limited Class A common shares, and the current
shareholders of IR-New Jersey will own exactly the same number of
IR-Limited Class A common shares as they currently own of IR-New Jersey
common stock. IR-New Jersey shareholders will not be required to exchange
their stock certificate(s) as a result of the merger. Each outstanding
stock certificate representing shares of IR-New Jersey common stock will
automatically represent the same number of IR-Limited Class A common shares
following the merger. For a description of the terms of IR-Limited Class A
common shares, please see "Description of Authorized Shares of IR-Limited."
3. As part of the reorganization, IR-New Jersey and certain of its
subsidiaries will transfer the Transferred Assets and issue the Debt to
IR-Limited in exchange for which IR-Limited will issue that number of
IR-Limited Class B common shares that has an aggregate value equal to the
fair market value of the Transferred Assets and the amount of the Debt. For
a description of the terms of IR-Limited Class B common shares, please see
"Description of Authorized Shares of IR-Limited."
4. The number of IR-Limited Class B common shares owned by IR-New
Jersey and other IR-Limited subsidiaries will reflect the fair market
values as of the effective time of the merger of the Transferred Assets and
IR-New Jersey, based on the market value of IR-New Jersey common stock at
that time. We currently estimate the aggregate number of IR-Limited Class B
common shares to be issued for the Transferred Assets and for the Debt to
be approximately 140,000,000 shares.
REASONS FOR THE REORGANIZATION
GENERAL
We believe that reorganizing as a Bermuda company will allow us to realize
a variety of potential business, financial and strategic benefits. In
particular, the board of directors is recommending the reorganization because it
believes that the reorganization should:
- help enhance business growth;
- result in a more favorable corporate structure for expansion of our
current business;
- improve expected cash flow for use in investing in further earnings
growth, including by developing higher-growth product lines and the
complementary higher-growth businesses;
- improve expected cash flow for use in reducing the amount of our debt;
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- reduce our worldwide effective tax rate;
- enable us to implement our business strategy more effectively; and
- expand our investor base as IR-Limited's shares may become more
attractive to non-U.S. investors.
We discuss some of these expected benefits in more detail below.
EFFECT ON BUSINESS STRATEGY
The reorganization should help enhance our business growth and cash flow.
We also believe that the reorganization will enable us to implement our business
strategy more effectively. Growth through acquisition and investment in
higher-growth product lines are important parts of our strategy and we believe
significant growth opportunities currently exist in the marketplace. Any
improvement in our cash flow should help us to develop higher-growth product
lines and to acquire higher-growth businesses. Increased cash flow would also
put us in a better position to reduce the amount of our debt.
EXPECTED TAX BENEFITS
IR-New Jersey is currently subject to U.S. corporate income tax on its
worldwide income. After the reorganization, the earnings of IR-New Jersey and
its U.S. subsidiaries will continue to be subject to U.S. corporate income tax.
IR-Limited believes that after the reorganization its non-U.S. operations will
generally not be subject to U.S. tax other than withholding taxes. As a result,
we believe the reorganization:
- will reduce our worldwide effective tax rate; and
- may facilitate tax savings through a more flexible corporate structure.
As a result of the reorganization, we expect to realize annual, incremental
net earnings of at least $40 million and expect to realize a one-time benefit to
net earnings in the fourth quarter of 2001 of $50 million to $60 million, net of
costs to effect the reorganization. However, we cannot give any assurance as to
the amount of taxes we will pay as a result of or after the reorganization. The
amount of taxes we will pay will depend in part on our treatment by the taxing
authorities in the jurisdictions in which we operate.
POTENTIAL EXPANSION OF INVESTOR BASE
We believe that the reorganization may increase IR-Limited's attractiveness
to non-U.S. investors. Distributions with respect to stock in a U.S. corporation
to nonresident aliens can be subject to withholding taxes under the Internal
Revenue Code of 1986, as amended (the "Code"). In addition, estate taxes are
payable in some cases in respect of the value of shares in a U.S. corporation
owned by a non-U.S. investor. As we will be a non-U.S. corporation following the
reorganization, these taxes will generally no longer be applicable to non-U.S.
investors. As a result, non-U.S. investors may be more receptive to an
investment in IR-Limited Class A common shares.
POTENTIAL RISKS
The reorganization will expose us and you to some risks. For a discussion
of risk factors associated with the reorganization, please see the discussion
under "Risk Factors." There are also differences between New Jersey law and
Bermuda law and the organizational documents of IR-New Jersey and IR-Limited.
For a discussion of the major differences, please see "Comparison of Rights of
Shareholders." The board of directors of IR-New Jersey has determined that the
potential advantages of the reorganization substantially outweigh these risks
and differences. Accordingly, the board of directors of IR-New Jersey has
unanimously approved the Agreement and Plan of Merger and recommends that
shareholders vote "FOR" its adoption. However, no assurances can be given that
the anticipated benefits of the reorganization will be realized.
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THE MERGER AGREEMENT
IR-New Jersey, IR-Limited and IR-Merger Sub have entered into the Agreement
and Plan of Merger, which is the legal document that governs the merger. We
recommend that you carefully read the complete Agreement and Plan of Merger for
the precise legal terms of the merger and other information that may be
important to you. The Agreement and Plan of Merger is attached to this proxy
statement/prospectus as Annex I.
CONDITIONS TO CONSUMMATION OF THE MERGER
The merger will not be completed unless, among other things, the following
conditions are satisfied or, if allowed by law, waived:
- the Agreement and Plan of Merger is adopted by the affirmative vote of at
least a majority of the votes cast by holders of shares present in person
or represented by proxy at the special meeting and entitled to vote as of
the record date;
- none of the parties to the Agreement and Plan of Merger is subject to any
decree, order or injunction that prohibits the consummation of any of the
steps in the reorganization;
- no stop order is in effect with respect to the registration statement of
which this proxy statement/ prospectus is a part;
- IR-Limited Class A common shares to be issued pursuant to the merger are
authorized for listing on the New York Stock Exchange subject to official
notice of issuance; and
- all material filings required by a governmental or regulatory agency are
made and all consents and approvals required by any court or governmental
or regulatory agency and all other third parties are received.
We are parties to certain agreements that require the consent of third
parties prior to the implementation of the merger. We believe that we will
obtain all material consents required prior to the completion of the merger and
that the failure to obtain any other consents will not have a material impact on
our business or our ability to consummate the reorganization.
EFFECTIVE TIME
If the Agreement and Plan of Merger is adopted by the requisite vote of
IR-New Jersey's shareholders, the merger will become effective pursuant to a
certificate of merger filed with the Treasurer of the State of New Jersey in
accordance with New Jersey law. IR-New Jersey expects to file the certificate of
merger following the special meeting and cause the merger to become effective as
soon as possible thereafter in accordance with the certificate of merger.
AMENDMENT OR TERMINATION
The Agreement and Plan of Merger may be amended, modified or supplemented
at any time before or after its adoption. However, after adoption, no amendment,
modification or supplement may be made or effected without additional
shareholder approval that does any of the following:
- alters or changes the amount or kind of shares to be received by
shareholders in the merger;
- alters or changes any term of the certificate of incorporation of the
surviving company, except for alterations or changes that could otherwise
be adopted by the directors of the surviving company; or
- alters or changes any other terms and conditions of the Agreement and
Plan of Merger if any of the alterations or changes, alone or in the
aggregate, would materially adversely affect the holders of IR-New Jersey
common stock.
In the event the conditions to the merger are not satisfied, the merger may
be abandoned or delayed even after the Agreement and Plan of Merger has been
adopted by our shareholders. In addition, the merger may
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be abandoned or delayed for any reason by the board of directors of IR-New
Jersey or IR-Limited, in their sole discretion, at any time prior to its
becoming effective, even though the Agreement and Plan of Merger has been
adopted by our shareholders and all conditions to the merger have been
satisfied.
AUTOMATIC SHARE CONVERSION
If you hold IR-New Jersey common stock, you WILL NOT be required to
exchange your stock certificate(s) as a result of the merger. Shares of IR-New
Jersey common stock will automatically become IR-Limited Class A common shares
upon the completion of the merger. AS A RESULT, YOU DO NOT NEED TO TENDER YOUR
SHARES IN ORDER TO EXERCISE YOUR RIGHTS AS A SHAREHOLDER OF IR-LIMITED. Your
stock certificate(s) representing IR-New Jersey common stock will, at the
effective time of the merger, automatically represent the same number of
IR-Limited Class A common shares.
If you desire to sell some or all of your IR-Limited Class A common shares
after the effective time of the merger, delivery of the stock certificate(s)
that previously represented shares of IR-New Jersey common stock will be
sufficient. Your right to sell shares of IR-New Jersey common stock before the
effective time of the merger will also not be affected.
Following the merger, certificates bearing the name of "Ingersoll-Rand
Company Limited" will be issued in the normal course upon surrender of
certificates bearing the name of "Ingersoll-Rand Company" for exchange or
transfer. If you surrender a stock certificate and request the new stock
certificate to be issued in a name other than the one appearing on the
surrendered stock certificate, you must endorse the stock certificate or
otherwise prepare it to be in proper form for transfer.
MANAGEMENT OF IR-LIMITED
When the reorganization is completed, all of the directors and all of the
executive officers of IR-New Jersey will become directors and executive officers
of IR-Limited and the current directors of IR-New Jersey will carry over their
remaining terms of office to IR-Limited.
REQUIRED VOTE FOR THE MERGER
In order to approve the merger, the Agreement and Plan of Merger must be
adopted by the affirmative vote of at least a majority of the votes cast by
holders of shares present in person or represented by proxy at the special
meeting and entitled to vote as of the record date. Each share of IR-New Jersey
common stock is entitled to one vote. Abstentions will be counted as "shares
present" at the special meeting for the purposes of determining whether a quorum
exists. However, since abstentions are not votes cast in favor or against the
merger, they will not affect the outcome of the vote. Proxies submitted by
brokers that do not indicate a vote because brokers do not have discretionary
voting authority and have not received instructions as to how to vote (so-called
"broker non-votes") are also considered "shares present," but also will not
affect the outcome of any vote. Under the rules of the New York Stock Exchange,
brokers who hold shares in street name for customers have the authority to vote
on many "routine" proposals when they have not received instructions from
beneficial owners. Under these rules, brokers are precluded from exercising
their voting discretion with respect to proposals for non-routine matters like
the merger. Thus, absent specific instructions from you, your broker is not
empowered to vote your shares with respect to the adoption of the Agreement and
Plan of Merger.
As of the record date for the special meeting, there were 167,986,731
shares of IR-New Jersey common stock outstanding and entitled to vote. As of the
record date, our directors and executive officers and their affiliates owned and
were entitled to vote, in the aggregate, approximately 73,000 shares of IR-New
Jersey common stock, which represents less than 1% of the outstanding IR-New
Jersey common stock. These persons have informed us that they intend to vote
their shares in favor of the proposal to adopt the Agreement and Plan of Merger.
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RIGHTS OF DISSENTING SHAREHOLDERS
Under New Jersey law, you will not have "dissenters' rights" in connection
with the merger because, among other reasons, IR-New Jersey common stock is
listed on the New York Stock Exchange.
DIVIDENDS
We have paid consecutive quarterly cash dividends on IR-New Jersey common
stock since 1919 and annual dividends since 1910. We have paid quarterly cash
dividends of US$.17 per share since September 1, 1999. Although IR-Limited
currently plans to pay these quarterly and annual cash dividends following the
merger, any future declaration and payment of dividends by IR-Limited will
continue to be:
- dependent upon its results of operations, financial condition, cash
requirements and other relevant factors;
- subject to the discretion of its board of directors;
- subject to the ability of its subsidiaries to pay dividends; and
- subject to the reasonable belief by its board of directors that after the
payment is made, IR-Limited would be able to pay its liabilities as they
become due or that the realizable value of IR-Limited's assets would not
be less than the aggregate of its liabilities and its issued share
capital and share premium account. The share premium account is made up
of the excess of the consideration paid on the issuance of shares over
the aggregate par value of such shares. Share premium may be distributed
in certain limited circumstances. For example, it may be used to pay-up
unissued shares which may be distributed to shareholders in proportion to
their holdings.
STOCK COMPENSATION PLANS
As part of the reorganization, the Ingersoll-Rand Company Savings and Stock
Investment Plan, the I-R/ Clark Leveraged Employee Stock Ownership Plan, the
Ingersoll-Rand/Thermo King Savings and Stock Investment Plan, the Ingersoll-Rand
Company Incentive Stock Plan of 1998, the Ingersoll-Rand Company Incentive Stock
Plan of 1995, the Ingersoll-Rand Company Incentive Stock Plan of 1990, the
Ingersoll-Rand Company Savings Plan for Bargaining Unit Employees, the
Dresser-Rand Company Retirement Savings Plan, the Dresser-Rand Company
Retirement Savings Plan B, the Thermo King de Puerto Rico Retirement Savings
Plan, the IR Executive Deferred Compensation Plan, the Management Incentive Unit
Plan of Ingersoll-Rand Company, the Ingersoll-Rand Company Employee Stock
Purchase Plan, the Ingersoll-Rand Company Supplemental Savings and Stock
Investment Plan and the IR Director Deferred Compensation and Stock Award Plan
will be amended as necessary to give effect to the reorganization including to
provide that IR-Limited Class A common shares will thereafter be issued, held,
available or used to measure benefits, as appropriate, under the plans in lieu
of IR-New Jersey common stock, including upon the exercise of any options issued
under the plans. As part of the reorganization the Ingersoll-Rand Company
Incentive Stock Plan of 1998, the Ingersoll-Rand Company Incentive Stock Plan of
1995, the Ingersoll-Rand Company Incentive Stock Plan of 1990 and the IR
Director Deferred Compensation and Stock Award Plan, and such other plans as
shall be agreed to by IR-Limited and IR-New Jersey, will be adopted and assumed
by IR-Limited. Shareholder approval of the Agreement and Plan of Merger will
also constitute any required shareholder approval of the plan amendments and the
adoption and assumption by IR-Limited of the plans it assumes as part of the
reorganization. Plans that provide benefits to employees of IR-New Jersey will
continue to provide benefits to such employees subsequent to their assumption by
IR-Limited.
DIVIDEND REINVESTMENT PLAN
As part of the reorganization, IR-New Jersey's dividend reinvestment plan
will be amended to provide that IR-Limited will assume all the rights and
obligations of IR-New Jersey under the plan and such plan will be deemed to
provide for the issuance or purchase of, or otherwise relate to, IR-Limited
Class A common shares. Shareholder approval of the Agreement and Plan of Merger
will also constitute any required shareholder approval of the amendments to
IR-New Jersey's dividend reinvestment plan and will constitute
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any required shareholder approval of the adoption and assumption of the dividend
reinvestment plan by IR-Limited.
SHAREHOLDER RIGHTS PLAN
IR-New Jersey has adopted a shareholder rights plan under which preference
stock purchase rights have been issued to shareholders of IR-New Jersey at the
rate of one right for each outstanding share of IR-New Jersey common stock. In
connection with the merger, the IR-New Jersey shareholder rights plan will be
amended to provide that the existing rights will expire immediately prior to the
effective time of the merger. This amendment of the IR-New Jersey shareholder
rights plan will not result in the issuance of any preference stock pursuant to
the rights or trigger redemption of the rights and will effectively terminate
the IR-New Jersey shareholder rights plan. Shareholder approval of the Agreement
and Plan of Merger will also constitute any required shareholder approval of the
amendment to the IR-New Jersey shareholder rights plan.
The board of directors of IR-Limited has adopted a plan substantially
similar to the IR-New Jersey shareholder rights plan, which plan provides for
the issuance of new preference share purchase rights that are equivalent to the
IR-New Jersey preference stock purchase rights. The IR-Limited shareholder
rights plan will expire on the original expiration date of the IR-New Jersey
shareholder rights plan. Initially, the new rights will attach to all IR-Limited
Class A common shares issued on or after the effective time of the merger.
For additional details, please see "Description of Authorized Shares of
IR-Limited -- Shareholder Rights Plan" and "Comparison of Rights of
Shareholders -- Shareholder Rights Plan."
STOCK EXCHANGE LISTING
IR-New Jersey common stock is currently listed on the New York Stock
Exchange. There is currently no established public trading market for IR-Limited
Class A common shares. Immediately following the merger, IR-Limited Class A
common shares will be listed on the New York Stock Exchange under the symbol
"IR," the same symbol under which IR-New Jersey common stock is currently
listed. IR-New Jersey common stock is also currently listed on the London Stock
Exchange and the Amsterdam Stock Exchange. The Company has determined that the
cost and expense of continued listings on such exchanges outweigh any benefits
of such listings. As a consequence, IR-Limited Class A common shares will not be
listed on such foreign exchanges. Since IR-Limited Class B common shares will be
held only by IR-New Jersey and other wholly-owned subsidiaries of IR-Limited,
they will not be registered with the Securities and Exchange Commission or
pursuant to any foreign securities laws and will not be publicly traded. IR-New
Jersey is currently included in the S&P 500 Index. We have been advised by
Standard & Poor's that the company's status as a member of the S&P 500 Index
will not be affected by the pending change of domicile to Bermuda.
ACCOUNTING TREATMENT OF THE REORGANIZATION
The reorganization will be accounted for as a reorganization of entities
under common control that will not result in changes in our historical
consolidated carrying amount of assets, liabilities and shareholders' equity.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF IR-NEW JERSEY HAS UNANIMOUSLY APPROVED THE
AGREEMENT AND PLAN OF MERGER AND RECOMMENDS THAT YOU VOTE "FOR" ITS ADOPTION.
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SPECIAL MEETING
This proxy statement/prospectus is being furnished in connection with the
solicitation of proxies from the holders of IR-New Jersey common stock by the
IR-New Jersey board of directors relating to the merger and other matters to be
voted upon at the special meeting and at any adjournment or postponement of the
special meeting. This proxy statement/prospectus is also a prospectus for
IR-Limited Class A common shares to be issued in the merger. IR-New Jersey
mailed this proxy statement/prospectus to shareholders beginning on or about
November 2, 2001. You should read this proxy statement/prospectus carefully
before voting your shares.
WHEN AND WHERE THE SPECIAL MEETING WILL BE HELD
The special meeting of shareholders will be held at 2:00 p.m., local time,
on December 14, 2001, at 200 Chestnut Ridge Road, Woodcliff Lake, New Jersey.
WHAT WILL BE VOTED UPON
At the special meeting, you will be asked to consider and vote upon the
following items:
- to adopt the Agreement and Plan of Merger, substantially in the form
attached to this proxy statement/prospectus as Annex I, among IR-New
Jersey, IR-Merger Sub and IR-Limited, whereby IR-New Jersey will
effectively change its domicile from New Jersey to Bermuda by merging
IR-Merger Sub into IR-New Jersey, which will be the surviving company and
become a wholly-owned, indirect subsidiary of IR-Limited, and pursuant to
which each share of IR-New Jersey common stock will automatically become
an IR-Limited Class A common share and all current shareholders of IR-New
Jersey will become IR-Limited Class A common shareholders; and
- to transact such other business as may properly come before the special
meeting.
ONLY IR-NEW JERSEY SHAREHOLDERS OF RECORD AS OF OCTOBER 31, 2001 ARE ENTITLED TO
VOTE
Only IR-New Jersey shareholders of record at the close of business on
October 31, 2001, as shown in our records, will be entitled to vote, or to grant
proxies to vote, at the special meeting. On the record date, there were
approximately 167,986,731 shares of IR-New Jersey common stock outstanding and
entitled to vote at the special meeting.
MAJORITY OF OUTSTANDING SHARES MUST BE REPRESENTED FOR A VOTE TO BE TAKEN
In order to have a quorum, the holders of record of the shares entitled to
cast a majority of the IR-New Jersey votes must be represented in person or by
proxy at the special meeting. If a quorum is not present, a majority of shares
that are represented at the special meeting may adjourn or postpone the special
meeting.
REQUIRED VOTE FOR THE MERGER
In order to approve the merger, the Agreement and Plan of Merger must be
adopted by the affirmative vote of at least a majority of the votes cast by
holders of shares present in person or represented by proxy at the special
meeting and entitled to vote as of the record date. Each share of IR-New Jersey
common stock is entitled to one vote. As of the record date, our directors and
executive officers and their affiliates owned and were entitled to vote, in the
aggregate, approximately 73,000 shares of IR-New Jersey common stock, which
represents less than 1% of the outstanding IR-New Jersey common stock. These
persons have informed us that they intend to vote their shares in favor of the
proposal to adopt the Agreement and Plan of Merger.
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VOTING YOUR SHARES AND CHANGING YOUR VOTE
VOTING YOUR SHARES
The IR-New Jersey board of directors is soliciting proxies from the IR-New
Jersey shareholders. This will give you the opportunity to vote at the special
meeting. When you deliver a valid proxy, the shares represented by that proxy
will be voted in accordance with your instructions.
Shareholders of record may vote by any one of the following methods:
1. CALL (866) 246-8472 (toll free) to vote by telephone anytime up to
5:00 p.m., New York time, on December 13, 2001;
2. GO TO THE WEBSITE: http://www.proxyvotenow.com/irc to vote over the
Internet anytime up to 5:00 p.m., New York time, on December 13, 2001; or
3. MARK, SIGN, DATE AND MAIL your proxy card in the enclosed
postage-prepaid envelope; if you are voting by telephone or by the
Internet, please do not return your proxy card.
If you hold your shares of IR-New Jersey common stock in the name of a
bank, broker or other nominee, you should follow the instructions provided by
your bank, broker or nominee when voting your shares.
If you participate in the Ingersoll-Rand Company Savings and Stock
Investment Plan, the I-R/Clark Leveraged Employee Stock Ownership Plan, the
Ingersoll-Rand/Thermo King Savings and Stock Investment Plan, the Ingersoll-Rand
Company Savings Plan for Bargaining Unit Employees, the Dresser-Rand Company
Retirement Savings Plan, the Dresser-Rand Company Retirement Savings Plan B or
the Thermo King de Puerto Rico Retirement Savings Plan then you may be receiving
these materials because of shares held for you in those plans. In that case, you
may use the enclosed proxy card to instruct the plan trustees of those plans how
to vote your shares, or give those instructions over the telephone or the
Internet. They will vote the shares in accordance with your instructions and the
terms of the applicable plan. If you do not provide voting instructions for
shares held for you in any of these plans, the plan trustees will vote these
shares in the same ratio as the shares for which voting instructions are
provided.
To be effective, your form of proxy must be received by us prior to the
beginning of voting at the special meeting.
PLEASE VOTE AS SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE
SPECIAL MEETING IN PERSON, SO THAT YOUR SHARES MAY BE REPRESENTED AND VOTED AT
THE SPECIAL MEETING.
CHANGING YOUR VOTE BY REVOKING YOUR PROXY
There are three ways in which you may revoke your proxy and change your
vote:
1. you may send a written notice to our proxy solicitor, Georgeson
Shareholder Communications, Inc., stating that you would like to revoke
your proxy; this notice must be received prior to the special meeting;
2. you may complete and submit a new later-dated proxy by any of the
three methods described above; the latest dated proxy actually received by
IR-New Jersey prior to the special meeting will be the one that is counted,
and all earlier proxies will be revoked; or
3. you may attend the special meeting and vote in person; however,
simply attending the special meeting will not revoke your proxy.
If you have instructed a bank, broker or other nominee to vote your shares,
you must follow the directions you receive from that person to change or revoke
your proxy.
HOW PROXIES ARE COUNTED
If you return a signed and dated proxy card but do not indicate how the
shares are to be voted, those shares represented by your proxy card will be
voted as recommended by the IR-New Jersey board of directors.
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A valid proxy also gives the individuals named as proxies authority to vote in
their discretion when voting the shares on any other matters that are properly
presented for action at the special meeting. A properly executed proxy marked
"ABSTAIN" will not be voted. Abstentions will be counted as "shares present" at
the special meeting for the purposes of determining whether a quorum exists.
However, since abstentions are not votes cast in favor or against the merger,
they will not affect the outcome of the vote. Proxies submitted by brokers that
do not indicate a vote because brokers do not have discretionary voting
authority and have not received instructions as to how to vote (so-called
"broker non-votes") are also considered "shares present," but also will not
affect the outcome of any vote. The New York Stock Exchange rules do not permit
brokers and nominees to vote the shares that they hold beneficially either for
or against the adoption of the Agreement and Plan of Merger without specific
instructions from the person who beneficially owns those shares. Therefore, if
your shares are held by a broker or other nominee and you do not give them
instructions on how to vote your shares, your shares will not be voted, and will
not have an effect on the outcome of the vote.
COST OF SOLICITATION
IR-New Jersey will pay the cost of soliciting proxies. In addition to
solicitation by mail, telephone or other means, IR-New Jersey will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxy materials to beneficial owners. IR-New Jersey will,
upon request, reimburse these institutions for their reasonable expenses. IR-New
Jersey has retained Georgeson Shareholder Communications, Inc. to aid in the
solicitation of proxies for a fee of approximately US$15,000, plus certain
additional ancillary charges based on the number of proxies solicited, plus
reasonable costs and expenses.
YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATE(S) WITH YOUR PROXY CARDS.
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DESCRIPTION OF AUTHORIZED SHARES OF IR-LIMITED
The following discussion is a summary of IR-Limited's share capital and
should be read in conjunction with "Comparison of Rights of Shareholders." This
summary is not complete and is subject to the complete text of IR-Limited's
memorandum of association and bye-laws as they will be in effect on the date of
the merger. IR-Limited is subject to the Companies Act 1981 of Bermuda (the
"Companies Act"). IR-Limited's memorandum of association is attached to this
proxy statement/prospectus as Annex II and its bye-laws are attached as Annex
III. You should read these documents carefully. Under Bermuda law, shareholders
are referred to as members, although we refer to them as shareholders in this
description for ease of reference.
AUTHORIZED SHARE CAPITAL
The authorized share capital of IR-Limited is US$1,175,010,000, consisting
of (1) 1,175,000,000 common shares, par value US$1.00 per share, which common
shares consist of (a) 600,000,000 Class A common shares and (b) 575,000,000
Class B common shares, and (2) 10,000,000 preference shares, par value US$0.001
per share, which preference shares consist of 600,000 Series A preference shares
and such other series of preference shares as may be designated from time to
time with the respective rights and restrictions determined by the board of
directors. Only Class A common shares (and associated preference share purchase
rights) will be issued to holders of IR-New Jersey common stock in the merger.
VOTING
Each holder of IR-Limited Class A common shares will be entitled to one
vote per common share held, subject to any required preference share class
votes, and directors will be elected in accordance with the procedures described
below. Except as otherwise specifically provided in IR-Limited's bye-laws or in
the Companies Act, any action to be taken by the shareholders at any general
meeting at which a quorum is in attendance shall be decided by the affirmative
vote of a majority of the votes cast at the general meeting.
Generally, the holders of IR-Limited Class B common shares will not be
entitled to vote. However, under the Companies Act, each share of IR-Limited
carries the right to vote in respect of an amalgamation or merger, whether or
not it otherwise carries the right to vote. IR-New Jersey and IR-Limited have
entered into a voting agreement which provides that in those limited instances
where IR-Limited Class B common shares have the right to vote, IR-New Jersey or
any other IR-Limited subsidiary holding IR-Limited Class B common shares shall
vote (or abstain from voting) the shares in the same proportion as the holders
of IR-Limited Class A common shares. Therefore, IR-Limited Class B common shares
will not dilute the voting power of IR-Limited Class A common shares.
Subject to the interested shareholder provisions described below in
"-- Anti-Takeover Provisions," shareholders holding a majority of the shares
voting at a general meeting (including IR-Limited Class B common shares voting
as a class with IR-Limited Class A common shares), and each class or series of
shares present and voting at a general meeting, and entitled to vote as a class
or series, is required to approve a merger.
Cumulative voting in the election of directors is permitted under
IR-Limited's bye-laws. As such, at all elections of directors, each holder of
IR-Limited Class A common shares will be entitled to as many votes as shall
equal the number of votes that the holder would be entitled to cast at a general
meeting, multiplied by the number of directors to be elected. A holder may cast
all such votes for a single director, or may distribute them among two or more
of the nominated directors as the holder may see fit.
Directors are divided into three classes, with each class to consist, as
nearly as possible, of 1/3rd of the total number of directors. If the number of
directors is changed, any increase or decrease will be apportioned among the
classes so as to maintain each class as nearly equal as possible. No reduction
shall have the effect of shortening the term of any incumbent director. Except
for two classes of directors that shall initially hold terms expiring at the
annual general meetings in 2002 and 2003, respectively, the term of office of
each class shall be until the third annual general meeting following a
director's election and until the election and qualification of a director's
successor.
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CHANGES TO RIGHTS OF A CLASS OR SERIES
Any rights attached to any class or series of shares of IR-Limited, unless
otherwise provided by the terms of that class or series, may be varied only with
the consent in writing of the holders of 75% of that class or series or by a
resolution passed at a separate general meeting of holders of the shares of that
class or series. Each holder of shares of the class or series present will have
one vote for each share of the class or series held to the extent such class or
series has voting rights. Outstanding shares will not be deemed to be varied by
the creation or issue of shares that rank in any respect prior to or equivalent
with those shares.
QUORUM FOR GENERAL MEETINGS
Holders of shares representing a majority of the shares entitled to vote
shall constitute a quorum at a general meeting of shareholders.
DIVIDEND RIGHTS
Subject to any rights and restrictions of any other class or series of
shares (none of which will be outstanding immediately following the
reorganization), the board of directors may from time to time declare dividends
and other distributions on the issued IR-Limited Class A common shares and
IR-Limited Class B common shares and authorize payment of such dividends and
other distributions. Such dividends or other distributions may be in cash,
shares or property of IR-Limited out of assets or funds legally available
therefor.
If at any time a dividend or other distribution in cash, shares or other
property is declared or paid on IR-Limited Class A common shares, a like
dividend or other distribution in cash, shares or other property shall also be
declared and paid on IR-Limited Class B common shares in an equal amount per
share.
RIGHTS UPON LIQUIDATION
Upon the liquidation of IR-Limited, after full amounts that holders of any
other issued shares ranking senior to the common shares as to distribution on
liquidation or winding up are entitled to receive have been paid or set aside
for payment, the holders of IR-Limited common shares are entitled to receive,
pro rata, any remaining assets of IR-Limited available for distribution to the
holders of common shares. The liquidator may deduct from the amount payable in
respect of those common shares any liabilities the holder has to or with
IR-Limited. The assets received by the holders of IR-Limited common shares in a
liquidation may consist in whole or in part of property. That property is not
required to be of the same kind for all shareholders. For a general description
of rights upon liquidation with respect to the Series A preference shares,
please see "-- Shareholder Rights Plan."
LIABILITY FOR FURTHER CALLS OR ASSESSMENTS; NO SINKING FUND
IR-Limited Class A common shares to be issued in the merger, and IR-Limited
Class B common shares to be issued in conjunction with the reorganization, will
be duly and validly issued, fully paid and nonassessable. IR-Limited shares have
no sinking fund provisions.
PRE-EMPTIVE RIGHTS
Subject to any series of preference shares granting such rights, holders of
shares of IR-Limited will have no pre-emptive or preferential right to purchase
any securities of IR-Limited.
REDEMPTION, REPURCHASE AND CONVERSION
IR-Limited Class A common shares will not be convertible into shares of any
other class or series or be subject to redemption either by IR-Limited or the
holders of IR-Limited Class A common shares, provided, however, that subject to
compliance with Bermuda law, IR-Limited may repurchase shares for cancellation
with the consent of the holder of such shares.
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IR-Limited Class B common shares will be convertible by the holder thereof
into IR-Limited Class A common shares on a one-for-one basis in the following
circumstances:
- to satisfy the obligations of IR-Limited or any of its subsidiaries or
affiliated companies to issue IR-Limited Class A common shares with
regard to the issuance of shares under any stock or deferred compensation
plans of IR-Limited or any of its subsidiaries or affiliated companies;
or
- as consideration for any acquisition of stock or assets of a third party.
See "-- Restrictions on Transfer."
In addition, and subject to the Companies Act, holders of IR-Limited Class
B common shares will have the right at any time following the issuance thereof
upon notice to IR-Limited to require IR-Limited to purchase for cancellation any
or all of the IR-Limited Class B common shares for cash at the per share fair
market value of the IR-Limited Class A common shares as of the date of such
notice. The purchased IR-Limited Class B common shares will then be cancelled by
IR-Limited. The fair market value per share of the IR-Limited Class A common
shares, as of any date, means the average of the high and low sales prices of a
share of the IR-Limited Class A common shares as reported on the New York Stock
Exchange composite tape on the applicable date. If no sales of IR-Limited Class
A common shares were made on the New York Stock Exchange on that date, the
average of the high and low prices as reported on the composite tape for the
most recent preceding day on which sales of the IR-Limited Class A common shares
were made will be the fair market value. Payment will be made within 180
calendar days of the date of the notice and will include interest at the prime
rate of Chase Manhattan Bank or its successor from the date of the notice until
the date of payment.
RESTRICTIONS ON TRANSFER
IR-Limited Class A common shares are not subject to restrictions on
transfer, other than as required to comply with applicable Bermuda law and U.S.
and other securities laws.
It is our intention that IR-Limited Class B common shares will only be held
by IR-New Jersey and other wholly-owned subsidiaries of IR-Limited, and as such,
would not be transferred out of the IR-Bermuda consolidated group prior to being
converted to IR-Limited Class A common shares as described above under
"-- Redemption, Repurchase and Conversion." The IR-Limited bye-laws provide that
in the event IR-Limited Class B common shares are transferred to any person or
entity other than a wholly-owned, direct or indirect, subsidiary of IR-Limited,
the shares so transferred will convert automatically into IR-Limited Class A
common shares on a one-for-one basis. Any transfer of IR-Limited Class A common
shares following conversion from IR-Limited Class B common shares will only be
made in accordance with the applicable securities laws and rules of the New York
Stock Exchange, including those rules relating to required shareholder
approvals.
Subject to the Companies Act, any shareholder may transfer any or all of
the holder's shares by an instrument of transfer in a usual common form or in
another form which the board of directors or IR-Limited's transfer agent may
approve. The board of directors may also decline to register any transfer
unless:
- it is accompanied by a duly executed instrument of transfer and by the
certificate in respect of the shares to which it relates, if a
certificate has been issued by IR-Limited in respect of the shares to be
transferred, and by such other evidence as the board of directors may
reasonably require to show the right of the transferor to make the
transfer; and
- all applicable consents, authorizations and permissions of any
governmental body or agency in Bermuda have been obtained.
STOCK EXCHANGE LISTING
Immediately following the merger, IR-Limited Class A common shares will be
listed on the New York Stock Exchange under the symbol "IR," the same symbol
under which IR-New Jersey common stock is
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currently listed on such exchange. Because IR-Limited Class B common shares will
be held only by IR-New Jersey and other IR-Limited subsidiaries, they will not
be registered with the Securities and Exchange Commission or pursuant to any
foreign securities laws and will not be publicly traded. IR-New Jersey is
currently included in the S&P 500 Index. We have been advised by Standard &
Poor's that the company's status as a member of the S&P 500 Index will not be
affected by the pending change of domicile to Bermuda.
OTHER CLASSES OR SERIES OF SHARES
The board of directors is authorized, without obtaining any vote or consent
of the holders of any class or series of shares unless expressly provided by the
terms of the issue of that class or series, to provide from time to time for the
issuance of other classes or series of preference shares and to establish the
characteristics of each class or series, including the number of shares,
designations, relative voting rights, dividend rights, liquidation and other
rights, redemption, repurchase or exchange rights and any other preferences and
relative, participating, optional or other rights and limitations not
inconsistent with applicable law. See "-- Preference Shares" and "Comparison of
Rights of Shareholders -- Issuance of Preference Shares/Stock" for specific
provisions with respect to preference shares.
COMPULSORY ACQUISITION OF SHARES HELD BY MINORITY HOLDERS
An acquiring party is generally able to compulsorily acquire the common
shares of minority shareholders in one of the following ways:
- By a procedure under the Companies Act known as a "scheme of
arrangement." A scheme of arrangement is made by obtaining the consent
for the arrangement of the board of directors of IR-Limited and of
holders of the Class A common shares and Class B common shares voting
together as a class by a majority vote of 75% of those shares voting at a
meeting at which a quorum is present in person or by proxy. Any
shareholder who does not vote in favor of the arrangement may, within one
month of the notice to shareholders of the special meeting to consider
such arrangement, apply to the Bermuda court to appraise the fair value
of such shares. If a scheme of arrangement receives all necessary
consents, all holders of Class A common shares and Class B common shares
could be compelled to sell their shares under the terms of the scheme of
arrangement at the fair value of such shares as determined by the Bermuda
court.
- If the acquiring party is a company, by acquiring pursuant to a tender
offer, 90% of the shares or class of shares not already owned by the
acquiring party (the "offeror"). If an offeror has, within four months
after the making of an offer for all the shares or class of shares not
owned by the offeror, obtained the approval of or acquired 90% or more of
all the shares to which the offer relates, the offeror may, at any time
within two months beginning with the date on which such approval is
obtained, require by a "notice of acquisition" any nontendering
shareholder to transfer its shares on the same terms as the original
offer. In those circumstances, nontendering shareholders will be
compelled to sell their shares. Nontendering shareholders have a
one-month period from the date of the notice of acquisition in which to
apply to a Bermuda court to enjoin the acquisition.
- By acquiring, pursuant to a notice given to the remaining shareholders or
class of shareholders, where the acquiring party holds not less than 95%
of the shares or the class of shares of IR-Limited, the shares of such
remaining shareholders or class of shareholders. When such a notice is
given, the purchaser is entitled and bound to acquire the shares of the
remaining shareholders on the terms set out in such notice, unless a
remaining shareholder applies to the Bermuda court for an appraisal of
the value of its shares. This provision only applies where the purchaser
offers the same terms to all holders of shares whose shares are being
acquired.
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TRANSFER AGENT
The transfer agent and registrar for IR-Limited Class A common shares will
be The Bank of New York, Church Street Station, P.O. Box 11258, New York, New
York 10286-1258, telephone number (800) 524-4458.
ANTI-TAKEOVER PROVISIONS
The bye-laws and shareholder rights plan of IR-Limited contain provisions
that may be considered to have certain "anti-takeover" effects such as
discouraging unsolicited takeover bids from third parties or making it more
difficult to remove incumbent management. These provisions are intended to
mirror provisions currently in IR-New Jersey's certificate of incorporation,
by-laws and shareholder rights plan and in the NJBCA. These provisions are
intended to enhance the likelihood of continuity and stability in the
composition of the board of directors and in the policies formulated by the
board of directors and to discourage transactions that may involve an actual or
threatened change of control of IR-Limited that the board of directors does not
believe is in the best interests of IR-Limited.
The bye-laws of IR-Limited provide that the board of directors will consist
of not less than three nor more than twenty persons, with the exact number to be
set from time to time by the board of directors. Accordingly, the board of
directors, and not the shareholders, has the authority to determine the number
of directors within the stated range and could delay any shareholder from
obtaining majority representation on the board of directors by enlarging the
board of directors and filling the new vacancies with its own nominees.
Directors are also divided into three classes each holding three year terms,
with each class to consist, as nearly as possible, of 1/3rd of the total number
of directors. A classified board makes it more difficult to replace a majority
or all of the board.
The bye-laws of IR-Limited provide that IR-Limited may not engage in any
"business combination" with any interested shareholder (generally, a 10% or
greater shareholder) unless the business combination receives the affirmative
vote of the holders of 80% of the shares then in issue of all classes of shares
entitled to vote considered for purposes of this provision as one class,
provided that the above vote requirement does not apply to:
- any business combination with an interested shareholder that has been
approved by the board of directors; or
- any agreement for the amalgamation, merger or consolidation of any
subsidiary of IR-Limited with IR-Limited or with another subsidiary of
IR-Limited if (1) the relevant bye-law provisions will not be changed or
otherwise affected by or by virtue of the amalgamation, merger or
consolidation and (2) the holders of greater than 50% of the voting power
of IR-Limited or the subsidiary, as appropriate, immediately prior to the
amalgamation, merger or consolidation continue to hold greater than 50%
of the voting power of the amalgamated company immediately following the
amalgamation, merger or consolidation.
The bye-laws of IR-Limited provide that "business combination" means:
- any amalgamation, merger or consolidation of IR-Limited or one of its
subsidiaries with an interested shareholder or with any person that is,
or would be after such amalgamation, merger or consolidation, an
affiliate or associate of an interested shareholder;
- any transfer or other disposition to or with an interested shareholder or
any affiliate or associate of an interested shareholder of all or any
material part of the assets of IR-Limited or one of its subsidiaries; and
- any issuance or transfer of shares of IR-Limited upon conversion of or in
exchange for the securities or assets of any interested shareholder, or
with any company that is, or would be after such merger or consolidation,
an affiliate or associate of an interested shareholder.
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The bye-laws of IR-Limited provide that at any annual general meeting, only
such business shall be conducted as shall have been brought before the meeting
by or at the direction of the board of directors, by any shareholder who
complies with certain procedures set forth in the bye-laws or by any shareholder
pursuant to the valid exercise of the power granted under the Companies Act. For
business to be properly brought before an annual general meeting by a
shareholder, the shareholder must have given timely notice thereof in proper
written form to the secretary of IR-Limited and satisfied all requirements under
applicable rules promulgated by the Securities and Exchange Commission and by
the New York Stock Exchange or any other exchange on which IR-Limited's
securities are traded. To be timely for consideration at the annual general
meeting, a shareholder's notice must be received by the secretary at
IR-Limited's principal executive offices not later than the date which is 90
days in advance of the anniversary of the immediately preceding annual general
meeting or, if the date of the annual general meeting occurs more than 30 days
before, or 60 days after, the anniversary of such immediately preceding annual
general meeting, not later than the seventh day after the date on which notice
of such annual general meeting is given. For purposes of determining these dates
in years 2001-2002, the date of IR-New Jersey's last annual meeting will be
considered the date of the immediately preceding annual general meeting of
IR-Limited. See "Shareholder Proposals and Nominations."
Subject to the terms of any other class of shares in issue, any action
required or permitted to be taken by the holders of IR-Limited common shares
must be taken at a duly called annual or special general meeting of shareholders
unless taken by written consent of all holders of common shares required or
permitted to take such action. Under the bye-laws, a special general meeting may
be called by the chairman of the board of directors, the president, a majority
of the board of directors, or upon the request of shareholders holding at least
10% of IR-Limited's shares as provided in the Companies Act. The bye-laws of
IR-Limited provide that any matter to be voted upon at a meeting called by
shareholders requires the affirmative vote of at least 66 2/3% of the shares
entitled to vote.
The board of directors is authorized, without obtaining any vote or consent
of the holders of any class or series of shares unless expressly provided by the
terms of issue of a class or series, to issue from time to time any authorized
and unissued preference shares on such terms and conditions as it may determine.
For example, the board of directors could authorize the issuance of preference
shares with terms and conditions that could discourage a takeover or other
transaction that holders of some or a majority of the IR-Limited Class A common
shares might believe to be in their best interests or in which holders might
receive a premium for their shares over the then-current market price of the
shares.
Immediately following the merger, IR-Limited will have in place the
IR-Limited shareholder rights plan, which is substantially similar to the IR-New
Jersey shareholder rights plan currently in place. The operation of the
IR-Limited shareholder rights plan could result in the possible dilution of a
potential acquiror's interest in IR-Limited. Consequently, the provisions of the
IR-Limited shareholder rights plan could discourage unsolicited takeover bids
for IR-Limited from third parties. See "-- Shareholder Rights Plan."
PREFERENCE SHARES
The board of directors may from time to time authorize the issuance of
preference shares in one or more series of preference shares, and in the
resolution or resolutions providing for the issuance of such shares, the board
of directors is expressly authorized to fix for each such series the number of
shares which shall constitute such series, voting power, full or limited, or no
voting power, and designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof. Such a "blank check" preference share provision could have certain
"anti-takeover" effects. See "-- Anti-Takeover Provisions."
The IR-Limited board of directors in authorizing such series may provide,
among others, that any such series may be (in each case, as set forth in the
resolutions authorizing the series of preference shares):
- subject to redemption at the option of IR-Limited or the holders, or
both, at such time or times and at such price or prices;
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- entitled to receive dividends (which may be cumulative or non-cumulative)
at such rates, on such conditions, and at such times, and payable in
preference to, or in such relation to, the dividends payable on any other
class or classes or any other series;
- entitled to such rights upon the liquidation, dissolution or winding up
of IR-Limited;
- convertible into, or exchangeable for, shares of any other class or
classes of shares, or of any other series of the same or any other class
or classes of shares, of IR-Limited at such price or prices or at such
rates of exchange and with such adjustments; and
- subject to the preferences, rights and qualifications of any other
series.
SHAREHOLDER RIGHTS PLAN
ISSUANCE OF RIGHTS
The IR-Limited shareholder rights plan provides for the issuance of one
right (a "right") to purchase one one-thousandth of an IR-Limited Series A
preference share for each IR-Limited Class A common share in issue as of the
effective time of the merger (the "record date").
EVIDENCE OF RIGHTS
Under the shareholder rights plan, until the earlier to occur of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (an "acquiring person") has acquired beneficial ownership of
15% or more of the shares in issue of IR-Limited Class A common shares or (ii)
10 business days (or such later date as may be determined by action of the board
of directors of IR-Limited prior to such time as any person or group of
affiliated persons becomes an acquiring person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the shares in issue of IR-Limited Class A common shares
(the earlier of such dates being called the "distribution date"), the rights
will be evidenced, with respect to any of the IR-Limited Class A common share
certificates in issue as of the record date, by such IR-Limited Class A common
share certificates together with a summary of the rights.
The shareholder rights plan provides that, until the distribution date (or
earlier redemption or expiration of the rights), the rights will be transferred
with and only with IR-Limited Class A common shares. Until the distribution date
(or earlier redemption or expiration of the rights), new IR-Limited Class A
common share certificates issued after the record date upon transfer or new
issuances of IR-Limited Class A common shares will contain a notation
incorporating the IR-Limited shareholder rights plan by reference. Until the
distribution date (or earlier redemption or expiration of the rights), the
surrender for transfer of any certificates for IR-Limited Class A common shares
in issue as of the record date, even without such notation or a copy of the
summary of rights, will also constitute the transfer of the rights associated
with IR-Limited Class A common shares represented by such certificate. As soon
as practicable following the distribution date, separate certificates evidencing
the rights will be mailed to holders of record of IR-Limited Class A common
shares as of the close of business on the distribution date and such separate
certificates alone will evidence the rights.
DURATION OF RIGHTS
The rights are not exercisable until the distribution date. The rights will
expire on December 22, 2008, unless this date is extended or unless the rights
are earlier redeemed or exchanged by IR-Limited, in each case as described
below.
ADJUSTMENTS
The purchase price payable, and the number of Series A preference shares or
other securities or property issuable, upon exercise of the rights are subject
to adjustment from time to time to prevent dilution (i) in the
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event of a share dividend on, or a subdivision, combination or reclassification
of, the Series A preference shares, (ii) upon the grant to holders of the Series
A preference shares of certain rights or warrants to subscribe for or purchase
Series A preference shares at a price, or securities convertible into Series A
preference shares, with a conversion price less than the then-current market
price of the Series A preference shares or (iii) upon the distribution to
holders of the Series A preference shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends or dividends payable in Series A
preference shares) or of subscription rights or warrants (other than those
referred to above).
The number of rights in issue is also subject to adjustment in the event of
a share division of IR-Limited Class A common shares or a share dividend on
IR-Limited Class A common shares payable in IR-Limited Class A common shares or
subdivisions, consolidations or combinations of IR-Limited Class A common shares
occurring, in any such case, prior to the distribution date.
SERIES A PREFERENCE SHARES
Series A preference shares purchasable upon exercise of the rights will not
be redeemable. Each Series A preference share will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of US$1.00 per
share but will be entitled to an aggregate dividend of 1000 times the dividend
declared per IR-Limited Class A common share. In the event of liquidation, the
holders of the Series A preference shares will be entitled to a minimum
preferential liquidation payment of US$100 per share (plus any accrued but
unpaid dividends) and will be entitled to an aggregate payment of 1000 times the
payment made per IR-Limited Class A common share. Each Series A preference share
will have 1000 votes, voting together with IR-Limited Class A common shares.
Finally, in the event of any amalgamation, merger, consolidation or other
transaction in which IR-Limited Class A common shares are converted or
exchanged, each Series A preference share will be entitled to receive 1000 times
the amount received per IR-Limited Class A common share. These rights are
protected by customary antidilution provisions.
Because of the nature of the Series A preference shares' dividend,
liquidation and voting rights, the value of the one one-thousandth interest in a
Series A preference share purchasable upon exercise of each right should
approximate the value of one IR-Limited Class A common share.
EXERCISE OF RIGHTS
In the event that any person or group of affiliated or associated persons
becomes an acquiring person, each holder of a right, other than rights
beneficially owned by the acquiring person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a right at the
then-current exercise price of the right, that number of IR-Limited Class A
common shares having a market value of two times the exercise price of the
right.
In the event that, after a person or group has become an acquiring person,
IR-Limited is acquired in an amalgamation, merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision will be made so that each holder of a right (other than rights
beneficially owned by an acquiring person which will have become void) will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the right, that number of common shares of the
person with whom IR-Limited has engaged in the foregoing transaction (or its
parent), which number of shares at the time of such transaction will have a
market value of two times the exercise price of the right.
EXCHANGE OF RIGHTS
At any time after any person or group becomes an acquiring person and prior
to the acquisition by such person or group of 50% or more of the IR-Limited
Class A common shares in issue or the occurrence of an event described in the
prior paragraph, the board of directors of IR-Limited may exchange the rights
(other than rights owned by such person or group which will have become void),
in whole or in part, at an exchange ratio of one IR-Limited Class A common
share, or one one-thousandth of a Series A preference share (or of a
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share of a class or series of IR-Limited's preference shares having equivalent
rights, preferences and privileges), per right (subject to adjustment).
NO FRACTIONAL SHARES
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least 1% in
such purchase price. No fractional Series A preference shares will be issued
(other than fractions which are integral multiples of one one-thousandth of a
Series A preference share, which may, at the election of IR-Limited, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Series A preference shares on the
last trading day prior to the date of exercise.
REDEMPTION
At any time prior to the time an acquiring person becomes such, the board
of directors of IR-Limited may redeem the rights in whole, but not in part, at a
price of US$.01 per right (the "redemption price"). The redemption of the rights
may be made effective at such time, on such basis and with such conditions as
the board of directors in its sole discretion may establish. Immediately upon
any redemption of the rights, the right to exercise the rights will terminate
and the only right of the holders of rights will be to receive the redemption
price.
AMENDMENT OF RIGHTS
The terms of the rights may be amended by the board of directors of
IR-Limited without the consent of the holders of the rights, including an
amendment to lower the 15% threshold for an acquiring person described above to
not less than the greater of (i) the sum of .001% and the largest percentage of
the IR-Limited Class A common shares in issue then known to IR-Limited to be
beneficially owned by any person or group of affiliated or associated persons
and (ii) 10%, except that from and after such time as any person or group of
affiliated or associated persons becomes an acquiring person no such amendment
may adversely affect the interests of the holders of the rights.
NO RIGHTS AS A SHAREHOLDER
Until a right is exercised, the holder thereof, as such, will have no
rights as a shareholder of IR-Limited including, without limitation, the right
to vote or to receive dividends.
CERTAIN ANTI-TAKEOVER EFFECTS
The rights have certain anti-takeover effects. The rights will cause
substantial dilution to a person or group that attempts to acquire IR-Limited on
terms not approved by the board of directors of IR-Limited, except pursuant to
an offer conditioned on a substantial number of rights being acquired. The
rights should not interfere with any amalgamation, merger or other business
combination approved by the board of directors since the rights may be redeemed
by IR-Limited at the redemption price prior to the time that a person or group
has acquired beneficial ownership of 15% or more of the IR-Limited Class A
common shares.
See "The Reorganization -- Shareholder Rights Plan" and "Comparison of
Rights of Shareholders -- Shareholder Rights Plan."
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COMPARISON OF RIGHTS OF SHAREHOLDERS
Your rights as a shareholder of IR-New Jersey are governed by New Jersey
law and IR-New Jersey's certificate of incorporation and by-laws. After the
merger, you will become a holder of IR-Limited Class A common shares, and your
rights will be governed by Bermuda law and IR-Limited's memorandum of
association and bye-laws. Shareholders are referred to as "members" under
Bermuda law, but we use the term "shareholder" in this description for ease of
comparison.
The principal attributes of IR-New Jersey common stock and IR-Limited Class
A common shares will be similar; however, there are certain differences between
your rights as a shareholder under New Jersey law and Bermuda law, which is
modeled after English law. In addition, there are certain differences between
IR-New Jersey's certificate of incorporation and by-laws and IR-Limited's
memorandum of association and bye-laws. It is our intent that your rights as a
shareholder be substantially the same before and after the merger and,
accordingly, the principal differences will arise as a consequence of the
differences between Bermuda law and New Jersey law.
The following table includes a summary of material changes in your rights
as a shareholder resulting from the merger. We encourage you to read this
summary carefully and in conjunction with "Description of Authorized Shares of
IR-Limited." This summary does not purport to be complete or to cover all of the
aspects in which Bermuda law or IR-Limited's constituent documents may differ
from laws generally applicable to New Jersey corporations and their shareholders
or IR-New Jersey's constituent documents. Additionally, while we believe this
summary is materially accurate, it is subject to the complete text of the
relevant provisions of the Companies Act, the NJBCA, IR-New Jersey's certificate
of incorporation and by-laws, and IR-Limited's memorandum of association
(attached as Annex II to this proxy statement/prospectus) and bye-laws (attached
as Annex III to this proxy statement/prospectus).
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
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SHAREHOLDER MEETINGS
------------------------------------------------------------------------------------------------
QUORUM REQUIREMENTS Holders of shares representing a The provisions of IR-New Jersey's
majority of the shares entitled organizational documents are
to vote shall constitute a quorum substantially similar.
at a general meeting of
shareholders.
------------------------------------------------------------------------------------------------
VOTING RIGHTS Each holder of IR-Limited Class A The provisions of IR-New Jersey's
common shares will be entitled to organizational documents are
one vote per common share held on substantially similar, except
all matters submitted to a vote that IR-New Jersey has only one
of the shareholders, subject to class of common stock and the
any required preference share NJBCA does not provide that every
class votes, and will vote share of a corporation carries
together as one class with the the right to vote in respect of a
holders of IR-Limited Class B merger.
common shares and preference
shares on any matter for which
holders of IR-Limited Class B
common shares are entitled to
vote under the Companies Act and
on any matter which the holders
of preference shares are entitled
to vote under the Companies Act
or the applicable series of
preference shares. Except as
otherwise specifically provided
in the bye-laws or in the
Companies Act, any action to be
taken by the shareholders at any
general meeting at which a quorum
is in attendance shall be decided
by the affirmative
</Table>
35
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
vote of a majority of the votes
cast at a general meeting.
Directors will be elected in
accordance with the procedures
described below.
Generally, the holders of
IR-Limited Class B common shares
will not be entitled to vote.
However, under the Companies Act,
each share of IR-Limited carries
the right to vote in respect of
an amalgamation or merger,
whether or not it otherwise
carries the right to vote. IR-New
Jersey and IR-Limited have
entered into a voting agreement
with respect to IR-Limited Class
B common shares to ensure that,
in the limited instances a vote
is granted to the holders of
IR-Limited Class B common shares,
such vote will not dilute the
voting power of IR-Limited Class
A common shares. See "Description
of Authorized Shares of
IR-Limited -- Voting."
At all elections of directors,
each holder of IR-Limited Class A
common shares will be entitled to
as many votes as shall equal the
number of votes that the holder
would be entitled to cast at a
general meeting, multiplied by
the number of directors to be
elected. A holder may cast all
such votes for a single director,
or may distribute them among two
or more of the nominated
directors as the holder may see
fit.
------------------------------------------------------------------------------------------------
VOTING REQUIREMENT FOR Except as otherwise specifically The provisions of IR-New Jersey's
SHAREHOLDER ACTION provided in the bye-laws or in organizational documents are
the Companies Act, any action to substantially similar.
be taken by the shareholders may
be taken by the affirmative vote
of a majority of the votes cast
at a general meeting.
Voting requirements for meetings
(i) called by shareholders or
(ii) with respect to mergers and
other business combinations are
described below under "-- Action
by Written Consent," "-- Calling
a Special Meeting" and
"-- Shareholder Approval for
Certain Actions." See also
"-- Voting Rights" with respect
to voting
</Table>
36
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
procedures in the election of
directors.
------------------------------------------------------------------------------------------------
ACTION BY WRITTEN CONSENT The Companies Act provides that The NJBCA provides that
shareholders may take action by shareholders may take action by
written consent only with the written consent with the
unanimous written consent of all percentage of shareholder consent
shareholders entitled to vote. that would be necessary to
authorize the action at a
meeting, provided, however, that
in the case of an annual meeting
of shareholders for the election
of directors, the consent must be
unanimous, and further provided
that, in the case of mergers,
consolidations, sales of all or
substantially all the assets of
the corporation and certain other
actions described in the NJBCA,
such actions may be taken without
a meeting only if all
shareholders consent thereto in
writing or if all shareholders
entitled to vote thereon consent
thereto in writing and IR-New
Jersey provides notice prior to
the effectiveness of such action
to all other shareholders.
------------------------------------------------------------------------------------------------
ADVANCE NOTICE The Companies Act provides that The provisions of IR-New Jersey's
REQUIREMENTS FOR shareholders may, as set forth organizational documents are
SHAREHOLDER PROPOSALS AND below and at their own expense substantially similar, but there
DIRECTOR NOMINATIONS (unless a company otherwise is no provision in the NJBCA
resolves), require a company to similar to that described under
give notice of any resolution the Companies Act for a
that the shareholders can requisition of a resolution.
properly propose at the next
annual general meeting or to IR-New Jersey is also subject to
circulate a statement prepared by the Exchange Act.
the shareholders in respect of
any matter referred to in a
proposed resolution or any
business to be conducted at a
general meeting. The number of
shareholders necessary for such a
requisition of a resolution is
either that number of
shareholders representing at
least 5% of the total voting
rights of all shareholders having
a right to vote at the meeting to
which the requisition relates or
not less than 100 shareholders.
IR-Limited's bye-laws provide
that all shareholder nominations
for nominees for election to the
board of directors must be made
following written notice to the
secretary of IR-Limited
accompanied by certain background
and other information
</Table>
37
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
specified in the bye-laws. In
connection with any annual
general meeting, written notice
of a shareholder's intention to
make such nominations must be
given to the secretary of
IR-Limited not later than the
date which is 90 days in advance
of the anniversary of the
immediately preceding annual
general meeting or, if the date
of the annual general meeting
occurs more than 30 days before,
or 60 days after, the anniversary
of such immediately preceding
annual general meeting, not later
than the seventh day after the
date on which notice of such
annual general meeting is given.
In order for a shareholder to
bring other business before a
shareholder meeting, timely
notice must be received by the
secretary of IR-Limited within
the time limits described above.
The notice must include a
description of the proposed item,
the reasons the shareholder
believes support its position
concerning the item, and other
specified matters.
IR-Limited will be subject to the
Securities Exchange Act of 1934,
as amended (the "Exchange Act"),
which provides that a shareholder
who continuously holds at least
US$2,000 in market value or 1% of
a company's voting securities for
at least one year prior to the
submission of a shareholder
proposal and through the
shareholder meeting date may,
provided that certain conditions
are met, present a proposal to be
voted on at a shareholder
meeting.
------------------------------------------------------------------------------------------------
ANNUAL MEETING The annual general meeting of The annual meeting of IR-New
IR-Limited shall be held in each Jersey shall be held on the
year other than the year of fourth Thursday of April, in each
organization at such time and year, or such other date as the
place as the board of directors board of directors may determine.
shall appoint.
------------------------------------------------------------------------------------------------
CALLING A SPECIAL MEETING A special general meeting of A special meeting of the
shareholders may be called by the shareholders may be called by the
chairman of the board of chairman of the board of
directors, the president, a directors, a vice-chairman of the
majority of the board of board of directors, the
directors or upon the request of president, a majority of the
shareholders holding at least 10% board of directors, or, upon the
of application of the holder
</Table>
38
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
IR-Limited's shares as provided or holders of not less than 10%
in the Companies Act, provided of all the shares entitled to
that any matter to be voted upon vote at a meeting, the New Jersey
at a meeting called by Superior Court, for good cause
shareholders requires the shown, may order a special
affirmative vote of at least meeting of the shareholders to be
66 2/3% of the shares entitled to called and held at such time and
vote. See "-- Voting Requirement place, upon such notice and for
for Shareholder Action," the transaction of such business
"-- Action by Written Consent" as may be designated in such
and "-- Shareholder Approval for order.
Certain Actions."
------------------------------------------------------------------------------------------------
BOARD OF DIRECTORS
------------------------------------------------------------------------------------------------
SIZE OF BOARD OF DIRECTORS IR-New Jersey, as sole The board of directors must
shareholder of IR-Limited, contain not less than eight
approved a resolution providing directors, as determined by the
that the board of directors must board of directors pursuant to a
contain not less than three resolution adopted by the
directors and not more than affirmative vote of a majority of
twenty directors, as determined the directors in office.
by the board of directors
pursuant to a resolution adopted
by the affirmative vote of a
majority of the board of
directors then in office.
------------------------------------------------------------------------------------------------
CLASSIFIED BOARD OF Directors are divided into three The provisions of IR-New Jersey's
DIRECTORS classes, with each class to organizational documents are
consist, as nearly as possible, substantially similar, except
of 1/3rd of the total number of that no class of directors may
directors. If the number of consist of less than two members.
directors is changed, any
increase or decrease will be
apportioned among the classes so
as to maintain each class as
nearly equal as possible. No
reduction shall have the effect
of shortening the term of any
incumbent director.
------------------------------------------------------------------------------------------------
TERM OF OFFICE Except for two classes of The provisions of IR-New Jersey's
directors that shall initially organizational documents are
hold terms expiring at the annual substantially similar.
general meetings in 2002 and
2003, respectively, the term of
office of each class shall be
until the third annual general
meeting following a director's
election and until the election
and qualification of a director's
successor.
------------------------------------------------------------------------------------------------
VACANCIES ON THE BOARD OF Any vacancy among directors of The provisions of IR-New Jersey's
DIRECTORS any class, including a vacancy organizational documents are
that results from an increase in substantially similar, except
the number of directors within that newly created directorships
the range stated in the bye-laws, resulting from any increase in
may be filled by a vote of the the number of directors may be
majority of remaining directors, filled by a majority of the
regardless of class, provided directors, though less than a
that a quorum is present. During quorum, or by the sole remaining
any vacancy the remaining director.
directors shall have full power
to act as the board of directors.
</Table>
39
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
REMOVAL OF DIRECTORS Directors may be removed without The provisions of IR-New Jersey's
cause upon the affirmative vote organizational documents are
of the holders of at least 80% of substantially similar, except
the shares entitled to vote for that removal of directors for
the election of directors. cause by the board of directors
Directors may be removed for requires the affirmative vote of
cause upon the affirmative vote 66 2/3% of the entire board of
of the holders of at least directors.
66 2/3% of the shares entitled to
vote for the election of
directors.
------------------------------------------------------------------------------------------------
INDEMNIFICATION OF The bye-laws of IR-Limited With respect to indemnification,
DIRECTORS, OFFICERS AND provide that IR-Limited shall the provisions of IR-New Jersey's
EMPLOYEES; LIMITATION OF indemnify any current or former organizational documents are
LIABILITY director or officer or any person substantially similar.
serving or who has served at the
request of IR-Limited as a The certificate of incorporation
director, officer, partner, of IR-New Jersey provides that a
venturer, proprietor, trustee, director or officer shall not be
employee, agent or similar personally liable to IR-New
functionary of another foreign or Jersey or its shareholders for
domestic corporation, general or damages for breach of any duty
limited partnership, firm, owed to IR-New Jersey or its
association, trust, estate, shareholders, except that such
company (including a limited director or officer shall not be
liability company) or other relieved from liability for any
enterprise to the fullest extent breach of duty based upon an act
permitted under Bermuda law. or omission (1) in breach of such
IR-Limited may also indemnify any person's duty of loyalty to
employee or agent of IR-Limited IR-New Jersey or its
to the fullest extent provided by shareholders, (2) not in good
Bermuda law. faith or involving a knowing
violation of law or (3) resulting
The indemnification provisions in in receipt by such person of an
the bye-laws of IR-Limited are improper personal benefit.
not exclusive of other rights to
which a director or officer may
be entitled.
Under the Companies Act, a
company shall not indemnify any
individual that is adjudged to be
liable for fraud or dishonesty in
the performance of his or her
duties to IR-Limited.
The bye-laws of IR-Limited
provide that each shareholder
agrees to exempt a director or
officer from any claim or right
of action such shareholder may
have, whether individually or by
or in the right of IR-Limited,
against any director or officer
on account of any action taken by
such director or officer, or the
failure of such director or
officer to take any action in the
performance of his or her duties
with or for IR-Limited, provided
that such waiver shall not extend
to any matter
</Table>
40
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
of fraud or dishonesty which may
attach to such director or
officer.
------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR Under the Companies Act, without Under the NJBCA, no contract or
TRANSACTIONS the consent of the holders of other transaction between a
shares carrying at least 90% of corporation and one or more of
the total voting rights or in its directors, or between a
certain other limited instances, corporation and another entity in
a company may not make a loan to which one or more of its
or enter into any guarantee or directors are directors or are
provide security in respect of otherwise interested, shall be
any loan made to any person who void or voidable solely by reason
is a director (or certain related of the common directorship or
persons or companies) of interest, or solely because the
IR-Limited (or of its holding director or directors are present
company, if there is one). at the meeting that authorizes or
approves the contract or
In addition, a director who has transaction, or solely because
an interest in any material his or her or their votes are
contract or proposed material counted for that purpose, if:
contract (or in any person that
is a party to the contract) with - the contract or other
IR-Limited or any of its transaction is fair and
subsidiaries and who fails to reasonable as to IR-New Jersey
disclose the interest shall be at the time;
deemed not to be acting honestly
and in good faith. - the fact of the common
directorship or interest is
disclosed or known to the board
and the board authorizes the
transaction by unanimous
written consent, provided at
least one director so
consenting is disinterested, or
by the affirmative vote of a
majority of the disinterested
directors; or
- the fact of common directorship
or interest is disclosed or known
to the shareholders, and they
authorize the transaction.
Common or interested directors
may be counted in determining the
presence of a quorum at a meeting
that authorizes the contract or
the transaction.
------------------------------------------------------------------------------------------------
AMENDMENTS TO
ORGANIZATIONAL DOCUMENTS
------------------------------------------------------------------------------------------------
AMENDMENT OF THE Under the Companies Act, Under the NJBCA, amendments to
MEMORANDUM OF amendments to the memorandum of the certificate of incorporation
ASSOCIATION/CERTIFICATE OF association must be approved by a require (1) the recommendation of
INCORPORATION majority of the shareholders the board of directors, (2) the
voting on the amendments. affirmative vote of a majority of
the votes cast by the holders of
the shares entitled to vote
thereon and (3) the affirmative
vote of a majority of the votes
cast in each class entitled to
vote thereon.
------------------------------------------------------------------------------------------------
AMENDMENT OF THE The bye-laws may only be amended The by-laws may be amended by a
BYE-LAWS/BY-LAWS by both a resolution of the board majority vote of the entire board
of of
</Table>
41
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
directors and the affirmative directors, but any by-law made by
vote of a majority of the the board of directors may be
shareholders voting on the altered or repealed by the
amendment at a general meeting, shareholders at any annual or
or without a meeting, by special meeting.
unanimous written consent.
------------------------------------------------------------------------------------------------
ISSUANCE OF PREFERENCE The bye-laws provide that the The provisions of IR-New Jersey's
SHARES/ STOCK board of directors of IR-Limited organizational documents are
may from time to time authorize substantially similar, except
by means of a board resolution that certain preference stock
the issuance of preference shares rights, including certain voting
in one or more series of and amendment rights, that are
preference shares, and in the set forth in IR-New Jersey's
resolution or resolutions certificate of incorporation are
providing for the issue of such not included in IR-Limited's
shares, the board of directors is bye-laws and may be included or
expressly authorized to fix for omitted in a resolution of
each such series the number of IR-Limited establishing a series
shares which shall constitute of preference shares.
such series, voting power, full
or limited, or no voting power,
and designations, preferences and
relative, participating, optional
or other special rights and
qualifications, limitations or
restrictions thereof. Such a
"blank check" preference share
provision could have certain
"anti-takeover" effects. See
"Description of Authorized Shares
of IR-Limited -- Anti-Takeover
Provisions."
------------------------------------------------------------------------------------------------
DISTRIBUTIONS AND Subject to the rights, if any, of The provisions of IR-New Jersey's
DIVIDENDS holders of preference shares, organizational documents are
IR-Limited may make distributions substantially similar, except
and pay dividends, to the extent that IR-New Jersey does not have
not prohibited by applicable law, any Class B common stock.
by action of the board of
directors.
If at any time a dividend or
other distribution is declared or
paid on IR-Limited Class A common
shares, a like dividend or other
distribution must also be
declared and paid on IR-Limited
Class B common shares in an equal
amount per share.
------------------------------------------------------------------------------------------------
REPURCHASES AND IR-Limited Class A common shares The provisions of IR-New Jersey's
REDEMPTIONS will not be convertible into organizational documents are
shares of any other class or substantially similar, except
series or be subject to that IR-New Jersey does not have
redemption either by IR-Limited any Class B common stock.
or the holder of the IR-Limited
Class A common shares, provided,
however, that subject to
compliance with Bermuda law,
IR-Limited may repurchase its own
shares for cancellation with the
consent of the holder of such
shares.
IR-Limited Class B common shares
will be convertible by the holder
</Table>
42
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
thereof into IR-Limited Class A
common shares on a one-for-one
basis in the following
circumstances:
- to satisfy the obligations of
IR-Limited or its subsidiaries
or affiliated companies to
issue IR-Limited Class A common
shares with regard to the
exercise of share options,
grants or purchases of shares
pursuant to share incentive
plans, employee share purchase
plans, dividend reinvestment
plans or other stock-based
compensation, retirement or
deferred compensation plans
sponsored by IR-Limited or its
subsidiaries or affiliated
companies; or
- as consideration for any
acquisition of stock or assets of
a third party.
The bye-laws also provide that in
the event IR-Limited Class B
common shares are transferred to
any person or entity other than a
wholly-owned, direct or indirect,
subsidiary of IR-Limited, the
shares so transferred will
convert automatically into
IR-Limited Class A common shares
on a one-for-one basis. See
"Description of Authorized Shares
of IR-Limited -- Restrictions on
Transfer."
------------------------------------------------------------------------------------------------
SHAREHOLDER APPROVAL FOR
CERTAIN ACTIONS
------------------------------------------------------------------------------------------------
MERGER/SALE OF ASSETS The Companies Act permits an In general, under the NJBCA, a
amalgamation or merger between plan of merger or consolidation
two or more Bermuda companies, or must be approved by the
between one or more Bermuda affirmative vote of a majority of
"exempted companies" and one or the votes cast by the holders of
more foreign companies. As shares of each such corporation
permitted by Bermuda law, subject entitled to vote thereon, and, in
to the interested shareholder addition, if any class or series
provisions discussed below in is entitled to vote thereon as a
"-- Business Combinations with class, the affirmative vote of a
Interested Shareholders," majority of the votes cast in
shareholders holding a majority each class vote.
of the shares voting at a meeting
(including IR-Limited Class B Similarly, a sale of all or
common shares voting as a class substantially all of such
with IR-Limited Class A common corporation's assets other than
shares), and each class of shares in the ordinary course of
present and voting at a meeting, business, or a voluntary
is required to approve a merger. dissolution of such corporation,
requires the approval of such
corporation's board of directors
and the affirmative vote of a
majority of the votes cast by the
holders of shares of each such
</Table>
43
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
Under Bermuda law, IR-Limited corporation entitled to vote.
will be considered an "exempted
company" since it will be owned See "-- Business Combinations
predominantly by non-Bermudians. with Interested Shareholders."
See "Description of Authorized
Shares of
IR-Limited -- Compulsory
Acquisition of Shares Held by
Minority Holders" and
"-- Business Combinations with
Interested Shareholders."
------------------------------------------------------------------------------------------------
BUSINESS COMBINATIONS WITH The bye-laws of IR-Limited Under the NJBCA, no New Jersey
INTERESTED SHAREHOLDERS provide that IR-Limited may not corporation may engage in any
engage in any "business "business combination" with any
combination" with any interested interested shareholder
shareholder (generally, a 10% or (generally, a 10% or greater
greater shareholder) unless the shareholder) for a period of five
business combination receives the years following such interested
affirmative vote of the holders shareholder's stock acquisition,
of 80% of the shares then in unless such business combination
issue of all classes of shares is approved by the board of
entitled to vote considered for directors of such corporation
purposes of this provision as one prior to the stock acquisition.
class, provided that the above
vote requirement does not apply Under the NJBCA, "business
to: combination" includes the
following:
- any business combination with
an interested shareholder that - any merger or consolidation of
has been approved by the board a resident domestic corporation
of directors; or or one of its subsidiaries with
an interested shareholder or
- any agreement for the any other corporation (whether
amalgamation, merger or or not it is an interested
consolidation of any subsidiary shareholder of the resident
of IR-Limited with IR-Limited domestic corporation) that is,
or with another subsidiary of or after a merger or
IR-Limited if (1) the relevant consolidation would be, an
bye-law provisions will not be affiliate or associate of that
changed or otherwise affected interested shareholder;
by or by virtue of the
amalgamation, merger or - any sale, lease, exchange,
consolidation and (2) the mortgage, pledge, transfer or
holders of greater than 50% of other disposition to or with an
the voting power of IR-Limited interested shareholder or any
or the subsidiary, as affiliate or associate of that
appropriate, immediately prior interested shareholder of
to the amalgamation, merger or assets of that resident
consolidation continue to hold domestic corporation or any
greater than 50% of the voting subsidiary of that resident
power of the amalgamated domestic corporation (1) having
company immediately following an aggregate market value equal
the amalgamation, merger or to 10% of more of the aggregate
consolidation. market value of all the assets,
determined on a consolidated
The bye-laws of IR-Limited basis, of such resident
provide that "business domestic corporation, (2)
combination" means: having an aggregate market
value equal to 10% or more of
- any amalgamation, merger or the aggregate market value of
consolidation of IR-Limited or all the outstanding stock of
one of its subsidiaries with an that resident domestic
interested shareholder or with corporation or (3) representing
any person that is, or would be 10% or more of the earnings
after power
</Table>
44
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
such amalgamation, merger or or income, on a consolidated
consolidation, an affiliate or basis, of such resident
associate of an interested domestic corporation; and
shareholder;
- other specified self-dealing
- any transfer or other transactions between such
disposition to or with an resident domestic corporation
interested shareholder or any and an interested shareholder
affiliate or associate of an or any affiliate or associate
interested shareholder of all thereof.
or any material part of the
assets of IR-Limited or one of In addition, no resident domestic
its subsidiaries; and corporation may engage, at any
time, in any business combination
- any issuance or transfer of with any interested shareholder
shares of IR-Limited upon of such corporation other than:
conversion of or in exchange
for the securities or assets of - a business combination approved
any interested shareholder, or by the board of directors of
with any company that is, or such corporation prior to the
would be after such stock acquisition;
amalgamation, merger or
consolidation, an affiliate or - a business combination approved
associate of an interested by the affirmative vote of the
shareholder. holders of 66 2/3% of the
voting stock not beneficially
owned by such interested
shareholder at a meeting called
for such purpose; or
- a business combination in which
the interested shareholder
meets certain fair price
criteria.
Under IR-New Jersey's certificate
of incorporation, the affirmative
vote of the holders of 80% of the
outstanding shares of all classes
of stock entitled to vote, and
voting as one class, is required
to approve:
- the merger or consolidation of
IR-New Jersey or any subsidiary
of IR-New Jersey with or into
any other corporation, person
or entity;
- any sale, lease, exchange or
other disposition of all or any
material part of the assets of
IR-New Jersey or of any
subsidiary of IR-New Jersey to
or with any other corporation,
person or entity; or
- any issuance or transfer of
securities of IR-New Jersey
upon conversion of or in
exchange for securities or
assets of any other
corporation, person or entity;
if such other corporation, person
or entity is the beneficial owner
(as defined in IR-New Jersey's
certificate of incorporation),
directly or indirectly, of more
than 10% of any class of stock of
IR-New Jersey. This
</Table>
45
<Table>
<Caption>
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PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
approval requirement does not
apply to the merger of any
subsidiary of IR-New Jersey with
IR-New Jersey or with another
subsidiary of IR-New Jersey where
IR-New Jersey or such other
subsidiary is the surviving
corporation and where the above
provisions are not changed or
otherwise affected by virtue of
the merger.
------------------------------------------------------------------------------------------------
SHAREHOLDER RIGHTS PLAN The board of directors of IR-New Jersey adopted a
IR-Limited has adopted a plan shareholder rights plan, dated
substantially similar to the November 9, 1998. In connection
IR-New Jersey shareholder rights with the merger, the IR-New
plan, which plan has been Jersey shareholder rights plan
approved and adopted by IR-New will be amended to provide that
Jersey as the sole shareholder of the existing rights will expire
IR-Limited and provides for the immediately prior to the
issuance of new preference share effective time of the merger.
purchase rights that are This amendment of the IR-New
equivalent to the IR-New Jersey Jersey shareholder rights plan
preference stock purchase rights. will not result in the issuance
The IR-Limited shareholder rights of any preference stock pursuant
plan will expire on the original to the rights or trigger
expiration date of the IR-New redemption of the rights and will
Jersey shareholder rights plan. effectively terminate the IR-New
Initially, the new rights will Jersey shareholder rights plan.
attach to all IR-Limited Class A Shareholder approval of the
common shares issued on or after Agreement and Plan of Merger will
the effective time of the merger. also constitute any required
See "The shareholder approval of the
Reorganization -- Shareholder amendment to the IR-New Jersey
Rights Plan" and "Description of shareholder rights plan.
Authorized Shares of
IR-Limited -- Shareholder Rights
Plan."
------------------------------------------------------------------------------------------------
OTHER CORPORATE GOVERNANCE
PROVISIONS
------------------------------------------------------------------------------------------------
SHAREHOLDER DERIVATIVE Bermuda courts ordinarily follow The NJBCA requires that a
SUITS English law precedent, which shareholder bringing a derivative
permits a shareholder derivative suit in New Jersey have been a
action only: holder of shares or of voting
trust certificates therefor at
- where the act complained of is the time of the disputed
alleged to be beyond the transaction, or its shares or
corporate power of IR-Limited voting trust certificates
or to be illegal; thereafter passed to the
shareholder by operation of law
- where an act requires approval from a person who was a holder at
by a greater percentage of that time.
IR-Limited's shareholders than
actually approved it; or Under the NJBCA, a complaint in a
derivative suit must:
- where such an action is
necessary in order that there not - state the plaintiff was a
be a violation of IR-Limited's shareholder at the time of the
organizational documents. transaction with respect to
which the plaintiff complains
or that the plaintiff's shares
thereafter became the
plaintiff's by operation of
law;
</Table>
46
<Table>
<Caption>
------------------------------------------------------------------------------------------------
PROVISION IR-LIMITED IR-NEW JERSEY
------------------------------------------------------------------------------------------------
and
- (1) allege with particularity
the efforts plaintiff has made to
obtain the action the plaintiff
desires from the directors of
the corporation or (2) state
the reasons for the plaintiff's
failure to obtain the action or
for not making the effort to
obtain the action.
------------------------------------------------------------------------------------------------
DISSENTERS' RIGHTS Under the Companies Act, a Under the NJBCA, a dissenting
dissenting shareholder of a shareholder has the right to
company participating in a merger receive the fair value for its
(other than a merger between a shares if the shareholder objects
company and its wholly-owned to certain (1) mergers or
subsidiary or between two or more consolidations requiring
subsidiaries of the same company) shareholder approval and (2)
may apply to the Bermuda courts dispositions of assets requiring
to appraise the fair value of its shareholder approval.
shares.
No dissenters' rights are
There is no exception under available with respect to shares
Bermuda law for dissenters' that, at the applicable record
rights similar to the exception date, were listed on a national
under the NJBCA for securities exchange or held of
exchange-listed companies. record by not less than 1000
holders.
------------------------------------------------------------------------------------------------
INSPECTION OF BOOKS AND Bermuda law provides the general Under the NJBCA, a shareholder
RECORDS public with a right of inspection who has been a shareholder for at
of a Bermuda company's public least six months or who holds, or
documents and provides a Bermuda is authorized in writing by
company's shareholders with a holders of, at least five percent
right of inspection of a Bermuda of the outstanding shares of any
company's bye-laws, minutes of class or series of stock of a
general meetings of shareholders corporation has the right, for
and audited financial statements. any proper purpose and upon at
least five days' written notice,
A Bermuda company's share to inspect the minutes of
register is open to inspection by shareholder meetings and the
its shareholders and, upon record of shareholders.
payment of a small fee, by any
other person. A Bermuda company
is required to keep at its
registered office a register of
its directors and officers that
is open for inspection by members
of the public without charge.
------------------------------------------------------------------------------------------------
</Table>
47
INCOME TAX CONSEQUENCES OF THE REORGANIZATION
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
The following general discussion summarizes the anticipated principal U.S.
federal income tax consequences of the receipt of IR-Limited Class A common
shares by certain holders of IR-New Jersey common stock pursuant to the merger.
This discussion does not address all of the U.S. federal income tax consequences
that may be relevant to particular IR-New Jersey shareholders in light of their
individual circumstances or to shareholders who, for U.S. federal income tax
purposes, are subject to special rules, such as:
- dealers or traders in securities or currencies;
- tax-exempt entities;
- banks, financial institutions, or insurance companies;
- grantor trusts;
- real estate investment trusts or regulated investment companies;
- holders who hold IR-New Jersey common stock as part of a position in a
straddle or as part of a hedging or conversion transaction for U.S.
federal income tax purposes;
- investors whose functional currency is not the U.S. dollar;
- holders who acquired their IR-New Jersey common stock within 12 months of
the effective time of the merger pursuant to the exercise of employee
stock options or otherwise as compensation;
- holders who, for U.S. federal income tax purposes, are nonresident alien
individuals, foreign corporations, foreign partnerships, foreign trusts,
or foreign estates;
- holders who own, or are deemed to own, 10% or more, determined by voting
power or value, of IR-New Jersey common stock or IR-Limited Class A
common shares; and
- holders subject to taxation of U.S. expatriates.
Further, this discussion does not address any U.S. federal estate, gift or
alternative minimum tax consequences or any state, local or foreign tax
consequences relating to the merger or the ownership and disposition of
IR-Limited Class A common shares.
EACH IR-NEW JERSEY SHAREHOLDER IS STRONGLY URGED TO CONSULT ITS OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO IT OF THE RECEIPT OF IR-LIMITED
CLASS A COMMON SHARES PURSUANT TO THE MERGER CONTEMPLATED BY THIS PROXY
STATEMENT/PROSPECTUS AND THE OWNERSHIP AND DISPOSITION OF IR-LIMITED CLASS A
COMMON SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL
AND FOREIGN INCOME AND OTHER TAX LAWS IN ITS PARTICULAR CIRCUMSTANCES.
This discussion is based on the Code, the U.S. Treasury regulations
promulgated thereunder, and judicial and administrative interpretations thereof,
including IRS Notice 94-93, 1994-2 C.B. 563, in each case as in effect and
available on the date of this proxy statement/prospectus. All of the foregoing
is subject to change, which change could apply with retroactive effect and could
affect the tax consequences described below. Neither IR-New Jersey nor
IR-Limited will request any ruling from the Internal Revenue Service as to the
U.S. federal income tax consequences of the merger and related reorganization
transactions, but IR-New Jersey has obtained an opinion of counsel as to certain
tax consequences with respect to the merger and related reorganization
transactions.
This discussion is also based on certain assumptions regarding the factual
circumstances that will exist at the time of the merger, including certain
representations made or to be made by IR-New Jersey and IR-Limited. Any change
in the truth, accuracy or completeness of any of the facts, assumptions or
representations
48
on which this discussion is based could affect the tax consequences described
below. This discussion assumes that IR-New Jersey shareholders hold their IR-New
Jersey common stock and will hold IR-Limited Class A common shares as capital
assets.
For purposes of this discussion, a "U.S. holder" is a beneficial owner of
IR-New Jersey common stock that, for U.S. federal income tax purposes, is:
- a citizen or resident of the U.S.;
- a corporation or partnership created or organized in or under the laws of
the U.S. or any State thereof, including the District of Columbia;
- an estate, the income of which is subject to U.S. federal income taxation
regardless of its source;
- a trust, if such trust validly has elected to be treated as a U.S. person
for U.S. federal income tax purposes or if (1) a U.S. court can exercise
primary supervision over its administration and (2) one or more U.S.
persons have the authority to control all of the substantial decisions of
such trust; or
- otherwise subject to U.S. federal income taxation on a net income basis
on its shares of IR-New Jersey common stock.
RECEIPT OF IR-LIMITED CLASS A COMMON SHARES
Each U.S. holder will recognize gain, but not loss, on the receipt of
IR-Limited Class A common shares for IR-New Jersey common stock pursuant to the
merger in an amount equal to the difference, if any, between (1) the fair market
value of the IR-Limited Class A common shares received by such U.S. holder and
(2) such U.S. holder's adjusted tax basis in its IR-New Jersey common stock
converted thereto. Any gain recognized will be capital gain and will be
long-term capital gain if the IR-New Jersey common stock has been held for more
than one year at the time of the merger. A U.S. holder that recognizes gain with
respect to the merger will have an aggregate adjusted tax basis in its
IR-Limited Class A common shares equal to the aggregate adjusted tax basis in
the IR-New Jersey common stock exchanged therefor, increased by the amount of
gain recognized. A U.S. holder will not be permitted to recognize any loss
realized on the exchange of its shares of IR-New Jersey common stock in the
merger, but the aggregate adjusted tax basis of the IR-Limited Class A common
shares received by a U.S. holder with a loss on its IR-New Jersey common stock
will be equal to such U.S. holder's aggregate adjusted tax basis in its IR-New
Jersey common stock surrendered in exchange therefor. Thus, any loss would be
preserved. The holding period for any IR-Limited Class A common shares received
by a U.S. holder recognizing gain with respect to the merger will begin at the
effective time of the merger. The holding period for any IR-Limited Class A
common shares received by U.S. holders with a loss on their IR-New Jersey common
stock will include the holding period of the IR-New Jersey common stock
exchanged therefor.
DISTRIBUTIONS
Subject to the discussion below under " -- Passive Foreign Investment
Company Considerations," the gross amount of any distribution by IR-Limited of
cash or property (other than certain distributions, if any, of common shares
distributed pro rata to all shareholders of IR-Limited) with respect to
IR-Limited Class A common shares will be includable in income by a U.S. holder
as dividend income to the extent such distributions are paid out of the current
or accumulated earnings and profits of IR-Limited as determined under U.S.
federal income tax principles. Such dividends will not generally be eligible for
the dividends received deduction generally allowed to U.S. holders that are
corporations. Subject to the discussion below under " -- Passive Foreign
Investment Company Considerations," to the extent, if any, that the amount of
any distribution by IR-Limited exceeds IR-Limited's current and accumulated
earnings and profits as determined under U.S. federal income tax principles, it
will be treated first as a tax-free return of the U.S. holder's adjusted tax
basis in the common shares and amounts in excess of such basis will be treated
as capital gain. IR-Limited will maintain calculations of its earnings and
profits under U.S. federal income tax principles.
49
The amount of any distribution of property other than cash will be the fair
market value of such property on the date of distribution.
It is anticipated that only a portion of the dividends received by a U.S.
holder with respect to IR-Limited Class A common shares will be treated as
foreign source income for purposes of calculating such holder's foreign tax
credit limitation. This is because it is anticipated that (1) U.S. persons will
own a majority of the IR-Limited Class A common shares after the merger and (2)
a portion of the income derived by IR-Limited will be U.S. source income. To the
extent that dividends distributed by IR-Limited are treated as foreign source
income, they generally will constitute passive income, or, in the case of
certain U.S. holders, financial services income.
SALE OR EXCHANGE OF IR-LIMITED CLASS A COMMON SHARES
Subject to the discussion below under " -- Passive Foreign Investment
Company Considerations," a U.S. holder generally will recognize gain or loss on
the sale or exchange of IR-Limited Class A common shares equal to the difference
between the amount realized on such sale or exchange and the U.S. holder's
adjusted tax basis in such IR-Limited Class A common shares. Such gain or loss
will be capital gain or loss. In the case of a noncorporate U.S. holder, the
maximum marginal U.S. federal income tax rate applicable to such gain is
currently lower than the maximum marginal U.S. federal income tax rate
applicable to ordinary income if such U.S. holder's holding period for such
common shares exceeds one year. Gain or loss, if any, recognized by a U.S.
holder generally will be treated as U.S. source income or loss for U.S. foreign
tax credit purposes. The deductibility of capital losses is subject to
limitations.
CONTROLLED FOREIGN CORPORATION CONSIDERATIONS
In certain circumstances the Code directly taxes each "United States
shareholder" who owns stock of a "controlled foreign corporation" or "CFC" on a
portion of the CFC's income. Section 951(b) of the Code defines a United States
shareholder as any U.S. corporation, citizen, resident or other U.S. person who
owns (directly, indirectly, or constructively) 10% or more of the total combined
voting power of all classes of stock of a foreign corporation (a "U.S.
Shareholder"). In general, a foreign corporation is treated as a CFC only if
such U.S. shareholders collectively own more than 50% of the total combined
voting power or total value of the corporation's stock.
If a foreign corporation is treated as a CFC for an uninterrupted period of
30 days or more during any taxable year, a person who is a U.S. Shareholder in
the corporation on any day during the taxable year and who directly or
indirectly owns any stock in the corporation on the last day of such year in
which it is a CFC will have to include in its gross income for U.S. federal
income tax purposes its pro rata share of the CFC's "subpart F income" relating
to the period during which the corporation is a CFC, even if the subpart F
income is not distributed. In addition, gain on the sale of stock in a CFC
realized by a U.S. shareholder of a CFC is treated as ordinary income to the
extent of such shareholder's proportionate share of the CFC's undistributed
earnings and profits (including earnings and profits of CFC subsidiaries of such
CFC) accumulated during such shareholder's holding period of the stock while a
CFC.
IR-Limited does not expect to be a CFC under the rules set forth above.
However, following the merger, IR-New Jersey will be deemed for U.S. tax
purposes, through its ownership of the non-voting Class B common shares, to own
up to approximately 45% of the total value of the shares of IR-Limited. As a
consequence, any Class A common shareholder who is considered to own 10% of the
voting power in IR-Limited could cause the foreign subsidiaries of IR-Limited or
(if the Internal Revenue Service successfully takes the position that the Class
B common shares held by IR-New Jersey in IR-Limited are voting stock) IR-Limited
itself to be treated as CFCs.
If IR-Limited or any of its foreign subsidiaries is treated as a CFC, this
status should have no adverse effect on any shareholder of IR-Limited who does
not own (directly, indirectly, or constructively within the meaning of section
958(a) or 958(b) of the Code) 10% or more of the total combined voting power of
all classes of stock of IR-Limited or any of its foreign subsidiaries. See
"Comparison of Rights of Shareholders -- Shareholder Meetings -- Voting Rights."
If, however, IR-Limited or any of its foreign subsidiaries is treated
50
as a CFC for an uninterrupted period of 30 days or more during any taxable year,
a person who is a U.S. Shareholder of IR-Limited or the subsidiary on any day
during such taxable year and who directly or indirectly owns any stock in the
corporation on the last day of such year in which it is a CFC will have to
include in its gross income for U.S. federal income tax purposes its pro rata
share of the corporation's "subpart F income" relating to the period during
which the corporation is a CFC.
In addition, gain on the sale of stock in IR-Limited, if treated as a CFC
at any time during the 5-year period ending with the sale, realized by a U.S.
person who was a U.S. Shareholder in the CFC at any time during such period
would be treated as ordinary income to the extent of the shareholder's
proportionate share of the undistributed earnings and profits of IR-Limited and
its CFC subsidiaries accumulated during the shareholder's holding period of the
stock while IR-Limited is a CFC.
If the U.S. person is a corporation, however, it may be eligible to credit
against its U.S. tax liability, with respect to these potential inclusions,
foreign taxes paid on the earnings and profits associated with the included
income. A disposition of shares by a U.S. Shareholder may result in termination
of the CFC status of IR-Limited or its foreign subsidiaries. See "Risk Factors."
PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS
A non-U.S. corporation will be classified as a passive foreign investment
company (a "PFIC") for U.S. federal income tax purposes in any taxable year in
which, after applying certain look-through rules, either (1) at least 75% of its
gross income is passive income or (2) at least 50% of the gross value of its
assets is attributable to assets that produce passive income or are held for the
production of passive income. Passive income for this purpose generally includes
dividends, interest, royalties, rents, and gains from commodities and securities
transactions.
Based on certain estimates of its gross income and gross assets and the
nature of its business, IR-Limited believes that it will not be classified as a
PFIC for its current taxable year. IR-Limited's status in future years will
depend on its assets and activities in those years. IR-Limited has no reason to
believe that its assets or activities will change in a manner that would cause
it to be classified as a PFIC. If IR-Limited was a PFIC, a U.S. holder of
IR-Limited Class A common shares generally would be subject to imputed interest
charges and other disadvantageous tax treatment with respect to any gain from
the sale or exchange of, and certain distributions with respect to, IR-Limited
Class A common shares.
If IR-Limited is treated as a PFIC, a U.S. holder of IR-Limited Class A
common shares could make a variety of elections that may alleviate the tax
consequences referred to above, and one of these elections may be made
retroactively. U.S. holders should consult their own tax advisors regarding the
tax consequences that would arise if IR-Limited was treated as a PFIC.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING REQUIREMENTS
Currently, distributions with respect to IR-New Jersey common stock and
proceeds from the sale or redemption of IR-New Jersey common stock are subject
to U.S. backup withholding tax and information reporting rules. After the
merger, it is anticipated that the same rules will apply to distributions with
respect to IR-Limited Class A common shares and to proceeds from the sale or
redemption of IR-Limited Class A common shares.
U.S. backup withholding tax and information reporting requirements
generally apply to certain payments to certain noncorporate holders of stock.
Information reporting generally will apply to payments of dividends on, and to
proceeds from the sale or redemption of, IR-Limited Class A common shares made
within the U.S. to a holder of IR-Limited Class A common shares (other than an
"exempt recipient," including a corporation, a payee that is not a U.S. person
that provides an appropriate certification and certain other persons). A payor
will be required to withhold 30.5% until January 1, 2002, 30% on or after
January 1, 2002, 29% on or after January 1, 2004, and 28% on or after January 1,
2006 of any payments of dividends on, or proceeds from the sale or redemption of
IR-Limited Class A common shares within the U.S. to a holder (other than an
"exempt recipient") if such holder fails to furnish its correct taxpayer
identification number or
51
otherwise fails to comply with, or establish an exemption from, such backup
withholding tax requirements. In the case of such payments by a payor or
middleman within the U.S. to a foreign simple trust, a foreign grantor trust, or
a foreign partnership (other than payments to a foreign simple trust, a foreign
grantor trust, or a foreign partnership that qualify as a "withholding foreign
trust" or a "withholding foreign partnership" within the meaning of U.S.
Treasury regulations and payments to a foreign simple trust, a foreign grantor
trust, or a foreign partnership that are effectively connected with the conduct
of a trade or business in the U.S.), the beneficiaries of the foreign simple
trust, the persons treated as the owners of the foreign grantor trust, or the
partners of the foreign partnership, as the case may be, will be required to
provide the certification discussed above in order to establish an exemption
from backup withholding tax and information reporting requirements. Moreover, a
payor or middleman may rely on a certification provided by a payee that is not a
U.S. person only if such payor or middleman does not have actual knowledge or a
reason to know that any information or certification stated in such certificate
is incorrect.
BERMUDA TAX CONSEQUENCES OF THE REORGANIZATION
Under current law, Bermuda will not impose on IR-Limited or any of its
operations or the shares, debentures or other obligations of IR-Limited, any tax
computed on profits or income, or computed on any capital asset, gain or
appreciation, or any tax in the nature of estate, duty or inheritance tax.
IR-Limited has obtained a written assurance from the Minister of Finance of
Bermuda under The Exempted Undertakings Tax Protection Act 1966 of Bermuda to
the effect that in the event of the enactment in Bermuda of any legislation
imposing any such tax, then the imposition of such tax shall not be applicable
to IR-Limited or to any of its operations or the shares, debentures or other
obligations of IR-Limited until March 28, 2016. The assurances are subject to
the proviso that they are not construed so as to prevent the application of any
tax or duty to such persons as are ordinarily resident in Bermuda (IR-Limited is
not currently so designated) or to prevent the application of any tax payable in
accordance with the provisions of The Land Tax Act 1967 of Bermuda or otherwise
payable in relation to the land, if any, leased to IR-Limited. IR-Limited is
required to pay certain annual Bermuda government and business fees. Under
current rates, IR-Limited will pay a maximum fixed annual fee of US$27,825. In
addition, all entities employing individuals in Bermuda are required to pay an
employment tax. Currently there is no Bermuda withholding tax on dividends that
may be paid by IR-Limited.
Under current Bermuda law, there will be no Bermuda income or withholding
tax on dividends paid by IR-Limited to its shareholders. Furthermore, no Bermuda
tax or other levy is payable on the sale or other transfer (including by gift or
on the death of the shareholder) of IR-Limited Class A common shares (other than
by shareholders resident in Bermuda).
52
SHAREHOLDER PROPOSALS AND NOMINATIONS
Pursuant to the merger IR-Limited will become the parent holding company of
IR-New Jersey and successor issuer of IR-New Jersey for purposes of U.S.
securities laws.
Any proposal by a shareholder intended to be presented at the 2002 Annual
Meeting of Shareholders of IR-Limited must be received at IR-Limited's principal
executive offices at 200 Chestnut Ridge Road, Woodcliff Lake, New Jersey 07677,
Attn: Vice President and Secretary, no later than November 19, 2001, for
inclusion in the proxy materials relating to that meeting.
IR-Limited's bye-laws provide that all shareholder nominations for nominees
for election to the board of directors must be made following written notice to
the secretary of IR-Limited accompanied by certain background and other
information specified in the bye-laws. In connection with any annual general
meeting, written notice of a shareholder's intention to make such nominations
must be given to the secretary of IR-Limited not later than the date which is 90
days in advance of the anniversary of the immediately preceding annual general
meeting or, if the date of the annual general meeting occurs more than 30 days
before, or 60 days after, the anniversary of such immediately preceding annual
general meeting, not later than the seventh day after the date on which notice
of such annual general meeting is given. For purposes of determining these dates
in years 2001-2002, the date of IR-New Jersey's last annual meeting will be
considered the date of the immediately preceding annual general meeting of
IR-Limited.
In order for a shareholder to bring other business before a general meeting
of shareholders, timely notice must be received by the secretary of IR-Limited
within the time limits described above. The notice must include a description of
the proposed item, the reasons the shareholder believes support its position
concerning the item, and other specified matters. These requirements are
separate from and in addition to the requirements you must meet to have a
proposal included in IR-Limited's proxy statement. The foregoing time limits
also apply in determining whether notice is timely for purposes of rules adopted
by the Securities and Exchange Commission relating to the exercise of
discretionary voting authority.
EXPERTS
The financial statements incorporated in this proxy statement/prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
2000, have been so incorporated in reliance on the report by
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
Certain legal matters in connection with IR-Limited Class A common shares
have been passed upon for us by our Bermuda counsel, Conyers Dill & Pearman.
Conyers Dill & Pearman has also rendered an opinion regarding the Bermuda tax
consequences of the reorganization referred to in "Income Tax Consequences of
the Reorganization -- Bermuda Tax Consequences of the Reorganization." Baker &
McKenzie has rendered an opinion regarding the U.S. federal income tax
consequences of the reorganization to shareholders referred to in "Income Tax
Consequences of the Reorganization -- U.S. Federal Income Tax Consequences of
the Reorganization."
WHERE YOU CAN FIND MORE INFORMATION
IR-Limited has filed with the Securities and Exchange Commission a
registration statement on Form S-4 (together with all amendments and exhibits,
we refer to it as the "Registration Statement") under the Securities Act of
1933, as amended. This proxy statement/prospectus, which constitutes a part of
the Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted as permitted by
the rules and regulations of the Securities and Exchange Commission. For further
information, reference is hereby made to the Registration Statement. Statements
made in this proxy statement/prospectus as to the contents of any contract,
agreement or other document are
53
not necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement or otherwise filed
with the Securities and Exchange Commission, reference is made to the copy so
filed, and each such statement shall be deemed qualified in its entirety by such
reference.
IR-New Jersey is, and after the merger IR-Limited as successor issuer to
IR-New Jersey will be, subject to the informational requirements of the Exchange
Act, and in accordance therewith IR-New Jersey files and IR-Limited will file
reports, proxy and information statements and other information with the
Securities and Exchange Commission. Such reports, proxy and information
statements and other information filed with the Securities and Exchange
Commission, can be inspected and copied at the public reference facilities
maintained by the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional office of the Securities and Exchange
Commission at Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661.
You may obtain information on the operation of the Public Reference Room by
calling the Securities and Exchange Commission at (800) SEC-0330. Copies of
reports, proxy and information statements and other information regarding
registrants that file electronically (including IR-New Jersey) are available on
the Securities and Exchange Commission's web site at http://www.sec.gov.
Upon completion of the reorganization, IR-Limited Class A common shares
will be traded on the New York Stock Exchange, the same exchange on which IR-New
Jersey common stock is currently traded. At the time of commencement of such
trading, IR-New Jersey common stock will be delisted and will no longer be
registered pursuant to Section 12 of the Exchange Act. At such time, your shares
will have become IR-Limited Class A common shares and IR-Limited Class A common
shares will be registered pursuant to Section 12 of the Exchange Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by IR-New Jersey with the Securities and
Exchange Commission (File No. 1-985) pursuant to the Exchange Act are hereby
incorporated by reference in this proxy statement/ prospectus:
1. Current Report on Form 8-K, dated February 6, 2001;
2. Current Report on Form 8-K, dated February 9, 2001;
3. Current Report on Form 8-K/A, dated February 9, 2001;
4. Current Report on Form 8-K, dated September 30, 2001;
5. Current Report on Form 8-K, dated October 16, 2001;
6. Proxy Statement filed March 15, 2001;
7. Annual Report on Form 10-K for the fiscal year ended December 31,
2000;
8. Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
9. Quarterly Report on Form 10-Q for the quarter ended June 30, 2001;
and
10. The description of the IR-New Jersey Series A preference share
purchase rights in the Registration Statement on Form 8-A/A dated
November 13, 1998.
Each document filed by IR-New Jersey pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this proxy
statement/prospectus and prior to the date of the special meeting shall be
deemed to be incorporated by reference in this proxy statement/prospectus and to
be a part of this proxy statement/prospectus from the date of filing of such
document. Any statement contained in this proxy statement/prospectus or in a
document incorporated or deemed to be incorporated by reference in this proxy
statement/prospectus shall be deemed to be modified or superseded for purposes
of the Registration Statement and this proxy statement/prospectus to the extent
that a statement contained in this proxy statement/prospectus or in any
subsequently filed document that also is or is deemed to be incorporated by
reference in this proxy statement/prospectus modifies or supersedes such
statement. Any such statement so
54
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement or this proxy
statement/prospectus.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
IR-LIMITED IS PROHIBITED FROM MAKING ANY INVITATION TO THE PUBLIC IN BERMUDA TO
SUBSCRIBE FOR ANY OF ITS SHARES.
Neither delivery of this proxy statement/prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of IR-New Jersey and IR-Limited since the date of
this proxy statement/prospectus.
55
ANNEX I
AGREEMENT AND PLAN OF MERGER
AMONG
INGERSOLL-RAND COMPANY LIMITED,
INGERSOLL-RAND COMPANY
AND
IR MERGER CORPORATION
DATED AS OF
OCTOBER 31, 2001
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
ARTICLE I MERGER........................................... 1
1.1 MERGER................................................. 1
1.2 EFFECTIVE TIME......................................... 1
1.3 EFFECTS OF THE MERGER.................................. 2
ARTICLE II NAME, CERTIFICATE OF INCORPORATION, DIRECTORS
AND EXECUTIVE OFFICERS.................................... 2
2.1 NAME OF SURVIVING CORPORATION.......................... 2
2.2 CERTIFICATE OF INCORPORATION; BY-LAWS.................. 2
2.3 DIRECTORS.............................................. 2
2.4 OFFICERS............................................... 2
ARTICLE III CONVERSION AND EXCHANGE OF STOCK............... 2
3.1 CONVERSION AND ISSUANCE OF IR-LIMITED SHARES........... 2
3.2 EXCHANGE OF STOCK...................................... 3
3.3 DISSENTERS' RIGHTS..................................... 4
ARTICLE IV BENEFIT AND COMPENSATION PLANS.................. 4
4.1 PLANS.................................................. 4
4.2 NEW CHANGE OF CONTROL AGREEMENTS....................... 4
ARTICLE V CONDITIONS PRECEDENT............................. 5
5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER................................................. 5
ARTICLE VI TERMINATION, AMENDMENT AND WAIVER............... 5
6.1 TERMINATION............................................ 5
6.2 EFFECT OF TERMINATION.................................. 5
6.3 AMENDMENT.............................................. 5
6.4 WAIVER................................................. 6
6.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER................................................. 6
ARTICLE VII GENERAL PROVISIONS............................. 6
7.1 NOTICES................................................ 6
7.2 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES......... 6
7.3 GOVERNING LAW.......................................... 7
7.4 GUARANTY............................................... 7
EXHIBIT A STOCK PLANS SPONSORED BY IR-NEW JERSEY........... A-1
EXHIBIT B STOCK PLANS SPONSORED BY IR-LIMITED.............. B-1
</Table>
i
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made as of October
31, 2001, among Ingersoll-Rand Company Limited, a Bermuda company
("IR-Limited"), Ingersoll-Rand Company, a New Jersey corporation ("IR-New
Jersey"), and IR Merger Corporation, a New Jersey corporation ("Merger Sub") and
a newly-formed, indirect wholly-owned subsidiary of IR-Limited.
PRELIMINARY STATEMENTS
A. The respective Boards of Directors of IR-Limited, IR-New Jersey and
Merger Sub deem it advisable and in the best interests of their respective
shareholders to reorganize such that IR-New Jersey will effectively change its
domicile from New Jersey to Bermuda by merging Merger Sub with and into IR-New
Jersey.
B. The respective Boards of Directors of IR-Limited, IR-New Jersey and
Merger Sub have each approved the merger of Merger Sub with and into IR-New
Jersey, pursuant to which IR-New Jersey will be the surviving company in the
merger and become a wholly-owned, indirect subsidiary of IR-Limited, upon the
terms and subject to the conditions set forth in this Agreement (the "Merger"),
and whereby each issued share of common stock, par value $2.00 per share, of
IR-New Jersey ("IR-New Jersey Common Stock"), other than those shares of IR-New
Jersey Common Stock held by IR-New Jersey or any direct or indirect wholly-owned
subsidiary of IR-New Jersey, shall automatically become one Class A common
share, par value $1.00 per share, of IR-Limited ("IR-Limited Class A Common
Share").
C. Pursuant to the Merger, the preference stock purchase rights associated
with IR-New Jersey Common Stock issued pursuant to the Rights Agreement (the
"IR-New Jersey Rights Agreement"), dated as of November 9, 1998, between IR-New
Jersey and The Bank of New York, as Rights Agent (the "IR-New Jersey Rights"),
will expire and a new IR-Limited Right (as defined below) will be issued with
each IR-Limited Class A Common Share issued in the Merger.
D. The consummation of the Merger requires, among other things, the
adoption of this Agreement by the affirmative vote of at least a majority of
votes cast by holders of shares of IR-New Jersey Common Stock present in person
or represented by proxy at IR-New Jersey's special shareholders meeting that are
entitled to vote (the "IR-New Jersey Shareholder Approval").
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE I
MERGER
1.1 MERGER
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the New Jersey Business Corporation Act (the "NJBCA"),
Merger Sub shall be merged with and into IR-New Jersey at the Effective Time (as
defined below). Following the Effective Time, the separate corporate existence
of Merger Sub shall cease and IR-New Jersey shall continue as the surviving
corporation (the "Surviving Corporation"), becoming a wholly-owned, indirect
subsidiary of IR-Limited, and shall succeed to and assume all the rights and
obligations of Merger Sub in accordance with the NJBCA.
1.2 EFFECTIVE TIME
Subject to the provisions of this Agreement, as soon as practicable
following the satisfaction or waiver of the conditions set forth in Section 5.1,
the parties shall duly prepare, execute and file a Certificate of Merger (the
"Certificate of Merger") in accordance with Section 14A:10-4.1 of the NJBCA with
the Treasurer of the State of New Jersey. The Merger shall become effective upon
the filing of the Certificate of Merger (or at
such later time reflected in such Certificate of Merger as shall be agreed to by
IR-Limited and IR-New Jersey). The date and time when the Merger shall become
effective is hereinafter referred to as the "Effective Time."
1.3 EFFECTS OF THE MERGER
(a) General Effects. The Merger shall have the effects set forth in
Section 14A:10-6 of the NJBCA.
(b) Assumption of Obligations. The Surviving Corporation specifically
assumes any obligation of Merger Sub which is required to be specifically
assumed by the Surviving Corporation.
ARTICLE II
NAME, CERTIFICATE OF INCORPORATION,
DIRECTORS AND EXECUTIVE OFFICERS
2.1 NAME OF SURVIVING CORPORATION
The name of the Surviving Corporation shall be "Ingersoll-Rand Company."
2.2 CERTIFICATE OF INCORPORATION; BY-LAWS
(a) Certificate of Incorporation. The Certificate of Incorporation of the
Surviving Corporation shall be amended as of the Effective Time to contain the
provisions in the Certificate of Incorporation of Merger Sub in effect
immediately prior to the Effective Time, except that Article FIRST of such
Certificate of Incorporation shall provide that the name of the Surviving
Corporation shall be "Ingersoll-Rand Company."
(b) By-laws. The by-laws of the Merger Sub in effect immediately prior to
the Effective Time shall be the by-laws of the Surviving Corporation until
amended in accordance with applicable law.
2.3 DIRECTORS
The directors of Merger Sub immediately prior to the Effective Time shall
be the directors of the Surviving Corporation, until their respective successors
shall be elected and qualify, subject to prior death, resignation or removal in
accordance with the Certificate of Incorporation and by-laws of the Surviving
Corporation, or as otherwise provided by applicable law.
2.4 OFFICERS
The officers of IR-New Jersey immediately prior to the Effective Time shall
be the officers of the Surviving Corporation, until their respective successors
shall be elected and qualify, subject to prior death, resignation or removal in
accordance with the Certificate of Incorporation and by-laws of the Surviving
Corporation, or as otherwise provided by applicable law.
ARTICLE III
CONVERSION AND EXCHANGE OF STOCK
3.1 CONVERSION AND ISSUANCE OF IR-LIMITED SHARES
At the Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares:
(a) Conversion of IR-New Jersey Common Stock. Each issued share of IR-New
Jersey Common Stock, other than a share cancelled in accordance with Section
3.1(b), shall be converted into and become one fully paid and nonassessable
IR-Limited Class A Common Share. In furtherance thereof and in partial
consideration for entering into the transactions contemplated by this Agreement,
IR-Limited agrees to issue
2
IR-Limited Class A Common Shares to the current holders of IR-New Jersey Common
Stock as provided hereby.
(b) Cancellation of IR-New Jersey Owned Stock. Each issued share of
IR-New Jersey Common Stock that is owned by IR-New Jersey or by any direct or
indirect wholly-owned subsidiary of IR-New Jersey prior to the Effective Time
shall automatically be cancelled and retired and shall cease to exist, and no
IR-Limited Class A Common Shares or other consideration shall be delivered or
deliverable in exchange for such shares of IR-New Jersey Common Stock.
(c) Effect on IR-Limited Shares In Issue. Each IR-Limited Class A Common
Share held by IR-New Jersey or any of its subsidiaries immediately prior to the
Effective Time shall be repurchased by IR-Limited at the Effective Time in
exchange for one IR-Limited Class B common share, par value $1.00 per share
("IR-Limited Class B Common Share"), and each IR-Limited Class B Common Share
held by IR-New Jersey or any of its subsidiaries immediately prior to the
Effective Time shall remain in issue.
(d) Conversion of Merger Sub Common Stock. Each issued and outstanding
share of common stock, par value $.01 per share, of Merger Sub shall be
converted into and become one share of common stock of the Surviving Corporation
with the same rights, power and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
(e) Stock-Based Compensation Plans. The stock-based benefit and deferred
compensation plans and programs and agreements providing for the grant or award
to IR-New Jersey's (and its affiliates') (i) employees of options or other
rights to purchase, receive, acquire, hold or realize the benefits measured by
the value of, as appropriate, IR-New Jersey Common Stock (the "Employee Stock
Plans") and (ii) directors of options or other rights to purchase, receive,
acquire, hold or realize the benefits measured by the value of, as appropriate,
IR-New Jersey Common Stock (the "Director Stock Plans") shall be maintained and
sponsored in accordance with Section 4.1 of this Agreement. The Employee Stock
Plans, together with the Director Stock Plans, are referred to as the "Stock
Plans."
(f) Dividend Reinvestment Plan. IR-Limited shall assume all the rights
and obligations of IR-New Jersey under IR-New Jersey's Dividend Reinvestment
Plan and such plan shall be deemed to provide for the issuance or purchase of,
or otherwise relate to, IR-Limited Class A Common Shares.
(g) Rights. Each IR-New Jersey Right shall automatically expire
immediately prior to the Effective Time in accordance with an amendment to the
IR-New Jersey Rights Agreement to be entered into prior to the Effective Time,
and a new right (each, an "IR-Limited Right") will be issued with each
IR-Limited Class A Common Share issued in the Merger pursuant to an IR-Limited
Rights Agreement, to be entered into prior to the Effective Time between
IR-Limited and The Bank of New York, as Rights Agent, containing terms and
conditions substantially similar to the IR-New Jersey Rights Agreement.
3.2 EXCHANGE OF STOCK
(a) Exchange Procedures. At the Effective Time, each outstanding
certificate theretofore representing shares of IR-New Jersey Common Stock, other
than shares to be cancelled as set forth in Section 3.1(b), shall automatically
represent the same number of IR-Limited Class A Common Shares, and therefore do
not need, and are not required, to be exchanged for certificates representing
IR-Limited Class A Common Shares. Following the Merger, certificates bearing the
name of IR-Limited will be issued in the normal course upon surrender of
certificates bearing the name of IR-New Jersey for exchange or transfer.
(b) No Further Ownership Rights in IR-New Jersey Common Stock. All
IR-Limited Class A Common Shares issued upon the Merger, including any
certificates issued upon the surrender for exchange of certificates in
accordance with the terms of this Article III, shall be deemed to have been
issued and paid in full satisfaction of all rights pertaining to the shares of
IR-New Jersey Common Stock theretofore represented by such certificates,
subject, however, to the Surviving Corporation's obligation (if any) to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by IR-New Jersey on such
shares of IR-New Jersey Common Stock in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain unpaid at the
Effective Time, and
3
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of IR-New Jersey Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates are presented to the Surviving Corporation they
shall be cancelled and exchanged as provided in this Article III, except as
otherwise provided by law.
3.3 DISSENTERS' RIGHTS
There are no dissenters' rights under the NJBCA in connection with the
Merger.
ARTICLE IV
BENEFIT AND COMPENSATION PLANS
4.1 PLANS
(a) At the Effective Time, (i) IR-New Jersey shall continue to sponsor and
maintain each Stock Plan listed on Exhibit A, and (ii) IR-Limited shall assume
the rights and obligations of IR-New Jersey under each Stock Plan listed on
Exhibit B (the "Assumed Plans").
(b) To the extent any Stock Plan provides for the issuance or purchase of,
or otherwise relates to, IR-New Jersey Common Stock, after the Effective Time,
such Stock Plan shall be deemed to provide for the issuance or purchase of, or
otherwise relate to, IR-Limited Class A Common Shares and all options or awards
issued, or benefits available or based upon the value of IR-New Jersey Common
Stock, under such Stock Plan after the Effective Time shall entitle the holder
thereof to purchase, receive, acquire, hold or realize the benefits measured by
the value of, as appropriate, IR-Limited Class A Common Shares in accordance
with the terms of such Stock Plan. The outstanding options or other awards, or
other benefits available, under the Stock Plans shall be exercisable, issuable
or available upon the same terms and conditions as under such Stock Plans and
the agreements relating thereto immediately prior to the Effective Time, except
that upon the exercise, issuance or availability of such options, awards or
benefits, IR-Limited Class A Common Shares shall be issuable, held or available
in lieu of shares of IR-New Jersey Common Stock. The number of IR-Limited Class
A Common Shares issuable or available upon the exercise, issuance or
availability of such an option, award or benefit, immediately after the
Effective Time and the option, exercise or measurement price of each such
option, award or benefit shall be the number of shares and option, exercise or
measurement price in effect immediately prior to the Effective Time.
(c) Such amendments deemed necessary or appropriate by IR-New Jersey and
IR-Limited to effect the Merger and related reorganization transactions,
including to facilitate the assignment to IR-Limited of the Assumed Plans, shall
be adopted and entered into with respect to the Stock Plans. The IR-New Jersey
Shareholder Approval shall also be deemed any required shareholder approval of
such amendments and the assumption by IR-Limited of the Assumed Plans.
4.2 NEW CHANGE OF CONTROL AGREEMENTS
IR-Limited shall offer to enter into management continuity agreements (the
"New Change of Control Agreements") with each executive officer and key employee
of IR-New Jersey who, immediately prior to the Effective Time, is a party to a
management continuity agreement with IR-New Jersey (each, a "Change of Control
Agreement") and the terms and conditions of the New Change of Control Agreements
shall be substantially similar to those set forth in the Change of Control
Agreements.
4
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER
The respective obligation of each party to effect the Merger is subject to
the satisfaction or waiver of the following conditions:
(a) Shareholder Approval. The IR-New Jersey Shareholder Approval shall
have been obtained.
(b) Form S-4. The registration statement on Form S-4 filed with the
Securities and Exchange Commission by IR-Limited in connection with the issuance
of the IR-Limited Class A Common Shares in the Merger shall have become
effective under the Securities Act of 1933, as amended, and shall not be the
subject of any stop order or proceedings seeking a stop order.
(c) NYSE Approval. The New York Stock Exchange (the "NYSE") shall have
confirmed that the IR-Limited Class A Common Shares have been approved for
listing on the NYSE, subject to notice of issuance, and may trade on the NYSE
and succeed to the ticker symbol "IR."
(d) Governmental, Regulatory and Other Material Third-Party Consents. All
filings required to be made prior to the Effective Time of the Merger with, and
all material consents, approvals, permits and authorizations required to be
obtained prior to the Effective Time from, any court or governmental or
regulatory authority or agency, domestic or foreign, or other person in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including from the Bermuda
Monetary Authority, will have been made or obtained (as the case may be).
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions contemplated hereby
shall be in effect.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 TERMINATION
This Agreement may be terminated and the Merger abandoned at any time prior
to the Effective Time, whether before or after the IR-New Jersey Shareholder
Approval, by action of the Board of Directors of IR-Limited, IR-New Jersey or
Merger Sub.
6.2 EFFECT OF TERMINATION
In the event of termination of this Agreement as provided in Section 6.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of IR-New Jersey, Merger Sub or IR-Limited,
other than the provisions of this Article VI and Article VII.
6.3 AMENDMENT
This Agreement may be amended by the parties at any time before or after
the IR-New Jersey Shareholder Approval; provided, however, that after any such
approval, there shall not be made any amendment without additional shareholder
approval that (a) alters or changes the amount or kind of shares to be received
by shareholders in the Merger, (b) alters or changes any term of the Certificate
of Incorporation of the Surviving Corporation, except for alterations or changes
that could otherwise be adopted by the Board of Directors of the Surviving
Corporation, or (c) alters or changes any other terms and conditions of this
Agreement if any of the alterations or changes, alone or in the aggregate, would
materially adversely affect the
5
holders of shares of IR-New Jersey Common Stock. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
6.4 WAIVER
At any time prior to the Effective Time, the parties may waive compliance
by the other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
6.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER
A termination of this Agreement and abandonment of the Merger pursuant to
Section 6.1, shall, in order to be effective, require action by the Board of
Directors of IR-Limited, IR-New Jersey or Merger Sub. An amendment of this
Agreement pursuant to Section 6.3 shall, in order to be effective, require
action by the Boards of Directors of IR-Limited, IR-New Jersey and Merger Sub
and, if applicable, shareholder approval. A waiver pursuant to Section 6.4
shall, in order to be effective, require action by the Boards of Directors of
the parties waiving compliance by the other parties with this Agreement.
ARTICLE VII
GENERAL PROVISIONS
7.1 NOTICES
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally,
by facsimile (which is confirmed) or sent by overnight courier (providing proof
of delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to IR-Limited:
Ingersoll-Rand Company Limited
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07677
Attention: Secretary
(b) if to IR-New Jersey:
Ingersoll Rand Company
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07677
Attention: Vice President and Secretary
(c) if to Merger Sub:
IR Merger Corporation
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07677
Attention: Secretary
7.2 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES
This Agreement (including the documents and instruments referred to herein)
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except for the provisions of Article
III, is not intended to confer upon any person other than the parties any rights
or remedies.
6
7.3 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New Jersey regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
7.4 GUARANTY
At or immediately after the Effective Time, IR-Limited agrees to guaranty
such debt of IR-New Jersey as IR-Limited and IR-New Jersey shall mutually agree.
IN WITNESS WHEREOF, IR-New Jersey, IR-Limited and Merger Sub have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first above written.
INGERSOLL-RAND COMPANY LIMITED
By: /s/ RONALD G. HELLER
------------------------------------
Name: Ronald G. Heller
Title: Secretary
INGERSOLL-RAND COMPANY
By: /s/ PATRICIA NACHTIGAL
------------------------------------
Name: Patricia Nachtigal
Title: Senior Vice President and
General Counsel
IR MERGER CORPORATION
By: /s/ GERALD E. SWIMMER
------------------------------------
Name: Gerald E. Swimmer
Title: President
7
EXHIBIT A
STOCK PLANS SPONSORED
BY IR-NEW JERSEY
<Table>
1. Ingersoll-Rand Company Employee Stock Purchase Plan
2. I-R/Clark Leveraged Employee Stock Ownership Plan
3. Ingersoll-Rand Company Supplemental Savings and Stock
Investment Plan
4. IR Executive Deferred Compensation Plan
5. Ingersoll-Rand/Thermo King Savings and Stock Investment Plan
6. Ingersoll-Rand Company Savings Plan for Bargaining Unit
Employees
7. Management Incentive Unit Plan of Ingersoll-Rand Company
8. Ingersoll-Rand Company Savings and Stock Investment Plan
9. Dresser-Rand Company Retirement Savings Plan
10. Dresser-Rand Company Retirement Savings Plan B
11. Thermo-King de Puerto Rico Retirement Savings Plan
</Table>
A-1
EXHIBIT B
STOCK PLANS SPONSORED
BY IR-LIMITED
<Table>
1. Ingersoll-Rand Company Incentive Stock Plan of 1998
2. Ingersoll-Rand Company Incentive Stock Plan of 1995
3. Ingersoll-Rand Company Incentive Stock Plan of 1990
4. IR Director Deferred Compensation and Stock Award Plan
</Table>
B-1
FORM NO. 2 ANNEX II
[BERMUDA CREST LOGO]
BERMUDA
THE COMPANIES ACT 1981
MEMORANDUM OF ASSOCIATION OF
COMPANY LIMITED BY SHARES
(Section 7(1) and (2))
MEMORANDUM OF ASSOCIATION
OF
INGERSOLL-RAND COMPANY LIMITED
(hereinafter referred to as "the Company")
1. The liability of the members of the Company is limited to the amount (if any)
for the time being unpaid on the shares respectively held by them.
2. We, the undersigned, namely,
<Table>
<Caption>
BERMUDIAN NUMBER OF
STATUS SHARES
NAME ADDRESS (YES/NO) NATIONALITY SUBSCRIBED
---- ------- --------- ----------- ----------
James M. MacDonald Clarendon House Yes British One
2 Church Street
Hamilton HM 11
Bermuda
John C.R. Collis Clarendon House Yes British One
2 Church Street
Hamilton HM 11
Bermuda
Anthony D. Whaley Clarendon House Yes British One
2 Church Street
Hamilton HM 11
Bermuda
</Table>
do hereby respectively agree to take such number of shares of the Company as may
be allotted to us respectively by the provisional directors of the Company, not
exceeding the number of shares for which we have respectively subscribed, and to
satisfy such calls as may be made by the directors, provisional directors or
promoters of the Company in respect of the shares allotted to us respectively.
3. The Company is to be an EXEMPTED Company as defined by the Companies Act
1981.
4. The Company, with the consent of the Minister of Finance, has power to hold
land situate in Bermuda not exceeding in all, including the
following parcels:
N/A
5. The authorised share capital of the Company is US$12,000 divided into shares
of US$1.00 each. The minimum subscribed share capital of the Company is
US$12,000.00.
6. The objects for which the Company is formed and incorporated are --
(a) to carry on business as a holding company and to acquire and hold
shares, stocks, debentures, debenture stock, interests, bonds, mortgages,
obligations and securities of any kind issued or guaranteed by any company,
corporation, partnership or other entity, or undertaking of whatever nature and
wherever constituted or carrying on business, and shares, stock, debentures,
debenture stock, interests, bonds, obligations and other securities issued or
guaranteed by any government, sovereign ruler, commissioners, trust, local
authority or other public body, whether in Bermuda or elsewhere, and to vary,
transpose, dispose of or otherwise deal with from time to time as may be
considered expedient any of the Company's investments for the time being;
(b) to acquire any such shares and other securities as are mentioned in
the preceding paragraph by subscription, syndicate participation, tender,
acquisition, purchase, exchange or otherwise and to subscribe for the same,
either conditionally or otherwise, and to guarantee the subscription thereof and
to exercise and enforce all rights and powers conferred by or incident to the
ownership thereof;
(c) to co-ordinate the administration, policies, management, supervision,
control, research, planning, trading and any and all other activities of any
company or companies now or hereafter incorporated, organised, or acquired which
may be or may become a Group Company (which expression, in this and the next
following paragraphs means a company, corporation, partnership or other entity,
wherever incorporated or formed, which is or becomes a holding company,
corporation, partnership or entity or a subsidiary of, or affiliated with, the
Company or any company, corporation, partnership or other entity now or
hereafter incorporated or formed or acquired which is considered to be within
the same "group" as the Company as such term is referred to in the Investment
Business Act 1998). A company, corporation, partnership or other entity shall be
deemed to be a subsidiary of the Company if it is controlled, directly or
indirectly, by the Company. A company, corporation, partnership or other entity
shall be deemed to be a holding company of the Company if that other company,
corporation, partnership or entity is its subsidiary. A company, corporation,
partnership or other entity shall be deemed to be affiliated with another
company, corporation, partnership or entity only if one of them is the
subsidiary of the other or both are subsidiaries of the same company,
corporation, partnership or entity or each of them is controlled by the same
person;
(d) to provide financing and financial investment, management and advisory
services to any Group Company, which shall include but not be limited to
granting or providing credit and financial accommodation, lending and making
advances with or without interest to any Group Company and lending to or
depositing with any bank funds or other assets to provide security (by way of
mortgage, charge, pledge, lien or otherwise) for loans or other forms of
financing granted to such Group Company by such bank; provided that the Company
shall not be deemed to have the power to act as executor or administrator, or as
trustee, except in connection with the issue of bonds and debentures by the
Company or any Group Company or in connection with a pension scheme for the
benefit of employees or former employees of the Company or a Group Company or
their respective predecessors, or the dependents or connections of such
employees or former employees;
(e) the packaging of goods of all kinds;
(f) the designing and manufacturing of goods and the buying, selling,
offering, providing and dealing in goods and services of all kinds, including
security and safety, climate control, industrial productivity and infrastructure
products and services;
(g) buying, selling and dealing in goods of all kinds;
(h) mining and quarrying and exploration for metals, minerals, fossil fuel
and precious stones of all kinds and their preparation for sale or use;
(i) exploring for, the drilling for, the moving, transporting and refining
petroleum and hydro carbon products including oil and oil products;
(j) scientific research including the improvement discovery and
development of processes, inventions, patents and designs and the construction,
maintenance and operation of laboratories and research centres;
2
(k) land, sea and air undertakings including the land, ship and air
carriage of passengers, mails and goods of all kinds;
(l) ships and aircraft owners, managers, operators, agents, builders and
repairers;
(m) acquiring, owning, selling, chartering, repairing or dealing in ships
and aircraft;
(n) travel agents, freight contractors and forwarding agents;
(o) dock owners, wharfingers, warehousemen;
(p) ship chandlers and dealing in rope, canvas oil and ship stores of all
kinds;
(q) all forms of engineering;
(r) farmers, livestock breeders and keepers, graziers, butchers, tanners
and processors of and dealers in all kinds of live and dead stock, wool, hides,
tallow, grain, vegetables and other produce;
(s) acquiring by purchase or otherwise and holding as an investment
inventions, patents, trade marks, trade names, sales and marketing intangibles,
trade secrets, designs and the like;
17. buying, selling, hiring, letting and dealing in conveyances of any
sort;
18. employing, providing, hiring out and acting as agent for artists,
actors, entertainers of all sorts, authors, composers, producers, directors,
engineers and experts or specialists of any kind;
19. to acquire by purchase or otherwise and hold, sell, dispose of and
deal in real property situated outside Bermuda and in personal property of all
kinds wheresoever situated; and
20. to enter into any guarantee, contract of indemnity or suretyship and
to assure, support or secure with or without consideration or benefit the
performance of any obligations of any person or persons and to guarantee the
fidelity of individuals filling or about to fill situations of trust or
confidence.
7. Powers of the Company
1. The Company shall, pursuant to the Section 42 of the Companies Act
1981, have the power to issue preference shares which are, at the option of the
holder, liable to be redeemed.
2. The Company shall, pursuant to Section 42A of the Companies Act 1981,
have the power to purchase its own shares.
Signed by each subscriber in the presence of at least one witness attesting
the signature thereof
<Table>
/s/ ANTHONY D. WHALEY /s/ TIFFANIE PILCHER
----------------------------------------------------- -----------------------------------------------------
Anthony D. Whaley Tiffanie Pilcher
/s/ JAMES M. MACDONALD /s/ TIFFANIE PILCHER
----------------------------------------------------- -----------------------------------------------------
James M. MacDonald Tiffanie Pilcher
/s/ JOHN C. R. COLLIS /s/ TIFFANIE PILCHER
----------------------------------------------------- -----------------------------------------------------
John C. R. Collis Tiffanie Pilcher
(Subscribers) (Witnesses)
</Table>
SUBSCRIBED this 31ST day of July, 2001.
3
ANNEX III
AMENDED AND RESTATED
BYE-LAWS
OF
INGERSOLL-RAND COMPANY LIMITED
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
INTERPRETATION................................................... 1
1. Interpretation.............................................. 1
BOARD OF DIRECTORS............................................... 2
2. Board of Directors.......................................... 2
3. Management of the Company................................... 2
4. Power to Authorise Specific Actions......................... 3
5. Power to Appoint Attorney................................... 3
6. Power to Delegate to a Committee............................ 3
7. Power to Appoint and Dismiss Employees...................... 3
8. Power to Borrow and Charge Property......................... 4
Exercise of Power to Purchase Shares of or Discontinue the
9. Company..................................................... 4
10. Election of Directors....................................... 4
11. Defects in Appointment of Directors......................... 5
12. Removal of Directors........................................ 5
13. Vacancies on the Board...................................... 6
14. Notice of Meetings of the Board............................. 6
15. Quorum at Meetings of the Board............................. 6
16. Meetings of the Board....................................... 6
17. Unanimous Written Resolutions of Directors.................. 7
18. Contracts and Disclosure of Directors' Interests............ 7
19. Remuneration of Directors................................... 7
OFFICERS......................................................... 7
20. Officers of the Company..................................... 7
21. Appointment and Authority of Officers....................... 7
22. Duties of Officers.......................................... 8
23. Chairman of Meetings........................................ 8
24. Register of Directors and Officers.......................... 8
MINUTES.......................................................... 8
25. Obligations of Board to Keep Minutes........................ 8
INDEMNITY........................................................ 8
26. Indemnification of Directors and Officers of the Company.... 8
MEETINGS......................................................... 10
27. Annual General Meeting...................................... 10
28. Special General Meetings.................................... 10
29. Accidental Omission of Notice of General Meeting............ 10
30. Meeting Called on Requisition of Members.................... 10
31. Short Notice................................................ 11
32. Postponement of Meetings.................................... 11
33. Quorum for General Meeting.................................. 11
34. Adjournment of Meetings..................................... 11
35. Attendance at Meetings...................................... 11
36. Unanimous Written Resolutions of Members.................... 12
</Table>
i
<Table>
<Caption>
PAGE
----
37. Attendance of Directors..................................... 12
38. Presiding Officer at Meetings............................... 12
39. Voting at Meetings.......................................... 12
40. Seniority of Joint Holders Voting........................... 13
41. Instrument of Proxy......................................... 13
42. Representation of Corporations at Meetings.................. 13
SHARE CAPITAL AND SHARES......................................... 13
43. Authorised Share Capital.................................... 13
44. Power to Issue Shares....................................... 15
Variation of Rights, Alteration of Share Capital and
45. Purchase of Shares of the Company........................... 15
46. Registered Holder of Shares................................. 16
47. Death of a Joint Holder..................................... 16
48. Certificated or Uncertificated Shares....................... 16
REGISTER OF MEMBERS.............................................. 16
49. Contents of Register of Members............................. 16
50. Inspection of Register of Members........................... 17
51. Transactions with Interested Members........................ 17
52. Record Dates................................................ 17
53. Scrutineers................................................. 17
TRANSFER OF SHARES............................................... 18
54. Instrument of Transfer...................................... 18
55. Restriction on Transfer..................................... 18
56. Transfers by Joint Holders.................................. 18
TRANSMISSION OF SHARES........................................... 18
57. Representative of Deceased Member........................... 18
58. Registration on Death or Bankruptcy......................... 18
59. Dividend Entitlement of Transferee.......................... 19
DIVIDENDS AND OTHER DISTRIBUTIONS................................ 19
60. Declaration of Dividends by the Board....................... 19
CAPITALISATION................................................... 19
61. Issue of Bonus Shares....................................... 19
ACCOUNTS AND FINANCIAL STATEMENTS................................ 19
62. Records of Account.......................................... 19
63. Fiscal Year................................................. 19
64. Financial Statements........................................ 19
AUDIT............................................................ 20
65. Appointment of Auditor...................................... 20
66. Remuneration of Auditor..................................... 20
67. Vacation of Office of Auditor............................... 20
68. Access to Books of the Company.............................. 20
69. Report of the Auditor....................................... 20
NOTICES.......................................................... 20
70. Notices to Members of the Company........................... 20
</Table>
ii
<Table>
<Caption>
PAGE
----
SEAL OF THE COMPANY.............................................. 21
71. The Seal.................................................... 21
72. Manner in Which Seal is to be Affixed....................... 21
WINDING-UP....................................................... 21
73. Winding-up/Distribution by Liquidator....................... 21
ALTERATION OF BYE-LAWS........................................... 21
74. Alteration of Bye-laws...................................... 21
</Table>
iii
AMENDED AND RESTATED
BYE-LAWS
OF
INGERSOLL-RAND COMPANY LIMITED
A BERMUDA LIMITED LIABILITY COMPANY
INTERPRETATION
1. INTERPRETATION
(1) In these Bye-laws the following words and expressions shall, where not
inconsistent with the context and not defined in the text, have the following
meanings respectively:
(a) "Act" means the Companies Act 1981, as amended from time to time;
(b) "Auditor" includes any individual, general or limited partnership,
corporation, firm, association or company (including a limited liability
company);
(c) A person is a "beneficial owner" of any shares of the Company:
(i) which it has the right to acquire pursuant to any agreement, or
upon exercise of conversion rights, warrants or options, or otherwise;
and
(ii) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (i) above),
by any other person with which it has any agreement, arrangement or
understanding with respect to the acquisition, holding, voting or
disposition of shares or of any material part of the assets of the
Company or of it, or which is its "affiliate" or "associate" as those
terms are defined in Rule 12b-2 of the General Rules and Regulations
under the United States Securities Exchange Act of 1934 (or any
successor rule or regulation);
(d) "Board" means the Board of Directors appointed or elected pursuant
to these Bye-laws and acting by resolution in accordance with the Act and
these Bye-laws or the Directors present at a meeting of Directors at which
there is a quorum;
(e) "Business Combination" means:
(i) any amalgamation, merger or consolidation of the Company or one
of its subsidiaries with an Interested Member or with any person that
is, or would be after such amalgamation, merger or consolidation, an
affiliate or associate of an Interested Member;
(ii) any transfer or other disposition to or with an Interested
Member or any affiliate or associate of an Interested Member of all or
any material part of the assets of the Company or one of its
subsidiaries; and
(iii) any issuance or transfer of shares of the Company upon
conversion of or in exchange for the securities or assets of any
Interested Member, or with any person that is, or would be after such
amalgamation, merger or consolidation, an affiliate or associate of an
Interested Member;
(f) "Company" means the company for which these Bye-laws are approved
and confirmed;
(g) "Director" means a director of the Company;
(h) "Interested Member" means any Member that:
(i) is the beneficial owner, directly or indirectly, of 10% or more
of the voting power of the voting shares of the Company then in issue;
or
(ii) is an affiliate or associate of the Company and at any time
within the five-year period immediately prior to the date in question
was the beneficial owner, directly or indirectly, of 10% or more of the
voting power of the shares then in issue of the Company. For the purpose
of determining whether a Member is an Interested Member, the number of
voting shares of the Company then in issue shall include shares deemed
to be beneficially owned by such Member, but shall not include
any other unissued voting shares of the Company which may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise;
(i) "Member" means the person registered in the Register of Members as
the holder of shares in the Company and, when two or more persons are so
registered as joint holders of shares, means the person whose name stands
first in the Register of Members as one of such joint holders or all of
such persons as the context so requires;
(j) "Notice" means written notice as further defined in these Bye-laws
unless otherwise specifically stated;
(k) "Officer" means any person appointed by the Board to hold an
office in the Company;
(l) "Person" means any individual, general or limited partnership,
corporation, firm, association, trust, estate, company (including a limited
liability company) or any other entity or organisation or bodies of persons
whether corporate or otherwise, including a government, a political
subdivision or agency or instrumentality thereof;
(m) "Register of Directors and Officers" means the Register of
Directors and Officers referred to in these Bye-laws;
(n) "Register of Members" means the Register of Members referred to in
these Bye-laws;
(o) "Resident Representative" means any person appointed to act as
resident representative and includes any deputy or assistant resident
representative; and
(p) "Secretary" means the person appointed to perform any or all of
the duties of secretary of the Company and includes any deputy or assistant
secretary.
(2) In these Bye-laws, where not inconsistent with the context:
(a) words denoting the plural number include the singular number and
vice versa;
(b) words denoting the masculine gender include the feminine gender;
(c) the word:
(i) "may" shall be construed as permissive;
(ii) "shall" shall be construed as imperative; and
(d) unless otherwise provided herein words or expressions defined in
the Act shall bear the same meaning in these Bye-laws.
(3) Expressions referring to writing or written shall, unless the contrary
intention appears, include cable, telex, telecopier, facsimile, printing,
computer generated email, lithography, photography and other modes of
representing words in legible and non-transitory form.
(4) Headings used in these Bye-laws are for convenience only and are not to
be used or relied upon in the construction hereof.
BOARD OF DIRECTORS
2. BOARD OF DIRECTORS
The business of the Company shall be managed by the Board.
3. MANAGEMENT OF THE COMPANY
(1) In managing the business of the Company, the Board may exercise all
such powers of the Company as are not, by statute or by these Bye-laws,
expressly required to be exercised by the Company in general
2
meeting, subject, nevertheless, to these Bye-laws, the provisions of any statute
and to such directions as may be prescribed by the Company in general meeting.
(2) No regulation or alteration to these Bye-laws made by the Company in
general meeting shall invalidate any prior act of the Board which would have
been valid if that regulation or alteration had not been made.
(3) The Board may procure that the Company pay all expenses incurred in
promoting and organising the Company.
4. POWER TO AUTHORISE SPECIFIC ACTIONS
The Board may from time to time and at any time authorise any person or
body of persons to act on behalf of the Company for any specific purpose and in
connection therewith to execute any agreement, document or instrument on behalf
of the Company.
5. POWER TO APPOINT ATTORNEY
The Board, or any duly authorised committee, may from time to time and at
any time by power of attorney appoint any person or body of persons, whether
nominated directly or indirectly by the Board, to be an attorney of the Company
for such purposes and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Board) and for such period and
subject to such conditions as it may think fit and any such power of attorney
may contain such provisions for the protection and convenience of persons
dealing with any such attorney as the Board may think fit and may also authorise
any such attorney to sub-delegate all or any of the powers, authorities and
discretions so vested in the attorney. Such attorney may, if so authorised under
the seal of the Company, execute any deed or instrument under such attorney's
personal seal with the same effect as the affixation of the seal of the Company.
6. POWER TO DELEGATE TO A COMMITTEE
(1) The Board may delegate any or all of its powers to a committee or
committees appointed by the Board which may consist partly or entirely of
non-Directors and every such committee shall conform to such directions as the
Board shall impose on them; provided that a committee appointed by the Board
shall not have the power to set its or its members' remuneration. The meetings
and proceedings of any such committee shall be governed by the provisions of
these Bye-laws regulating the meetings and proceedings of the Board, so far as
the same are applicable and are not superseded by directions imposed by the
Board.
(2) The Board, by the affirmative vote of a majority of the entire Board,
may appoint from their number an executive committee of which committee a
majority of committee members shall constitute a quorum; and to such extent as
shall be provided in these Bye-laws and as may be permitted by law, such
committee shall have and may exercise any or all of the powers of the Board.
(3) The Board, by the affirmative vote of a majority of the entire Board,
may appoint any other standing committees and such standing committees shall
have and may exercise such powers as may be conferred and authorised by these
Bye-laws or by the Board and as may be permitted by law.
(4) Each committee of the Board shall keep complete, accurate minutes and
records of all actions taken by such committee, prepare such minutes and records
in a timely fashion and promptly distribute all such minutes and records to each
member of the Board at the meeting of the Board next ensuing.
7. POWER TO APPOINT AND DISMISS EMPLOYEES
The Board may appoint, suspend or remove any Officer, manager, secretary,
clerk, agent or employee of the Company and may fix their remuneration and
determine their duties. Nothing contained in this Bye-law shall be construed to
limit the Officers or any other Company official from being able to exercise
these same powers to the extent they are duly authorised to do so.
3
8. POWER TO BORROW AND CHARGE PROPERTY
The Board may exercise all the powers of the Company to borrow money and to
mortgage or charge its undertaking and property, or any part thereof, and may
issue debentures, debenture shares and other securities whether outright or as
security for any debt, liability or obligation of the Company or any third
party. Nothing contained in this Bye-law shall be construed to limit the
Officers or any other Company official from being able to exercise these same
powers to the extent they are duly authorised to do so.
9. EXERCISE OF POWER TO PURCHASE SHARES OF OR DISCONTINUE THE COMPANY
(1) The Board may exercise all the powers of the Company to purchase all or
any part of its own shares pursuant to Section 42A of the Act.
(2) The Board may exercise all the powers of the Company to discontinue the
Company to a named country or jurisdiction outside Bermuda pursuant to Section
132G of the Act.
10. ELECTION OF DIRECTORS
(1) The Board shall consist of not less than three and not more than twenty
Directors or such number in excess thereof as the Members may from time to time
determine. The initial Directors shall be elected or appointed at the statutory
meeting of the Company and thereafter, except in the case of casual vacancy,
Directors shall be elected or appointed at the annual general meeting or at any
special general meeting called for that purpose. Directors shall hold office for
such term as the Members may determine or, in the absence of such determination,
until the next annual general meeting or until their successors are elected or
appointed or their office is otherwise vacated. Any general meeting may
authorise the Board to fill any vacancy left unfilled at a general meeting. The
number of Directors to be elected at any time within the minimum and maximum
limitations specified herein shall be determined from time to time by the Board
pursuant to a resolution adopted by the affirmative vote of a majority of the
Board then in office. Any vacancy on the Board within the minimum and maximum
limitations specified in this Bye-law may be filled by a majority of the Board
then in office; provided that a quorum is present. During the existence of a
vacancy on the Board the remaining Directors shall have full power to act;
provided that a quorum is present. The holders of Class A Common Shares (as
defined hereinafter) shall be entitled at all meetings of the Members at which
Directors are elected to one vote for each such share held by them as described
in this Bye-Law. The holders of Class B Common Shares (as defined hereinafter)
shall not be entitled to vote for the election of Directors. At all elections of
Directors each holder of Class A Common Shares shall be entitled to as many
votes as shall equal the number of votes which such holder would be entitled to
cast at a general meeting, multiplied by the number of Directors to be elected,
and such holder may cast all such votes for a single Director, or may distribute
them among the number to be voted for or any two or more Directors as such
holder may see fit.
(2) The Board shall be divided as equally as may be possible into three
classes, each of which shall consist of such number as these Bye-laws may from
time to time provide. Initially, the Directors of the first class shall be
elected for a term of one year or until the first annual general meeting, the
Directors of the second class shall be elected for a term of two years or until
the second annual meeting, and the Directors of the third class shall be elected
for a term of three years or until the third annual meeting. At each annual
election thereafter, the successors of the Directors of the class whose term
expires in that year shall be elected to hold office for a term of three years,
so that the term of office of one class of Directors shall expire each year.
(3) If the number of Directors is changed, any newly created directorships
or decrease in directorships shall be so apportioned among the classes as to
make all classes as nearly equal in number as possible. In case of any increase
in the number of Directors of any class or classes within the minimum and
maximum limitations specified in Bye-law 10(1) causing a casual vacancy,
additional Directors may be elected by the Board to fill such casual vacancy,
but any such Director so elected shall hold office only until the next
succeeding annual general meeting of Members and until his or her successor
shall have been elected and qualified. No decrease in the number of Directors
shall shorten the term of any incumbent Director.
4
(4) Directors may be removed without cause only upon the affirmative vote
of the holders of at least 80% of the shares of the Company entitled to vote for
the election of Directors. Directors may be removed for cause only upon the
affirmative vote of the holders of at least 66 2/3% of the shares of the Company
entitled to vote for the election of Directors; provided that any meeting
convened and held to consider the removal of a Director shall be convened and
held in accordance with Bye-law 12.
(5) Notwithstanding subparagraph (1) of this Bye-law, any Member entitled
to vote for the election of Directors at a meeting or to express a consent in
writing without a meeting may nominate a person or persons for election as a
Director only if written notice of such Member's intent to make such nomination
is given to the Secretary of the Company, either by personal delivery, mail or
facsimile not later than (a) with respect to an election to be held at an annual
general meeting of Members, 90 days in advance of the anniversary of the
immediately preceding annual general meeting or if the date of the annual
general meeting of Members occurs more than 30 days before or 60 days after the
anniversary of such immediately preceding annual general meeting, not later than
the close of business on the seventh day following the date on which notice of
such meeting is given to Members and (b) in the case of any Member who wishes to
nominate a person or persons for election as a Director pursuant to consents in
writing by Members without a meeting (to the extent election by such consents is
permitted under applicable law and these Bye-laws), 60 days in advance of the
date on which materials soliciting such consents are first mailed to Members or,
if no such materials are required to be mailed under applicable law, 60 days in
advance of the date on which the first such consent in writing is executed. Each
such notice shall set forth the name and address of the Member who intends to
make the nomination and of the person or persons to be nominated for election as
a Director, a representation that the Member is a holder of record of shares of
the Company entitled to vote at such meeting or to express such consent in
writing and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice or to execute such a consent in
writing to elect such person or persons as a Director, a description of all
arrangements or understandings between the Member and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations for election as a Director are to be made by the
Member, such other information regarding each nominee proposed by such Member as
would have been required to be included in a proxy statement filed pursuant to
the proxy rules of the United States Securities and Exchange Commission if such
nominee had been nominated, or was intended to be nominated, for election as a
Director by the Board, and the consent of each nominee to serve as a Director if
so elected. The Board may refuse to acknowledge the nomination of any person not
made in compliance with the foregoing procedures.
11. DEFECTS IN APPOINTMENT OF DIRECTORS
All bona fide acts taken at any meeting of the Board or by a committee of
the Board or by any person acting as a Director shall, notwithstanding that it
be afterwards discovered that there was some defect in the appointment of any
Director or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
qualified to be a Director.
12. REMOVAL OF DIRECTORS
(1) Subject to Bye-law 10(4) and any provision to the contrary in these
Bye-laws, the Members may, at any special general meeting convened and held in
accordance with these Bye-laws, remove a Director; provided that the notice of
any such meeting convened for the purpose of removing a Director shall contain a
statement of the intention so to do and be served on such Director not less than
fourteen days before the meeting and at such meeting such Director shall be
entitled to be heard on the motion for such Director's removal.
(2) A vacancy on the Board created by the removal of a Director under the
provisions of subparagraph (1) of this Bye-law may be filled by the Members at
the meeting at which such Director is removed and, in the absence of such
election or appointment, the Board may fill the vacancy in accordance with
Bye-law 13.
5
13. VACANCIES ON THE BOARD
(1) Subject to any requirements of these Bye-laws with respect to the
filling of vacancies among additional Directors elected by a class or classes of
shares, if the office of any Director becomes vacant, the remaining Directors
may, by a majority vote, elect a successor who shall hold office until the next
succeeding annual general meeting of the Members and until his or her successor
shall have been elected and qualified.
(2) The Board may act notwithstanding any vacancy in its number but, if and
so long as its number is reduced below the number fixed by these Bye-laws as the
quorum necessary for the transaction of business at meetings of the Board
pursuant to Bye-law 15, the continuing Directors or Director may act for the
purpose of (i) summoning a general meeting of the Company or (ii) preserving the
assets of the Company.
(3) The office of Director shall be vacated if the Director:
(a) is removed from office pursuant to these Bye-laws or is prohibited
from being a Director by law;
(b) is or becomes bankrupt or makes any arrangement or composition
with his or her creditors generally;
(c) is or becomes of unsound mind or dies; or
(d) resigns his or her office by notice in writing to the Company.
14. NOTICE OF MEETINGS OF THE BOARD
(1) Notice of a regular meeting of the Board shall be deemed to be duly
given to a Director if it is given to such Director verbally in person or by
telephone or otherwise communicated or sent to such Director by mail, courier
service, cable, telex, telecopier, facsimile, printing, computer generated email
or other mode of representing words in a legible and non-transitory form at such
Director's last known address or any other address given by such Director to the
Company for this purpose at least two days before the proposed date of the
meeting, but a failure of the Secretary to send such notice shall not invalidate
any proceedings of the Board at such meeting.
(2) Notice of a special meeting of the Board shall be deemed to be duly
given to a Director if it is sent to such Director by mail at least two days
before the proposed date of the meeting, or given to such Director verbally in
person or by telephone or otherwise communicated or sent to such Director by
mail, courier service, cable, telex, telecopier facsimile, printing, computer
generated email or other mode of representing words in a legible and
non-transitory form, at such Director's last known address or any other address
given by such Director to the Company for this purpose at least one day before
the proposed date of the meeting, but such notice may be waived by any Director.
At any special meeting at which every Director shall be present, even without
notice, any business may be transacted.
15. QUORUM AT MEETINGS OF THE BOARD
The quorum necessary for the transaction of business at all meetings of the
Board shall be a majority of the Directors then in office. If at any meeting of
the Board there be less than a quorum present, a majority of those present or
any Director solely present may adjourn the meeting from time to time without
further notice.
16. MEETINGS OF THE BOARD
(1) Regular meetings of the Board shall be held at such times and intervals
as the Board may from time to time determine.
(2) Special meetings of the Board shall be held on the requisition of the
Chairman, if one is appointed, the Deputy Chairman, if one is appointed, the
President, or by 33 1/3% of the Directors then in office.
(3) Directors may participate in any meeting of the Board by means of such
telephone, electronic or other communication facilities as permit all persons
participating in the meeting to communicate with each
6
other simultaneously and instantaneously, and participation in such a meeting
shall constitute presence in person at such meeting.
(4) Unless a greater number is expressly required by law or these Bye-laws,
the affirmative votes of a majority of the votes cast by the Directors present
at a meeting at which a quorum is in attendance shall be the act of the Board or
a committee thereof, as appropriate. At any time that these Bye-laws provide
that Directors elected by the holders of a class or series of shares shall have
more or less than one vote per Director on any matter, every reference in these
Bye-laws to a majority or other proportion of Directors shall refer to a
majority or other proportion of the votes of such Directors.
17. UNANIMOUS WRITTEN RESOLUTIONS OF DIRECTORS
A resolution in writing signed by all the Directors then in office, which
may be in counterparts, shall be as valid as if it had been passed at a meeting
of the Board duly called and constituted, such resolution to be effective on the
date on which the last Director signs the resolution.
18. CONTRACTS AND DISCLOSURE OF DIRECTORS' INTERESTS
(1) Any Director, or any firm, partner or any company with whom any
Director is associated, may act in a professional capacity for the Company and
such Director or such Director's firm, partner or such company shall be entitled
to remuneration for professional services as if such Director were not a
Director; provided that nothing herein contained shall authorise a Director or
Director's firm, partner or such company to act as Auditor of the Company.
(2) A Director who is directly or indirectly interested in a contract or
proposed contract or arrangement with the Company shall declare the nature of
such interest as required by the Act.
(3) Following a declaration being made pursuant to this Bye-law, and unless
disqualified by the chairman of the relevant Board meeting, a Director may vote
in respect of any contract or proposed contract or arrangement in which such
Director is interested and may be counted in the quorum at such meeting.
19. REMUNERATION OF DIRECTORS
The remuneration (if any) of the Directors shall be determined by the Board
from time to time. The Directors may also be paid all travel, hotel and other
expenses properly incurred by them in attending and returning from meetings of
the Board, any committee appointed by the Board, general meetings of the
Company, or in connection with the business of the Company or their duties as
Directors generally; provided that nothing contained herein shall be construed
to preclude any Director from serving the Company in any other capacity or
receiving compensation therefor.
OFFICERS
20. OFFICERS OF THE COMPANY
The Officers of the Company shall consist of a President and a Vice
President or a Chairman and a Deputy Chairman, such additional Vice Presidents
or Deputy Chairmen as the Board may from time to time determine, a Secretary and
such additional Officers, including a Chief Executive Officer, as the Board may
from time to time determine all of whom shall be deemed to be Officers for the
purposes of these Bye-laws. A person may hold any number of offices
simultaneously; provided that the same person may not hold the offices of
President and Vice President, or Chairman and Deputy Chairman, simultaneously.
21. APPOINTMENT AND AUTHORITY OF OFFICERS
(1) The Board shall, as soon as possible after the statutory meeting of
Members and after each annual general meeting, appoint a President and a Vice
President or a Chairman and a Deputy Chairman who shall be Directors. Any
vacancy arising in the position of President or Chairman shall be filled by the
Board at such
7
time and in such manner as the Board shall determine. Such Vice President or
Deputy Chairman shall have such duties and responsibilities as provided in these
Bye-laws or as may be determined by the Board from time to time.
(2) The Secretary and additional Officers, if any, shall be appointed by
the Board from time to time. The Chief Executive Officer shall have the
authority to appoint and remove assistant officers (who shall not be deemed to
be Officers for the purposes of these Bye-laws) with such authority as the Chief
Executive Officer shall deem appropriate.
22. DUTIES OF OFFICERS
The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to them by
the Board from time to time.
23. CHAIRMAN OF MEETINGS
Unless otherwise agreed by a majority of those attending and entitled to
attend and vote thereat, the Chairman, if one is appointed, or, in the absence
of a Chairman, the Deputy Chairman, if one is appointed, or, in the absence of
the Deputy Chairman, the President, shall act as chairman at any general
meeting, or in the absence of any of the foregoing Officers, a chairman shall be
appointed or elected by those present at the meeting and entitled to vote.
24. REGISTER OF DIRECTORS AND OFFICERS
The Board shall cause to be kept in one or more books at the registered
office of the Company a Register of Directors and Officers and shall enter
therein the particulars required by the Act.
MINUTES
25. OBLIGATIONS OF BOARD TO KEEP MINUTES
(1) The Board shall cause minutes to be duly entered in books provided for
the purpose:
(a) of all elections and appointments of Officers;
(b) of the names of the Directors present at each meeting of the Board
and of any committee appointed by the Board; and
(c) of all resolutions and proceedings of general meetings of the
Members, meetings of the Board and meetings of committees appointed by the
Board.
(2) Minutes prepared in accordance with the Act and these Bye-laws shall be
kept by the Secretary at the registered office of the Company.
INDEMNITY
26. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY
(1) The Company shall indemnify any person who was, is or is threatened to
be made a party to a Proceeding (as hereinafter defined) by reason of the fact
that he or she (a) is or was a Director or Officer of the Company or (b) while a
Director or Officer of the Company, is or was serving at the request of the
Company as a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic
corporation, general or limited partnership, firm, association, trust, estate,
company (including a limited liability company) or any other entity or
organisation or employee benefit plan or other enterprise, to the fullest extent
permitted under Bermuda law, as the same exists or may hereafter be amended.
Such right shall be a contract right and as such shall run to the benefit of any
Director or Officer who is elected and accepts the position of Director or
Officer of the Company or elects to continue to serve as
8
a Director or Officer of the Company while this Bye-law is in effect. Any repeal
or amendment of this Bye-law shall be prospective only and shall not limit the
rights of any such Director or Officer or the obligations of the Company with
respect to any claim arising from or related to the services of such Director or
Officer in any of the foregoing capacities prior to any such repeal or amendment
to this Bye-law. Such right shall include the right to be paid by the Company
expenses incurred in defending any such Proceeding in advance of its final
disposition to the maximum extent permitted under Bermuda law, as the same
exists or may hereafter be amended; provided that to the extent required by law,
such payment of expenses in advance of the final disposition of the Proceeding
shall be made only upon receipt of an undertaking by the person to repay all
amounts advanced if it should be ultimately determined that the Director or
Officer is not entitled to be indemnified under this Bye-law or otherwise. If a
claim for indemnification or advancement of expenses hereunder is not paid in
full by the Company within 60 days after a written claim has been received by
the Company, the claimant may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim, and if successful in whole or
in part, the claimant shall also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under
Bermuda law, but the burden of proving such defense shall be on the Company.
Neither the failure of the Company (including the Board or any committee
thereof, independent legal counsel or Members) to have made its determination
prior to the commencement of such action that indemnification of, or advancement
of costs of defense to, the claimant is permissible in the circumstances nor an
actual determination by the Company (including the Board or any committee
thereof, independent legal counsel or Members) that such indemnification or
advancement is not permissible shall be a defense to the action or create a
presumption that such indemnification or advancement is not permissible. In the
event of the death of any person having a right of indemnification under the
foregoing provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators and personal representatives.
Except as otherwise provided in this subparagraph (1), the Company shall be
required to indemnify a Director or Officer in connection with a Proceeding (or
part thereof) commenced by such person only if the commencement of such
Proceeding (or part thereof) by the person was authorised by the Board.
(2) The Company may additionally indemnify any employee or agent of the
Company to the fullest extent permitted by law.
(3) The rights conferred on any person indemnified by this Bye-law shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Memorandum of Association of the
Company, these Bye-laws, agreement, vote of the Members or disinterested
Directors or otherwise.
(4) The Company's obligation, if any, to indemnify or to advance expenses
to any person indemnified who was or is serving at its request as a Director or
Officer or otherwise of another person described in subparagraph (1) shall be
reduced by any amount such person may collect as indemnification or advancement
of expenses from such other person.
(5) This Bye-law shall not limit the right of the Company, to the extent
and in the manner permitted by law, to indemnify and to advance expenses to
persons other than persons authorised for indemnification under this Bye-law
when and as authorised by appropriate corporate action.
(6) The indemnity provided by this Bye-law 26 shall not extend to any
matter in respect of any fraud or dishonesty which may attach to any of said
persons.
(7) "Proceeding," for purposes of this Bye-law 26, means any threatened,
pending or completed action, suit, claim or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such an action,
suit, claim or proceeding, and any inquiry or investigation that could lead to
such an action, suit, claim or proceeding.
(8) Each Member agrees to exempt a Director or Officer from any claim or
right of action such Member might have, whether individually or by or in the
right of the Company, against any Director or Officer on account of any action
taken by such Director or Officer, or the failure of such Director or Officer to
take any
9
action in the performance of his or her duties with or for the Company; provided
that such waiver shall not extend to any matter in respect of any fraud or
dishonesty which may attach to such Director or Officer.
MEETINGS
27. ANNUAL GENERAL MEETING
(1) The annual general meeting of the Company shall be held in each year
other than the year of organisation at such time and place as the Board shall
appoint. At least five days notice of such meeting shall be given to each Member
stating the date, place and time at which the meeting is to be held, that the
election of Directors will take place thereat, and as far as practicable, the
other business to be conducted at the meeting.
(2) At any annual general meeting only such business shall be conducted as
shall have been brought before the meeting (a) by or at the direction of the
Board or (b) by any Member entitled to vote at such meeting who complies with
the procedures set forth in this Bye-law. Any Member entitled to vote at such
meeting may propose business to be included in the agenda of such meeting only
if written notice of such Member's intent is given to the Secretary of the
Company, either by personal delivery or mail or by facsimile, not later than 90
days in advance of the anniversary of the immediately preceding annual general
meeting or if the date of the annual general meeting of Members occurs more than
30 days before or 60 days after the anniversary of such immediately preceding
annual meeting, not later than the close of business on the seventh day
following the date on which notice of such meeting is given to Members. A
Member's notice to the Secretary shall set forth in writing as to each matter
such Member proposes to bring before the annual general meeting (a) a brief
description of the business desired to be brought before the annual general
meeting and the reasons for conducting such business at the annual general
meeting, (b) the name and address, as they appear on the Company's books, of the
Members proposing such business, (c) the class and number of shares of the
Company which are beneficially owned by the Member and (d) any material interest
of the Member in such business. Notwithstanding anything in these Bye-laws to
the contrary, no business shall be conducted at an annual general meeting except
in accordance with the procedures set forth in this subparagraph. The Officer of
the Company or other person presiding at the annual general meeting shall, if
the facts so warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
subparagraph, and, if such Officer or other person should so determine, he or
she shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.
28. SPECIAL GENERAL MEETINGS
The Chairman, if one is appointed, the President or the Board by vote of a
majority of the Board may convene a special general meeting of the Company
whenever in its judgement such a meeting is necessary, upon not less than five
days' notice which shall state the date, time, place and the nature of the
business to be considered at the meeting. Special general meetings may be held
at such place as may from time to time be designated by the Board and stated in
the notice of the meeting. In any special general meeting of the Company only
such business shall be conducted as is set forth in the notice thereof.
29. ACCIDENTAL OMISSION OF NOTICE OF GENERAL MEETING
The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a general meeting by, any person entitled to receive
notice shall not invalidate the proceedings at that meeting.
30. MEETING CALLED ON REQUISITION OF MEMBERS
Notwithstanding anything herein, the Board shall, on the requisition of
Members holding at the date of the deposit of the requisition not less than
one-tenth of such of the paid-up capital of the Company as at the date of the
deposit carries the right to vote in general meetings of the Company, forthwith
proceed to convene a special general meeting of the Company and the provisions
of Section 74 of the Act shall apply; provided
10
that for any question proposed for consideration at any such special general
meeting to be approved shall require the affirmative vote of the holders of not
less than 66 2/3% of the shares entitled to vote thereon.
31. SHORT NOTICE
A general meeting of the Company shall, notwithstanding that it is called
by shorter notice than that specified in these Bye-laws, be deemed to have been
properly called if it is so agreed by (i) all the Members entitled to attend and
vote thereat in the case of an annual general meeting and (ii) a majority in
number of the Members having the right to attend and vote at the meeting, being
a majority together holding not less than 95% in nominal value of the shares
giving a right to attend and vote thereat in the case of a special general
meeting.
32. POSTPONEMENT OF MEETINGS
The Secretary may postpone any general meeting called in accordance with
the provisions of these Bye-laws (other than a meeting requisitioned under
Bye-law 30 of these Bye-laws); provided that notice of postponement is given to
each Member before the time for such meeting. Fresh notice of the date, time and
place for the postponed meeting shall be given to each Member in accordance with
the provisions of these Bye-laws.
33. QUORUM FOR GENERAL MEETING
(1) In any general meeting of the Company, except as otherwise expressly
required by the Act or by these Bye-laws, two or more persons present in person
and representing in person or by proxy a majority of the shares then in issue
entitled to vote at any meeting shall form a quorum for the transaction of
business; provided that if the Company shall at any time have only one Member,
one Member present in person or by proxy shall form a quorum for the transaction
of business in any general meeting of the Company held during such time. If the
holders of the number of shares necessary to constitute a quorum shall fail to
attend in person or by proxy at the time and place fixed by these Bye-laws for
an annual general meeting, a majority in interest of the Members present, in
person or by proxy, may adjourn from time to time without notice other than
announcement at the meeting until the holders of the amount of shares requisite
to constitute a quorum shall attend. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified.
(2) Whenever the holders of any class or series of shares are entitled to
vote separately on a specified item of business, the presence in person or by
proxy of the holders of record of the shares of such class or series entitled to
cast a majority of the votes thereon shall constitute a quorum for the
transaction of such specified item of business.
34. ADJOURNMENT OF MEETINGS
The chairman of a general meeting may, with the consent of a majority of
the Members, in any general meeting at which a quorum is present (and shall if
so directed), adjourn the meeting. Unless the meeting is adjourned to a specific
date and time, fresh notice of the date, time and place for the resumption of
the adjourned meeting shall be given to each Member in accordance with the
provisions of these Bye-laws.
35. ATTENDANCE AT MEETINGS
Members may participate in any general meeting by means of such telephone,
electronic or other communication facilities as permit all persons participating
in the meeting to communicate with each other simultaneously and
instantaneously, and participation in such a meeting shall constitute presence
in person at such meeting.
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36. UNANIMOUS WRITTEN RESOLUTIONS OF MEMBERS
(1) Subject to subparagraph (6), any action which may be done by resolution
of the Company in general meeting or by resolution of a meeting of any class of
the Members of the Company, may, without a meeting and without any previous
notice being required, be done by resolution in writing signed by, or, in the
case of a Member that is a corporation whether or not a company within the
meaning of the Act, on behalf of, all the Members who at the date of the
resolution would be entitled to attend the meeting and vote on the resolution.
(2) A resolution in writing may be signed by, or, in the case of a Member
that is a corporation whether or not a company within the meaning of the Act, on
behalf of, all the Members, or any class thereof, in as many counterparts as may
be necessary.
(3) For the purposes of this Bye-law, the date of the resolution is the
date when the resolution is signed by, or, in the case of a Member that is a
corporation whether or not a company within the meaning of the Act, on behalf
of, the last Member to sign and any reference in any Bye-law to the date of
passing of a resolution is, in relation to a resolution made in accordance with
this Bye-law, a reference to such date.
(4) A resolution in writing made in accordance with this Bye-law is as
valid as if it had been passed by the Company in a general or special meeting or
by a meeting of the relevant class of Members, as the case may be, and any
reference in any Bye-law to a meeting at which a resolution is passed or to
Members voting in favour of a resolution shall be construed accordingly.
(5) A resolution in writing made in accordance with this Bye-law shall
constitute minutes for the purposes of Sections 81 and 82 of the Act.
(6) This Bye-law shall not apply to:
(a) a resolution passed pursuant to Section 89(5) of the Act; or
(b) a resolution passed for the purpose of removing a Director before
the expiration of his or her term of office under these Bye-laws.
37. ATTENDANCE OF DIRECTORS
The Directors of the Company shall be entitled to receive notice of, and to
attend and be heard in any general meeting.
38. PRESIDING OFFICER AT MEETINGS
At all meetings of Members, unless otherwise determined by the Board, the
Chairman, if one is appointed, or, in the absence of a Chairman, the Deputy
Chairman, if one is appointed, or, in the absence of the Deputy Chairman, the
President, shall preside and the Secretary shall act as secretary of the
meeting.
39. VOTING AT MEETINGS
Except as otherwise expressly required by the Act or these Bye-laws, any
question proposed for the consideration of the Members at any general meeting at
which a quorum is in attendance shall be decided by the affirmative vote of a
majority of the votes cast by ballot by the Members in person or by proxy
appointed by instrument in writing subscribed by such Member or by his or her
duly authorised attorney and delivered to the chairman of the meeting. Without
limiting the generality of the foregoing, any matter which relates to the
amalgamation, merger or consolidation of the Company with another entity or the
sale, lease or exchange of all or substantially all of the assets of the Company
shall, except as otherwise expressly provided in these Bye-laws, require the
affirmative vote of a majority of the votes cast in order to be approved. In the
case of an equality of votes the resolution shall fail. Directors shall be
elected as set forth in Bye-law 10.
12
40. SENIORITY OF JOINT HOLDERS VOTING
In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders, and for this purpose seniority shall be determined
by the order in which the names stand in the Register of Members.
41. INSTRUMENT OF PROXY
The instrument appointing a proxy shall be in writing in the form as may be
prescribed by the Board from time to time, under the hand of the appointor or of
the appointor's attorney duly authorised in writing, or if the appointor is a
corporation, either under its seal, or under the hand of a duly authorised
officer or attorney. The decision of the chairman of any general meeting as to
the validity of any instrument of proxy shall be final.
42. REPRESENTATION OF CORPORATIONS AT MEETINGS
A corporation which is a Member may, by written instrument, authorise such
person as it thinks fit to act as its representative at any meeting of the
Members and the person so authorised shall be entitled to exercise the same
powers on behalf of the corporation which such person represents as that
corporation could exercise if it were an individual Member. Notwithstanding the
foregoing, the chairman of the meeting may accept such assurances as he or she
thinks fit as to the right of any person to attend and vote in general meetings
on behalf of a corporation that is a Member.
SHARE CAPITAL AND SHARES
43. AUTHORISED SHARE CAPITAL
(1) The authorised share capital of the Company is US$1,175,010,000,
consisting of (1) 1,175,000,000 common shares of the par value of US$1.00 per
share, which common shares consist of (a) 600,000,000 Class A common shares
("Class A Common Shares") and 575,000,000 Class B common shares ("Class B Common
Shares"), and (2) 10,000,000 preference shares of the par value of US$0.001 per
share ("Preference Shares"), with any series of Preference Shares being
designated from time to time pursuant to subparagraph (4) of this Bye-law.
(2) Subject to these Bye-laws, the holders of Class A Common Shares shall:
(a) subject to Bye-law 43(3)(b), be entitled to such dividends as the
Board may, in its discretion, from time to time declare and pay out of
funds legally available for the payment of dividends;
(b) in the event of a liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary or for the purpose of a
reorganisation or otherwise or upon any distribution of capital, after
payment in full has been made to the holders of the Preference Shares of
the amounts to which they are respectively entitled or sufficient sums have
been set apart for the payment thereof, be entitled to receive ratably any
and all surplus assets remaining to be paid or distributed;
(c) subject to any required Preference Share class votes, be entitled
to one vote per Class A Common Share held by them and shall vote together
as a single class on all matters submitted to a vote of the Members with
the holders of (i) Preference Shares (but only to the extent the holders of
Preference Shares shall be entitled to vote with respect to the applicable
series of Preference Shares or under the Act) and (ii) Class B Common
Shares (but only to the extent the holders of Class B Common Shares shall
be entitled to vote under the Act);
(d) generally be entitled to enjoy all of the rights attaching to
Class A Common Shares; and
(e) not be entitled to any preemptive or preferential rights to
subscribe for or purchase any shares of any class or series of shares of
the Company, now or hereafter authorised, or any series convertible into,
or warrants or other evidences of optional rights to purchase or subscribe
for, shares of any class or series of the Company, now or hereafter
authorised.
13
(3) Subject to these Bye-laws, the holders of Class B Common Shares shall
have all of the rights of the holders of Class A Common Shares, except that:
(a) the holders of Class B Common Shares shall not be entitled to
vote, except as to matters for which the Act specifically requires voting
rights for otherwise nonvoting shares;
(b) if a dividend or other distribution in cash, shares or other
property is declared or paid on Class A Common Shares, a like dividend or
other distribution in kind and amount shall also be declared and paid on
Class B Common Shares;
(c) the holders of Class B Common Shares shall have the right to
convert their shares into Class A Common Shares on a one-for-one basis in
the following circumstances:
(i) to satisfy the obligations of the Company or its subsidiaries
or affiliated companies to issue Class A Common Shares with regard to
the exercise of share options, grants or purchases of shares pursuant to
share incentive plans, employee share purchase plans, dividend
reinvestment plans or other stock-based compensation, retirement or
deferred compensation plans sponsored by the Company or its subsidiaries
or affiliated companies; or
(ii) as consideration for any acquisition of stock or assets of a
third party;
(d) in the event of the transfer of Class B Common Shares to any
person other than a wholly-owned, direct or indirect, subsidiary of the
Company, Class B Common Shares so transferred shall automatically be
converted into Class A Common Shares on a one-for-one basis, subject to
adjustment for share divisions or other recapitalization events; and
(e) the holders of Class B Common Shares shall have the right upon
written notice to require the Company, subject to Section 42A of the Act,
to purchase for cash the number of Class B Common Shares stated in such
notice at the fair market value per Class A Common Share on the date of
such notice. Any such purchase shall be settled within 180 calendar days of
the day such notice is given and shall include simple interest from the
date of the notice to but not including the payment date at a rate equal to
the prime rate charged by the Chase Manhattan Bank or its successor. For
purposes of this paragraph, the fair market value per Class A Common Share,
as of any date, means the average of the high and low sales prices of a
Class A Common Share as reported on the New York Stock Exchange composite
tape on the applicable date, or if no sales of Class A Common Shares were
made on the New York Stock Exchange on that date, the average of the high
and low prices as reported on the composite tape for the most recent
preceding day on which sales of Class A Common Shares were made. No
dividends shall be declared on any Class B Common Shares for which notice
has been given under this paragraph.
(4) The Board is empowered to cause the Preference Shares to be issued from
time to time as shares of one or more series of Preference Shares, and in the
resolution or resolutions providing for the issue of shares of each particular
series, before issuance, the Board is expressly authorised to fix:
(a) the distinctive designation of such series and the number of
shares which shall constitute such series, which number may be increased
(except as otherwise provided by the Board in creating such series) or
decreased (but not below the number of shares thereof then in issue) from
time to time by resolution of the Board;
(b) the rate of dividends payable on shares of such series, whether or
not and upon what conditions dividends on shares of such series shall be
cumulative and, if cumulative, the date or dates from which dividends shall
accumulate;
(c) the terms, if any, on which shares of such series may be redeemed,
including without limitation, the redemption price or prices for such
series, which may consist of a redemption price or scale of redemption
prices applicable only to redemption in connection with a sinking fund
(which term as used herein shall include any fund or requirement for the
periodic purchase or redemption of shares), and the same or a different
redemption price or scale of redemption prices applicable to any other
redemption;
14
(d) the terms and amount of any sinking fund provided for the purchase
or redemption of shares of such series;
(e) the amount or amounts which shall be paid to the holders of shares
of such series in case of liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary;
(f) the terms, if any, upon which the holders of shares of such series
may convert shares thereof into shares of any other class or classes or of
any one or more series of the same class or of another class or classes;
(g) the voting rights, full or limited, if any, of the shares of such
series; and whether or not and under what conditions the shares of such
series (alone or together with the shares of one or more other series
having similar provisions) shall be entitled to vote separately as a single
class, for the election of one or more additional Directors of the Company
in case of dividend arrearages or other specified events, or upon other
matters;
(h) whether or not the holders of shares of such series, as such,
shall have any preemptive or preferential rights to subscribe for or
purchase shares of any class or series of shares of the Company, now or
hereafter authorised, or any securities convertible into, or warrants or
other evidences of optional rights to purchase or subscribe for, shares of
any class or series of the Company, now or hereafter authorised;
(i) whether or not the issuance of additional shares of such series,
or of any shares of any other series, shall be subject to restrictions as
to issuance, or as to the preferences, rights and qualifications of any
such other series; and
(j) such other rights, preferences and limitations as may be permitted
to be fixed by the Board of the Company under the laws of Bermuda as in
effect at the time of the creation of such series.
(5) Subject to these Bye-laws and except to the extent otherwise provided
for in a series of Preference Shares in its designation, the Preference Shares
shall be of equal rank and be identical in all respects. The Board is authorised
to change the designations, rights, preferences and limitations of any series of
Preference Shares theretofore established, no shares of which have been issued.
44. POWER TO ISSUE SHARES
(1) Subject to these Bye-laws and without prejudice to any special rights
previously conferred on the holders of any existing shares or class of shares,
the Board shall have the power to issue any unissued shares of the Company on
such terms and conditions as it may determine and any shares or class of shares
may be issued with such preferred, deferred or other special rights or such
restrictions, whether in regard to dividend, voting, return of capital or
otherwise as the Board may from time to time prescribe.
(2) The Board shall, in connection with the issue of any share, have the
power to pay such commission and brokerage as may be permitted by law.
(3) Unless otherwise permitted by law, the Company shall not give, whether
directly or indirectly, whether by means of loan, guarantee, provision of
security or otherwise, any financial assistance for the purpose of a purchase or
subscription made or to be made by any person of or for any shares in the
Company, but nothing in this Bye-law shall prohibit transactions mentioned in
Sections 39A, 39B and 39C of the Act.
45. VARIATION OF RIGHTS, ALTERATION OF SHARE CAPITAL AND PURCHASE OF SHARES OF
THE COMPANY
(1) Subject to the provisions of Sections 42 and 43 of the Act and except
as otherwise expressly set forth in these Bye-laws, any Preference Shares may be
issued or converted into shares that, at a determinable date or at the option of
the Company, are liable to be redeemed on such terms and in such manner as the
Company before the issue or conversion may by resolution of the Members
determine.
(2) If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class) may, whether or not the Company is being
wound-up, be varied with the consent in writing of the holders of 75% of the
shares then in
15
issue of that class or with the sanction of a resolution passed by a majority of
the votes cast in a separate general meeting of the holders of the shares of the
class in accordance with Section 47(7) of the Act. The rights conferred upon the
holders of the shares of any class issued with preferred or other rights shall
not, unless otherwise expressly provided by the terms of issue of the shares of
that class, be deemed to be varied by the creation or issue of further shares
ranking pari passu therewith.
(3) The Company may from time to time by resolution of the Members change
the currency denomination of, increase, alter or reduce its share capital in
accordance with the provisions of Sections 45 and 46 of the Act. Where, on any
alteration of share capital, fractions of shares or some other difficulty would
arise, the Board may deal with or resolve the same in such manner as it thinks
fit including, without limiting the generality of the foregoing, the issue to
Members, as appropriate, of fractions of shares and/or arranging for the sale or
transfer of the fractions of shares of Members.
(4) The Company may from time to time purchase its own shares in accordance
with the provisions of Section 42A of the Act.
46. REGISTERED HOLDER OF SHARES
(1) The Company shall be entitled to treat the registered holder of any
share as the absolute owner thereof and accordingly shall not be bound to
recognise any equitable or other claim to, or interest in, such share on the
part of any other person.
(2) Any dividend, interest or other moneys payable in cash in respect of
shares may be paid by direct deposit to the bank account designated by the
Member for such purpose and cheque or draft sent through the post directed to
the Member at such Member's address in the Register of Members or, in the case
of joint holders, to such address of the holder first named in the Register of
Members, or to such person and to such address as the holder or joint holders
may in writing direct. If two or more persons are registered as joint holders of
any shares any one can give an effectual receipt for any dividend paid in
respect of such shares.
47. DEATH OF A JOINT HOLDER
Where two or more persons are registered as joint holders of a share or
shares then in the event of the death of any joint holder or holders the
remaining joint holder or holders shall be absolutely entitled to the said share
or shares and the Company shall, subject to Bye-law 58, recognise no claim in
respect of the estate of any joint holder except in the case of the last
survivor of such joint holders.
48. CERTIFICATED OR UNCERTIFICATED SHARES
(1) The shares of the Company may be issued in certificated or
uncertificated form. The Board shall have power and authority to make such rules
and regulations as it may deem expedient concerning the issue, transfer and
registration of such certificated or uncertificated shares of the Company.
(2) Promptly after uncertificated shares have been registered as issued,
the Company or its transfer agent shall send to the registered owner thereof a
written statement containing a description of the issue of which such shares are
a part, the number of shares registered, the date of registration and such other
information as may be required or appropriate.
REGISTER OF MEMBERS
49. CONTENTS OF REGISTER OF MEMBERS
(1) The Board shall cause to be kept in one or more books a Register of its
Members and shall enter therein the particulars required by the Act which are as
follows:
(a) the name and address of each Member, the number and, where
appropriate, the class or series of shares held by such Member and the
amount paid on such shares;
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(b) the date on which each person was entered in the Register as a
Member; and
(c) the date on which any person ceased to be a Member.
(2) Subject to the Act, the Company may keep an overseas or local or other
branch register of Members resident in any place, and the Board may make and
vary such regulations as it determines in respect of the keeping of any such
register and maintaining a registration office in connection therewith.
50. INSPECTION OF REGISTER OF MEMBERS
The Register of Members and, if applicable, any branch register of Members
shall be open to inspection at the registered office of the Company and, if
applicable, any registration office, on every business day, subject to such
reasonable restrictions as the Board may impose, so that not less than two hours
in each business day be allowed for inspection. The Register of Members and, if
applicable, any branch register of Members may, after notice has been given by
advertisement in an appointed newspaper to that effect, be closed for any time
or times not exceeding in the whole thirty days in each year.
51. TRANSACTIONS WITH INTERESTED MEMBERS
(1) The Company may not engage, at any time, in any Business Combination
with any Interested Member unless the Business Combination receives the
affirmative vote of the holders of 80% of the shares then in issue of all
classes of shares of the Company entitled to vote, considered for the purposes
of this provision as one class.
(2) Interested Member status of a Member is determined as of the date of
any action taken by the Board with respect to such transaction or as of any
record date for the determination of Members entitled to notice and to vote with
respect thereto or immediately prior to the consummation of such transaction.
Any determination made in good faith by the Board, on the basis of information
at the time available to it, as to whether any person is an Interested Member,
shall be conclusive and binding for all purposes of these Bye-laws.
(3) The provisions of subparagraph (1) of this Bye-law shall not apply to
(a) any Business Combination with an Interested Member that has been approved by
the Board or (b) any agreement for the amalgamation, merger or consolidation of
any subsidiary of the Company with the Company or with another subsidiary of the
Company if (i) the provisions of this subparagraph shall not be changed or
otherwise affected by or by virtue of the amalgamation, merger or consolidation
and (ii) the holders of greater than 50% of the voting power of the Company or
the subsidiary, as appropriate, immediately prior to the amalgamation, merger or
consolidation continue to hold greater than 50% of the voting power of the
amalgamated company immediately following the amalgamation, merger or
consolidation.
52. RECORD DATES
Notwithstanding any other provision of these Bye-laws, the Board may fix
any date as the record date for:
(a) determining the Members entitled to receive any dividend; and
(b) determining the Members entitled to receive notice of and to vote
in any general meeting of the Company.
53. SCRUTINEERS
(1) One or more scrutineers may be appointed by the Board to act at any
meeting of Members, or, if the Board fails to act, the chairman of the meeting
may appoint a scrutineer or scrutineers. A scrutineer may or may not be a
Member, but shall not be a candidate for the office of Director.
(2) The scrutineer or scrutineers shall determine the number of shares then
in issue and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in
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connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all Members.
(3) Each scrutineer, before entering upon the discharge of the duties
described in Bye-law 53(2), shall be sworn faithfully to execute the duties of a
scrutineer at such meeting with strict impartiality, and according to the best
of such person's ability.
TRANSFER OF SHARES
54. INSTRUMENT OF TRANSFER
An instrument of transfer shall be in the form as may be prescribed by the
Board from time to time. The Board may accept the instrument signed by or on
behalf of the transferor alone. The transferor shall be deemed to remain the
holder of such share until the same has been transferred to the transferee in
the Register of Members.
55. RESTRICTION ON TRANSFER
(1) The Board shall refuse to register the transfer of a share unless such
transfer is in accordance with the Bye-laws and all applicable consents,
authorisations and permissions of any governmental body or agency in Bermuda
have been obtained.
(2) If the Board refuses to register a transfer of any share, the Secretary
shall, within three months after the date on which the transfer was lodged with
the Company, send to the transferor and transferee notice of the refusal.
56. TRANSFERS BY JOINT HOLDERS
The joint holders of any share or shares may transfer such share or shares
to one or more of such joint holders, and the surviving holder or holders of any
share or shares previously held by them jointly with a deceased Member may
transfer any such share to the executors or administrators of such deceased
Member.
TRANSMISSION OF SHARES
57. REPRESENTATIVE OF DECEASED MEMBER
In the case of the death of a Member, the survivor or survivors where the
deceased Member was a joint holder, and the legal personal representatives of
the deceased Member where the deceased Member was a sole holder (as set forth in
Bye-law 58), shall be the only persons recognised by the Company as having any
title to the deceased Member's interest in the shares. Subject to the provisions
of Section 52 of the Act, for the purpose of this Bye-law, legal personal
representative means the executor or administrator of a deceased Member or such
other person as the Board may in its absolute discretion decide as being
properly authorized to deal with the shares of a deceased Member.
58. REGISTRATION ON DEATH OR BANKRUPTCY
Any person becoming entitled to a share in consequence of the death or
bankruptcy of any Member may be registered as a Member upon such evidence as the
Company may deem sufficient or may elect to nominate some person to be
registered as a transferee of such share, and in such case the person becoming
entitled shall execute in favour of such nominee an instrument of transfer in
the form as may be prescribed by the Board. On the presentation thereof to the
Company, accompanied by such evidence as the Company may require to prove the
title of the transferor, the transferee shall be registered as a Member but the
Company shall, in either case, have the same right to decline or suspend
registration as it would have had in the case of a transfer of the share by that
Member before such Member's death or bankruptcy, as the case may be.
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59. DIVIDEND ENTITLEMENT OF TRANSFEREE
A person becoming entitled to a share by reason of the death or bankruptcy
or winding-up of a Member shall be entitled to the same dividends and other
advantages to which he or she would be entitled if he or she were the registered
holder of the share. However, the Company may determine to withhold the payment
of any dividend payable or other advantages in respect of such share until such
person shall become the registered holder of the share or shall have effectually
transferred such share, but, subject to the requirements of these Bye-laws being
met, such a person may vote at meetings.
DIVIDENDS AND OTHER DISTRIBUTIONS
60. DECLARATION OF DIVIDENDS BY THE BOARD
The Board may, subject to these Bye-laws and in accordance with Section 54
of the Act, declare a dividend to be paid to the Members, in proportion to the
number of shares held by them or the class or series of shares held by them, and
such dividend may be paid in cash or wholly or partly in specie in which case
the Board may fix the value for distribution in specie of any assets.
CAPITALISATION
61. ISSUE OF BONUS SHARES
The Board may resolve to capitalise any part of the amount for the time
being standing to the credit of any of the Company's share premium or other
reserve accounts or to the credit of the profit and loss account or otherwise
available for distribution by applying such sum in paying up unissued shares to
be allotted as fully paid bonus shares pro rata to the Members.
ACCOUNTS AND FINANCIAL STATEMENTS
62. RECORDS OF ACCOUNT
The Board shall cause to be kept proper records of account with respect to
all transactions of the Company and in particular with respect to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt and expenditure relates;
(b) all sales and purchases of goods by the Company; and
(c) the assets and liabilities of the Company.
Such records of account shall be kept at the registered office of the
Company or, subject to Section 83(2) of the Act, at such other place as the
Board thinks fit and shall be available for inspection by the Directors during
normal business hours.
63. FISCAL YEAR
The financial year end of the Company may be determined by resolution of
the Board and failing such resolution shall be 31st December in each year.
64. FINANCIAL STATEMENTS
Subject to any rights to waive laying of accounts pursuant to Section 88 of
the Act, financial statements as required by the Act shall be laid before the
Members in general meeting.
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AUDIT
65. APPOINTMENT OF AUDITOR
Subject to Section 88 of the Act, in the annual general meeting or in a
subsequent special general meeting in each year, an independent representative
of the Members shall be appointed by them as Auditor of the accounts of the
Company. Such Auditor may be a Member but no Director, Officer or employee of
the Company shall, during his or her continuance in office, be eligible to act
as an Auditor of the Company.
66. REMUNERATION OF AUDITOR
The remuneration of the Auditor shall be fixed by the Company in general
meeting or in such manner as the Members may determine.
67. VACATION OF OFFICE OF AUDITOR
If the office of Auditor becomes vacant by the resignation or death of the
Auditor, or by the Auditor becoming incapable of acting by reason of illness or
other disability at a time when the Auditor's services are required, the Board
shall, as soon as practicable, convene a special general meeting to fill the
vacancy thereby created.
68. ACCESS TO BOOKS OF THE COMPANY
The Auditor shall at all reasonable times have access to all books kept by
the Company and to all accounts and vouchers relating thereto, and the Auditor
may call on the Directors or Officers of the Company for any information in
their possession relating to the books or affairs of the Company.
69. REPORT OF THE AUDITOR
(1) Subject to any rights to waive laying of accounts or appointment of an
Auditor pursuant to Section 88 of the Act, the accounts of the Company shall be
audited at least once in every year.
(2) The financial statements provided for by these Bye-laws shall be
audited by the Auditor in accordance with generally accepted auditing standards.
The Auditor shall make a written report thereon in accordance with generally
accepted auditing standards and the report of the Auditor shall be submitted to
the Members in general meeting pursuant to Bye-law 64.
(3) The generally accepted auditing standards referred to in subparagraph
(2) of this Bye-law may be those of a country or jurisdiction other than
Bermuda. If so, the financial statements and the report of the Auditor must
disclose this fact and name such country or jurisdiction.
NOTICES
70. NOTICES TO MEMBERS OF THE COMPANY
A notice may be given by the Company to any Member either by delivering it
to such Member in person or by sending it to such Member's address in the
Register of Members or to such other address given for the purpose. For the
purposes of this Bye-law, a notice may be sent by mail, courier service, cable,
telex, telecopier, facsimile, printing, computer generated email or other mode
of representing words in a legible and non-transitory form.
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SEAL OF THE COMPANY
71. THE SEAL
The seal of the Company shall be in such form as the Board may from time to
time determine. The Board may adopt one or more duplicate seals for use outside
Bermuda.
72. MANNER IN WHICH SEAL IS TO BE AFFIXED
The seal of the Company shall not be affixed to any instrument except
attested by the signature of a Director and the Secretary or any two Directors,
or any person appointed by the Board for the purpose; provided that any
Director, Officer or Resident Representative, may affix the seal of the Company
attested by such Director, Officer or Resident Representative's signature to any
authenticated copies of these Bye-laws, the organisation documents of the
Company, the minutes of any meetings or any other documents required to be
authenticated by such Director, Officer or Resident Representative.
WINDING-UP
73. WINDING-UP/DISTRIBUTION BY LIQUIDATOR
If the Company shall be wound up, the liquidator may, with the sanction of
a resolution of the Members, divide amongst the Members in specie or in kind the
whole or any part of the assets of the Company (whether they shall consist of
property of the same kind or not) and may, for such purpose, set such value as
he or she deems fair upon any property to be divided as aforesaid and may
determine how such division shall be carried out as between the Members or
different classes of Members. The liquidator may, with the like sanction, vest
the whole or any part of such assets in trustees upon such trusts for the
benefit of the Members as the liquidator shall think fit, but so that no Member
shall be compelled to accept any shares or other securities or assets whereon
there is any liability.
ALTERATION OF BYE-LAWS
74. ALTERATION OF BYE-LAWS
No Bye-law shall be rescinded, altered or amended and no new Bye-law shall
be made until the same has been approved by a resolution of the Board and by a
resolution of the Members.
* * * * * *
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