SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
DYNAMICS CORPORATION OF AMERICA
(Name of Subject Company)
DYNAMICS CORPORATION OF AMERICA
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(including the associated Series A Cumulative
Participating Preferred Stock Purchase Rights)
(Title of Class of Securities)
268039 10 4
(CUSIP Number of Class of Securities)
HENRY V. KENSING
VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
475 STEAMBOAT ROAD
GREENWICH, CONNECTICUT 06830-7197
(203) 869-3211
(Name, address and telephone number of person
authorized to receive notices and communications
on behalf of the person(s) filing statement).
WITH A COPY TO:
ALAN C. MYERS
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Dynamics Corporation of America, a New
York corporation (the "Company"), and the address of the principal executive
offices of the Company is 475 Steamboat Road, Greenwich, Connecticut
06830-7197. The title of the class of equity securities to which this
statement relates is the common stock, par value $0.10 per share, of the
Company (the "Common Stock"), including the associated Series A Cumulative
Participating Preferred Stock Purchase Rights (the "Rights" and, together with
the Common Stock, the "Shares") issued pursuant to the Rights Agreement, dated
as of January 30, 1986, as amended on December 27, 1995 (the "Rights
Agreement"), between the Company and First National Bank of Boston, as Rights
Agent.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule relates to a tender offer by SB Acquisition Corp., a New
York corporation (the "Purchaser") and a wholly-owned subsidiary of WHX
Corporation, a Delaware corporation ("Parent"), disclosed in a Tender Offer
Statement on Schedule 14D-1, dated March 31, 1997, as amended by Amendment
No. 1, dated April 9, 1997, and Amendment No. 2, dated April 10, 1997 (the
"Schedule 14D-1"), under which the Purchaser is offering to purchase up to
649,000 Shares (approximately 17% of the outstanding Shares) at a price of
$45 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated March 31, 1997, as
amended (the "Offer to Purchase"), and the related Letter of Transmittal
(which together constitute the "Offer"). Parent, the Purchaser and none of
their affiliates are affiliated with the Company and the Offer was not
solicited by the Company.
As set forth in the Schedule 14D-1, the principal executive offices of the
Purchaser and Parent are located at 110 East 59th Street, New York, New York
10022.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Except as described in this Schedule or on pages 6-14 of the Company's
Proxy Statement, dated March 26, 1997, relating to the Company's 1997 Annual
Meeting of Shareholders (the "Annual Meeting"), which are filed as Exhibit 1 to
this Schedule and incorporated herein by reference, to the knowledge of the
Company, as of the date hereof, there are no material contracts, agreements,
arrangements or understandings, or any actual or potential conflicts of
interest between the Company or its affiliates and (i) its executive
officers, directors or affiliates or (ii) the Purchaser, its executive
officers, directors or affiliates.
EMPLOYMENT AGREEMENTS
On April 11, 1997, the Board approved amendments to the employment
agreements (the "Employment Agreements") previously entered into with Andrew
Lozyniak, Chairman of the Board of Directors and President of the Company,
Henry V. Kensing, Vice President, General Counsel and Secretary, and Patrick
J. Dorme, Vice President-Finance and Chief Financial Officer (collectively,
the "Executives") to (i) provide for a new definition of a change in control
of the Company ("Change in Control"), pursuant to which a Change in Control
is, in general, deemed to occur if (a) any person, with specified exceptions,
becomes the beneficial owner of at least 25% of the Company's voting
securities, (b) a change in the majority of the membership of the Board
occurs without approval of two-thirds of the directors who either were
directors on the date of the amendments, or whose election was previously so
approved, (c) there is consummated a merger or consolidation of the Company
or a subsidiary thereof with another company in which the Company's
shareholders do not continue to hold at least 60% of the voting securities of
the surviving entity (excepting certain recapitalizations of the Company) or
(d) there occurs a liquidation of the Company or a sale or other disposition
of all or substantially all of the Company's assets and (ii) clarify that the
payment by the Company of any excise tax imposed under section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), would itself be made
on an after-tax basis and would include all "change-in-control" payments,
whether made pursuant to the Employment Agreements or otherwise.
TRUST AGREEMENT
On April 11, 1997, the Board approved an amendment to the grantor trust
previously established by the Company that provides for the segregation of
assets to pay liabilities under certain of the Company's employee benefit
arrangements to permit the segregation of additional assets to pay any future
severance liabilities under the Employment Agreements and the Severance
Agreements, which are described immediately below. The grantor trust agreement
was also amended to adopt the definition of Change in Control described above
under "Employment Agreements" and to provide certain other changes.
SEVERANCE AGREEMENTS
On April 11, 1997, the Board authorized the Company to enter into
severance agreements (the "Severance Agreements") with two groups of
employees: Group I (the "Group I Severance Agreements"), consisting of seven
employees, and Group II (the "Group II Severance Agreements"), consisting of
approximately 30 employees. The Severance Agreements provide for the payment
of certain severance and other benefits to covered employees who are
terminated within two years following a Change in Control (as defined above
under "Employment Agreements"). If, following a Change in Control, the
employee is terminated by the Company other than for Cause (as defined in the
Severance Agreements), or if the employee terminates employment for Good Reason
(as defined in the Severance Agreements) (each a "Qualifying Termination"),
then the Company will pay to the employee in one lump sum, as severance pay,
an amount equal to, in the case of the Group I Severance Agreements, three
times, and in the case of the Group II Severance Agreements, one times, salary
(based upon annual base salary at the date of termination) and bonus payments
(based upon the highest bonus paid in respect of the Company's prior three
full fiscal years) and will continue the employee's welfare benefits for a
period of, in the case of the Group I Severance Agreements, three years, and
in the case of the Group II Severance Agreements, one year. In no case,
however, may the employee receive any payment or benefit in connection with a
Change in Control in excess of 2.99 times his "base amount" (as that term is
defined in section 280G of the Code).
SEVERANCE POLICY
On April 11, 1997, the Board adopted a severance policy pursuant to which
six employees would be eligible, in the event of a Qualifying Termination, to
receive, in the case of covered employees with at least five years of service
with the Company or its subsidiaries, one year's, and in the case of the
remaining covered employees, six months', salary (based upon annual base
salary at the date of termination) and highest bonus paid in respect of the
Company's prior three full fiscal years, payable in one lump sum.
RESTRICTED STOCK PLAN
The Company maintains the 1980 Restricted Stock and Cash Bonus Plan, as
amended (the "Restricted Stock Plan"), which provides for the award or sale
of shares of so-called restricted stock. On April 11, 1997, the Board adopted
an amendment to the Restricted Stock Plan to adopt the definition of Change
in Control described above under "Employment Agreements."
The foregoing descriptions are qualified by reference to the texts of the
applicable agreements, copies of which are filed as Exhibits 2 through 5
hereto.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
REJECTED THE OFFER AS INADEQUATE AND NOT IN THE BEST INTERESTS OF THE
COMPANY AND ITS SHAREHOLDERS. THE BOARD UNANIMOUSLY RECOMMENDS THAT ALL
HOLDERS OF SHARES REJECT THE OFFER AND NOT TENDER THEIR SHARES TO WHX.
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(b) BACKGROUND; REASONS FOR THE RECOMMENDATION.
On March 27, 1997, Parent sent the following letter to the Company
regarding a proposed business combination between the Company and Parent (the
"Merger Proposal"):
March 27, 1997
Mr. Andrew Lozyniak
Chairman of the Board and President
Dynamics Corporation of America
475 Steamboat Road
Greenwich, CT 06830
Dear Mr. Lozyniak:
We are writing to propose a business combination between our companies and
to express a desire that we work together to accomplish this transaction on
an amicable, negotiated basis.
The Board of Directors of WHX has authorized me to present an offer to
acquire in a merger transaction all of the outstanding shares of common stock
of Dynamics Corp. at a price of $40 per share. This proposal represents a
premium of 16% over the current market price and nearly 30% over the market
price at year-end.
In making this proposal, please be advised that we have no interest in
increasing the equity stake which Dynamics Corp. holds in CTS Corporation, or
in changing the nature of the current relationship between the two companies.
This proposal is subject to negotiation and execution of appropriate
definitive agreements containing customary and mutually acceptable
representations, warranties, terms and conditions. In pursuing this
transaction, we would expect representatives from your Board of Directors to
join the board of the combined enterprise and the senior management of your
company to stay with the combined enterprise under mutually satisfactory
arrangements.
We are confident of our ability to complete this transaction on these
terms. In this respect, please note that as of December 31, 1996 we have
available over $400 million in cash and cash equivalents.
We are certain that, upon reflection, your Board of Directors will
recognize the fine opportunity which a combination with WHX represents for
your stockholders. Our objective is to work with you in a professional and
constructive manner to complete our proposal so that the best interests of
your stockholders and employees can be served. Please be advised that we
would be prepared to increase our offer if additional information which may
be provided about your company demonstrates that a higher price is warranted.
We are willing to discuss with you or a committee of our directors all
aspects of our proposal and to answer any questions which you may have. I and
other representatives of WHX are available to meet with you for this purpose
at any time. If we do not hear from you by the close of business on Friday,
March 28, we are authorized to present this proposal directly to your
stockholders, through a proxy solicitation at the upcoming annual meeting and
through a cash tender offer.
Very truly yours,
/s/ Ron LaBow
Ron LaBow
Chairman of the Board
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Later that same day, Mr. Lozyniak sent a letter to Mr. LaBow in response
to Mr. LaBow's letter in which he stated that several of the Company's
directors were traveling for the Easter weekend and that the Company's
offices would be closed the next day for Good Friday. Mr. Lozyniak stated
that he would be in a position to inform all of the directors the following
week of Mr. LaBow's correspondence and would communicate further with Mr.
LaBow after discussing the matter with them.
On March 31, 1997, the Company issued a press release in which it said
that the Company had been able to contact all its directors except one and
that their unanimous initial reaction following preliminary discussions was
that the Merger Proposal was totally inadequate.
Also on March 31, Parent and the Purchaser filed with the Securities and
Exchange Commission (the "Commission") the Schedule 14D-1, which provided
that the Purchaser was offering to purchase up to 649,000 Shares, subject to
downward adjustment, at a price of $40 per Share. Parent also filed
preliminary proxy materials with the Commission on March 31, 1997, relating
to the solicitation of proxies by Parent for use at the Annual Meeting (the
"Parent Proxy Materials") to (i) elect four Parent nominees to the Board,
(ii) adopt changes to the Company's By-laws to (a) permit holders of at least
9.9% of the outstanding Shares to call a special meeting of shareholders and
(b) permit the removal of directors at any time with or without cause and
(iii) repeal any By-law changes adopted by the Board after March 14, 1997,
and prior to the adoption of such resolution (the "Proxy Solicitation").
On April 9, 1997, the Purchaser amended the Offer, among other things, to
increase the Offer and Merger Proposal price to $45 per Share.
On April 9, 1997, the Board met with representatives of Wasserstein
Perella & Co., Inc. ("Wasserstein Perella"), its financial advisor, and
Skadden, Arps, Slate, Meagher & Flom LLP, its legal advisor, to discuss the
Offer and possible actions to be taken by the Company.
On April 11, 1997, the Board met with its legal and financial advisors to
continue to discuss the Offer and possible actions to be taken by the
Company. The Board received a presentation by representatives of Wasserstein
Perella relating to the Offer, including Wasserstein Perella's opinion that
the $45 per Share cash consideration offered to holders of Shares in the
Offer was inadequate from a financial point of view. The Board also (i)
postponed the Annual Meeting to August 1, 1997, (ii) added two directors to
the Board (resulting in the Board being divided into three classes, rather
than two classes), (iii) amended the Company's By-laws to (a) eliminate the
shareholders' ability to remove directors without cause, (b) raise to
two-thirds the percentage of Shares needed to call a special meeting of
shareholders, (c) add advance-notice provisions for shareholders to nominate
persons for election to the Board or to propose business at annual or special
shareholders' meetings and (d) remove an inconsistent, and thus ineffective,
provision purporting to allow the holders of a majority of the Shares to amend
the By-laws, as the Company's Restated Certificate of Incorporation, as amended
(the "Charter"), which controls over the By-laws, provides for an 80% vote to
amend the By-laws, and (iv) approved certain employee benefits matters, as set
forth under "Identity and Background" above. As a result of these actions, it
will take at least two annual meetings to replace a majority of the Board. See
"Additional Information to Be Furnished."
After discussion and further analysis, the Board unanimously rejected the
Offer as inadequate and not in the best interests of the shareholders of the
Company and unanimously recommended that holders of Shares reject the Offer
and not tender their Shares pursuant to the Offer. In addition, the Board of
Directors has determined to explore alternative transactions to maximize
shareholder value. In reaching its determination to reject the Offer, the
Board considered the following factors:
(i) the business, results of operations, financial condition and prospects
of the Company and presentations by management of the Company and
Wasserstein Perella;
(ii) that the Offer is for only 649,000 Shares (approximately 17% of the
outstanding Shares), that there can be no assurance as to any merger
between the Company and the Purchaser or that the remaining Shares would
be purchased and that if the remaining Shares were not purchased, a large
shareholder such as Parent could have an adverse effect on the Board's
ability to effectively manage the affairs of the Company or diminish the
value of the remaining Shares;
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(iii) historical market prices and trading information for the Shares;
(iv) the opinion of Wasserstein Perella to the effect that, based upon
and subject to the matters reviewed with the Board, the $45 per Share cash
consideration offered to holders of the Shares pursuant to the Offer is
inadequate from a financial point of view to such holders; such opinion
is based on various assumptions and subject to various limitations
as discussed in the opinion. A copy of the opinion of Wasserstein Perella,
which sets forth the factors considered and the assumptions made by
Wasserstein Perella, is attached hereto as Exhibit 9, and incorporated
herein by reference. STOCKHOLDERS ARE URGED TO READ THE OPINION OF
WASSERSTEIN PERELLA CAREFULLY IN ITS ENTIRETY; and
(v) certain legal issues raised by the Offer, as set forth under
"Additional Information to be Furnished."
The foregoing discussion of the information and factors considered by the
Board is not intended to be exhaustive but includes all material factors
considered by the Board. The Board did not assign relative weights to the
foregoing factors or determine that any factor was of particular importance,
and individual directors may have given differing weights to different
factors. Rather, the Board viewed its position and recommendation as being
based on the totality of the information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Wasserstein Perella was retained, pursuant to the terms of a letter
agreement, dated as of April 4, 1997 (the "Letter Agreement"), to provide
financial advisory services with regard to the Company's review of the Offer,
any acquisition of or similar business combination involving the Company or a
significant portion of the Company's assets or any alternative transaction
(each, a "Transaction"). Wasserstein Perella also agreed to provide, in
accordance with its customary practice, an opinion to the Board with respect
to the adequacy or fairness, from a financial point of view, of the
consideration to be paid or received, as the case may be, in any Transaction.
The Company agreed to pay Wasserstein Perella a fee of $150,000 in cash on
the date the Letter Agreement is executed, which fee is to be credited
against any other fees earned by Wasserstein Perella pursuant to the Letter
Agreement. The Company has also agreed to pay Wasserstein Perella a fee, in
connection with any Transaction, equal to 0.875% of the aggregate value of
such Transaction, as determined in accordance with the Letter Agreement, or a
fee of $750,000 if, after the passage of one year from the date of the Letter
Agreement, no Transaction shall have been consummated. The Company has also
agreed to reimburse Wasserstein Perella for its reasonable out-of-pocket
expenses, including the fees, disbursements and other costs of counsel and of
other consultants and advisors retained by Wasserstein Perella in connection
with its activities contemplated by the Letter Agreement, and to indemnify
Wasserstein Perella for certain liabilities arising out of actions taken
under the Letter Agreement.
In the ordinary course of its business, Wasserstein Perella or its
affiliates may actively trade or otherwise effect transactions in the
securities of the Company for its own account and for the account of its
customers and, accordingly, may hold long or short positions in such
securities.
In addition, the Company retained Morrow & Co., Inc. in connection with
the Offer and the Proxy Solicitation for customary fees.
Except as disclosed herein, neither the Company nor any person acting on
its behalf currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to security holders on its behalf
concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transactions in the Shares have been effected during the past 60
days by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company, except
that on April 11, 1997, the Compensation Committee of the Board awarded 22,000
shares of restricted stock to certain officers of the Company or its
subsidiaries, including 5,000 shares to Ronald Steiner.
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(b) To the best of the Company's knowledge, no executive officer,
director, affiliate or subsidiary of the Company currently intends to tender,
pursuant to the Offer, any Shares which are held of record or beneficially
owned by such person or to otherwise sell any such Shares.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer that relates to or would result
in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary of the Company; (ii) a purchase, sale
or transfer of a material amount of assets by the Company or any subsidiary
of the Company; (iii) a tender offer for or other acquisition of securities
by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
In this regard, the Company has held preliminary discussions with CTS
Corporation regarding the possibility of a business combination.
In the event the Company decides to engage in a sale or other transaction
in the future, any disclosure with respect to the parties to, and the
possible terms of, any transaction or proposal might jeopardize any
discussions or negotiations that the Board might conduct. Accordingly, the
Board has instructed management not to disclose the possible terms of any
such transactions or proposals, or the parties thereto, unless and until an
agreement in principle relating thereto has been reached or, upon the advice
of counsel, required by law.
(b) To the best of the Company's knowledge, there are currently no
transactions, board resolutions, agreements in principle or signed contracts
in response to the Offer, other than as described in Item 3(b) of this
Schedule, that relate to or would result in one or more of the matters
referred to in Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) BOARD OF DIRECTORS
At the April 11, 1997 meeting, the Board increased the number of directors
of the Company from seven to nine. Two new directors, John A. Thompson, a
principal of IMCOR, a management consulting firm, and Ronald Steiner, President
of International Electronic Research Corporation, a subsidiary of the Company,
were elected. As a result of such increase, as provided in the Charter, the
Board has been reclassified from two classes of directors, one consisting of
four members and the other consisting of three members to three classes. At the
next annual meeting, three directors (Henry Kensing, Ronald Steiner and John
Thompson) will stand for election, the terms of Harold Cohan, Frank Gunther
and Andrew Lozyniak will expire at the second succeeding annual meeting and
the terms of Patrick Dorme, Russell Knisel and Saul Sperber will expire at the
third succeeding annual meeting. Directors will be elected to three year terms
of office. As a result, only three directors will stand for election at the
next annual meeting of shareholders, as opposed to the current four directors,
and it will take at least two, as opposed to one, annual meetings to replace a
majority of the Board.
(b) BY-LAW AMENDMENTS
At the April 11, 1997 meeting, the Board also adopted certain amendments
to the Company's By-laws. In particular, (i) Article I Section 2 of the
By-laws was amended to allow the Board to set the date of the annual
shareholders meeting, as opposed to fixing such date on the first Friday in
May, (ii) Article I Section 3 of the By-laws was amended to require the
Chairman of the Board or the President of the Company to call a special
meeting of shareholders upon the written request of the holders of record of
at least two-thirds (as opposed to the prior twenty-five percent) of the
issued and outstanding Shares, (iii) Article II Section 8 of the By-laws was
amended to eliminate the ability of the shareholders to remove a director
without cause, and (iv) Article XIII Section 1 of the By-laws was amended to
remove an inconsistent, and thus ineffective, provision purporting to allow
the holders of a majority of the Shares
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to amend the By-laws, as the Charter, which controls over the By-laws,
provides for an 80% vote to amend the By-laws. In addition, Sections
10 and 11 were added to Article I of the By-laws to require shareholders to
give advance notice to nominate persons for election to the Board and to
bring business before an annual or special meeting of shareholders.
The foregoing discussion of the By-law amendments is qualified by
reference to the text of the amendments, a copy of which is filed as Exhibit
6 hereto.
(c) CERTIFICATE OF INCORPORATION
The Company's Charter provides that 80% of the outstanding voting stock of
the Company is required to approve a merger of the Company with another
person if the other person is the "beneficial owner" of 5% or more of the
outstanding voting stock unless (i) the transaction is consistent with a
memorandum of understanding approved by the Board prior to the time such
person shall have become the beneficial owner of 5% or more of the
outstanding voting stock or (ii) the Company and its subsidiaries own a
majority of the outstanding voting stock of such person. If the Purchaser
(alone or in concert with others) acquires beneficial ownership of 5% or more
of the Shares pursuant to the Offer or otherwise, the 80% vote requirement
will apply to any proposed merger between the Company and either Parent or
the Purchaser. The Offer to Purchase fails to disclose this requirement.
The Charter provides that 80% of the outstanding voting stock of the
Company is required for shareholders to adopt, amend or repeal the By-laws of
the Company. The Offer to Purchase does not disclose this requirement. The
Parent Proxy Materials misstate that a majority vote is required to adopt the
Parent's proposed By-law amendments.
(d) LITIGATION AGAINST THE COMPANY
On April 1, 1997, a suit was filed in the Supreme Court of the State of
New York, County of New York, by an alleged stockholder of the Company
against the Company and the members of the Board (the "Individual
Defendants"). The suit was filed as a purported class action on behalf of the
public shareholders of the Company except the defendants and their
affiliates. The complaint alleges, among other things, that the Individual
Defendants have breached their fiduciary duties to plaintiffs in connection
with the Offer by (i) failing and refusing to take steps necessary to
maximize shareholder value, including considering the Offer, (ii) using their
fiduciary positions of control to thwart others in their attempt to acquire
the Company and (iii) entrenching themselves in their positions with the
Company. The complaint seeks, among other things, (i) class certification,
(ii) an order requiring the Individual Defendants to carry out their
fiduciary duties to plaintiff by (a) cooperating with any person expressing
an interest in acquiring the Company, (b) taking appropriate action to
enhance the value of the Company, (c) acting independently to protect the
interests of the Company's public shareholders and (d) ensuring that no
conflicts exist between the interests of the Individual Defendants and those
of the Company's public shareholders, (iii) damages from the Individual
Defendants and (iv) an award of the plaintiff's costs and disbursements,
including reasonable attorneys' fees.
This summary is qualifed by reference to the text of the complaint, a
copy of which is filed as Exhibit 10 hereto.
(e) LITIGATION BY THE COMPANY.
On April 14, 1997, the Company filed suit against Parent and the Purchaser
in the United States District Court for the District of Connecticut. The
complaint alleges, among other things, that Parent and Purchaser have
violated, in connection with the Offer and Proxy Solicitation, Sections
10(b), 13(d), and 14(a), (d) and (e) of the Securities and Exchange Act of
1934 (the "Exchange Act") and the rules and regulations promulgated
thereunder.
Among other things, the complaint alleges that the Schedule 14D-1 and
Parent Proxy Materials contain materially false and misleading statements and
omissions including that (i) Parent is part of a group under Section 13(d) of
the Exchange Act with Warren Lichtenstein and his affiliates, Steel Partners
II, L.P. and Steel Partners Services Ltd. which, therefore, subject to the
completion of the Offer,
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would trigger the Rights Agreement, (ii) regardless of the existence of a
Section 13(d) group, if the Offer is completed, approval of a merger between
the Company and Parent would require the affirmative vote of
80% of the outstanding Shares entitled to vote, rather than the two-thirds
stated in the Offer and (iii) shareholder amendment to the Company's By-laws
requires the affirmative vote of 80% of the outstanding Shares entitled to
vote, not a majority as stated by Parent.
The complaint seeks, among other things, an order directing Parent to file
corrective disclosure, and an order enjoining Parent from any future action
under the Offer or the Proxy Solicitation, pending compliance by Parent with
federal securities laws.
This summary is qualified by reference to the text of the complaint, a
copy of which will be filed as an exhibit to an amendment to this Schedule.
(f) BCL 912
Section 912 of the BCL regulates certain business combinations, including
mergers, of a New York corporation, such as the Company, with a stockholder
that beneficially owns 20% or more of the outstanding voting stock of such
corporation. If neither Parent nor the Purchaser (alone or in concert with
others) becomes the beneficial owner of at least 20% of the outstanding
Shares, Section 912 of the BCL would not be applicable to the Purchaser's
proposed merger with the Company.
(g) SHAREHOLDER RIGHTS PLAN
Each Right issued pursuant to the Rights Plan entitles the holder thereof
to purchase one-hundredth of a share of Series A Cumulative Preferred Stock
of the Company at an exercise price of $80, subject to adjustment, in the
event that (i) a person, together with all affiliates and associates of such
person, has acquired, or obtained the right to acquire, the beneficial
ownership of 20% or more of the outstanding Shares in a transaction not
approved by the Board prior to such acquisition or (ii) a person has
commenced a tender offer for 25% or more of the Shares. If neither Parent nor
the Purchaser (alone or in concert with others) becomes the beneficial owner
of at least 20% of the outstanding Shares, the Rights will not become
exercisable as a result of the Offer. See "Litigation by the Company," above.
For a more complete description of the Rights Plan, see the Company's Form
8-A, dated January 30, 1986, and the Company's Form 8-K, dated as of December
27, 1995, each as filed with the Commission.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO.
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Exhibit 1 Pages 6-14 of the Company's Proxy Statement, dated March 26, 1997, relating to
the Company's Annual Meeting of Shareholders.
Exhibit 2 Form of amended employment agreement.
Exhibit 3 Form of severance agreement.
Exhibit 4 Form of Trust Agreement amendment.
Exhibit 5 Form of Bonus Plan amendment.
Exhibit 6 By-law amendments.
Exhibit 7 Letter to Stockholders, dated April 14, 1997.*
Exhibit 8 Press Release issued by Dynamics Corporation of America, dated April 14, 1997.
Exhibit 9 Opinion of Wasserstein Perella & Co., Inc., dated April 11, 1997.*
Exhibit 10 Complaint in Kenneth Steiner v. Andrew Lozyniak et al. (Index No. 97-601661) filed
in the Supreme Court of the State of New York, County of New York, on April 1,
1997.
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* Included in copies of the Schedule 14D-9 mailed to stockholders.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: April 14, 1997 DYNAMICS CORPORATION OF
AMERICA
By: /s/ Henry V. Kensing
----------------------
Henry V. Kensing
Vice President,
General Counsel and
Secretary
9
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
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Exhibit 1 PAGES 6-14 OF THE COMPANY'S PROXY STATEMENT, DATED MARCH 26, 1997, RELATING TO THE
Company's Annual Meeting of Shareholders
Exhibit 2 Form of amended employment agreement
Exhibit 3 Form of severance agreement
Exhibit 4 Form of Trust Agreement amendment
Exhibit 5 Form of Bonus Plan amendment
Exhibit 6 By-law amendments
Exhibit 7 Letter to Stockholders, dated April 14, 1997
Exhibit 8 Press Release issued by Dynamics Corporation of America, dated April 14, 1997
Exhibit 9 Opinion of Wasserstein Perella & Co., Inc., dated April 11, 1997
Exhibit 10 Complaint in Kenneth Steiner v. Andrew Lozyniak et al. (Index No. 97-601661) filed
in the Supreme Court of the State of New York, County of New York, on April 1, 1997