SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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CLARK EQUIPMENT COMPANY
(Name of Subject Company)
CLARK EQUIPMENT COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $7.50 PER SHARE
(Including the Associated Preferred Stock Purchase Rights)
(Title of Class of Securities)
181396 10 2
(CUSIP Number of Class of Securities)
BERNARD D. HENELY, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CLARK EQUIPMENT COMPANY
100 NORTH MICHIGAN STREET
SOUTH BEND, INDIANA 46634
(219) 239-0100
(Name, address and telephone number of person authorized to receive notice and
communications on
behalf of the person(s) filing statement)
COPY TO:
WILLIAM F. WYNNE, JR., ESQ.
WHITE & CASE
1155 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 819-8200
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Clark Equipment Company, a Delaware
corporation (the "Company"), and the address of its principal executive offices
is 100 North Michigan Street, South Bend, Indiana 46634. The title of the class
of equity securities to which this statement relates is the common stock, par
value $7.50 per share, of the Company (the "Common Stock"), and the associated
preferred stock purchase rights (the "Rights" and, together with the Common
Stock, the "Shares") issued pursuant to the Rights Agreement dated March 10,
1987, as amended and restated as of August 14, 1990, and as amended as of April
10, 1995 (the "Rights Agreement") between the Company and Harris Trust and
Savings Bank, as Rights Agent (the "Rights Agent").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the revised tender offer disclosed in a Tender
Offer Statement on Schedule 14D-1 dated April 3, 1995 as amended through the
date hereof (as so amended, the "Schedule 14D-1"), of CEC Acquisition Corp., a
Delaware corporation (the "Purchaser"), and a wholly-owned subsidiary of
Ingersoll-Rand Company, a New Jersey corporation ("Ingersoll-Rand"), to purchase
all of the outstanding Shares at a price of $86 per Share net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated April 3, 1995, as amended by the First Supplement thereto dated
April 12, 1995 (as so amended, the "Offer to Purchase"), and the related Letter
of Transmittal and any supplement thereto (which together constitute the
"Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger among
Ingersoll-Rand, the Purchaser and the Company dated April 9, 1995 (the "Merger
Agreement"). The Merger Agreement provides that, upon the terms and subject to
the conditions contained therein, as promptly as practicable after the purchase
of Shares pursuant to the Offer and, if required by the General Corporation Law
of the State of Delaware ("Delaware Law"), the approval and adoption by the
affirmative vote of the shareholders of the Company in accordance with Delaware
Law and the Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation"), the Purchaser will be merged with and into the Company (the
"Merger") and each then outstanding Share (other than Shares held in the
treasury of the Company, Shares owned by Ingersoll-Rand or the Purchaser or any
other direct or indirect wholly owned subsidiary of Ingersoll-Rand or the
Company and any Shares held by Dissenting Shareholders (as such term is defined
in the Merger Agreement)), will be converted automatically into the right to
receive $86 in cash.
According to the Schedule 14D-1, the address of the principal executive
offices of the Purchaser and Ingersoll-Rand is 200 Chestnut Ridge Road,
Woodcliff Lake, New Jersey 07675.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this statement, are set forth in Item 1 above.
(b)(1) Certain information with respect to certain contracts, agreements,
arrangements or understandings between the Company and certain of its directors,
executive officers and affiliates is set forth in the sections entitled
"Director Compensation Arrangements," "Stock Acquisition Plan for Non-Employee
Directors," "Report of Human Effectiveness Committee on Executive Compensation -
Compensation Policies," "Compensation Actions in 1994," "Executive
Compensation," "Executive Employment Contracts," "Retirement Program,"
"Performance Graph" and "Security Ownership of Certain Beneficial Owners and
Management" in the Company's Proxy Statement, dated March 27, 1995, for the
Company's 1995 Annual Meeting of Stockholders (the "Proxy Statement"). A copy of
pages 1 through 24 of the Proxy Statement is filed as Exhibit 1 hereto and
incorporated herein by reference.
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At a meeting of the Company's Board of Directors (the "Board") held on April
9, 1995, the Board determined that it was in the best interests of the Company
and its stockholders to (i) amend the Company's FlexPlan (the "FlexPlan") as
described below, (ii) amend the Company's Corporate Office Reduction-in-Force
Policy (the "Policy") as described below, (iii) amend the Clark Equipment
Company Supplemental Executive Retirement Trust and the Clark Equipment Company
Deferred Benefit Trust, as described below, (iv) exempt the Merger Agreement and
the transactions contemplated thereby from Delaware Law Section 203, (v)
postpone indefinitely the Company's 1995 annual meeting, (vi) exempt the Merger
Agreement and the transactions contemplated thereby from the supermajority
voting provisions of the Certificate of Incorporation and (vii) amend the Rights
Agreement to render the Rights Agreement inapplicable to the transactions
contemplated by the Merger Agreement. The items described in Clauses (iv)
through (vii) are described in more detail in Item 8 hereof.
The FlexPlan provides medical, dental and life insurance benefits to certain
employees and retirees of the Company and participating subsidiaries and their
dependents and surviving spouses. The amendments to the Company's FlexPlan
provide that following a "Change in Control" of the Company (i) employees of the
Company who have retired on or after August 1, 1986 and prior to such Change in
Control and who were eligible for retiree benefits coverage under the FlexPlan
immediately prior to such Change in Control ("Original Benefits Coverage") will
continue to receive benefits coverage which is no less than the Original
Benefits Coverage for the life of such employee and (ii) the Company's
contribution to the costs of such coverage will be made at the same percentage
as in effect immediately prior to such Change in Control. The lifetime
continuation of retiree medical coverage also extends to such employee's
dependents who would be eligible to receive medical coverage under the terms of
the FlexPlan in effect immediately prior to the Change in Control.
"Change in Control" under the FlexPlan means (i) the acquisition of
beneficial ownership of 25% or more of the Shares by or for any person (as such
term is defined in Section 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including for purposes of calculating such
person's ownership, all Shares beneficially owned by the affiliates and
associates (as such terms are defined in Rule 12b-2 under the Exchange Act) of
such person, provided, however, that the term "person" shall not include any of
the following: the Company, any subsidiary of the Company, any employee benefit
plan or employee stock plan of the Company or of any subsidiary of the Company,
any dividend reinvestment plan of the Company, any person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan, or any person which becomes the beneficial owner of 25% or more of such
Shares then outstanding solely as a result of the acquisition by the Company or
any employee benefit plan of the Company of Shares, provided that such person
does not thereafter acquire any Shares, or (ii) during any period of 24
consecutive months, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute a majority thereof, unless the
election, or nomination for election by the Company's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period or (iii) the
Company's stockholders approve (a) the merger or consolidation of the Company
with or into another corporation and the Company shall not be the surviving
corporation or (b) an agreement to sell or otherwise dispose of all or
substantially all of the Company's assets (including a plan of liquidation).
The amendments to the FlexPlan further provide that following a Change in
Control, the FlexPlan, as so amended, may not be terminated or amended in any
manner if such termination or amendment could have an adverse effect on the
rights of a retiree eligible for the benefits described above or his or her
eligible dependents or surviving spouse under the FlexPlan without the express
written consent of such retiree, dependent or surviving spouse, as the case may
be. The Purchaser's purchase of Shares pursuant to the Offer will constitute a
"Change in Control" under the FlexPlan.
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The foregoing description is qualified in its entirety by reference to the
resolution of the Board, dated as of April 9, 1995, in which the FlexPlan was
amended, a copy of which is filed as Exhibit 2 hereto and incorporated herein by
reference.
The Company maintains the Policy to provide uniform procedures for
administering eligible salaried employee reductions. The amendments to the
Policy provide that upon a "Change in Control" of the Company (defined in the
same manner as in the FlexPlan), any appendix to the Policy that the Board has
adopted prior to such Change in Control modifies and amends the Policy to the
extent set forth in such appendix. In connection therewith, the Board adopted an
appendix to the Policy (the "Appendix") that ensures that each corporate office
salaried employee employed by the Company at the time of a Change in Control
(the "Participant"), is generally provided with the following benefits (the
"Benefits"), if any such Participant (i) is terminated without "Cause" (as
defined in the Appendix) or (ii) terminates within six months of any "Good
Reason" (as defined in the Appendix) (any event described in clauses (i) and
(ii) being a "Termination Event"), in either case within 24 months of a Change
in Control; provided, however, that with respect to Participants who are
corporate officers of the Company at its corporate office at the vice president
level and above immediately prior to a Change in Control, the term "Termination
Event" shall mean not only the events described in clauses (i) and (ii), but
shall also mean any termination of employment "other than for cause" (as defined
in such officer's employment agreement with the Company as in effect immediately
prior to such Change in Control) following a Change in Control:
(i) A lump sum amount equal to three weeks of separation pay (based on
such Participant's base annual salary ("Salary")) for each year of completed
service with the Company plus three additional weeks of separation pay (such
lump sum amount referred to herein as the "Severance Benefit"), subject to a
minimum Severance Benefit of one times Salary and a maximum of two times
Salary; provided that, any Participant who is a participant in the Company's
Incentive Compensation Plan for Corporate Office Management or who is a
bonus employee, is entitled to a Severance Benefit equal to two times such
Participant's Salary;
(ii) Continuation for a limited period of time of welfare benefit
coverage at levels of coverage no less than those which existed immediately
prior to the Change in Control and at a cost to such Participant that is no
greater than the cost to such Participant immediately prior to the Change in
Control; and
(iii) Payment of the cost of certain outplacement services
("Outplacement Services") up to a maximum total amount of 15% of such
Participant's Salary.
Notwithstanding the above, the Appendix provides that any corporate officer
of the Company at its corporate office at the vice-president level or above
immediately prior to such Change in Control is not eligible to receive the
Severance Benefit or Outplacement Services described above.
The Appendix also provides that if a Participant has attained at least age
50 and has at least four years of service with the Company or any affiliate or
subsidiary of the Company on the date immediately prior to the Change in
Control, such Participant is eligible (i) for the welfare benefits described
above if such Participant is terminated without Cause or terminates for Good
Reason at any time on or after such Change in Control and before such
Participant attains age 55; and (ii) subject to certain terms and conditions,
the extension of such welfare benefits coverage until such Participant attains
age 55; and (iii) certain retiree medical and life insurance coverage when such
Participant attains age 55.
Moreover, the Appendix provides that if a Participant has attained at least
age 50 and has at least four years of service with the Company or any affiliate
or subsidiary of the Company on the date immediately prior to a Change in
Control, such Participant is eligible for retiree medical and life insurance
benefits based on provisions set forth in the Company's FlexPlan, if such
Participant's
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employment is terminated with the Company for any reason at any time on or after
such Participant attains age 55.
Notwithstanding the above, the Appendix provides that if any payment to a
Participant (whether under the Policy, the Appendix or otherwise) (a "Payment")
by the Company or any affiliate or subsidiary of the Company would be subject to
the limitations in Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") (which limits the Company's Federal income tax deductions with
respect to certain "parachute payments"), then the aggregate present value of
amounts payable as a Severance Benefit to such Participant will generally be
reduced to avoid the nondeductibility of any such Payment to the extent
possible.
The Appendix provides further that with respect to a Participant who has
attained at least the age 53 but not age 55 at or before such Participant
terminates for Good Reason or such Participant's employment is terminated by the
Company without Cause at any time after a Change in Control, such Participant
will be deemed to continue to be an employee (in lay-off status) for a period of
up to two years following such termination for purposes of determining such
Participant's eligibility for early retirement benefits under the Company's
Retirement Program for Salaried Employees.
Upon or after a Change in Control, the benefits described above and in the
Policy may not be amended and the Policy may not be terminated if such amendment
or termination could adversely affect the rights of any Participant or any
dependent or surviving spouse eligible for benefits under the Policy unless such
Participant, dependent or surviving spouse, as the case may be, expressly
consents in writing to such amendment or termination. The Purchaser's purchase
of Shares pursuant to the Offer will also constitute a "Change in Control" for
purposes of the Policy and the Appendix.
The foregoing description is qualified in its entirety by reference to the
resolution of the Board, dated as of April 9, 1995, in which the Policy was
amended and the Appendix thereto adopted, a copy of which is filed as Exhibit 3
and incorporated herein by reference.
At a special meeting of the Board held on April 9, 1995, the Board, in order
to ensure the continued dedication and objectivity of certain key personnel who
serve as business unit Presidents in the event of a threat of a change in
control of the Company, authorized Change in Control Severance Agreements for
William D. Anderson, David D. Hunter, James D. Kertz and John J. Reynolds
("Severance Agreements"), copies of which are filed as Exhibit 4 and
incorporated herein by reference. The Severance Agreements became effective
following their execution on April 11, 1995.
The Severance Agreement for Mr. Anderson provides for the following benefits
(as described below) if his employment is terminated by the Company "Other Than
For Cause" following a "Change in Control" defined in the same manner as in the
FlexPlan of the Company:
(i) a lump sum payment equal to two times the sum of his base salary and
his target bonus, such target bonus being the difference between average
total compensation and average base salary as determined from the Hay
Compensation Report for Industrial Management for the last year preceding
the year in which such termination occurs, for the number of Hay Client
Points of his position at the time of such termination, but in any event for
not less than the number of Hay Client Points of his position on the date of
the Severance Agreement;
(ii) the continuation of (A) health care benefits to Mr. Anderson and
his dependents of the type and in the amounts in effect immediately prior to
any termination by the Company "Other Than For Cause" and (B) life insurance
coverage to Mr. Anderson in the amount of two times his salary, in each case
until the earlier of the date on which he obtains suitable employment or the
second anniversary of the date of such termination; and
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(iii) payment for the cost of professional Outplacement Services,
selected by Mr. Anderson in his sole discretion, to obtain new employment;
provided, however, that the total cost of such services by the Company will
not exceed 15% of his base salary as of the date of his termination.
Mr. Anderson would also be reimbursed for all legal and accounting fees and
expenses incurred by him with respect to any dispute arising out of or relating
to his Severance Agreement.
The Severance Agreement for Mr. Hunter provides the same benefits as the
Severance Agreement for Mr. Anderson except that the Company has agreed to
provide Mr. Hunter or his beneficiary with supplemental retirement benefits to
the extent that the benefits which would otherwise be provided to Mr. Hunter or
his beneficiary under the Company's Retirement Program for Salaried Employees
(a) do not reflect certain cash bonuses received by him from the Company, and
(b) are limited under certain provisions of the Code.
The Severance Agreement for Mr. Kertz provides the same benefits as the
Severance Agreement for Mr. Anderson except that Mr. Kertz will not receive
benefits (ii) and (iii) above.
The Severance Agreement of Mr. Reynolds provides the same benefits as the
Severance Agreement for Mr. Anderson except that (A) Mr. Reynolds will not
receive benefit (iii) above and (B) benefit (ii) above continues until the
second anniversary of the date of his termination and is supplemented by the
following benefit: if at the end of such two year period of coverage Mr.
Reynolds has not attained the age of 65, he is entitled to continue such health
care and life insurance coverages at his own expense until he attains the age of
65; upon attaining age 65, the Company will provide Mr. Reynolds with the group
life and health care benefits (under the same terms) which would have been
provided to him under the Company's FlexPlan as in effect immediately prior to
the Change in Control of the Company if he had retired from employment with the
Company at age 65 and with ten years of service on that date.
For purposes of the Severance Agreements, a termination of employment is
Other Than For Cause if (i) the employee voluntarily terminates his employment
within two years subsequent to a Change in Control within six months after the
occurrence of (A) a change in the location of his employment, (B) a reduction in
the nature and scope of his employment responsibilities or duties with respect
to his business unit, or (C) any reduction in his compensation, benefits or
perquisites, either separately or in the aggregate, or (ii) the termination is
for any reason other than wilful misconduct by the employee that has
substantially prejudiced the interests of the Company or its subsidiaries. The
purchase of Shares by the Purchaser pursuant to the Offer will also constitute a
"Change in Control" under the Severance Agreements.
At a meeting of the Human Effectiveness Committee of the Board, which
committee is comprised of independent directors (the "Committee") held on
February 14, 1995, Mr. Leo J. McKernan, Chairman, President and Chief Executive
Officer of the Company, informed the Committee that he would soon be
recommending that the Committee approve grants of stock options, performance
units or other long-term incentive compensation awards to Company officers and
other management employees. He explained that details of the proposed grants
were being formulated and that a special meeting of the Committee would be
called as soon as the details were finalized. The Committee agreed that it was
appropriate to award such grants and that a special Committee meeting should be
called to approve such grants as soon as the details were completed. Following
the meeting of the Board on March 27, 1995, where the Board unanimously
determined that the Ingersoll-Rand proposal was wholly inadequate and that the
Company was not for sale and should remain independent, the Committee approved
the grant of 89,700 stock options and 149,100 performance units to certain of
its employees all at a grant price of $52.625 per Share or unit. The following
table sets forth the performance units granted to
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the Company's executive officers and directors at the March 27, 1995 meeting (no
stock options were granted to the executive officers and directors):
NUMBER OF PERFORMANCE
NAME: UNITS GRANTED:
- ------------------------------------------------------- ---------------------
[S] [C]
Leo J. McKernan........................................ 59,900
James D. Kertz......................................... 16,100
Frank M. Sims.......................................... 13,500
William N. Harper...................................... 12,900
John J. Reynolds....................................... 12,400
Bernard D. Henely...................................... 9,000
Paul R. Bowles......................................... 8,800
Thomas L. Doepker...................................... 8,700
David D. Hunter........................................ 7,800
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Total.................................................. 149,100
At its March 27, 1995 meeting, the Committee also approved, effective as of
March 28, 1995, amendments to employment agreements that the Company had
previously entered into with the following current and former employees: Thomas
C. Clarke, Thomas L. Doepker, William N. Harper, Bernard D. Henely, Leo J.
McKernan, Frank M. Sims and Robert N. Spolum (the "Employment Agreements"). The
Employment Agreements describe the retirement, severance and other benefits to
which such individual parties may become entitled. Under the Employment
Agreements, a particular interest rate published from time to time by the
Pension Benefit Guaranty Corporation (the "PBGC Rate") is used for certain
calculations. The amendments to the Employment Agreements were technical in
nature so as to make a direct reference to such PBGC Rate for the purpose of
such calculations.
The foregoing description is qualified in its entirety by reference to the
amendments to the Employment Agreements, copies of which are filed as Exhibit 5
and incorporated herein by reference.
Under the Clark Equipment Company Supplemental Executive Retirement Plan
("SERP 1") and the Clark Equipment Company Supplemental Retirement Income Plan
For Certain Executives ("SERP 2") (collectively, the "SERPs"), certain benefits
are provided to certain participants in the Company's Retirement Program for
Salaried Employees (the "Qualified Plan") to the extent that benefits which
would otherwise be provided under the Qualified Plan to such participants are
limited under certain provisions of the Code. The Committee approved certain
technical amendments, which were effective February 15, 1995, to the SERPs
providing for direct references to the PBGC Rate in the same manner as the
corresponding amendments to the Employment Agreements, discussed above. As
permitted by the Merger Agreement, if all the participants and beneficiaries of
SERP 2 (other than the retired participants) consent to an amendment to such
plan to permit either Ingersoll-Rand, the Company or any of their respective
subsidiaries to make a one-time withdrawal of assets from the Clark Equipment
Company Deferred Benefit Trust (the "SERP 2 Trust") to the extent such assets
exceed 100% of the "Plan benefit value" (as such term is used in Section 3 of
the Retirement Income Plan), such funding level to be first certified by the
actuary for the Company's tax-qualified Plan, the Company intends to contribute
an additional $23 million to the Retirement Income Plan.
The Committee also approved an amendment, which was effective as of February
15, 1995, to the Supplemental Executive Retirement Plan deleting a restriction
which had excluded Frank M. Sims from participating in such plan. The SERPs were
also amended so that certain benefits otherwise provided to Mr. Sims under an
employment agreement between Mr. Sims and the Company would be provided under
such plans.
The Supplemental Executive Retirement Plan provides that certain cash
bonuses received by certain participants are included for purposes of
calculating benefits to be provided to such participants
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under the plan. Previously, bonuses paid to participants who were not officers
of the Company were excluded for purposes of calculating benefits payable under
the plan to such participants. The Committee approved an amendment, effective as
of March 27, 1995, to the Supplemental Executive Retirement Plan which provides
that this restriction will be applied to participants whose employment with the
Company terminated prior to March 1, 1995, rather than to participants who are
not officers of the Company. The Committee also approved an amendment to the
Supplemental Executive Retirement Plan, effective as of March 27, 1995, which
provides that such plan may not be amended or terminated without the consent of
participants and beneficiaries adversely affected by such amendment or
termination. Prior to such amendment, the Supplemental Executive Retirement Plan
could not be amended or terminated unless all participants and beneficiaries
affected by such amendment or termination gave their consent thereto.
The foregoing description is qualified in its entirety by reference to the
amendments to the SERPS, copies of which are filed as Exhibit 6 and incorporated
herein by reference.
At a meeting of the Board held on April 9, 1995, the Board amended the Clark
Equipment Company Supplemental Executive Retirement Trust (the "SERP 1 Trust")
and the SERP 2 Trust (collectively, the "Rabbi Trusts"). The Rabbi Trusts were
established by the Company and certain of its affiliates (the "Employers") in
order to provide a method for the orderly accumulation of assets that may be
used to make certain payments to participants under certain supplemental
retirement plans maintained by the Employers. The amendments to the Rabbi Trusts
provide that following a "Change in Control" of the Company (defined in the same
manner as in the FlexPlan), the trust funds (the "Trust Funds") established
under each of the Rabbi Trusts may only be invested in certain enumerated types
of assets. The amendments to the Rabbi Trusts further provide that the amount of
benefits payable to participants pursuant to the related supplemental retirement
plans shall be determined by a reputable, independent actuarial or consulting
firm retained by the committee that is responsible for administration of the
Rabbi Trusts (the "Trust Committee"). Under the amendment, such firm will
provide to the Trust Committee, the Employer and the affected participant a
written statement with respect to the benefits so determined. Finally, the
amendments clarify that the Rabbi Trusts may not be amended to provide for
distributions from either of the Trust Funds for any purpose other than payment
of an Employer's obligations to its creditors, including participants, in
accordance with the insolvency provisions of the Rabbi Trusts.
The Purchase of Shares by the Purchaser pursuant to the Offer will also
constitute a "Change of Control" under the SERPs.
The foregoing description is qualified in its entirety by reference to the
amendment to the Rabbi Trusts, copies of which are filed as Exhibit 7 and
incorporated herein by reference.
MERGER AGREEMENT
The following is a summary of the Merger Agreement. Defined terms used below
and not defined herein have the respective meanings assigned to those terms in
the Merger Agreement. Such summary is qualified in its entirety by reference to
the Merger Agreement, a copy of which is filed as Exhibit 8 hereto and is
incorporated by reference.
The Offer. In the Merger Agreement, the Purchaser has agreed subject to
certain conditions to, among other things, amend the Offer (i) to extend the
Offer to May 5, 1995, (ii) to increase the purchase price offered to $86.00 per
share of Common Stock (and associated Right) and (iii) to modify the conditions
of the Offer to conform to the Tender Offer Conditions. The obligations of the
Purchaser to accept for payment and promptly to pay for any shares of Common
Stock tendered will be subject only to the Tender Offer Conditions any of which
may be waived; provided, however, that, without the consent of the Company, the
Purchaser will not waive the Minimum Condition (as defined below). Without the
consent of the Company, the Purchaser will not (i) reduce the number of Shares
to be
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purchased in the Offer, (ii) reduce the Offer Price, (iii) impose conditions to
the Offer in addition to the Tender Offer Conditions, (iv) change the form of
consideration payable in the Offer, or (v) amend any other term of the Offer
(including the Tender Offer Conditions) in a manner materially adverse to the
holders of the Common Stock. Subject to the terms and conditions of the Merger
Agreement, and unless the Company otherwise consents in writing, Ingersoll-Rand
and the Purchaser agree that the Purchaser will accept for payment and pay for
Common Stock as soon as it is permitted to do so under applicable law, provided
that the Purchaser will have the right, in its sole discretion, to extend the
Offer from time to time for up to a maximum of 10 additional business days,
notwithstanding the prior satisfaction of the Tender Offer Conditions.
Pursuant to the Merger Agreement, the Company has approved of and consented
to the Offer and represented and warranted that (i) its Board (at a meeting duly
called and held on April 9, 1995) has (1) determined by the unanimous vote of
the Directors that the Offer and the Merger are fair to and in the best
interests of the holders of Common Stock, (2) approved the Merger Agreement, the
Offer and the Merger, and determined that the consummation of the Offer and the
Merger will not constitute a "Change In Control" for purposes of Section 9.2 of
the Clark Equipment Company Leveraged Employee Stock Option Plan (the "LESOP"),
(3) resolved to recommend acceptance of the Offer by the stockholders of the
Company and approval and adoption of the Merger Agreement and the Merger by the
stockholders of the Company, (4) taken all other action necessary to render (A)
Section 203 of the Delaware Law, (B) the Rights Agreement and (C) Article SIXTH,
paragraph 6, of the Certificate of Incorporation inapplicable to the Offer and
the Merger; provided, however, that such recommendation or other action may be
withdrawn, modified or amended at any time if a majority of the Board of the
Company determines, in its good faith judgment, based on the opinion of
independent outside legal counsel to the Company, that failing to take such
action would constitute a breach of such Board's fiduciary obligations under
applicable law; and (ii) CS First Boston Corporation ("CS First Boston") has
delivered to the Board of the Company its opinion that the consideration to be
received by the holders of Common Stock (other than Ingersoll-Rand and the
Purchaser) pursuant to the Offer and the Merger is fair to the holders of Common
Stock from a financial point of view.
The Merger. The Merger Agreement provides that at the Effective Time the
Purchaser will be merged with the Company. By virtue of the Merger, at the
Effective Time, each outstanding share of Common Stock (other than (i) any
shares of Common Stock which are held by any subsidiary of the Company or in the
treasury of the Company, or which are held, by Ingersoll-Rand or any of its
subsidiaries (including the Purchaser), all of which will be cancelled, and (ii)
shares of Common Stock held by dissenting stockholders), will be cancelled and
converted into the right to receive an amount in cash, without interest, equal
to the price paid for each share of Common Stock pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof less any required
withholding taxes. At the Effective Time, each share of outstanding common stock
of the Purchaser will become one share of common stock of the Company (the
"Surviving Corporation"). For a description of certain rights available to
stockholders upon consummation of the Offer or the Merger, see Section 11 of the
Offer to Purchase.
Agreements of the Company, the Purchaser and Ingersoll-Rand. In the Merger
Agreement, the Company has agreed that during the period from the date of the
Merger Agreement to the Effective Time, except as otherwise approved in writing
by Ingersoll-Rand, the Company and each of its subsidiaries will conduct their
respective operations only in the ordinary course of business consistent with
past practice and will use their reasonable best efforts to preserve intact
their respective business organization, keep available the services of their
officers and employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients and others having business relationships with
them.
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The Merger Agreement provides that neither the Company nor any of its
subsidiaries (other than VME Group, N.V.) will (i) make any amendment to its
Certificate of Incorporation or By-Laws (or comparable governing documents);
(ii) issue or sell any shares of its capital stock (other than in connection
with the exercise of currently outstanding stock options) or any of its other
securities (including stock appreciation rights or phantom stock), or issue any
securities convertible into, or options, warrants or rights to purchase, or
enter into any arrangement or contract with respect to the issuance or sale of,
any shares of its capital stock or any of its other securities, or make any
other changes in its capital structure; (iii) sell or pledge any stock owned by
it in any of its subsidiaries; (iv) declare or pay any dividend or other
distribution or payment with respect to, or split, combine, redeem, reclassify
or purchase any shares of its capital stock; (v) other than in the ordinary
course of business consistent with past practice, transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of, encumber or subject to any lien
any material assets or incur or modify any indebtedness other than any
indebtedness incurred in connection with the acquisition of Club Car, Inc. or
other liability or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for the obligations of any
person; (vi) make any tax election or settle or compromise any material tax
liability; (vii) make any material change in its method of accounting; (viii)
(A) acquire (by merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization or division thereof; (B)
enter into any contract or agreement other than in the ordinary course of
business consistent with past practice that would be material to the Company and
its subsidiaries taken as a whole; (C) to the extent not included in the
Company's capital budget for 1995 previously approved by the Board, for 150 days
after the date of the Merger Agreement, authorize any single capital expenditure
in excess of $1.5 million or capital expenditures of $10 million in the
aggregate; or (D) enter into or materially amend any agreement, commitment or
arrangement with respect to any of the matters set forth in this clause (viii);
(ix) except to the extent required under existing employee and director benefit
plans, agreements or arrangements as in effect on the date of the Merger
Agreement, increase the compensation or fringe benefits of any of its directors,
officers or employees, except for increases in salary or wages of employees of
the Company or its subsidiaries who are not officers of the Company in the
ordinary course of business in accordance with past practice, or grant any
severance or termination pay not currently required to be paid under existing
severance plans or enter into any employment, consulting or severance agreement
or arrangement with any present or former director, officer or other employee of
the Company or any of its subsidiaries (other than employment contracts with
certain individuals), or establish, enter into or amend or terminate any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any directors, officers or employees; (x)
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries (other than the Merger); (xi) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in the financial
statements of the Company or incurred in the ordinary course of business and
consistent with past practice; or (xii) agree to take any of the foregoing
actions. However, the Merger Agreement permits the Company to fully fund,
through the Rabbi Trusts all amounts which may become payable to employees of
the Company and its subsidiaries upon a change in control of the Company
(including additional amounts (up to a maximum of $23 million) required to be
paid to such employees to gross up such payments for any income or other taxes
incurred with respect thereto).
Pursuant to the Merger Agreement, the Company will not, and will not permit
any of its subsidiaries other than VME Group, N.V. to, (i) take any action,
engage in any transaction or enter into any agreement which would cause any of
the representations or warranties set forth therein to be untrue as of the
Effective Time, or (ii) purchase or offer to purchase any shares of capital
stock of the Company.
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The Merger Agreement provides that promptly after the consummation of the
Offer, if required by the Delaware Law in order to consummate the Merger, the
Company will convene a meeting of the holders of Common Stock for the purpose of
voting upon the Merger Agreement and the Merger. The Company will use its
reasonable best efforts to solicit from its stockholders proxies and, subject
always to the fiduciary obligations of the Company's directors under applicable
law, will take all other action necessary and advisable to secure the vote of
stockholders required by applicable law to obtain the approval of the Merger
Agreement and the Merger. Subject always to the fiduciary obligations of the
Company's directors under applicable law, the Company has agreed to include in
the Proxy Statement the recommendation of its Board that holders of Common Stock
approve and adopt the Merger Agreement and approve the Merger. For a description
of the short-form merger provisions of the Delaware Law, which under certain
circumstances could be applicable to the Merger, see Section 11 of the Offer to
Purchase.
The Merger Agreement provides that, if required by law, as promptly as
practicable after the consummation of the Offer, the Company will prepare and
file a preliminary Proxy Statement with the Commission and will use its
reasonable best efforts to have it cleared by the Securities and Exchange
Commission (the "Commission") at the earliest practicable time.
Pursuant to the Merger Agreement, promptly following the purchase by the
Purchaser of Shares pursuant to the Offer, the Purchaser will be entitled to
designate up to such number of directors, rounded up to the next whole number,
of the Company as will give the Purchaser representation on the Board equal to
the product of the total number of directors on the Board (giving effect to the
directors elected pursuant to the Merger Agreement) multiplied by the percentage
that the aggregate number of shares of Company Common Stock beneficially owned
by the Purchaser and its affiliates bears to the total number of shares of
Company Common Stock then outstanding. At such times, the Company will use its
best efforts to cause persons designated by the Purchaser to constitute the same
percentage as is on the Board of (i) each committee of the Board, (ii) each
board of directors of each domestic subsidiary of the Company and (iii) each
committee of each such board. Until the Purchaser acquires a majority of the
outstanding Shares on a fully diluted basis, the Company will use its best
efforts to ensure that all the members of the Board and such boards and
committees as of the date of the Merger Agreement who are not employees of the
Company will remain members of the Board and such boards and committees.
Annex I attached hereto sets forth information with respect to the possible
designation by the Purchaser, pursuant to the Merger Agreement, of persons to be
elected to the Board. The information contained in Annex I concerning the
Purchaser and Ingersoll-Rand has been furnished to the Company by
Ingersoll-Rand, and the Company assumes no responsibility for the accuracy,
completeness or fairness of such information. The Purchaser currently intends to
choose the designees to the Board which it has the right to designate pursuant
to the Merger Agreement from among the directors and officers of Ingersoll-Rand
listed in Schedule I to the Offer to Purchase.
The Company has agreed to take all actions required pursuant to Section
14(f) and Rule 14f-1 under the Exchange Act in order to fulfill its obligations
under the Merger Agreement described in the preceding paragraph and will include
in the Schedule 14D-9 or a separate Rule 14f-1 information statement provided to
stockholders such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations thereunder. Pursuant to the Merger Agreement, Ingersoll-Rand or the
Purchaser will supply to the Company any information with respect to either of
them and their nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1 under the Exchange Act.
Following the appointment of the Purchaser's designees as described above
and prior to the Effective Time, any amendment of the Merger Agreement, the
Certificate of Incorporation or By-Laws of the Company, any termination of the
Merger Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of the Purchaser or
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waiver of any of the Company's rights thereunder, and any other consent or
action by the Board thereunder, will require the concurrence of a majority of
the directors of the Company then in office who are neither designated by the
Purchaser nor are employees of the Company.
Pursuant to the Merger Agreement, from the date of the Merger Agreement to
the Effective Time, the Company will afford Ingersoll-Rand and its
representatives and advisors reasonable access to the employees, properties,
offices, plants and other facilities and to all books and records of the Company
and its subsidiaries in order that they may have the opportunity to make such
investigations as they desire of the affairs of the Company and its
subsidiaries.
Under the Merger Agreement, the Company, its affiliates and their respective
officers, directors, employees, representatives and agents will immediately
cease any existing discussions or negotiations with any parties conducted
heretofore with respect to any acquisition or exchange of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries (except pursuant to the VME Sale Agreement) or any business
combination with the Company or any of its subsidiaries. The Company, its
subsidiaries, directors, employees, representatives and agents may furnish
information and access, in each case only in response to a request made after
the date of the Merger Agreement for such information or access, to any person
which was not initiated, solicited or knowingly encouraged by the Company or any
of its affiliates or any of its or their respective officers, directors,
employees, representatives or agents after the date of the Merger Agreement
(with respect to confidential information, pursuant to appropriate
confidentiality agreements), and may participate in discussions and negotiate
with such entity or group concerning any merger, sale of assets, sale of shares
of capital stock or similar transaction (including an exchange of stock or
assets) involving the Company or any subsidiary or division of the Company, if
such entity or group has submitted a bona fide proposal to the Board relating to
any such transaction and if a majority of the Board of the Company determines,
in its good faith judgment, based on the opinion of independent outside legal
counsel to the Company, that failing to take such action would constitute a
breach of such Board's fiduciary obligations under applicable law. The Company
will promptly notify Ingersoll-Rand if any proposal or offer, or any inquiry or
contact with any person with respect thereto, is made and will indicate in
reasonable detail the identity of the offeror and the terms and conditions of
any proposal or offer, or any such inquiry or contact. The Company will keep
Ingersoll-Rand promptly advised of all developments which could reasonably be
expected to culminate in the Board withdrawing, modifying or amending its
recommendation of the Offer and the Merger. Except as set forth in the
provisions described in this paragraph, neither the Company or any of its
affiliates, nor any of its or their respective officers, directors, employees,
representatives or agents, will, directly or indirectly, knowingly encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Ingersoll-Rand and the Purchaser, any affiliate or associate
of Ingersoll-Rand and the Purchaser, or any designees of Ingersoll-Rand or the
Purchaser) concerning any merger, sale of assets, sale of shares of capital
stock or similar transactions (including an exchange of stock or assets)
involving the Company or any subsidiary or division of the Company; provided,
that none of the foregoing will prevent the Company or the Board from taking,
and disclosing to the Company's stockholders, a position contemplated by Rules
14d-9 and 14e-2 promulgated under the Exchange Act with regard to any tender
offer or from making such disclosure to the Company's stockholders which, as
advised in an opinion of counsel, is required under applicable law; provided,
further, that the Board will not recommend that the stockholders of the Company
tender their Shares in connection with any such tender offer unless the Board by
a majority vote determines in its good faith judgment, based on the opinion of
independent outside legal counsel to the Company, that failing to take such
action would constitute a breach of the Board's fiduciary duty under applicable
law.
In the Merger Agreement, the Company has agreed that it will not amend the
Rights Agreement except as expressly contemplated by the Merger Agreement.
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The Merger Agreement provides that each of the Company, Ingersoll-Rand and
the Purchaser will cooperate and use their respective reasonable best efforts to
take all appropriate action to consummate the Merger, including cooperation in
the preparation and filing of the Offer Documents, the Schedule 14D-9, the Proxy
Statement, any required filings under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended (the "HSR Act"), Regulation (EEC) No.
4064/89 of the European Community or other foreign filings and obtaining all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Company and
its subsidiaries as are necessary for consummation of the Merger and fulfillment
of the conditions to the Offer and the Merger.
Certain Employee Benefits Matters. Under the Merger Agreement,
Ingersoll-Rand has agreed that, during the period commencing at the Effective
Time and ending on December 31, 1996, the employees of the Company and its
subsidiaries (other than those employees covered by a collective bargaining
agreement) will continue to be provided with employee benefit plans which in the
aggregate are substantially comparable to those currently provided by the
Company and its subsidiaries to such employees (other than plans involving or
related to the securities of the Company except the Melroe Savings and
Investment Plan and the Clark Equipment Company Savings and Investment Plan
(each as in effect on April 3, 1995 and disregarding the effect of the Offer and
the Merger on such plans)). Employees covered by collective bargaining
agreements will be provided with such benefits as will be required under the
terms of any applicable collective bargaining agreement.
Under the Merger Agreement, Ingersoll-Rand has agreed to cause the Surviving
Corporation to honor and continue to perform all benefit obligations (including
to employees who have retired from the Company and its subsidiaries before the
Effective Time), contracts and agreements (including employment, consulting and
severance obligations and agreements, but excluding any Stock Plans) of the
Company or any of its subsidiaries authorized by the Company or any of its
subsidiaries on or prior to the date of the Merger Agreement which apply to any
current or former employee or current or former director of the Company or any
of its subsidiaries. Ingersoll-Rand has agreed that after the Effective Time the
Surviving Corporation or its subsidiaries will pay all amounts provided under
all agreements of the Company and its subsidiaries and all benefit obligations
of the Company and its subsidiaries, including the change in control agreements
entered into between the Company and its subsidiaries and their officers (the
"Change in Control Agreements") (or honor the provisions of the Change in
Control Agreements in the case where no payment by the Surviving Corporation or
its subsidiaries is required) conditioned on a change in control of the Company,
in accordance with the terms of such Change in Control Agreements (or will cause
any related trusts to make such payments in the case of funded plans).
Notwithstanding anything described in this section to the contrary, neither
Ingersoll-Rand nor the Surviving Corporation will be prevented from terminating
the employment of any person.
For purposes of all employee benefit plans, programs and arrangements
maintained by or contributed to by Ingersoll-Rand and its subsidiaries
(including the Surviving Corporation), Ingersoll-Rand will cause each such plan,
program or arrangement to treat the prior service with the Company and its
subsidiaries of each person who is an employee of the Company or its
subsidiaries a ("Clark Employee") (to the same extent such service is recognized
under analogous plans, programs or arrangements of the Company or its
subsidiaries prior to the Effective Time) as service rendered to Ingersoll-Rand
or its subsidiaries for purposes of eligibility to participate and for all
benefits and vesting thereunder; provided, however, that any benefits provided
under Ingersoll-Rand Plans (as defined below) will be reduced by benefits in
respect of the same years of service under analogous plans, programs and
arrangements maintained by or contributed to by the Company, the Surviving
Corporation or their subsidiaries.
Each Clark Employee who becomes an employee of Ingersoll-Rand or any of its
subsidiaries (other than the Surviving Corporation and its subsidiaries)
following the Effective Time (each a "Continued
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Employee") will be entitled, as an employee of Ingersoll-Rand or of any of its
subsidiaries (other than the Surviving Corporation and its subsidiaries), to
participate in whatever employee benefit plans or nonqualified employee benefit
or deferred compensation plans, stock option, bonus or incentive plans or other
employee benefit or fringe benefit programs that may be in effect generally for
employees of Ingersoll-Rand or its subsidiaries from time to time ("Parent
Plans") if such Continued Employee will be eligible for participation therein
and otherwise will not be participating in a similar plan which continues to be
maintained by the Surviving Corporation and its subsidiaries. Ingersoll-Rand or
Ingersoll-Rand's subsidiaries will cause their respective tax-qualified defined
benefit pension plans in which any Continued Employee will become a participant
on or after the Effective Time to be amended to recognize, for purposes of
vesting, eligibility and benefit accrual thereunder, each Clark Employee's
compensation and term of service with the Company and its subsidiaries to the
same extent recognized under analogous plans of the Company and its subsidiaries
prior to the Effective Time; provided, however, that any benefits under such
plans will be reduced by benefits in respect of the same years of service under
analogous plans, programs and arrangements maintained by or contributed to by
the Company, the Surviving Corporation or their subsidiaries. Subject to the
above-described provisions, Continued Employees will be eligible to participate
on the same basis as similarly-situated employees of Ingersoll-Rand or its
subsidiaries. All such participation will be subject to such terms of such plans
as may be in effect from time to time.
Pursuant to the Merger Agreement, at all times after the Effective Time,
notwithstanding anything to the contrary in SERP 1, the SERP 1 Trust, SERP 2 or
the SERP 2 Trust, the terms (i) "committee," as used in the SERP 1 Trust and
SERP 2 Trust, (ii) "Administrator," as used in the SERP 1 and SERP 2, (iii)
"Chief Executive Officer" as used in Section 2.3 of the SERP 1 and SERP 2, and
(iv) "Company" as used in Section 4.2 of the SERP 1 and SERP 2, will in each
instance mean Ingersoll-Rand's benefits committee.
The Company has agreed that as soon as practicable after the execution of
the Merger Agreement it will use its best efforts to obtain the requisite
consents of all participants and beneficiaries of the Rabbi Trusts so that the
Company may amend SERP 1 and SERP 2 to permit either Ingersoll-Rand, the Company
or any of their respective subsidiaries to make a one-time withdrawal of assets
from the Rabbi Trusts to the extent such assets exceed 100% of the "Plan benefit
value" (as such term is used in Section 3 of each of SERP 1 and SERP 2), such
funding level to be first certified by the actuary for the Company's
tax-qualified Plan. After such withdrawal, the right to withdraw amounts from
either such Rabbi Trust will continue as in effect prior to such amendments.
Directors' and Officers' Insurance; Indemnification. The Merger Agreement
provides that the certificate of incorporation and the by-laws of the Surviving
Corporation will contain provisions with respect to indemnification and
exculpation from liability no less favorable than those set forth in the
Company's Certificate of Incorporation and By-Laws on the date of the Merger
Agreement, which provisions will not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who on or prior to the
Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
For six years from the Effective Time, the Surviving Corporation will either
(x) maintain in effect the Company's current directors' and officers' liability
insurance covering those persons who are currently covered on the date of the
Merger Agreement by the Company's directors' and officers' liability insurance
policy (the "Indemnified Parties"); provided, however, that in no event will
Ingersoll-Rand be required to expend in any one year an amount in excess of 175%
of the annual premiums currently paid by the Company for such insurance and if
the annual premiums of such insurance coverage exceed such amount, the Surviving
Corporation will be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount; provided further, that the
Surviving
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Corporation may substitute, for such Company policies, policies with at least
the same coverage containing terms and conditions which are no less advantageous
and provided that said substitution does not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time or (y)
cause Ingersoll-Rand directors' and officers' liability insurance then in effect
to cover those persons who are covered on the date of the Merger Agreement by
the Company's directors' and officers' liability insurance policy with respect
to those matters covered by the Company's directors' and officers' liability
policy.
Disposition of Litigation. In the Merger Agreement, the Company has agreed
to dismiss without prejudice Clark Equipment Company v. Ingersoll-Rand Company,
Civil Action Docket No. 95 CIV 2130 (CSH) (S.D.N.Y. 1995). The Company agreed
that it will not settle any litigation currently pending, or commenced after the
date of the Merger Agreement, against the Company or any of its directors by any
stockholder of the Company relating to the Offer or the Merger Agreement without
the prior written consent of Ingersoll-Rand.
The Merger Agreement provides that the Company will not voluntarily
cooperate with any third party which has sought or may hereafter seek to
restrain or prohibit or otherwise oppose the Offer or the Merger and will
cooperate with Ingersoll-Rand and the Purchaser to resist any such effort to
restrain or prohibit or otherwise oppose the Offer or the Merger.
Proxy Contests. Pursuant to the Merger Agreement, Ingersoll-Rand and the
Purchaser have agreed to withdraw and rescind (i) the notice, dated April 3,
1995, pursuant to Article II, Section 10 of the Company's By-Laws and (ii) the
Schedule 14A filed with the Commission, in each case relating to the nomination
of the persons named in such notice for election to the Board at the annual
meeting of the Company's stockholders.
From the date of the Merger Agreement until the earlier of (i) the Effective
Time and (ii) the termination of the Merger Agreement, neither Ingersoll-Rand
nor the Purchaser nor any of their affiliates or associates (as such terms are
defined in Rule 12b-2 promulgated under the Exchange Act) will, except as
otherwise expressly permitted or required by the Merger Agreement, directly or
indirectly, alone or through or with others, in any manner (i) solicit, make, or
in any way participate in, directly or indirectly, any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Commission
promulgated pursuant to Section 14a-11 of the Exchange Act) from the
stockholders of the Company, become a "participant" in any "election contest"
(as such terms are defined or used in Rule 14a-11 promulgated under the Exchange
Act) with respect to the Board of the Company, solicit or execute any written
consent in lieu of a meeting of holders of voting securities except to support
the nominees or directors of the Board or any affiliate thereof or call or seek
to have called any meeting of the stockholders of the Company or any affiliate
thereof, or (ii) except as provided in the Merger Agreement, otherwise seek
election to or seek to place a representative on the Board or any affiliate
thereof, or seek the removal of any member of the Board or any affiliate
thereof.
Postponement of Annual Meeting. The Company has agreed to postpone
indefinitely its annual meeting of stockholders currently scheduled for May 9,
1995, and will take no action unless compelled by legal process to reschedule
such annual meeting or to call a special meeting of stockholders of the Company
except in accordance with the Merger Agreement, unless and until the Merger
Agreement has been terminated in accordance with its terms.
Sale of VME. The Company has agreed to use its reasonable best efforts to
take or cause to be taken all such action necessary (i) to consummate the
transactions contemplated by the VME Sale Agreement (which agreement is
described in the Company's Current Report on Form 8-K filed with the Commission
on March 6, 1995) prior to the completion of the Offer, including selling its
50% interest in VME Group N.V. for cash proceeds of not less than $573 million,
or (ii) failing such consummation, to prevent cancellation or termination of the
VME Sale Agreement or any amendment of such agreement
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in a manner that would reasonably be expected to have a material adverse affect
on the Company, or any other event which will cause the VME Sale Agreement to no
longer remain in full force and effect.
Representations and Warranties. The Merger Agreement contains customary
representations and warranties with respect to the Company, including that the
Board has approved the Merger Agreement and the Offer and the Merger so as to
render inapplicable thereto Section 203 of the Delaware Law and the
supermajority stockholder voting requirements of Article SIXTH, paragraph 6, of
the Company's Certificate of Incorporation; the accuracy of the Company's
documents and reports filed with the Commission; with respect to the Company's
financial statements and financial condition; the absence of certain changes of
events which individually or in the aggregate would reasonably be expected to
have a material adverse effect on the business, assets, financial condition or
results of operations of the Company and its subsidiaries taken as a whole; the
absence of certain litigation; with respect to the Company's employee benefit
plans, tax matters, environmental matters; that the Company has taken all
necessary action so that none of the execution of the Merger Agreement, the
making of the Offer, the acquisition of Shares pursuant to the Offer or the
consummation of the Merger will cause the Rights to become exercisable, cause
any person to become an Acquiring Person or give rise to a Distribution Date
or a Triggering Event; and that since December 31, 1994, no event has occurred
and no circumstance has arisen which would reasonably be expected to result in
a failure to satisfy any of the conditions to the Offer.
In the Merger Agreement, Ingersoll-Rand and the Purchaser have made
customary representations and warranties, including that Ingersoll-Rand has a
commitment to provide the financing for, and will provide the Purchaser with,
the funds necessary to consummate the Offer and the Merger and the transactions
contemplated thereby in accordance with the terms thereof.
Conditions to Merger. The respective obligations of Ingersoll-Rand, the
Purchaser and the Company to effect the Merger are subject to the satisfaction
or waiver (subject to applicable law) at or prior to the Effective Time of each
of the following conditions: (i) to the extent required by applicable law, the
Merger Agreement and the Merger will have been approved and adopted by holders
of a majority of the Common Stock of the Company in accordance with applicable
law and the Certificate of Incorporation and By-Laws; (ii) any waiting period
(and any extension thereof) under the HSR Act applicable to the Merger will have
expired or been terminated; (iii) no preliminary or permanent injunction or
other order will have been issued by any court or by any governmental or
regulatory agency, body or authority which prohibits the consummation of the
Offer or the Merger and which is in effect at the Effective Time, provided,
however, that, in the case of any such decree, injunction or other order, each
of the parties to the Merger Agreement will have used reasonable best efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any decree, injunction or other order that may be entered;
(iv) no statute, rule, regulation, executive order, decree or order of any kind
will have been enacted, entered, promulgated or enforced by any court or
governmental authority which prohibits the consummation of the Offer or the
Merger or has the effect of making the purchase of the Common Stock illegal; and
(v) the Purchaser will have accepted for payment and paid for the shares of
Common Stock tendered pursuant to the Offer; provided, that the foregoing will
not be a condition to Ingersoll-Rand's and the Purchaser's obligation to
consummate the Merger if the Purchaser's failure to purchase Shares of Common
Stock violates the terms of the Offer.
Termination. The Merger Agreement may be terminated and the transactions
contemplated thereby may be abandoned, at any time prior to the Effective Time,
whether before or after approval of the Merger by the Company's stockholders:
(a) by mutual written consent of the Company, IngersollRand and the Purchaser;
(b) by either Ingersoll-Rand or the Company, if any governmental or regulatory
agency located or having jurisdiction within the United States or any country or
economic region in which either the Company or Ingersoll-Rand has material
assets or operations will have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise
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prohibiting the acceptance for payment of, or payment for, shares of Common
Stock pursuant to the Offer or the Merger and such order, decree or ruling or
other action will have become final and nonappealable; provided, that
Ingersoll-Rand will, if necessary to prevent the taking of such action, or the
enaction, enforcement, promulgation, amendment, issuance or application of any
statute, rule, regulation, legislation, interpretation, judgment, order or
injunction, offer to accept an order to divest such of the Company's or
Ingersoll-Rand's assets and businesses as may be necessary to forestall such
injunction or order and to hold separate such assets and business pending such
divestiture, but only if the amount of such assets and businesses is not
material to the assets or profitability of Ingersoll-Rand and its subsidiaries
taken as a whole; (c) by Ingersoll-Rand or the Company, if due to an occurrence
or circumstance which would result in a failure to satisfy any of the Tender
Offer Conditions, the Purchaser will have failed to pay for Shares pursuant to
the Offer on or prior to the Outside Date, unless such failure has been caused
by or results from the failure of the party seeking to terminate the Merger
Agreement to perform in any material respect any of its respective covenants
contained in the Merger Agreement. The term "Outside Date" will mean the latest
(not to exceed 150 days) of (A) 60 days following the date of the Merger
Agreement, (B) the date on which either the applicable waiting period under the
HSR Act will have expired or been terminated or the final terms of a consent
decree between Ingersoll-Rand and the Antitrust Division of the Department of
Justice (the "Antitrust Division") (the "Consenting Parties"), with respect to
the Offer and the Merger have been agreed to by the Consenting Parties, or an
order of a Federal District Court adjudging that the Merger does not violate the
Federal antitrust laws will have been issued or the Antitrust Division will have
otherwise authorized Ingersoll-Rand to acquire Shares pursuant to the Offer, or
(C) 10 business days following the conclusion of any ongoing proceedings before
the European Commission in connection with its review of the transactions
contemplated by the Merger Agreement or any similar delay pursuant to any other
material antitrust or competitive law or regulation; (d) by Ingersoll-Rand or
the Company, if the Offer is terminated or expires in accordance with its terms
without the Purchaser having purchased any Common Stock thereunder due to a
failure of any of the conditions to the Offer to be satisfied, unless such
termination or expiration has been caused by or results from the failure of the
party seeking to terminate the Merger Agreement to perform in any material
respect any of its respective covenants contained in the Merger Agreement; (e)
by the Company, if the Board of the Company determines that a proposal for a
Third Party Acquisition is a Superior Proposal and a majority of the Board of
the Company determines, in its good faith judgment, based on the opinion of
independent legal outside counsel to the Company, that a failure to terminate
the Merger Agreement would constitute a breach of such Board's fiduciary
obligations under applicable law; provided, that any such termination by the
Company under the provisions described in this clause (e) will not be effective
until the Company has made payment of the full fee and expense reimbursement
described below under "Fees and Expenses"; (f) prior to the consummation of the
Offer, by the Company, if (i) any of the representations and warranties of
Ingersoll-Rand or the Purchaser contained in the Merger Agreement were incorrect
in any material respect when made or have since become, and at the time of
termination remain, incorrect in any material respect, or (ii) Ingersoll-Rand or
the Purchaser will have breached or failed to comply in any material respect
with any of their respective obligations under the Merger Agreement, which
breach will not have been cured prior to the earlier of (A) 10 days following
notice of such breach and (B) two business days prior to the date on which the
Offer expires; or (g) by Ingersoll-Rand prior to the purchase of Shares pursuant
to the Offer, if (i) there will have been a breach of any representation or
warranty on the part of the Company contained in the Merger Agreement which
would reasonably be expected to have a material adverse effect on the business,
assets, financial condition or results of operations of the Company and its
subsidiaries taken as a whole or which would reasonably be expected to prevent
(or materially delay) the consummation of the Offer, (ii) there will have been a
breach of any covenant on the part of the Company contained in the Merger
Agreement which would reasonably be expected to have a material adverse effect
on the business, assets, financial condition or results of operations of the
Company and its subsidiaries taken as a whole or which would reasonably be
expected to prevent (or materially delay) the consummation of the Offer, which
will not have been cured prior to the earlier of (A) 10 days following notice of
such breach and (B) two business days prior to the date on which the
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<PAGE>
Offer expires, (iii) the Board will have withdrawn or modified in a manner
adverse to the Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger and will not have reinstated such approval or
recommendation within three business days thereof, will have approved or
recommended another offer or transaction, or will have resolved to effect any of
the foregoing, or (iv) the Minimum Condition will not have been satisfied by the
expiration date of the Offer and on or prior to such date (A) any person (other
than Ingersoll-Rand or the Purchaser) will have made a proposal or public
announcement or communication to the Company with respect to a Third Party
Acquisition at a price in excess of $86.00 per Share or (B) any person
(including the Company or any of its affiliates or subsidiaries), other than
Ingersoll-Rand or any of its affiliates, will have become the beneficial owner
of more than 20.0% of the Shares.
"Third Party Acquisition" is defined in the Merger Agreement as the
occurrence of any of the following events: (i) the acquisition of the Company by
merger, tender offer or otherwise by any person other than Ingersoll-Rand, the
Purchaser or any affiliate (a "Third Party"); (ii) the acquisition by a Third
Party of 20.0% or more of the assets of the Company and its subsidiaries taken
as a whole; (iii) the acquisition by a Third Party of more than 20.0% of the
outstanding Shares; (iv) the adoption by the Company of a plan of liquidation or
the declaration or payment of an extraordinary dividend; or (v) the repurchase
by the Company or any of its subsidiaries of 20.0% or more of the outstanding
Shares.
"Superior Proposal" is defined in the Merger Agreement as a bona fide
proposal made by a Third Party to acquire all of the outstanding Shares pursuant
to a tender offer or a merger, or to purchase all or substantially all of the
assets of the Company, on terms which a majority of the members of the Board of
the Company determines in its good faith reasonable judgment (based on the
advice of its financial and legal advisors) to be more favorable to the Company
and its stockholders than the Offer and the Merger.
In the event of the termination of the Merger Agreement, the Merger
Agreement will forthwith become void and there will be no liability on the part
of any party thereto subject to limited exceptions; provided, however, that
nothing therein will relieve any party from liability for any breach hereof.
Fees and Expenses. Under the Merger Agreement, if: (i) Ingersoll-Rand
terminates the Merger Agreement pursuant to the provisions described in clause
(g)(iv)(A) under "Termination" above and within twelve months thereafter: (A)
the Company enters into an agreement with respect to a Third Party Acquisition,
or a Third Party Acquisition occurs, involving any party (or any affiliate or
associate thereof) (x) with whom the Company (or its agents) had any discussions
with respect to a Third Party Acquisition, (y) to whom the Company (or its
agents) furnished information with respect to or with a view to a Third Party
Acquisition or (z) who had submitted a proposal or expressed any interest
publicly or to the Company in a Third Party Acquisition, in the case of each of
clauses (x), (y) and (z) prior to such termination; or (B) the Company enters
into an agreement with respect to a Third Party Acquisition, or a Third Party
Acquisition occurs, that contemplates a direct or indirect consideration (or
implicit valuation) for Shares (including the value of any stub equity) in
excess of $86.00 per Share; or (ii) the Company terminates the Merger Agreement
pursuant to the provisions described in clause (e) under "Termination" above or
Ingersoll-Rand terminates the Merger Agreement pursuant to the provisions
described in clause (g)(iii) or (g)(iv)(B) under "Termination" above; then the
Company must pay to Ingersoll-Rand and the Purchaser, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with any termination contemplated by the
provisions described in clause (ii) above, a cash fee of $35 million, provided,
however, that the Company will in no event be obligated to pay more than one
such fee with respect to all such agreements and occurrences and such
termination.
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<PAGE>
Except as otherwise specifically provided therein, all costs and expenses
incurred in connection with the Merger Agreement and the consummation of the
transactions contemplated thereby will be paid by the party incurring such costs
and expenses.
Amendment and Modification. Subject to the terms of the Merger Agreement and
applicable law, the Merger Agreement may be amended, modified and supplemented
in writing by the parties thereto in any and all respects before the Effective
Time (notwithstanding any stockholder approval of the Merger), by action taken
by the respective Boards of Directors of Ingersoll-Rand, the Purchaser and the
Company or by the respective officers authorized by such Boards of Directors,
provided, however, that after any such stockholder approval, no amendment will
be made which by law requires further approval by such stockholders without such
further approval.
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser shall not be
required to accept for payment or subject to any applicable rules and
regulations of the Commission, including Rule 14e-1c under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered shares
promptly after termination or withdrawal of the Offer), pay for any Shares
tendered and may terminate or amend the Offer in accordance with the Merger
Agreement and may postpone the acceptance of, and payment for, Shares, if (i)
there shall not have been validly tendered and not withdrawn prior to the
expiration of the Offer a number of Shares which, together with Shares owned by
Ingersoll-Rand and the Purchaser, represent a majority of the total voting power
of all Shares outstanding on a fully diluted basis on the date of purchase (the
"Minimum Condition"), (ii) subject to the proviso contained in paragraph (a)
below, any applicable waiting period under the HSR Act or under any applicable
foreign statutes or regulations in a jurisdiction where Ingersoll-Rand or the
Company, directly or indirectly, has material operations or a material amount of
assets shall not have expired or been terminated or (iii) at any time on or
after the date of the Merger Agreement and at or before the time of payment for
any such Shares (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer) any of the following shall occur:
(a) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended, issued or deemed applicable to the Offer, by
any legislative body, court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer or
to the Merger, that would reasonably be expected to: (i) make illegal or
otherwise prohibit or materially delay consummation of the Offer or the
Merger or seek to obtain material damages or make materially more costly the
making of the Offer, (ii) prohibit or materially limit the ownership or
operation by Ingersoll-Rand or the Purchaser of all or any material portion
of the business or assets of the Company or any of its subsidiaries taken as
a whole or compel Ingersoll-Rand or the Purchaser to dispose of or hold
separately all or any material portion of the business or assets of
Ingersoll-Rand or the Purchaser or the Company or any of its subsidiaries
taken as a whole, or seek to impose any material limitation on the ability
of Ingersoll-Rand or the Purchaser to conduct its business or own such
assets, (iii) impose material limitations on the ability of Ingersoll-Rand
or the Purchaser effectively to acquire, hold or exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or owned by the Purchaser or Ingersoll-Rand on all
matters properly presented to the Company's stockholders, or (iv) require
divestiture by Ingersoll-Rand or the Purchaser of any Shares; provided, that
Ingersoll-Rand shall, if necessary to prevent the taking of such action, or
the enaction, enforcement, promulgation, amendment, issuance or application
of any statute, rule, regulation, legislation, interpretation, judgment,
order or injunction, offer to accept an order to divest such of the
Company's or Ingersoll-Rand's assets and businesses as may be necessary to
forestall such injunction or order and to hold separate such assets and
business
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<PAGE>
pending such divestiture, but only if the amount of such assets and
businesses is not material to the assets or profitability of Ingersoll-Rand
and its subsidiaries taken as a whole;
(b) there shall have occurred any development that has, or would
reasonably be expected to have, a material adverse effect on the business,
assets, financial condition or results of operations of the Company and its
subsidiaries taken as a whole;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange (the
"NYSE"), (ii) any decline in the Standard & Poor's 500 in excess of 25%
measured from the close of business on the trading day next preceding the
date of the Merger Agreement, (iii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (iv)
any material limitation by any U.S., federal or state government or
governmental, administrative or regulatory authority or agency on the
extension of credit by banks or other lending institutions, or (v) a
commencement or escalation of a war or armed hostilities or other national
or international calamity directly or indirectly involving the United States
and having a material adverse effect on the business, assets, financial
condition or results of operations of the Company and its subsidiaries taken
as a whole or materially adversely affecting (or materially delaying) the
consummation of the Offer.
(d)(i) it shall have been disclosed or the Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 20% of the outstanding Shares has been acquired by any
corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), other than Ingersoll-Rand or any of
its affiliates, or (ii)(A) the Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Ingersoll-Rand or the Purchaser
the approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any takeover proposal or any other
acquisition of Shares other than the Offer and the Merger, (B) any
corporation, partnership, person or other entity or group shall have entered
into a definitive agreement or an agreement in principle with the Company
with respect to a tender offer or exchange offer for any Shares or a merger,
consolidation or other business combination with or involving the Company or
any of its subsidiaries, or (C) the Board or any committee thereof shall
have resolved to do any of the foregoing;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct, or any such representations and warranties that are not so
qualified shall not be true and correct in any respect which would
reasonably be expected to have a material adverse effect on the business
assets, results of operations or financial condition of the Company and its
subsidiaries taken as a whole, in each case as if such representations and
warranties were made at the time of such determination except as to any such
representation or warranty which speaks as of a specific date, which must be
untrue or incorrect in the foregoing respects as of such specific date;
(f) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
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<PAGE>
(g)(x) the Company shall not have consummated the sale of its 50%
interest in VME Group N.V. for cash proceeds of not less than $573 million
and (y) the definitive agreement to sell such interest to AB Volvo of Sweden
described in the Company's Current Report on Form 8-K filed with the
Commission on March 6, 1995 shall have been cancelled or terminated, or
shall have been amended in a manner that is materially adverse to the
Company, or shall otherwise no longer remain in full force and effect; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of the Purchaser, in any such case and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions (including those set forth in clauses (i)-(iii)
above) are for the sole benefit of the Purchaser and may be asserted by the
Purchaser, or may be waived by the Purchaser, in whole or in part at any time
and from time to time in its sole discretion. The failure by the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
The Company has agreed to take all actions required pursuant to Section
14(f) and Rule 14f-1 in order to fulfill its obligations under Section 4.13 of
the Merger Agreement. Annex I to this Schedule 14D-9 fulfills the Company's
obligation in this regard under the Merger Agreement. Pursuant to the Merger
Agreement, Ingersoll-Rand or the Purchaser will supply to the Company and be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
To the best of the knowledge of the Company, except as described above,
there are no material contracts, agreements, arrangements or understandings and
no actual or potential conflicts of interest between the Company or its
affiliates and (i) its executive officers, directors or affiliates or (ii) the
Purchaser or Ingersoll-Rand, its executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) At a meeting of the Board held on April 9, 1995, the Board met with its
financial and legal advisors to review the business, financial condition and
prospects of the Company, the terms and conditions of the Offer and various
matters related thereto, including reports by the Company's financial advisor,
CS First Boston, on the financial condition and performance and potential value
of the Company. Based on the proposed terms of the draft Merger Agreement
presented to the Board on April 9, 1995, which among other things, substantially
increased the price offered per Share, in light of and subject to the terms and
conditions set forth in the Merger Agreement and after receiving advice from
management of the Company ("Management"), CS First Boston and its legal
advisors, the Board unanimously determined that the Offer and Merger Agreement
are fair to, and in the best interest of, the shareholders of the Company.
AT THE APRIL 9, 1995 MEETING, THE BOARD UNANIMOUSLY DETERMINED THAT BOTH THE
OFFER AND MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT
ALL HOLDERS OF SHARES ACCEPT THE OFFER AND MERGER AGREEMENT AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
A copy of a letter to stockholders communicating the recommendation of the
Board is filed as Exhibit 9 and is incorporated herein by reference.
(b) In reaching its determination and recommendations with respect to the
Offer, as indicated above, the Board reviewed in detail the Offer and the
various alternative transactions reviewed by Management and its financial
advisors, and deliberated extensively with its legal and financial advisors
21
<PAGE>
regarding the foregoing. At the end of the meeting, the Board determined by
unanimous vote that the Offer, as revised, is fair to, and in the best interests
of, the Company, its shareholders and its other constituencies and authorized
the execution and delivery of the Merger Agreement. Numerous factors were taken
into account including, among other things, the following:
(i) The terms and conditions of the Offer and the Merger Agreement.
(ii) Presentation by Management at the March 27, 1995 meeting regarding
the financial condition, results of operations, business and prospects of
the Company, including the prospects of the Company were it to remain
independent.
(iii) The Board's belief, based on the advice and analysis of CS First
Boston presented to the Board at the meetings held on April 2 and April 9,
1995, that alternative financial transactions, such as a leveraged
recapitalization, payment of a substantial dividend, or leveraged buy-out,
were not likely to provide values to the shareholders of the Company
superior to the $86 per Share Offer.
(iv) The fact that since March 28, 1995, the date Ingersoll-Rand first
publicly announced its proposal to acquire the Company, no person other than
Ingersoll-Rand had made an offer or proposal to acquire the Company, and the
Board was not confident that an offer superior to the Offer would be
forthcoming either prior to the annual meeting on May 9, 1995 or any
reasonable postponement thereof, at which meeting the Board faced the
prospect that the Ingersoll-Rand nominees would be elected as directors of
the Company pursuant to the proxy solicitation launched by Ingersoll-Rand
and such new directors would then approve the $77 offer.
(v) The trading price of the Shares over the past three years and that
the $86 per Share Offer price represents a premium of approximately 63% over
the closing sales price of $52 5/8 for the Shares on the NYSE on March 27,
1995, the last trading day prior to the public announcement by
Ingersoll-Rand of its interest in acquiring the Company, and a premium of
approximately 70% over the closing price of $50 1/2 for the Shares on the
NYSE on March 14, 1995, the last trading date prior to the initial telephone
conversation concerning the acquisition of the Company by Ingersoll-Rand
between Mr. Leo J. McKernan, Chairman, President and Chief Executive of the
Company, and Mr. James E. Perrella, Chairman, President and Chief Executive
Officer of Ingersoll-Rand.
(vi) The prices paid in other recent comparable acquisition
transactions.
(vii) The recommendation of Management that the Offer and Merger be
approved.
(viii) The presentation of CS First Boston, financial advisor to the
Company, at the April 9, 1995 Board meeting and their written opinion (the
"CS First Boston Opinion") dated April 9, 1995 that, based upon and subject
to the information contained therein, as of the date of the opinion, the
consideration to be received by the stockholders of the Company (other than
Ingersoll-Rand and the Purchaser) in the Offer and the Merger is fair to
such stockholders from a financial point of view.
(ix) The Merger Agreement permits the Company to terminate the Merger
Agreement, if any person shall have made a bona fide proposal to acquire the
Company on terms which a majority of the Board determines in its good faith
judgment, based on the opinion of independent legal outside counsel to the
Company, that a failure to terminate the Merger Agreement would constitute a
breach of the Board's fiduciary obligations under applicable law.
The Board did not assign relative weights to the foregoing factors or
determine that any factor was of particular importance. Rather, the Board viewed
its position and recommendations as being based on the totality of the
information presented and considered by it.
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<PAGE>
The full text of the CS First Boston Opinion, which sets forth the
assumptions made, the matters considered and the limitations on the review
undertaken by CS First Boston, is filed herewith as Exhibit 10 and is
incorporated herein by reference. The Company's stockholders are urged to read
the attached CS First Boston Opinion in its entirety.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement, dated as of March 22, 1995 (the "March 22
Agreement"), the Company retained CS First Boston to render general financial
advisory services to the Company with respect to, among other things, responding
to any business combination proposals received by the Company. Pursuant to a
letter agreement, dated as of April 6, 1995 (the "April 6 Agreement" and,
together with the March 22 Agreement, the "Letter Agreements"), the Company
retained CS First Boston to act as the Company's financial advisor with respect
to the Offer. Pursuant to the March 22 Agreement, the Company paid CS First
Boston an advisory fee of $75,000.
The Company has agreed with CS First Boston that if within twelve months
following the April 6 Agreement, a transaction involving the acquisition by a
third party of at least a majority of the total number of outstanding voting
securities of the Company on a fully diluted basis, a merger or consolidation
involving the Company and a third party in which the Company is acquired, or the
transfer of all or substantial portion of the assets of the Company to a third
party (an "Acquisition") is consummated, the Company will pay to CS First Boston
at the closing of such Acquisition a transaction fee equal to 1% of the
aggregate consideration received by the Company's stockholders pursuant to such
Acquisition (the "Transaction Fee"). Consummation of the Offer in accordance
with its terms will constitute an Acquisition.
Pursuant to the Letter Agreements, the Company has also agreed to reimburse
CS First Boston for its reasonable out-of-pocket expenses, including the fees
and expenses of legal counsel. In addition, the Company has agreed to indemnify
CS First Boston against certain liabilities in connection with its engagement.
The Company previously retained D.F. King & Co., Inc. ("D.F. King") to
assist the Company in connection with ongoing communications with its
stockholders, including with respect to the Offer and related matters. Such firm
will receive customary compensation for its services and reimbursement of
out-of-pocket expenses in connection therewith.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to stockholders with respect to the Offer.
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<PAGE>
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as described below, to the knowledge of the Company, there have
been no transactions in Shares which were effected during the past 60 days by
the Company, or by any executive officer, director, affiliate or subsidiary of
the Company.
Between February 7, 1995 and March 15, 1995 the Company repurchased in the
open market an aggregate of 305,000 Shares pursuant to its stock repurchase
program announced on February 3, 1995. The prices paid for such Shares ranged
between $49.75 and $55.00 per Share. The aggregate purchase price for such
Shares was $16,245,150 (including commissions).
Under the Stock Purchase Program for Officers (the "Plan"), which is
described in the Report of the Human Effectiveness Committee in the Proxy
Statement, officers may contribute up to 15% of their base salary and incentive
compensation into the Plan. The Company contributes into the Plan an amount
equal to 2/3 of the participant's contribution. Pursuant to the Plan, the
Company and the Company's executive officers contributed the following amounts
to the Plan toward the purchase of Shares on March 1, 1995, calculated on the
basis of the closing price of $54.25 per Share for the Company's Shares on March
1, 1995:
<TABLE><CAPTION>
SHARES OF SHARES OF RESTRICTED
EMPLOYEE STOCK PURCHASED WITH COMPANY'S STOCK PURCHASED WITH TOTAL
NAME CONTRIBUTION EMPLOYEE CONTRIBUTION MATCH COMPANY MATCH SHARES
- ------------------------- ------------ --------------------- ----------- -------------------- ------
<S> <C> <C> <C> <C> <C>
Leo J. McKernan.......... $ 198,970.35 3667 $132,655.94 2445 6112
Frank M. Sims............ $ 48,858.24 900 $ 32,573.76 600 1500
William N. Harper........ $ 48,583.15 895 $ 32,407.00 597 1492
James D. Kertz........... $ 36,327.42 669 $ 24,210.09 446 1115
Bernard D. Henely........ $ 32,947.11 607 $ 21,996.12 405 1012
Paul R. Bowles........... $ 32,685.84 602 $ 21,780.85 401 1003
Thomas L. Doepker........ $ 32,645.61 601 $ 21,769.16 401 1002
John J. Reynolds......... $ 23,552.84 434 $ 15,681.35 289 723
David D. Hunter.......... $ 14,083.90 259 $ 9,407.74 173 432
</TABLE>
(b) To the best of the Company's knowledge, all of the Company's executive
officers, directors and affiliates currently intend to tender all Shares held of
record or beneficially owned by them pursuant to the Offer, except for those
Shares held by such persons which, if tendered, would cause such persons to
incur liability under the provisions of Section 16(b) of the Exchange Act. The
foregoing does not include any Shares over which, or with respect to which, any
such executive officer, director or affiliate acts in a fiduciary or
representative capacity or is subject to the instructions of a third party with
respect to such tender.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) On March 15, 1995, Mr. Leo J. McKernan, Chairman, President and Chief
Executive Officer of the Company, had a telephone conversation with Mr. James E.
Perrella, Chairman, President and Chief Executive Officer of Ingersoll-Rand. Mr.
Perrella proposed that Ingersoll-Rand acquire the Company in an all-cash merger
transaction in which the stockholders of the Company would receive between
$75.00 and $77.00 in cash per Share. Mr. McKernan informed Mr. Perrella that the
Company was not interested in such a transaction.
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On March 15, 1995, Mr. McKernan and each of the Company's directors received
the following letter from Mr. Perrella:
March 15, 1995
Mr. Leo J. McKernan
Chairman, President and Chief Executive Officer
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Dear Leo:
I was disappointed that you did not give me the chance to explain fully
our proposal when we spoke today. I would have much preferred to convey
to you personally everything that I wanted to say, but since I was
unable to do so, I am sending this letter to set forth our specific
proposal.
Ingersoll-Rand Company proposes to acquire Clark Equipment Company in a
merger transaction in which Clark's stockholders would receive between
$75.00 and $77.00 in cash for each share of outstanding Clark common
stock. We think the lower end of that range is the appropriate price,
but I would like to meet with you to give you the opportunity to
convince us that the higher end of the range is justified.
We believe our proposal presents an extremely attractive opportunity for
Clark's stockholders, who at $75.00 per share would receive a premium of
50% over today's closing market price of Clark common stock. We and our
financial advisors believe that Clark's stockholders will
enthusiastically support our proposal.
We have been studying Clark for some time and we are extremely impressed
with the businesses you have so ably built up and the manner in which
they complement Ingersoll-Rand's businesses. We believe the
complementary aspects of our two companies' products, customers and
distribution capabilities would enable the combined entity to be an even
more effective competitor in the global marketplace.
Our proposal visualizes the negotiation and execution of a mutually
acceptable definitive merger agreement, the operation of Clark in the
ordinary course of business and the taking of the various actions by
Clark's Board necessary to facilitate the completion of the transaction.
Our proposal also assumes Clark's consummation of the sale of its 50%
interest in VME to Volvo on substantially the terms previously
announced. Our antitrust counsel has studied the two companies'
businesses and we do not believe that our proposal gives rise to any
meaningful antitrust concerns. We are confident that any antitrust
issues would readily be resolved. Finally, based on our discussions with
Ingersoll-Rand's principal senior lender, we are also confident that the
necessary financing for this transaction can easily be arranged.
We hope that you and your Board of Directors will view this proposal as
we do - a unique opportunity for Clark's stockholders to realize full
value for their shares in a transaction that can quickly be consummated.
We are prepared to meet with you and your advisors to answer any
questions that you may have about our proposal and to proceed
expeditiously to negotiate a definitive merger agreement with you.
My purpose in sending this letter is to provide you and your fellow
directors with information about our proposal and to express our sincere
desire to work together with you to reach agreement on a transaction
that can be presented to Clark's stockholders as the joint effort of
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<PAGE>
Ingersoll-Rand's and Clark's Boards of Directors and management. At this
point, therefore, we hope that our discussions can remain a private
matter between us.
Needless to say, it is important that we hear from you as soon as
practicable as to your Board's views about our proposal.
Sincerely,
James E. Perrella
Chairman, President and Chief Executive Officer
cc: Members of the Board of Directors of Clark Equipment Company
On March 20, 1995, Mr. McKernan telephoned Mr. Perrella and informed him
that the Company would give serious consideration to Ingersoll-Rand's proposal,
and that he intended to convene a meeting of the Board on March 27, 1995,
subject to final confirmation of the availability of the Company's directors, to
consider the proposal.
On March 21, 1995, Mr. McKernan received the following letter from Mr.
Perrella:
March 21, 1995
Mr. Leo J. McKernan
Chairman, President and Chief Executive Officer
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Dear Leo:
I appreciated your phone call yesterday. I think it would be in our
mutual best interests for us to continue to stay in touch with each
other as events unfold.
We hope you will be able to convene your Board as soon as possible this
week since time is so important. But we certainly hope that Monday would
be the latest possible date for your Board meeting.
When it does meet, we hope that your Board will view this proposal as we
do-as an unusual opportunity for Clark's stockholders to realize full
value for their shares in a transaction that will create a company that
will be uniquely positioned in the global marketplace.
I want to stress my desire to meet with you to discuss our proposal and
answer any questions that you may have about it. I would like to give
you the opportunity to show us how the higher end of the range that I
mentioned in my March 15 letter might be justified.
Thanks again for your call.
Sincerely,
James E. Perrella
On March 23, 1995, Mr. McKernan telephoned Mr. Perrella to report that the
Company's Board would be meeting on Monday, March 27, 1995 to consider
Ingersoll-Rand's proposal.
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On March 27, 1995 a special meeting of the Board was held to consider
Ingersoll-Rand's proposal as contained in Mr. Perrella's March 15th letter to
Mr. McKernan. The Board carefully considered together with the advice of its
legal and financial advisors the Ingersoll-Rand proposal. As a result of such
review, the Board unanimously determined that the Ingersoll-Rand proposal was
wholly inadequate and that the Company was not for sale, and authorized and
instructed Mr. McKernan to decline the Ingersoll-Rand proposal and send the
following letter to Mr. Perrella:
March 27, 1995
Mr. James E. Perrella
Chairman, President and Chief Executive Officer
Ingersoll-Rand Company
200 Chestnut Ridge Road
Woodcliff Lake, NJ 07675
Dear Mr. Perrella:
The Board of Directors of Clark Equipment Company met today to consider
your letter of March 15, 1995. During the meeting, we considered the
views of our financial and legal advisors and other issues we deemed
appropriate.
Although the Board of Directors appreciates your interest in Clark
Equipment Company as a strategic acquisition, the Board of Directors
unanimously reaffirmed its long-standing position that the Company is
not for sale. We therefore decline your proposal.
The management team at Clark, with the full support of the Board, has
been successfully implementing a strategic plan which has benefited our
shareholders materially. As a result of our efforts, Clark Equipment
Company enjoys an outstanding reputation with its shareholders,
customers and the financial community. The management and Board of
Directors of Clark believe that our shareholders will continue to
benefit materially from our commitment to stay the course of our
strategic plan.
Thank you again for your expression of interest in Clark. The Board of
Directors requests that this letter remain confidential and that it
shall serve as an appropriate final response to your inquiry.
Sincerely,
Leo J. McKernan
Following receipt of Mr. McKernan's letter, Mr. McKernan received a
telephone call from Mr. Perrella on March 28, 1995, during which Mr. Perrella
asked Mr. McKernan and the Company's Board to reconsider the Ingersoll-Rand
proposal. Mr. McKernan reiterated the Board's position that the Company was not
for sale. Later that day, Mr. McKernan received the letter set forth below and
Ingersoll-Rand issued the following press release:
Woodcliff Lake, N.J. (March 28, 1995) Ingersoll-Rand Company
announced today that it had submitted a proposal to Clark Equipment
Company for the acquisition of Clark in a merger transaction in which
Clark's stockholders would receive between $75 and $77 in cash per
share.
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A letter sent today by James E. Perrella, Chairman, President and
Chief Executive Officer of Ingersoll-Rand, to Clark's Chairman is
attached.
Ingersoll-Rand first submitted its acquisition proposal to Clark on
March 15, 1995. Clark advised Ingersoll-Rand today that at a meeting
held on March 27, 1995 Clark's Board had rejected Ingersoll-Rand's
proposal.
Here is the full text of Ingersoll-Rand's letter:
March 28, 1995
Mr. Leo J. McKernan
Chairman, President and Chief Executive Officer
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Dear Leo:
We are surprised and disappointed that Clark Equipment Company's Board
has rejected our acquisition proposal and "reaffirmed its long-standing
position that the Company is not for sale." We would have thought that
an acquisition proposal at a 50% premium over the price at which Clark
common stock has recently been trading-and a price exceeding Clark's all
time high stock price-would have led to a more constructive dialogue
between us. But as I have mentioned to you, we have proposed a
transaction that is so compelling for the stockholders of both of our
companies that we feel obligated to pursue it notwithstanding your
Board's rejection. Because we are confident that Clark's stockholders
will enthusiastically support our proposal, we are sending this letter
to you and also releasing it publicly.
Ingersoll-Rand Company proposes to acquire Clark in a merger transaction
in which Clark's stockholders would receive between $75.00 and $77.00 in
cash for each share of outstanding Clark common stock. We think the
lower end of that range is the appropriate price, but as you know we
have repeatedly offered to meet with you to give you the opportunity to
convince us that the higher end of that range is justified.
We have been studying Clark for some time and we are extremely impressed
with the businesses you have so ably built up and the manner in which
they complement Ingersoll-Rand's businesses. We believe the
complementary aspects of our two companies' products, customers and
distribution capabilities would enable the combined entity to be an even
more effective competitor in the global marketplace.
Our offer is subject to the negotiation and execution of a mutually
acceptable definitive merger agreement, the operation of Clark in the
ordinary course of business, the taking of the various actions by
Clark's Board necessary to facilitate the completion of the transaction
and the absence of any actions by Clark's Board which would frustrate
our offer. Our proposal also assumes Clark's consummation of the sale of
its 50% interest in VME to Volvo on substantially the terms previously
announced or, if not consummated, the continued effectiveness of Clark's
announced agreement with Volvo without any change in its terms.
Our antitrust counsel has studied the two companies' businesses and we
do not believe that our proposal gives rise to any meaningful antitrust
concerns. We are confident that any antitrust issues would readily be
resolved. Finally, based on our discussions with our senior lenders, we
are also confident that the necessary financing for the transaction can
easily be arranged.
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I still would like to meet with you at your earliest convenience to
discuss our proposal and to proceed with negotiations leading to the
execution of a definitive merger agreement.
We believe that your Board of Directors should reconsider our proposal
and view it as we do - as a unique opportunity for Clark's stockholders
to realize full value for their shares in a transaction that can quickly
be consummated.
We hope to hear from you promptly.
Sincerely, James E. Perrella
Later on March 28, 1995, the Company issued the following press release:
South Bend, Ind. (March 28, 1995)-Clark Equipment Company said today
that its Board of Directors met on March 27, 1995 to review a letter
received from Ingersoll-Rand proposing an acquisition of the company.
After consulting with Clark's financial and legal advisors, the Board of
Directors unanimously determined to decline Ingersoll-Rand's unsolicited
proposal. The Board reaffirmed its long standing position that Clark is
not for sale and its commitment to implement successfully its strategic
plan. This plan has included the recent acquisitions of Club Car and
Blaw-Knox and the impending divestiture of its 50 percent interest in
VME Group for $573 million.
Clark Chairman Leo J. McKernan stated that Ingersoll-Rand's proposal is
entirely inadequate. "Clark's share price reached a high of $71 only
five months ago. I believe this is an opportunistic attempt to buy Clark
during a temporary decline in the price of Clark's shares," added Mr.
McKernan. (A copy of Mr. McKernan's letter to James E. Perrella,
Chairman, President and CEO of Ingersoll-Rand, declining the offer
follows.)
The Company's press release then included the text of the March 27th Letter
from Mr. McKernan to Mr. Perrella set forth above.
On March 29, 1995, the Company filed an action against Ingersoll-Rand in the
United States District Court for the Southern District of New York. The
complaint alleged that Ingersoll-Rand's proposed acquisition of the Company
would substantially lessen competition in the market for asphalt pavers and tend
to create a monopoly in such market and that therefore the proposed acquisiton
of the Company by Ingersoll-Rand would violate Section 7 of the Clayton Act and
Section 2 of the Sherman Act. The lawsuit is more fully described in Item 8
below.
On March 31, 1995, Ingersoll-Rand sent to the Company a demand under
Delaware Law for the Company's list of stockholders and security position
listings.
At a meeting held on April 2, 1995, with certain members of the Board
participating by conference telephone, management of the Company and CS First
Boston presented the preliminary results of their analysis of alternative
financial transactions, including a leveraged recapitalization of the Company,
payment of a substantial dividend, and a leveraged buy-out of the Company.
Management and CS First Boston then discussed contacts with and a list of other
potential acquirors of the Company. The Board also reviewed Ingersoll-Rand's
statements of its intention to commence a tender offer for all the Shares of the
Company for between $75 and $77 per Share and to conduct a proxy solicitation to
remove the Board at the annual meeting on May 9, 1995. The Board discussed the
prospect that if the Company conducted a search for another offeror at the end
of which no offer superior to Ingersoll-Rand's $75 to $77 per Share offer were
forthcoming, and if Ingersoll-Rand was successful in its proxy solicitation
either at the annual meeting on May 9, 1995 or any reasonable postponement of
such meeting, then the Company would have little leverage to negotiate an
increase in the $75 to $77 per Share offer from Ingersoll-Rand. In such event,
the Company's shareholders might have no alternative to Ingersoll-
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Rand's $75 to $77 per Share offer. The Board also took note of the fact that the
market price of the Company's shares substantially exceeded Ingersoll-Rand's
proposal of $75 to $77 per Share. Desiring to use the market price of the
Company's Shares to the shareholders' advantage, the Board authorized the
Management to open discussions with Ingersoll-Rand.
On April 3, 1995, the Purchaser filed its tender offer documents with the
Commission on Schedule 14D-1 and commenced the Offer. On the same day,
Ingersoll-Rand delivered a notice to the Company nominating seven individuals
for election as directors at the Company's annual meeting of stockholders
previously scheduled for May 9, 1995. On April 3, 1995, Mr. Perrella also sent
the following letter to Mr. McKernan:
April 3, 1995
Mr. Leo J. McKernan
Chairman, President and Chief Executive Officer
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Dear Leo:
Over the past two and a half weeks, Ingersoll-Rand has made repeated
efforts to meet with Clark in an attempt to negotiate the terms of a
merger transaction that could be presented to Clark's stockholders as
the joint effort of both companies' Boards and managements. But rather
than recognize its fiduciary responsibility to explore further a
possible transaction on the basis we have proposed, the only response
from Clark has been to state its longstanding position that Clark is not
for sale and to file a lawsuit against us.
The Company's actions leave us with only one alternative. Today we are
commencing a tender offer to acquire all outstanding shares of Clark
common stock at $77.00 in cash per share and we are sending a letter
notifying you that we are nominating seven individuals for election as
directors of Clark at Clark's May 9 annual meeting of stockholders.
We regret that we have to resort to these actions; we would have greatly
preferred to enter into negotiations with you in an effort to reach
agreement on a merger transaction. But even though we have commenced a
tender offer, we continue to be interested in meeting with you to
negotiate the terms of a transaction that can be approved by your Board.
When your Board recognizes that its fiduciary duties require
consideration of the sale of Clark, please call me.
Sincerely,
James E. Perrella
Chairman, President and Chief Executive Officer
During the week of April 3, 1995, the respective financial advisors to
Ingersoll-Rand and the Company discussed the possibility of a modified Offer on
terms, including an increased price per Share, which the Management might be
prepared to recommend to the Board and pursuant to which the Company might be
willing to enter into a merger agreement with Ingersoll-Rand. These discussions
were concluded on April 6, 1995 with the two financial advisors each
recommending to their respective clients that it might be productive for the
Chairmen of Ingersoll-Rand and the Company to meet to see
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if they could reach agreement on the terms of a transaction which each Chairman
would be willing to recommend to his company's board of directors.
In the early evening on April 7, 1995, Mr. Perrella met with Mr. McKernan in
New York City. At that meeting the two Chairmen reached agreement on the
principal terms of a merger between the Company and Ingersoll-Rand. Starting
that same evening, other representatives and advisors of Ingersoll-Rand and the
Company met separately to conduct negotiations regarding the other terms of the
Merger Agreement. These discussions continued on Saturday, April 8, 1995 and
Sunday, April 9, 1995 and on Sunday, April 9, 1995 an agreement was reached
between the representatives of the two companies on all of the terms of the
Merger Agreement.
On April 9, 1995, the Boards of Directors of Ingersoll-Rand and the
Purchaser approved the Merger Agreement and the Board approved the Merger
Agreement and took other action to render the Rights and the supermajority
charter provision inapplicable to the Offer and the Merger. Later that
afternoon, the Merger Agreement was executed and Ingersoll-Rand and the Company
issued the following joint press release:
Woodcliff Lake, N.J. and South Bend, Indiana (April 9,
1995)--Ingersoll-Rand Company and Clark Equipment Company jointly
announced today that they have entered into a definitive merger
agreement under which Ingersoll-Rand will acquire Clark for $86.00 per
share in cash. The Boards of Directors of both companies have
unanimously approved the agreement.
Ingersoll-Rand's pending tender offer is being amended to increase
the offering price to $86.00 per share and extend the expiration date to
midnight New York time on Friday, May 5, 1995.
"We're delighted to add Clark's strong businesses and fine people to
our own," said James E. Perrella, Chairman, President and Chief
Executive Officer of Ingersoll-Rand. "This is a great fit. Clark's
businesses complement Ingersoll-Rand's and, like ours, are well-managed
leaders in their sectors."
Clark's Chairman, President and Chief Executive Officer, Leo J.
McKernan, said "This merger delivers fair value to our shareholders and
also provides our employees with excellent opportunities within the
framework of a fine company like Ingersoll-Rand."
Consummation of the merger is subject to customary terms and
conditions, including regulatory approvals.
On April 9, 1995, the Company postponed indefinitely its annual meeting of
stockholders scheduled for May 9, 1995; on April 10, 1995, Ingersoll-Rand
withdrew its April 3, 1995 nomination of director candidates for election at the
annual meeting; and on April 11 the Company filed with the court in the
Antitrust Litigation a notice of dismissal of all claims against Ingersoll-Rand
(all pursuant to the Merger Agreement).
During the discussions between the financial advisors to Ingersoll-Rand and
the Company during the week of April 3, 1995, Ingersoll-Rand's financial advisor
made inquiries of the Company's financial advisor concerning the Company's
expectations as to its operating performance in 1995 and 1996. Although the
Company's financial advisor gave Ingersoll-Rand's financial advisor no specific
information in that regard, following conversations between the financial
advisors regarding publicly available analysts' estimates of the Company's 1995
and 1996 earnings, Ingersoll-Rand's financial advisor concluded, based upon,
among other things, the Company's financial advisor's comments on such analysts'
estimates (which comments the Company authorized), that the Company currently
expects its
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consolidated net income for this year and next to fall within the following
approximate ranges: 1995-- between $95 and $105 million; 1996--between $110 and
$120 million.
Any forecasts of future net income are inherently unreliable due to the
numerous uncertainties associated with forecasts and the various assumptions on
which they must necessarily be based. But because the expected consolidated net
income figures referred to above with respect to the Company (the "Projections")
were not prepared by management of the Company or by the Company's financial
advisor, such data is necessarily far more speculative and far less reliable
than if it had actually been prepared by the management of the Company or by the
Company's financial advisor. The Projections are set forth herein solely because
they were developed by Ingersoll-Rand's financial advisor on the basis of
limited information regarding the Company's expected net income in 1995 and 1996
indicated by the Company's financial advisor.
In light of the uncertainties inherent in forecasts of any kind, and
particularly in view of the manner in which the Projections were developed by
Ingersoll-Rand's financial advisor as noted above, the inclusion of the
Projections should not be regarded as a representation by Ingersoll-Rand, the
Purchaser, the Company or any other person that such Projections will be
achieved. HOLDERS OF SHARES ARE THEREFORE CAUTIONED NOT TO PLACE ANY RELIANCE ON
THE PROJECTIONS.
The Projections were not developed with a view to public disclosure or
compliance with the published guidelines of the Commission regarding forecasts,
nor were they prepared in accordance with the guidelines established by the
American Institute of Certified Public Accountants for preparation and
presentation of financial forecasts.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Restated Certificate of Incorporation
Article SIXTH, paragraph (6)(a) of the Certificate of Incorporation provides
that the affirmative vote or consent of the holders of four-fifths of all
classes of stock of the Company entitled to vote in elections of directors is
required (i) for the adoption of any agreement for the merger or consolidation
of the Company with or into any other corporation, or (ii) to authorize any sale
or lease of all or any substantial part of the assets of the Company to, or any
sale or lease to the Company or any subsidiary thereof in exchange for
securities of the Company of any assets (except assets having an aggregate fair
market value of less than $10,000,000) of, any other corporation, person or
other entity, if, in either case, as of the record date for the determination of
the stockholders of the Company entitled to notice thereof and to vote thereon
or consent thereto such other corporation, person or entity is the beneficial
owner, directly or indirectly, of more than 10% of the outstanding shares of
stock of the Company entitled to vote in elections of directors.
Article SIXTH, paragraph (6)(d) provides that paragraph (6)(a) is not
applicable to (i) any merger or consolidation of the Company with or into any
other corporation, or any sale or lease of all or any substantial part of the
assets of the Company to, or any sale or lease to the Company or any subsidiary
thereof in exchange for securities of the Company of any assets of, any
corporation if the Board shall by resolution have approved a memorandum of
understanding or a letter of intent with such other corporation with respect to
and substantially consistent with such transaction prior to the time that such
other corporation shall have become a holder or more than 10% of the outstanding
shares of stock of the Company entitled to vote in elections of directors; or
(ii) any merger or consolidation of the Company with, or any sale or lease to
the Company or any subsidiary thereof of any of the assets of, any corporation
of which a majority of the outstanding shares of all classes of stock entitled
to vote in elections of directors is owned of record or beneficially by the
Company and its subsidiaries.
A copy of Article SIXTH, paragraph (6) of the Certificate of Incorporation
is filed herewith as Exhibit 11 and is incorporated herein by reference, and the
foregoing summary is qualified in its entirety by reference thereto.
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On April 9, 1995, the Board adopted resolutions approving, among other
things (the "April 9 Resolutions"), a Letter of Intent, dated as of April 9,
1995 (the "Letter of Intent"), by and between the Company and Ingersoll-Rand, in
connection with the Offer and the Merger Agreement. Pursuant to Article SIXTH,
paragraph (6)(d) of the Certificate of Incorporation, the supermajority voting
provisions of Article SIXTH, paragraph (6)(a) described above were rendered
inapplicable to the transactions contemplated by the Merger Agreement as a
result of the execution of the Letter of Intent and the Board's resolution
approving the Letter of Intent. A copy of the Letter of Intent is filed herewith
as Exhibit 12. A copy of the April 9 Resolutions is filed herewith as Exhibit
13.
Rights Agreement
As provided in the Merger Agreement, the Company has amended the Rights
Agreement (the "Rights Amendment") to provide that no transaction undertaken by
Ingersoll-Rand or any of its Affiliates (as defined in the Rights Agreement) or
Associates (as defined in the Rights Agreement) pursuant to the Merger Agreement
shall (A) trigger the exercisability of the Rights (as defined in the Rights
Agreement), (B) cause the separation of the Rights from the certificates
representing Shares to which they are attached, (C) cause the occurrence of a
Distribution Date (as defined in the Rights Agreement) or (D) cause
Ingersoll-Rand, Purchaser or any of Ingersoll-Rand's subsidiaries or affiliates
to be deemed an Acquiring Person (as defined in the Rights Agreement).
A copy of the Rights Amendment is filed herewith as Exhibit 14, and is
incorporated herein by reference, and the foregoing summary is qualified in its
entirety by reference thereto.
Section 203
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of Delaware Law. Section 203 would prevent an "Interested Stockholder"
(generally defined as a person beneficially owning 15% or more of a
corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an Interested Stockholder unless: (i) before such
person became an Interested Stockholder, the board of directors of the
corporation approved the transaction in which the Interested Stockholder became
an Interested Stockholder or approved the Business Combination, (ii) upon
consummation of the transaction which resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for purposes of determining the number of
shares of outstanding stock held by directors who are also officers and by
employee stock ownership plans that do not allow plan participants to determine
confidentially whether to tender shares), or (iii) following the transaction in
which such person became an Interested Stockholder, the Business Combination is
(x) approved by the board of directors of the corporation and (y) authorized at
a meeting of shareholders by the affirmative vote of the holders of at least
66-2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder. In accordance with the provisions of the Company's
Certificate of Incorporation and Section 203, the Board of the Company has
approved the Merger Agreement and the Purchaser's acquisition of Shares pursuant
to the Offer and the Merger and the transactions contemplated thereby and,
therefore, the restrictions of Section 203 are inapplicable to the Offer, the
Merger and the related transactions.
Antitrust
HSR Act. Under the HSR Act, and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division and the FTC and certain waiting period
requirements have been satisfied. The acquisition of Shares by the Purchaser
pursuant to the Offer is subject to such requirements.
Pursuant to the requirements of the HSR Act, Ingersoll-Rand filed the
required Premerger Notification and Report Forms (the "Forms") with the
Antitrust Division and the FTC on April 3,
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1995. The Company intends to file the required Forms with the Antitrust Division
and the FTC as promptly as practicable. In the Merger Agreement, the Company has
agreed to file the forms with the FTC and the Antitrust Division by the close of
business on April 13, 1995, and to use its reasonable best efforts to respond as
promptly as practicable to all inquiries received from the FTC or the Antitrust
Division for additional information or documentation. The applicable provisions
of the HSR Act impose a fifteen-calendar day waiting period following
Ingersoll-Rand's filing. That waiting period is scheduled to expire at 11:59
P.M., New York City time, on Tuesday, April 18, 1995, unless early termination
of the waiting period is granted or Ingersoll-Rand and the Company receive a
request for additional information of documentary material prior thereto. If
such a request is made, the waiting period will be extended until 11:59 P.M.,
New York City time, on the tenth day after substantial compliance by
Ingersoll-Rand with such request. Thereafter, such waiting periods can be
extended only by court order.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could,
notwithstanding termination of the waiting period, take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or
seeking divestiture of the Shares so acquired or divestiture of substantial
assets of Ingersoll-Rand or the Company. Private parties may also bring legal
actions under the antitrust laws. The Company previously instituted an antitrust
action against Ingersoll-Rand seeking to enjoin the acquisition of Shares but
that action has been voluntarily dismissed. See discussion under Antitrust
Litigation below. There can be no assurance that a further challenge to the
Offer on antitrust grounds will not be made, or if such a challenge is made,
what the result will be.
EEA Merger Regulations. Under Regulation (EEC) No. 4064/89 (the "Merger
Regulation") and Article 57 of the European Economic Area ("EEA") Agreement,
notices of concentrations with a "Community dimension" must be provided to the
European Commission for review and advance approval for compatibility with the
common market. On April 5, 1995, Ingersoll-Rand filed its Form CO Relating to
the Notification of a Concentration Pursuant to Council Regulation (EEC) No.
4064/89 with the European Commission. Under the Merger Regulation, an automatic
three week suspension period commences upon receipt of the notification. That
period is scheduled to expire on April 27, 1995, unless the European Commission
decides to extend the suspension period for such period as it finds necessary to
make a final decision on the legality of the transaction.
Postponement of Annual Meeting
Pursuant to the Merger Agreement, and by way of a resolution adopted by the
Board in the April 9 Resolutions, the Company has indefinitely postponed its
annual meeting of stockholders scheduled for May 9, 1995. The Company has
further agreed to take no action unless compelled by legal process to reschedule
the annual meeting or to call a special meeting of stockholders of the Company
except in accordance with the Merger Agreement unless and until the Merger
Agreement is terminated in accordance with its terms.
Litigation
(a) Delaware Shareholder Lawsuit
On March 29, 1995, Ralph Dietsche, a purported stockholder of the Company,
filed a purported class action in Delaware Chancery Court against the Company
and Leo J. McKernan, James C. Chapman, Donald N. Frey, James A.D. Geier, Gaynor
N. Kelley, Ray B. Mundt and, Frank M. Sims, all of whom are directors of the
Company. The complaint alleges that the individual defendants have breached
fiduciary and common law duties which they owe to the Company's public
stockholders by, among other things, failing to maximize shareholder value,
failing to adequately consider an offer for the Company's shares which was
proposed by Ingersoll-Rand and carrying out a preconceived plan to entrench
management to the detriment of the Company's stockholders. The complaint seeks
injunctive
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and declaratory relief, an unspecified amount of compensatory damages, and
attorney's fees. A copy of the complaint is attached hereto as Exhibit 15.
Pursuant to the Merger Agreement, the Company has agreed that it will not
settle any litigation currently pending, or commenced after April 9, 1995,
against the Company or any of its directors by any stockholder of the Company
relating to the Offer or the Merger Agreement, without the prior written consent
of Ingersoll-Rand.
In addition, the Company has agreed that it will not voluntarily cooperate
with any third party which has sought or may hereafter seek to restrain or
prohibit or otherwise oppose the Offer or the Merger and will cooperate with
Ingersoll-Rand and Purchaser to resist any such effort to restrain or prohibit
or otherwise oppose the Offer or the Merger.
(b) Antitrust Litigation
On March 29, 1995, the Company filed an action against Ingersoll-Rand in the
United States District Court for the Southern District of New York (the
"Antitrust Litigation"). The complaint alleged that Ingersoll-Rand's proposed
acquisition of the Company would substantially lessen competition in the market
for asphalt pavers and tend to create a monopoly in such market and that
therefore the proposed acquisition of the Company by Ingersoll-Rand would
violate Section 7 of the Clayton Act and Section 2 of the Sherman Act. The
lawsuit requested that the court issue a judgment declaring that the proposed
acquisition of the Company by Ingersoll-Rand would violate the federal antitrust
laws and that the court enter preliminary and permanent injunctions prohibiting
Ingersoll-Rand from proceeding with the transaction. A copy of the complaint is
attached hereto as Exhibit 16. Pursuant to the Merger Agreement, on April 11,
1995, the Company voluntarily filed a Notice of Dismissal dismissing the
complaint without prejudice. A copy of the Notice of Dismissal is attached
hereto as Exhibit 17.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
<TABLE>
<S> <C>
Exhibit 1 --Pages 1 through 24 of the Company's Proxy Statement dated March 27, 1995, for
its Annual Meeting of Stockholders.
Exhibit 2 --The Board Resolution in which the FlexPlan was amended, dated as of April 9,
1995.
Exhibit 3 --The Board Resolution in which the Corporate Office Reduction in Force Policy
was amended and the Appendix thereto adopted, dated as of April 9, 1995.
Exhibit 4 --The Change in Control Severance Agreements for William D. Anderson, David D.
Hunter, James D. Kertz, and John J. Reynolds, all dated as of April 11, 1995.
Exhibit 5 --The amendments to the Employment Agreements, dated as of March 28, 1995.
Exhibit 6 --The amendments to the SERPs, dated as of February 15, 1995 and March 27, 1995.
Exhibit 7 --The amendments to the Clark Equipment Company Supplemental Executive Retirement
Trust and the Clark Equipment Company Deferred Benefit Trust, dated as of April
9, 1995.
Exhibit 8 --Agreement and Plan of Merger, dated as of April 9, 1995, among the Company,
Ingersoll-Rand and the Purchaser.
Exhibit 9 --Letter to Stockholders communicating the recommendation of the Board, dated as
of April 12, 1995.
Exhibit 10 --Opinion of CS First Boston Corporation, dated April 9, 1995.
Exhibit 11 --Article SIXTH, paragraph (6) of the Company's Restated Certificate of
Incorporation, dated as of August 14, 1969.
Exhibit 12 --Letter of Intent, dated as of April 9, 1995.
Exhibit 13 --Board Resolutions, dated as of April 9, 1995.
Exhibit 14 --The amendment to the Rights Agreement, dated as of April 9, 1995.
Exhibit 15 --Complaint in Dietsche, et al., v. Clark Equipment Company, et al.
Exhibit 16 --Complaint in Clark Equipment Company v. Ingersoll-Rand Company.
Exhibit 17 --Notice of Dismissal in Clark Equipment Company v. Ingersoll-Rand Company.
</TABLE>
35
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
CLARK EQUIPMENT COMPANY
By: /s/ Bernard D. Henely
..................................
Name: Bernard D. Henely
Title: Vice President and General
Counsel
Dated: April 12, 1995
36
<PAGE>
ANNEX I
CLARK EQUIPMENT COMPANY
100 NORTH MICHIGAN STREET
SOUTH BEND, INDIANA 46634
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about April 12, 1995, as
part of Clark Equipment Company's (the "Company") Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") with respect to the revised
tender offer by CEC Acquisition Corp. (the "Purchaser") to the holders of record
of the Company's Common Stock, $7.50 par value ("Common Stock"). Capitalized
terms used and not otherwise defined herein shall have the meaning set forth in
the Schedule 14D-9. You are receiving this Information Statement in connection
with the possible election of persons designated by the Purchaser to a majority
of the seats on the Board. The Merger Agreement provides that the Purchaser,
upon purchase of Shares pursuant to the Offer, shall be entitled to designate up
to such number of directors, rounded up to the next whole number, on the Board
as will give the Purchaser representation on the Board equal to the product of
the total number of directors on the Board (after giving effect to the directors
to be elected pursuant to the Merger Agreement) and the percentage that the
aggregate number of shares of Common Stock beneficially owned by the Purchaser
or any affiliate bears to the total number of outstanding shares of Common Stock
of the Company then outstanding, and that the Company promptly take all action
necessary to cause Purchaser's designees to be so elected including, either
increasing the size of the Board or securing the resignation of such number of
directors, or both. The Merger Agreement further provides that, at such times
and subject to the agreement set forth in the next sentence, the Company will
use its best efforts to cause persons designated by the Purchaser to constitute
the same percentage as is on the Board of (i) each committee of the Board, (ii)
each board of directors of each domestic subsidiary of the Company and (iii)
each committee of each such board, in each case only to the extent permitted by
law. The Merger Agreement further provides that, notwithstanding the foregoing,
the Company shall use its best efforts to ensure that all members of the Board
and such boards and committees as of the date of the Merger Agreement who are
not employees of the Company shall remain members of the Board until the
Purchaser acquires a majority of the outstanding shares. This Information
Statement is required by Section 14(f) of the Securities Exchange Act of 1934,
as amended, and Rule 14f-1 thereunder.
YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE NOT,
HOWEVER, REQUIRED TO TAKE ANY ACTION.
Pursuant to the Merger Agreement, on April 12, 1995, the Purchaser revised
its Offer to Purchase dated April 3, 1995. The Offer is scheduled to expire at
12:00 midnight, New York City time, on May 5, 1995, at which time, if all
conditions to the Offer have been satisfied or waived, the Purchaser has
informed the Company that it intends to purchase all of the Shares validly
tendered pursuant to the Offer and not properly withdrawn.
Information with respect to the Company and certain of its directors,
executive officers and affiliates is set forth in the Company's Proxy Statement,
dated March 27, 1995, for the Company's 1995 Annual Meeting of Stockholders (the
"Proxy Statement"). A copy of pages 1 through 24 of the Proxy Statement is filed
as Exhibit 1 hereto and incorporated herein by reference.
The information contained in this Information Statement concerning the
Purchaser and Ingersoll-Rand has been furnished to the Company by Ingersoll-Rand
and the Company assumes no responsibility for the accuracy, completeness or
fairness of any such information.
Ingersoll-Rand has advised the Company that it currently intends to
designate one or more of the Persons listed in Schedule I to Ingersoll-Rand's
Offer to Purchase, a copy of which is being mailed to
<PAGE>
stockholders, to serve as directors of the Company. The information with respect
to such directors or officers in Schedule I is hereby incorporated herein by
reference in its entirety. As of April 12, 1995, the ages of each of such
directors and officers are as follows: Donald J. Bainton--63, Theodore H.
Black-- 66, Brendan T. Byrne--71, Joseph P. Flannery--63, Constance J.
Horner--53, Alexander H. Massad--71, James E. Perrella--59, John E. Phipps--62,
Donald E. Procknow--71, Cedric E. Ritchie-- 67, William G. Mulligan--64, J.
Frank Travis--59, Thomas F. McBride--59, William J. Armstrong-- 53, Paul L.
Bergren--45, Frederick W. Hadfield--58, Daniel E. Kletter--56, Patricia
Nachtigal--48, Allen M. Nixon--55, James R. O'Dell--56, Donald H. Rice--51,
Larry H. Pitsch--54, Gerald E. Swimmer--50, R. Barry Uber--49, Ronald G.
Heller--48. Ingersoll-Rand has advised the Company that all such persons have
consented to act as directors of the Company if so designated.
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------
<S> <C>
Exhibit 1 Pages 1 through 24 the Company's Proxy Statement dated March 27, 1995, for its
Annual Meeting of Stockholders.
Exhibit 2 The Board Resolution in which the Flex Plan was amended, dated as of April 9,
1995.
Exhibit 3 The Board Resolution in which the Corporate Office Reduction-in-Force Policy was
amended and the Appendix thereto adopted, dated as of April 9, 1995.
Exhibit 4 The Change in Control Severance Agreements for William D. Anderson, David D.
Hunter, James D. Kertz, and John J. Reynolds, all dated as of April 11, 1995.
Exhibit 5 The amendments to the Employment Agreements, dated as of March 28, 1995.
Exhibit 6 The amendments to the SERPs, dated as of February 15, 1995 and March 27, 1995.
Exhibit 7 The amendments to the Clark Equipment Company Supplemental Executive Retirement
Trust and the Clark Equipment Company Deferred Benefit Trust, dated as of April
9, 1995.
Exhibit 8 Agreement and Plan of Merger, dated as of April 9, 1995, among the Company,
Ingersoll-Rand and the Purchaser.
Exhibit 9 Letter to Stockholders communicating the recommendation of the Board, dated as
of April 12, 1995.
Exhibit 10 Opinion of CS First Boston Corporation, dated April 9, 1995.
Exhibit 11 Article SIXTH, paragraph (6) of the Company's Restated Certificate of
Incorporation, dated as of August 14, 1969.
Exhibit 12 Letter of Intent, dated as of April 9, 1995.
Exhibit 13 Board Resolutions, dated as of April 9, 1995.
Exhibit 14 The amendment to the Rights Agreement, dated as of April 9, 1995.
Exhibit 15 Complaint in Dietsche, et al., v. Clark Equipment Company, et al.
Exhibit 16 Complaint in Clark Equipment Company v. Ingersoll-Rand Company.
Exhibit 17 Notice of Dismissal in Clark Equipment Company v. Ingersoll-Rand Company.
</TABLE>
[LOGO]
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
-------------------------------------------
-------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
May 9, 1995
<PAGE>
[LOGO]
CLARK EQUIPMENT COMPANY
March 27, 1995
Dear Stockholder:
You are cordially invited to the Annual Meeting of Stockholders of Clark
Equipment Company to be held on Tuesday, May 9, 1995, commencing at 9:00 a.m.,
Eastern Standard Time, at the South Bend Marriott Hotel, 123 North St. Joseph
Street, South Bend, Indiana. The Board of Directors and management look forward
to greeting personally those stockholders able to attend.
At the meeting you will be asked to elect seven directors to terms ending at the
next Annual Meeting of Stockholders, and to ratify the appointment of
independent accountants for the fiscal year ending December 31, 1995.
Regardless of the number of shares you own, it is important that they are
represented and voted at the meeting whether or not you plan to attend.
Accordingly, you are requested to sign, date and mail the enclosed proxy at your
earliest convenience.
On behalf of the Board of Directors, thank you for your cooperation and
continued support.
Sincerely,
[SIG]
Leo J. McKernan
Chairman, President and
Chief Executive Officer
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN YOUR PROXY NOW TO AVOID MISPLACING IT. A
POSTAGE-PAID RETURN ENVELOPE IS PROVIDED FOR YOUR CONVENIENCE. IF YOU ATTEND THE
MEETING YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE>
CLARK EQUIPMENT COMPANY
SOUTH BEND, INDIANA 46634
NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of Clark Equipment Company will be held at
the South Bend Marriott Hotel, 123 North St. Joseph Street, South Bend, Indiana,
on Tuesday, May 9, 1995, at 9:00 a.m., Eastern Standard Time, for the following
purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Stockholders and until their successors shall have been elected and
qualified;
2. To ratify the appointment of Price Waterhouse LLP to serve as independent
accountants for the Company for the fiscal year ending December 31, 1995; and
3. To transact such other business as may properly come before the meeting.
The Audit Committee of the Board of Directors has designated the close of
business on March 13, 1995, as the date of record for the determination of
stockholders entitled to notice of and to vote at the meeting and any
adjournments thereof.
A list of stockholders entitled to vote at the meeting will be available for
examination by any stockholder, for any purpose germane to the meeting, for a
period of 10 days prior to the meeting during normal business hours at the
offices of Clark Equipment Company at 100 North Michigan Street, South Bend,
Indiana.
By Order of the Board of Directors
[SIG]
Bernard D. Henely
Secretary
South Bend, Indiana
March 27, 1995
<PAGE>
PROXY STATEMENT
VOTING INFORMATION
This proxy statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Clark Equipment Company for the Annual
Meeting of Stockholders to be held on May 9, 1995. On March 13, 1995, the record
date for the Annual Meeting as set by the Audit Committee of the Board of
Directors, there were 17,132,696 shares of Common Stock outstanding.
This proxy statement and form of proxy will first be sent to stockholders on or
about March 27, 1995. The annual report of the Company for the fiscal year ended
December 31, 1994, including financial statements, has been mailed to each
stockholder of record and provided to security dealers, banks, fiduciaries and
nominees for mailing to beneficial owners at the Company's expense.
Each stockholder is entitled to one vote for each share of Common Stock held.
There are no other voting securities. If the accompanying proxy form is signed
and returned, the shares represented will be voted in the manner indicated on
the proxy form. If a properly signed proxy form is returned to the Company and
is not marked, it will be voted in accordance with management's recommendations
on all proposals. The stockholders may revoke the proxy at any time prior to the
voting thereof. Proxies may be revoked prior to their exercise by a written
revocation delivered to the Secretary of the Company. The mailing address is 100
North Michigan Street, P.O. Box 7008, South Bend, Indiana 46634.
The Company's Board of Directors has adopted a policy which provides that each
proxy, ballot and consent, as well as voting tabulations, relating to a meeting
of stockholders that identifies the vote of a specific stockholder will be kept
confidential for a period of three years after the meeting except: (i) where
disclosure is pursuant to applicable legal requirements or necessary to assert
or defend claims for or against the Company, (ii) in the event of a contested
proxy solicitation, (iii) to allow independent election inspectors to tabulate
and certify the results of the vote, (iv) if the stockholder has specifically
agreed to non-confidential treatment, or (v) in situations where comments are
written on proxy cards, the comments and the identity of the stockholder may be
submitted to the management and members of the Board of Directors, but the
actual vote of the stockholder may not be disclosed to the Company unless such
stockholder has specifically agreed to non-confidential treatment. Information
regarding which stockholders have not voted and periodic status reports
regarding the aggregate vote of all stockholders would continue to be available
to management and members of the Board of Directors. In addition, in accordance
with its past practice, the receipt, certification and tabulation of such votes
shall be performed by an independent third party, Harris Trust and Savings Bank
of Chicago, Illinois.
The By-Laws of the Company provide that a majority of the outstanding shares,
present in person or by proxy,
1
<PAGE>
shall constitute a quorum for the transaction of business at the Annual Meeting.
The By-Laws further provide that, except as otherwise provided by statute or by
the Certificate of Incorporation of the Company, all matters coming before the
Annual Meeting shall be decided by the vote of a majority of the shares of stock
having voting power present in person or by proxy at the Annual Meeting.
Therefore, abstentions as to particular proposals will have the same effect as
votes against such proposals. In the case of election of directors, the
withholding of authority to vote for a nominee will have the same effect as a
vote against the nominee.
Votes cast at the Annual Meeting will be tabulated by the persons appointed by
the Company to act as inspectors of election for the Annual Meeting. The
inspectors of election will treat shares of voting stock represented by a
properly signed and returned proxy as present at the Annual Meeting for purposes
of determining a quorum, without regard to whether the proxy is marked as
casting a vote or abstaining. Likewise, the inspectors of election will treat
shares of voting stock represented by "broker non-votes" as present for purposes
of determining a quorum at the Annual Meeting. Broker non-votes as to particular
proposals, however, will be deemed shares not having voting power on such
proposals, will not be counted as votes for or against such proposals, and will
not be included in calculating the number of votes necessary for approval of
such proposals. "Broker non-votes" are proxies with respect to shares of voting
stock held in record name by brokers or nominees, as to which (i) instructions
have not been received from the beneficial owners or persons entitled to vote,
(ii) the broker or nominee does not have discretionary voting power under
applicable New York Stock Exchange rules or the instrument under which it serves
in such capacity, and (iii) the record holder has indicated on the proxy card or
otherwise notified the Company that it does not have authority to vote such
shares on that matter.
The expense of this solicitation will be paid by the Company. Brokers and
certain other holders for beneficial owners will be reimbursed for out-of-pocket
expenses incurred in the solicitation of proxies from the beneficial owners of
shares held in their names. The Company has engaged D. F. King & Co., Inc., 77
Water Street, New York, New York, to assist in the solicitation of proxies for
the meeting at a cost not expected to exceed in the aggregate $9,000 plus out-
of-pocket expenses.
1. ELECTION OF DIRECTORS
Seven directors are to be elected to hold office until the Annual Meeting of
Stockholders in 1996 and until their respective successors are elected and
qualified.
All of the nominees have been designated by the Board of Directors. All nominees
are members of the present Board with the exception of Juanita H. Hinshaw who is
standing for election for the first time. Donald N. Frey will complete his
present term as a director as of the 1995 Annual Meeting of Stockholders and is
not a nominee for reelection.
Each nominee has consented to being named in the proxy statement as a nominee
for director and has agreed to serve
2
<PAGE>
as a director, if elected. The proxies appointed by name in the enclosed proxy
form will vote as instructed by the stockholder for the election of the nominees
listed below. The proxies, however, reserve full discretion to cast votes for
other persons if any nominees are unable to serve or for good cause will not
serve, except where authority is withheld by the stockholder.
------------------------------------
3
<PAGE>
IDENTIFICATION OF NOMINEES FOR DIRECTOR
Set forth below for each nominee for director is the name, age and principal
occupation of the nominee during the past five years, and the other
directorships held by the nominee:
<TABLE>
<S> <C>
James C. Chapman Age 64 Director since 1993
Retired Chairman of the Board, President and Chief
Executive Officer, Outboard Marine Corporation,
Waukegan, Illinois -- a manufacturer and marketer of
marine power products, boats and accessories; prior to
February 1995, Chairman, President and Chief Executive
Officer, Outboard Marine Corporation; prior to January
1993, President and Chief Executive Officer, Outboard
Marine Corporation.
James A. D. Geier Age 69 Director since 1969
Chairman of Executive Committee and Director, Cincinnati
Milacron Inc., Cincinnati, Ohio -- a manufacturer and
supplier of process equipment, systems and related
accessories; prior to December 1990, Chairman, Chief
Executive Officer and Director, Cincinnati Milacron Inc.
Other Directorships: USX Corporation; The Cincinnati
Gear Company; BDM Holdings, Inc.
Juanita H. Hinshaw Age 50
Vice President and Treasurer, Monsanto Company, St.
Louis, Missouri -- a diversified global manufacturer of
science-based products, including nylon and acrylic
carpet fiber, plastics, resins, rubber chemicals,
herbicides, pharmaceutical products and aspartame-based
artificial sweetener.
Gaynor N. Kelley Age 63 Director since 1989
Chairman of the Board, Chief Executive Officer and
Director, The Perkin-Elmer Corporation, Norwalk,
Connecticut -- a manufacturer of analytical instruments;
prior to December 1990, President, Chief Operating
Officer and Director, The Perkin-Elmer Corporation.
Other Directorships: Hercules Inc.; Northeast Utilities
System.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Leo J. McKernan Age 57 Director since 1980
Chairman of the Board, President, Chief Executive
Officer and Director, Clark Equipment Company.
Other Directorships: VME Group N.V.; Lincoln National
Corporation; 1st Source Corporation.
Ray B. Mundt Age 66 Director since 1989
Chairman of the Board and Director, Alco Standard Cor-
poration, Valley Forge, Pennsylvania -- a diversified
company in the fields of paper distribution and
converting, and office products distribution; prior to
August 1993, Chairman, Chief Executive Officer and
Director, Alco Standard Corporation.
Other Directorships: Core States Bank, N.A.; Liberty Mu-
tual Insurance Co.; Liberty Mutual Fire Insurance Co.;
Liberty Mutual Financial Co., Inc.; Nocopi Technologies,
Inc.
Frank M. Sims Age 62 Director since 1984
Senior Vice President and Director, Clark Equipment Com-
pany.
Other Directorships: VME Group N.V.
</TABLE>
BOARD OF DIRECTORS
The Board of Directors held nine meetings during 1994.
GOVERNANCE COMMITTEE
The Governance Committee is composed of all directors who are not employed by
the Company. Accordingly, this Committee now consists of Donald N. Frey,
Chairman; James C. Chapman; James A.D. Geier; Gaynor N. Kelley and Ray B. Mundt.
Mr. Frey will cease to be a member of this Committee upon completion of his
present term as of the 1995 Annual Meeting of Stockholders.
The Governance Committee has the responsibility of meeting at least annually
with the Chief Executive Officer to discuss the mission and objectives of the
Chief Executive Officer, organizational development, and changes in concepts. At
least once a year the Chief Executive Officer is required to review succession
for officers with the Governance Committee.
The Governance Committee held one meeting during 1994.
NOMINATING COMMITTEE
The Nominating Committee has the responsibility of considering for
recommendation to the full Board of Directors the nomination and screening of
Board member candidates, the evaluation of the performance of the Board and its
members, the termination of Board membership in accordance with corpo-
5
<PAGE>
rate policy because of conflicts of interest, for cause, or for other
appropriate reason and the assignment of Board members to committee memberships
and committee chairmanships. Members of the Committee are Gaynor N. Kelley,
Chairman; Donald N. Frey and James A.D. Geier. Mr. Frey will cease to be a
member of this Committee upon completion of his present term at the 1995 Annual
Meeting of Stockholders.
The Nominating Committee recommends to the full Board of Directors candidates to
fill vacancies on the Board as they occur and a slate of directors for election
by the stockholders at each Annual Meeting. The Committee will consider
candidates suggested by stockholders, directors, and others. Suggestions for
candidates, accompanied by biographical material and material regarding the
candidate's qualifications to serve as a director, should be sent to the
Secretary of the Company. Suggestions for candidates to be elected at an Annual
Meeting of Stockholders must be received no later than December 31 immediately
prior to such Annual Meeting to be considered for the slate for that meeting.
Among the required qualifications for candidates are personal integrity, an
attained position of leadership in the candidate's field of endeavor, breadth of
experience, and ability to exercise sound business judgment.
The Nominating Committee held three meetings during 1994.
FINANCE COMMITTEE
The Finance Committee is charged with overseeing the financial affairs of the
Company and recommending to the Board of Directors such financial actions and
policies as will best accommodate the Company's long range objectives. Members
of the Finance Committee are James A.D. Geier, Chairman; James C. Chapman; and
Frank M. Sims.
The Finance Committee held five meetings during 1994.
AUDIT COMMITTEE
The Audit Committee is responsible to the Board for reviewing the Company's
accounting and auditing procedures, financial reporting practices, internal
accounting controls, and compliance with the Company's Code of Business Conduct.
The Audit Committee is also responsible for appointment of the independent
accountants, subject to ratification by the stockholders, and for establishing
the time, place, and record date for the Annual Meeting of Stockholders. The
Audit Committee meets periodically with management, internal auditors, and
independent accountants to review the work of each and satisfy itself that they
are properly discharging their responsibilities. Both the independent
accountants and the internal auditors have free access to the Committee, without
the presence of management, to discuss their opinions on the adequacy of
internal controls and to review the quality of financial reporting. This
Committee is composed of Donald N. Frey, Chairman; and Gaynor N. Kelley. Ray B.
Mundt is an alternate member of this Committee. None of these members are
employees of the Company. Mr. Frey will cease to be a member of this Committee
upon completion of his present term at the 1995 Annual Meeting of Stockholders.
6
<PAGE>
The Audit Committee held five meetings during 1994.
HUMAN EFFECTIVENESS COMMITTEE
The Human Effectiveness Committee is composed of directors who are not employees
or former employees of the Company. This Committee reviews the salary
administration policy of the Company and administers the Company's Incentive
Compensation Plans, Stock Option Plans, Savings and Investment Plan, Leveraged
Employee Stock Ownership Plan, Long Term Incentive Plan, Officer Stock Purchase
Program, Restricted Stock Plans, Performance Unit Plans, other performance-based
compensation arrangements, and the Stock Acquisition Plan and Retirement Plan
for Non-Employee Directors. The Committee reviews and approves the compensation
range and compensation level of the Chief Executive Officer and all other
Company officers. The Committee also approves loans to or guarantees of
obligations of any employee of the Company and approves contracts between the
Company and its officers. In addition, the Committee determines Directors' fees
and remuneration. The Committee is composed of Ray B. Mundt, Chairman; James C.
Chapman; and James A.D. Geier.
The Human Effectiveness Committee held seven meetings during 1994.
ATTENDANCE
All of the incumbent directors attended more than 88% of the Board and Committee
Meetings held in 1994 during the period they were members of the Board or of a
Committee.
DIRECTOR COMPENSATION ARRANGEMENTS
Directors who are not in the employ of the Company receive compensation for
director services performed throughout the year. The regular annual compensation
is currently $21,000. In addition, each director receives $1,000 per Board or
Committee meeting attended, with Committee chairmen receiving $1,250 per
Committee meeting. Directors also receive $600 for each telephonic meeting.
Directors who are employees of the Company receive no additional compensation
for services as a director. Directors who are not and have not previously been
officers or employees of the Company do not receive salaries, incentive
compensation or stock options, or participate in the Company Savings and
Investment Plan.
Non-employee Directors who are at least age 65 at retirement and who complete at
least five years of service as a Director are entitled to receive a monthly
retirement benefit after retiring from the Company's Board of Directors. Payment
of such benefit begins upon the later of the Director's 70th birthday or his or
her separation from service on the Board of Directors. The amount of such
monthly benefit is equal to one-twelfth of the annual cash retainer in effect
for such Director (excluding Board and Committee meeting fees) immediately
preceding his or her separation from service on the Board of Directors. Payment
of the monthly retirement benefit continues for a period equal to the number of
months of the Director's Board service or until death, whichever is earlier.
Retirement benefits cease in the event a Director violates the non-com-
7
<PAGE>
pete or confidentiality provisions of the Retirement Plan.
STOCK ACQUISITION PLAN FOR NON-EMPLOYEE DIRECTORS
At the 1994 Annual Meeting, the stockholders approved the Stock Acquisition Plan
for Non-Employee Directors. This Plan includes a Stock Purchase Program and a
Stock Grant Program.
Under the Stock Purchase Program, non-employee directors may elect to forego
receipt of all or any portion of their retainer and meeting fees and instead
receive an equivalent amount of Company stock. The number of shares of stock
distributed to the non-employee director is, in the case of retainer fees, equal
to the amount of retainer fees to be earned for the calendar quarter which the
participant elects to have paid in stock divided by the closing price for sales
of Company stock as reported on the Composite Transaction Reporting System on
the New York Stock Exchange on the first business day of the calendar quarter
for which the retainer fees are earned. In the case of meeting fees, the number
of shares distributed is equal to the amount of meeting fees earned for the
calendar quarter which the participant elects to have paid in stock divided by
the closing price for sales of Company stock as reported on the Composite
Transaction Reporting System on the New York Stock Exchange on the first
business day of the calendar quarter following the calendar quarter for which
the meeting fees are earned. An election to receive stock under this Plan must
be made prior to the first day of the calendar quarter of participation and is
irrevocable for such calendar quarter on and after the first day of the calendar
quarter.
Under the Stock Grant Program, on the first business day of each calendar
quarter, each non-employee director is granted a number of shares of Company
stock which is determined by dividing $5,000 by the closing price for sales of
Company stock as reported on the Composite Transaction Reporting System on the
New York Stock Exchange on such date. This stock vests in five equal annual
installments beginning on January 2 of the second calendar year following the
year of the grant. Stock which has not previously vested will vest on the death,
disability or normal retirement of the director or upon the acquisition by a
person or a group, as defined in Section 14(d)(2) of the Securities Exchange Act
of 1934, of 25% or more of the voting stock of the Company or upon the
occurrence of certain other change in control events. Under the Plan, normal
retirement is termination of service as a director on or after the attainment of
age 70. If a participant ceases to be eligible under any other circumstances,
his interest in any unvested shares shall terminate.
REPORT OF HUMAN EFFECTIVENESS COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
Overall compensation for executive officers is determined by the Human
Effectiveness Committee, which is composed solely of non-employee directors. The
Committee administers various executive compensation plans which are intended to
align closely the financial interests of the Company's executive officers and
those of its stockholders, to
8
<PAGE>
provide reasonable compensation in comparison to competitive practices, and to
continue to motivate and reward executive officers on the basis of Company and
individual performance.
Compensation for the Company's executives is competitive and consists of a base
salary as well as short and long term incentive compensation. Each year, the
Committee reviews the competitiveness of the base salaries of executive officers
and determines whether adjustments are appropriate. The Committee's
determinations are also based on judgments as to the contributions of individual
executive officers to the overall performance of the Company. In setting base
salaries for its executive officers, the Committee relies primarily on the Hay
Compensation Report for Industrial Management ("Hay Report") which establishes
market compensation levels through a survey of 447 operating units of 298
industrial organizations. The Committee uses the average salary level of the
companies surveyed in the Hay Report (increased to take into account the fact
that the Company has eliminated all perquisites for its executive officers) as
its guideline in establishing salaries for executive officers. Mr. McKernan's
base salary is equal to 106% of the average salary level from the Hay Report for
his position, and the base salaries of the other executive officers listed in
the Summary Compensation Table range from 91% to 106% of the average salary
level for their respective positions. The Company does not consider the market
for determining competitive compensation of the Company's executive officers to
be limited to the companies comprising the peer group index in the Performance
Graph on page 22. However, Clark and two of the other four companies which are
included in the peer group are also included in the Hay Report.
All of the executive officers named in the Summary Compensation Table ("Named
Executive Officers") are parties to employment contracts with the Company. The
contracts each provide that the officer will be paid a salary of not less than
88.75% of the average salary level of companies surveyed in the Hay Report for
their positions. These contractual requirements are considered by the Committee
when it sets the base salaries of those executive officers who are parties to
employment contracts containing such requirements.
The Company has short term incentive compensation plans for the executive
officers of the Company and the senior management of the Company and its
Business Units. For 1994, the Named Executive Officers were covered by the
Corporate Plan. Under these plans, the bonus guideline for a particular
executive is established based upon the data in the Hay Report. The Hay Report
determines competitive compensation for executive officers both in terms of
total compensation as well as base salary. Under the plans, the bonus guideline
for a particular executive is equal to the amount by which the average total
compensation for his salary grade exceeds average base salary. For 1994, the
bonus guideline for the Chief Executive Officer was 62% of his base salary and
the bonus guideline for other Named Executive Officers ranged from 27% to 38% of
their base salaries. For 1994, the actual bonus payable to the Chief Executive
Officer under the plan could have
9
<PAGE>
ranged from zero to 106% of his base salary, while the actual bonuses payable to
other Named Executive Officers could have ranged from zero to 65% of their base
salaries, depending upon the extent to which the criteria described below were
met or exceeded.
The bonus payable to each executive officer under the Corporate and Business
Unit Plans in any year is based one-half on actual net income and return on
equity in relation to planned net income and return on equity (in the case of
the Business Unit Plan, return on capital is substituted for return on equity),
and 25% each on the accomplishment of specific operating goals and the
discretion of the Committee. Included among the operating goals are product
quality, product development, cost reductions, safety, sales and market share
increases, acquisitions and divestitures and improved delivery and productivity.
Although there is no formal weighting of these goals, the Committee exercises
judgments as to the relative importance of each goal in establishing the amount
of incentive compensation. Although the goals are generally objective in nature,
there is not always a quantitative measurement or other similar benchmark to
establish whether a particular goal has been met. In these situations, the
Committee exercises its judgment in evaluating whether or not such a goal has
been achieved.
No incentive compensation may be paid under the Corporate Plan for a year in
which the Company is not profitable, or under the Business Unit Plan for a year
in which the Business Unit is not profitable, even if all financial and
operating goals are met, unless the next two consecutive years are profitable.
After the end of the second consecutive year in which the Company or Business
Unit is profitable, the amount of the incentive compensation that would
otherwise have been payable during the unprofitable year would be paid to the
executive officer; provided, however, that if the second consecutive profitable
year is after 1994, the incentive compensation will be paid in the discretion of
the Committee and in an amount not to exceed 50% of the bonus guideline.
The short term incentive compensation plans, when coupled with the Clark
Equipment Company 1994 Long Term Incentive Plan discussed below, result in a
very significant portion of the executive officer's total potential compensation
being directly related to the performance of the Company and the creation of
stockholder value.
The Committee believes that long term incentive compensation should reward the
executive officers of the Company only to the extent that the stockholders are
rewarded through a higher stock price. To this end, the Committee uses various
stock-based incentive plans including a stock purchase program, stock options,
and stock appreciation rights called performance units. Although no specific
target ownership level has been established, it is the Committee's view that the
executive officers of the Company should have significant amounts of their own
money invested in Company stock.
One factor which the Committee considers in establishing its compensation
policies is the expected tax treatment to the Company and its executive officers
of the various forms of compensation. The
10
<PAGE>
deductibility of certain types of compensation will, however, depend upon the
timing of the executive officer's exercise of stock options or stock
appreciation rights, the vesting of restricted stock, the existence of binding
written contracts or other similar items. In addition, changes in the law and
other factors which are beyond the Committee's control can affect the
deductibility of compensation. Consequently, the Committee may not, in all
cases, limit executive compensation to that amount which is deductible under
Section 162(m) of the Internal Revenue Code of 1986, as amended. The Committee
will, however, consider methods of preserving the deductibility of compensation
benefits to the extent that it is reasonably practicable and to the extent that
it is consistent with the Committee's other compensation goals and objectives.
The Long Term Incentive Plan described below which was adopted by the Company in
February 1994, and approved by the Company's stockholders at the 1994 Annual
Meeting, has been established in a manner such that compensation attributable to
stock options, stock appreciation rights and performance units to be granted and
exercised thereunder should be fully deductible by the Company.
COMPENSATION ACTIONS IN 1994
In February 1994, the Board of Directors adopted the Clark Equipment Company
1994 Long Term Incentive Plan ("LTIP"), which was subsequently approved by the
stockholders at the 1994 Annual Meeting of Stockholders. The LTIP provides for a
stock purchase program and the grant of stock options, stock appreciation
rights, performance units, incentive grants and restricted stock. The purpose of
the LTIP is to provide management with additional incentive to enhance
stockholder value.
On May 10, 1994, the Committee adopted a stock purchase program for executive
officers pursuant to the LTIP. This program superseded a substantially identical
stock purchase plan which was implemented in 1990. The new stock purchase
program is intended to stimulate ownership of the Company's common stock by its
executive officers. Under the program, executive officers may contribute up to
15% of their base salary and cash incentive compensation, and the Company
contributes an amount equal to 2/3 of the executive officer's contribution.
These contributions are used to purchase Company stock at the closing price of
the stock on the date of the purchase. Stock purchased with the executive
officer's contribution vests immediately. Stock purchased with the Company's
contribution vests in five equal annual installments commencing in the second
year following the year of purchase. Vesting would also occur on the death or
disability of the participant, or upon the acquisition by a person or group of
25% or more of the voting stock of the Company or the occurrence of certain
other change in control events. If the executive's employment terminates because
of retirement, unvested shares will continue to vest as if such retirement had
not occurred unless the executive was at least 60 years of age upon retirement
and the Committee, in its discretion, decides to vest the shares. If an
executive's employment terminates for any other reason, the Committee will
determine whether unvested shares will con-
11
<PAGE>
tinue to vest and if so in what manner. Factors which the Committee would
consider in determining whether unvested shares will be vested include the
reason that the executive's employment terminated and the quality of the
executive officer's contributions to the Company's performance.
As was the case during 1993, the Committee did not grant any stock options or
performance units to the Named Executive Officers during 1994. In November 1992,
the Committee granted a combination of stock options and performance units to
the executive officers with an exercise price equal to the closing price of the
Company's stock on the date of the grant. These options and performance units
become exercisable in varying amounts over a three year period and lapse if not
exercised within ten years after the date of the grant. The size of the grants
in 1992 resulted in the Committee's decision not to grant any additional stock
options or performance units to the Named Executive Officers in 1993 or 1994.
Effective September 1, 1994, the Committee increased Mr. McKernan's base salary
approximately 6%, from $660,000 to $700,000 per year. The Committee felt that
this increase was appropriate based on compensation data contained in the Hay
Report and in two other salary surveys reviewed by the Committee. None of the
salary surveys reviewed by the Committee were limited to companies included in
the peer group index in the performance graph on page 22. Instead, the Committee
reviews broad market surveys of industrial companies which it considers to be
more representative of the market for determining competitive compensation. This
increase also recognized Mr. McKernan's individual contribution to the
significant improvement in the Company's earnings in 1994.
In February of 1995, Mr. McKernan was paid a bonus of $740,061 under the
Corporate Office Incentive Compensation Plan for performance during 1994. This
bonus, which was equal to approximately 106% of Mr. McKernan's current base
salary, was determined in accordance with the criteria previously described and
reflects the fact that the Company substantially exceeded its financial goals
based on actual versus planned net income and return on equity in 1994. The
bonus also reflects the fact that the Company achieved its operating goals
established by the Committee. Bonuses paid to the other Named Executive Officers
in February of 1995 for performance during 1994 ranged from 46% to 65% of their
current base salaries.
In February of 1995, Mr. McKernan was also paid a bonus of $528,046, equal to
75% of his current base salary, under the Corporate Office Incentive
Compensation Plan for performance during 1992. As previously discussed, no bonus
can be paid for a year in which the Company is not profitable even if all
financial and operating goals are met; however, if the next two consecutive
years are profitable, the bonus for the previous unprofitable year can be paid.
Since the Company was not profitable in 1992, no bonuses were paid for that year
even though all financial and operating goals for that year were met. However,
the Company was profitable in both 1993 and 1994, and the Company
12
<PAGE>
therefore paid the bonuses for 1992 performance in February of 1995, as provided
for in the Plan. Bonuses paid to other Named Executive Officers in February of
1995 for performance during 1992 ranged from 34% to 47% of their current base
salaries.
In November of 1994, the Committee approved the creation of two supplemental
executive retirement plans ("SERPs"). The Pension Plan SERP provides for payment
to all of the Named Executive Officers and to other employees of the portion of
the retirement benefits which cannot be paid from the pension plan due to the
limitations imposed by the Internal Revenue Code on (i) the maximum salary that
can be used to calculate the pension benefit and (ii) the maximum annual benefit
that can be paid from a tax qualified pension plan. This Pension Plan SERP also
provides for payment to the Named Executive Officers of the additional amounts
that would be payable under the pension plan formula if cash bonus payments were
included in base salary. An Employment Contract SERP also approved by the
Committee provides for payment to all of the Named Executive Officers of the
deferred payments due under their employment contracts. Under both SERPs, the
Named Executive Officers will receive a present valued lump sum at retirement
unless they elect a monthly payment. The Committee also approved the funding by
the Company of the Pension Plan SERP and Employment Contract SERP through the
contribution to irrevocable grantor trusts of Company owned insurance policies
on the lives of the Named Executive Officers and certain other current and
former Company executives. In establishing these two SERPs and the related
funding, the Committee considered that 51% of 974 companies participating in a
1994 survey conducted by Hay Associates have SERPs and that, of the companies
with SERPs, approximately 49% have some type of funding in place.
The foregoing report has been submitted by the Human Effectiveness Committee of
the Company's Board of Directors.
Ray B. Mundt, Chairman
James C. Chapman
James A.D. Geier
13
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information for the years
indicated concerning compensation paid to the Company's Chief Executive Officer
and the four other most highly compensated executive officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------- -----------------------
OTHER SECURITIES ALL
NAME ANNUAL RESTRICTED UNDERLYING OTHER
AND COMPEN- STOCK OPTIONS COMPEN-
PRINCIPAL SALARY BONUS SATION AWARDS AND SARS SATION
POSITION YEAR ($) ($)(1) ($)(2) ($)(3) (#) ($)(4)
- -------------------------------- ---- -------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Leo J. McKernan 1994 $673,336 $1,268,107 $164,866 $ 133,600 0 $22,347
Chairman of the Board, 1993 637,856 987,500 335,382 63,789 0 25,761
President and Chief 1992 600,000 0 74,760 60,003 200,000 12,552
Executive Officer
Frank M. Sims 1994 281,594 301,401 54,579 42,321 0 23,566
Senior Vice President 1993 268,179 471,600 275,220 26,819 0 26,809
1992 235,164 0 21,382 23,518 35,586 12,895
William N. Harper 1994 271,812 491,401 194,954 41,343 0 22,883
Vice President and 1993 254,820 141,600 33,576 25,483 0 26,180
Controller 1992 225,843 0 19,884 22,585 44,484 12,164
Bernard D. Henely 1994 247,509 387,563 179,532 33,903 0 23,471
Vice President, 1993 218,190 91,500 18,394 21,814 0 25,186
General Counsel and 1992 182,740 0 14,489 18,275 35,586 11,585
Secretary
Thomas L. Doepker 1994 238,132 297,563 136,202 10,845 0 23,566
Vice President and 1993 227,216 97,200 25,277 18,897 0 24,492
Treasurer 1992 191,095 0 15,712 17,910 40,034 11,130
</TABLE>
- ---------------
(1) The amounts shown represent the total of the payments made pursuant to the
short term incentive compensation plans described in the Report of the Human
Effectiveness Committee for performance during 1994 and 1992. The amounts
paid for 1994 performance are $740,061 for Mr. McKernan, $174,407 for Mr.
Sims, $174,407 for Mr. Harper, $113,128 for Mr. Henely, and $113,128 for Mr.
Doepker. The amounts paid for 1992 performance are $528,046 for Mr.
McKernan, $126,994 for Mr. Sims, $126,994 for Mr. Harper, $84,435 for Mr.
Henely and $84,435 for Mr. Doepker. The amounts shown for Mr. Harper, Mr.
Henely and Mr. Doepker for 1994 also include a one-time payment pursuant to
their employment contracts in the amount of $190,000, $190,000 and $100,000
respectively.
(2) For 1994, the amounts shown represent tax gross-ups paid to the Named
Executive Officers.
(3) Under the Stock Purchase Program for Officers, which is described in the
Report of the Human Effectiveness Committee, officers may contribute up to
15% of their base salary and incentive compensation into the Plan. The
Company contributes
14
<PAGE>
into the Plan an amount equal to 2/3 of the participant's contribution. The
amounts shown are contributions by the Company pursuant to this Plan. The
number and value of the aggregate restricted stock holdings as of December
31, 1994 are 8,292 shares valued at $449,841 for Mr. McKernan; 3,097 shares
valued at $168,012 for Mr. Sims; 2,999 shares valued at $162,696 for Mr.
Harper; 2,440 shares valued at $132,370 for Mr. Henely and 1,982 shares
valued at $107,523 for Mr. Doepker. The value of the aggregate restricted
stock holdings is calculated on the basis of the closing price of $54.25 per
share for the Company's Common Stock on December 31, 1994. Any dividends
payable on the restricted stock are paid to the officer.
(4) For 1994, the amount shown in this column for Mr. McKernan, Mr. Sims, Mr.
Harper, Mr. Henely and Mr. Doepker includes (a) contributions by the Company
under the Clark Savings and Investment Plan in the amount of $4,620 each and
(b) the value of the Company stock allocated to their account under the
Company's Leveraged Employee Stock Ownership Plan ("LESOP") in the amount of
$17,727, $18,946, $18,263, $19,121, and $18,946, respectively, based on a
closing price of $54.25 per share for the Company's Common Stock on December
31, 1994.
STOCK OPTION/SAR TABLES
The following table shows, for the Chief Executive Officer and the four other
most highly compensated executive officers, certain information regarding each
exercise of stock options or stock appreciation rights ("SARs") during 1994 and
the aggregate number and value, as of December 31, 1994, of all unexercised
stock options and SARs. There were no grants of stock options, with or without
tandem SARs, or freestanding SARs during 1994 to the Chief Executive Officer or
the four other most highly compensated executive officers.
15
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1994
AND OPTION/SAR VALUES AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT IN-THE-MONEY
ACQUIRED DECEMBER 31, 1994 (#) OPTIONS/SARS AT
ON VALUE --------------------------- DECEMBER 31, 1994 ($)(4)
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE ---------------------------
NAME (#)(1) ($) (2) (3) EXERCISABLE UNEXERCISABLE
- -------------------------- -------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leo J. McKernan 136,522 $6,583,530 2,712 66,666 $ 96,954 $ 2,383,309
Chairman of the Board,
President and Chief
Executive Officer
Frank M. Sims 24,909 1,194,111 482 11,862 17,231 424,066
Senior Vice President
William N. Harper 28,162 1,324,683 4,828 14,828 172,601 530,101
Vice President and
Controller
Bernard D. Henely 24,359 1,167,755 482 11,862 17,231 424,066
Vice President, General
Counsel and Secretary
Thomas L. Doepker 12,802 609,695 1,659 13,345 46,603 477,084
Vice President and
Treasurer
</TABLE>
- ---------------
(1) Represents the number of securities with respect to which options, stock
appreciation rights ("SARs") or performance units were exercised.
Performance units are equivalent to free-standing SARs. When the performance
units are surrendered, the grantee receives the amount by which the price of
Clark Common Stock exceeds the price set forth in the grant for each unit
surrendered.
(2) The number shown in this column represents unexercised stock options, except
in the case of Mr. Harper for whom it represents the sum of 603 unexercised
stock options and 4,225 unexercised performance units and Mr. Doepker for
whom it represents the sum of 542 unexercised stock options and 1,117
unexercised performance units. Of the 2,712 stock options shown for Mr.
McKernan, 1,356 include an SAR; for Mr. Sims, 241 of the 482 stock options
include an SAR; for Mr. Harper, 301 of the 603 stock options include an SAR;
for Mr. Henely, 241 of the 482 stock options include an SAR; and for Mr.
Doepker, 271 of the 542 stock options include an SAR.
(3) The number shown in this column represents unexercised performance units.
(4) Based on the difference between the closing price of $54.25 per share for
the Company's Common Stock on December 31, 1994 and the option exercise
price, in the case of stock options, and the unit exercise price, in the
case of performance units.
16
<PAGE>
EXECUTIVE EMPLOYMENT CONTRACTS
Each of the Named Executive Officers is a party to an employment contract with
the Company.
Each of the contracts prohibits the executives, upon cessation of employment,
from competing with the Company, disclosing confidential information or inducing
key employees to leave the Company. The obligation regarding non-disclosure of
confidential information continues for a period of five years following
cessation of employment. The non-compete obligation continues for five years
following cessation of employment if employment terminates at a time and for a
reason that entitles the executive to the lifetime monthly payments described
below, and for two years if employment terminates at a time and for a reason
that does not entitle him to such payments. The prohibition against inducing key
employees to leave the Company continues for three years following cessation of
employment. The contracts also provide that the salaries payable to each of
these executives will not be less than 88.75% of the average salary level of
companies surveyed in the Hay Report for their positions, and not less than his
then current rate unless reductions of the same percentage are being made to the
salaries of all other executive officers in the corporate office of the Company.
The contracts each provide for monthly payments to the executive for the
remainder of his life (with a minimum of 60 such payments) in the event of his
retirement from Clark, termination without cause, or the termination of his
employment after the date he became eligible to retire. If employment of the
executive is terminated without cause, he also receives a lump sum payment equal
to 1.5 times his annual salary. The amounts of the monthly payments vary
depending upon the date on which the applicable event occurs. In the case of Mr.
McKernan, the payment ranges from $25,610 per month, if the applicable event
occurs before February 29, 1996, up to $47,415 per month, if the applicable
event occurs on or after March 1, 2003. In the case of Mr. Sims, the payment
ranges from $9,767 per month if the applicable event occurs before July 31,
1995, up to $12,300 per month, if the applicable event occurs on or after August
1, 1997. In the case of Mr. Harper, the payment ranges from $18,833 per month,
if the applicable event occurs between January 1, 2000 and December 31, 2000, up
to $40,658 per month if the applicable event occurs on or after January 1, 2010.
In the case of Mr. Henely, the payment ranges from $16,250 per month if the
applicable event occurs between September 1, 1998 and August 31, 1999 up to
$34,425 per month if the applicable event occurs on or after September 1, 2008.
In the case of Mr. Doepker, the payment ranges from $5,083 per month if the
applicable event occurs between May 1, 1998 and April 30, 1999 up to $10,966 if
the applicable event occurs after May 1, 2008. The contracts with Mr. Sims, Mr.
Harper, Mr. Henely and Mr. Doepker each provide that, in the event of his death,
his surviving spouse will receive a monthly payment for the remainder of her
life in an amount equal to 60% of the monthly payment payable to the executive.
The contracts with Mr. Sims,
17
<PAGE>
Mr. Harper, Mr. Henely and Mr. Doepker provide that the monthly payment to the
executive can be actuarially increased if these survivor benefits are terminated
in certain circumstances. The contracts with Mr. Harper, Mr. Henely and Mr.
Doepker also provide for monthly payments for the remainder of the executive's
life in the event that his employment with Clark is terminated other than for
cause before he reaches age 55. The amount of the monthly payment varies
depending upon when the termination occurs. In the case of Mr. Harper, the
payment ranges from $10,667 if the termination occurs during 1995 to $16,667 if
the termination occurs during 1999. In the case of Mr. Henely, the payment
ranges from $11,667 if the termination occurs prior to August 31, 1995 to
$14,167 if the termination occurs from September 1, 1997 to August 31, 1998. In
the case of Mr. Doepker, the payment ranges from $4,167 if the termination
occurs prior to May 1, 1995 to $5,000 if the termination occurs from May 1, 1997
to April 30, 1998. The amount of these monthly payments is reduced by the
amounts payable under the funded retirement program and supplemental unfunded
arrangement described in the next section of this Proxy Statement and one-half
of any social security benefits received.
The contracts require each of the Named Executive Officers to forego a portion
of their base salaries. The amounts foregone are used by the Company to purchase
insurance policies on these executives' lives and, upon the executive's death,
the proceeds of the policies are payable to irrevocable grantor trusts. The
proceeds from these insurance policies (together with the proceeds of other
insurance policies on certain other current and former Company executives) are
sufficient to fund the monthly payments described above.
The contract with Mr. McKernan also provides that (a) cash bonuses will be
included as compensation for purposes of determining his supplemental unfunded
retirement payments, and (b) if he is replaced as Chairman of the Board,
President and/or Chief Executive Officer, he may terminate his employment within
one year thereafter and such termination will be deemed to be a termination
without cause.
Each of the contracts provides that the executive will receive (i) a payment
(grossed up to cover income taxes thereon) equal to the present value of the
monthly payments which would otherwise have been payable to the executive or his
surviving spouse under the contract; and (ii) a severance payment equal to two
times the executive's average annual total compensation over the previous five
years if either (A) within one year after a change in control, the executive
terminates his employment, or (B) at any time after a change in control the
executive terminates his employment within six months of a change in the
location of his employment, a significant change in his responsibilities or
duties or a reduction in his compensation, benefits or perquisites. However, no
such severance payment will be made to the extent that the aggregate payments
under (i) and (ii) above would constitute an "excess parachute payment" under
applicable Internal Revenue Code provisions. If the aggregate payment under (i)
above would itself constitute
18
<PAGE>
an excess parachute payment, then the Company will pay the executive an amount
sufficient that after his payment of income taxes and any excise taxes thereon,
the amount remaining will be sufficient to pay any excise tax imposed on the
executive because of such excess parachute payment. In the event of a change in
control while the executive officer is retired, the contracts provide for a
payment (grossed up to cover the income taxes thereon) equal to the present
value of all future payments to which the executive officer or his surviving
spouse is entitled under the contract.
Each of the contracts provides that a "change in control" is deemed to occur if
(i) any person (as defined in Section 14(d)(2) of the Securities and Exchange
Act of 1934) acquires beneficial ownership of 25% or more of the shares of the
Company's Common Stock; (ii) during any consecutive 24 month period, individuals
who at the beginning of the period constitute the Board of Directors of the
Company, cease for any reason to constitute a majority thereof unless the
election of each new director was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning of such
period; (iii) the stockholders of the Company approve the merger or
consolidation of the Company with or into another corporation and the Company is
not the surviving corporation or (iv) the stockholders of the Company approve
the sale or disposition of all or substantially all of the Company's assets.
RETIREMENT PROGRAM
Certain of the Company's salaried employees in the United States, including the
Named Executive Officers, are covered under a funded retirement program to which
only the Company contributes. Benefits are related to years of service with the
Company and certain predecessor employers acquired by the Company.
The benefit computations using such service are based on final average base
salary and are computed on a straight life, joint and contingent annuity basis.
An amount equal to one-half of the retiree's social security benefit is deducted
from the amount set forth in the table below when computing the retiree's
pension benefit.
Assuming continuance of the program in its present form and the operation of
minimums as outlined above, lifetime annual benefits would be payable from the
fund to employees retiring at age 65 with final average base salaries and
indicated years of Company service as follows, subject to the social security
deduction described above:
19
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------------------------------
REMUNERATION* 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------ --------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000... $ 48,000 $ 72,000 $ 86,000 $ 100,000 $ 110,000 $ 120,000
300,000... 72,000 108,000 129,000 150,000 165,000 180,000
400,000... 96,000 144,000 172,000 200,000 220,000 240,000
500,000... 120,000 180,000 215,000 250,000 275,000 300,000
600,000... 144,000 216,000 258,000 300,000 330,000 360,000
700,000... 168,000 252,000 301,000 350,000 385,000 420,000
800,000... 192,000 288,000 344,000 400,000 440,000 480,000
900,000... 216,000 324,000 387,000 450,000 495,000 540,000
1,000,000... 240,000 360,000 430,000 500,000 550,000 600,000
1,100,000... 264,000 396,000 473,000 550,000 605,000 660,000
1,200,000... 288,000 432,000 516,000 600,000 660,000 720,000
1,300,000... 312,000 468,000 559,000 650,000 715,000 780,000
1,400,000... 336,000 504,000 602,000 700,000 770,000 840,000
1,500,000... 360,000 540,000 645,000 750,000 825,000 900,000
1,600,000... 384,000 576,000 688,000 800,000 880,000 960,000
1,700,000... 408,000 612,000 731,000 850,000 935,000 1,020,000
1,800,000... 432,000 648,000 774,000 900,000 990,000 1,080,000
1,900,000... 456,000 684,000 817,000 950,000 1,045,000 1,140,000
2,000,000... 480,000 720,000 860,000 1,000,000 1,100,000 1,200,000
2,100,000... 504,000 756,000 903,000 1,050,000 1,155,000 1,260,000
2,200,000... 528,000 792,000 946,000 1,100,000 1,210,000 1,320,000
2,300,000... 552,000 828,000 989,000 1,150,000 1,265,000 1,380,000
2,400,000... 576,000 864,000 1,032,000 1,200,000 1,320,000 1,440,000
2,500,000... 600,000 900,000 1,075,000 1,250,000 1,375,000 1,500,000
</TABLE>
- ---------------
* Average annual base salary during the five consecutive highest years of
service of the final ten.
Credited years of service as of May 1, 1995 of the Named Executive Officers are:
Leo J. McKernan, 21 years; Frank M. Sims, 25 years; William N. Harper, 22 years;
Bernard D. Henely, 25 years; and Thomas L. Doepker, 25 years.
The Internal Revenue Code limits the annual benefits that may be paid from a tax
qualified retirement plan. The Company has adopted a supplemental executive
retirement plan ("SERP") to maintain total benefits to the Named Executive
Officers upon retirement at the levels shown in the above table, with the
amounts in excess of the Internal Revenue Code limits being paid by the SERP.
The supplemental payment to the Named Executive Officers will also include the
additional amount that would be payable under the pension plan formula if cash
bonus payments were included in base salary. This SERP has been funded by the
Company through the contribution to irrevocable grantor trusts of Company owned
insurance policies on the lives of the Named Execu-
20
<PAGE>
tive Officers and certain other current and former Company executives.
The amount of the benefit payable under the pension plan is subject to reduction
for the pension equivalent value of the amount received by the employee under
the Company's Leveraged Employee Stock Ownership Plan ("LESOP"). Amounts
allocated to the accounts of the Named Executive Officers under the LESOP for
1994 are included in the Summary Compensation Table under Other Compensation.
PERFORMANCE GRAPH
Set forth below is a line graph which compares the yearly percentage change in
the cumulative stockholder return on the Company's Common Stock from December
31, 1989 through December 31, 1994 with the cumulative total return during the
same period of the Standard & Poor's 500 Index and a group of peer companies
selected by the Company. The companies included in the peer group index are
Caterpillar, Inc., Deere and Company, Tenneco Inc., Twin Disc Incorporated and
the Company. These companies were chosen because they, or their subsidiaries,
manufacture products which are competitive with products manufactured by the
Company. Cumulative total returns are calculated assuming reinvestment of
dividends, and the index is weighted to reflect the market capitalization of the
index members.
The comparisons in this graph are required by the Securities and Exchange
Commission and are not intended to forecast or be indicative of possible future
performance of the Company's stock.
A significant number of the Company's competitors are divisions of large
companies that also have other important business activities or, in some cases,
are located outside the United States and are not included in any published
index.
21
<PAGE>
5-YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) CLARK PEER GROUP S&P 500
<S> <C> <C> <C>
1989 100 100 100
1990 71 81 97
1991 65 71 126
1992 53 84 136
1993 143 132 150
1994 148 134 152
</TABLE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 13, 1995 (except as
otherwise indicated), with respect to beneficial ownership, as defined by the
Securities and Exchange Commission, of the Company's Common Stock by (a) any
person known to the Company to own more than 5% of the Company's Common Stock,
(b) the directors of the Company, nominees for director and each of the
executive officers listed in the Summary Compensation Table and (c) all
directors and executive officers as a group:
22
<PAGE>
SECURITY OWNERSHIP TABLE
<TABLE>
<CAPTION>
TOTAL SHARES
BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
------------------------------------------------------ ------------- ---------
<S> <C> <C> <C>
(a) FMR Corp. 2,311,789(1) 13.49%
82 Devonshire Street
Boston, Massachusetts
Bankmont Financial Corp. 2,083,969(2) 12.16%
111 West Monroe Street, P.O. Box 755
Chicago, Illinois 60690
Clark Equipment Company 2,053,996(3) 11.99%
Leveraged Employee Stock Ownership Plan
100 North Michigan St., P. O. Box 7008
South Bend, Indiana 46634
- ----
(b) J. C. Chapman 1,365 *
- --------------------------------------------------------------------------------------------
D. N. Frey 8,657 *
- --------------------------------------------------------------------------------------------
J. A. D. Geier 7,808 *
- --------------------------------------------------------------------------------------------
G. N. Kelley 5,029 *
- --------------------------------------------------------------------------------------------
L. J. McKernan 90,032(4)(5) *
- --------------------------------------------------------------------------------------------
R. B. Mundt 9,991 *
- --------------------------------------------------------------------------------------------
F. M. Sims 29,729(4)(5) *
- --------------------------------------------------------------------------------------------
W. N. Harper 29,413(4)(5) *
- --------------------------------------------------------------------------------------------
B. D. Henely 24,693(4)(5) *
- --------------------------------------------------------------------------------------------
T. L. Doepker 27,068(4)(5) *
- --------------------------------------------------------------------------------------------
(c) All Directors and Executive Officers 286,265(4)(5) 1.67%
as a Group
- --------------------------------------------------------------------------------------------
</TABLE>
(1) According to an Amendment to Schedule 13G filed with the Securities and
Exchange Commission, FMR Corp., on behalf of itself and certain of its
affiliates, including Fidelity Management & Research Company, Fidelity
Management Trust Company, Fidelity Magellan Fund and Edward C. Johnson 3d,
reported that, as of December 31, 1994, it had sole voting power as to
55,329 shares and sole dispositive power as to 2,311,789 shares.
(2) According to an Amendment to Schedule 13G filed with the Securities and
Exchange Commission, Bankmont Financial Corp., on behalf of itself and its
subsidiaries, Harris Bankcorp, Inc., Harris Trust and Savings Bank, Harris
Trust Company of Florida and Harris Investment Management, Inc., reported
that, as of December 31, 1994, it had sole voting power as to 2,083,969
shares, sole dispositive power as to 2,083,789 shares and shared dispositive
power as to 180 shares. Included are 2,080,689 shares held by Harris Trust
and Savings Bank as
23
<PAGE>
trustee of the Clark Leveraged Employee Stock Ownership Plan ("LESOP") and Stock
Purchase Program as to which beneficial ownership has been disclaimed.
(3) Owned as of December 31, 1994 according to an Amendment to Schedule 13G
filed with the Securities and Exchange Commission, indicating sole voting
power as to 834,494 shares; shared voting power as to 1,219,502 shares, and
shared dispositive power as to 834,494 shares. These shares are also
included in the shares shown in this table as being owned by Bankmont
Financial Corp.
(4) Includes shares held by the trustees of the Clark Savings and Investment
Plan ("Savings Plan") and the LESOP. As of December 31, 1994, these amounts
were as follows: for Mr. McKernan no shares in the Savings Plan and 4,706
shares in the LESOP; for Mr. Sims no shares in the Savings Plan and 4,515
shares in the LESOP; for Mr. Harper 715 shares in the Savings Plan and 3,855
shares in the LESOP; for Mr. Henely 1,666 shares in the Savings Plan and
3,897 shares in the LESOP; for Mr. Doepker 753 shares in the Savings Plan
and 3,893 shares in the LESOP; and for all Directors and Executive Officers
as a Group 4,548 shares in the Savings Plan and 26,993 shares in the LESOP.
(5) Includes shares which the individual has the right to acquire through the
exercise of stock options which are exercisable within 60 days of March 13,
1995 in the following amounts: for Mr. McKernan 2,712 shares; for Mr. Sims
482 shares; for Mr. Harper 603 shares; for Mr. Henely 482 shares; for Mr.
Doepker 542 shares; and for all Directors and Executive Officers as a Group
7,194 shares.
* Less than 1%.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
On February 13, 1995, the Audit Committee of the Board of Directors appointed
Price Waterhouse LLP to serve as independent accountants for the Company for the
fiscal year ending December 31, 1995, subject to the ratification of such
appointment by the stockholders at the 1995 Annual Meeting of Stockholders.
Ratification of the appointment requires the favorable vote of a majority of the
outstanding shares of Common Stock present at the meeting and constituting a
quorum. If the stockholders do not ratify this appointment, the selection of
independent auditors will be reconsidered by the Audit Committee.
Representatives of Price Waterhouse LLP are expected to be present at the Annual
Meeting and be available to respond to questions pertaining to services
performed during the preceding fiscal year and make a statement if they so
desire.
The Board of Directors recommends that stockholders vote FOR this proposal.
24
<PAGE>
3. OTHER MATTERS
The Company has no knowledge of any other business which may be presented, but
should any other business properly come before the meeting the proxies named in
the enclosed proxy will act upon it according to their best judgment.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy statement and
form of proxy for next year's Annual Meeting of Stockholders, any proposals by
stockholders pursuant to Securities and Exchange Commission Rule 14a-8 intended
to be presented at the 1996 Annual Meeting must be received by the Company on or
before December 5, 1995 and otherwise meet the requirements of that rule.
The Company's By-Laws require that stockholders give timely written notice to
the Company of any items of business or any nominees for director to be brought
before a meeting of stockholders. To be timely, the notice must be received by
the Secretary of the Company on or before the 10th day following the date of
mailing of the notice of the meeting of stockholders. The timely notice
requirement will not apply to items of business or director nominations
presented by or at the direction of the Board of Directors.
As to an item of business, the notice is required to contain a brief description
of the business which the stockholder desires to be brought before the meeting,
the name and address of the stockholder proposing the business, and the number
of shares of stock owned by the stockholder.
As to a nominee for director, the notice is required to contain all information
relating to the nominee which would be required in a proxy statement by
Securities and Exchange Commission rules, the nominee's written consent to serve
as a director, the name and address of the stockholder proposing the nominee and
the number of shares of stock owned by the stockholder.
If timely written notice is not given, the item of business or director nominee
may not be brought to the stockholders for a vote at the stockholders meeting.
By Order of the Board of Directors
[SIG]
Bernard D. Henely
Secretary
South Bend, Indiana
March 27, 1995
25
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CLARK EQUIPMENT COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE>
PROXY PROXY
CLARK EQUIPMENT COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Leo J. McKernan and Bernard D. Henely,
or either of them, as Proxies, with the full power to appoint their substitutes,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of Common Stock held of record by the undersigned at the Annual
Meeting of Stockholders of Clark Equipment Company to be held on May 9, 1995, at
9:00 a.m. E.S.T., at the South Bend Marriott Hotel, 123 North St. Joseph
Street, South Bend, Indiana, or any adjournment thereof and, in their
discretion, the Proxies are authorized to vote on such other business as may
properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1 AND 2.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
CLARK EQUIPMENT COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR all
1. ELECTION OF DIRECTORS WITHOLD nominees
Nominees: James C. Chapman, Juanita H. Hinshaw, AUTHORITY (except
James A.D. Geier, Gaynor N. Kelley, Leo J. McKernan, to vote for the
Ray B. Mundt, Frank M. Sims FOR all for all nominees
nominees nominees written below)
INSTRUCTION: To withhold authority to vote for any / / / / / /
individual nominee, print that nominee's name on the
line provided below.
</TABLE>
- ----------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2. RATIFICATION OF APPOINTMENT OF For Against Abstain
INDEPENDENT ACCOUNTANTS. / / / / / /
</TABLE>
Please sign below exactly as name appears here. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in the full corporate name by the President or
other authorized officer. If a partnership, please sign in the
partnership name by an authorized person.
If you do not wish to have this proxy kept confidential in accordance
with Clark Equipment Company's Confidential Voting Policy, as described
in the Proxy Statement, please so indicate by checking the box below.
/ / I do not wish to have this proxy kept confidential.
---------------------------------------------------------------
Signature
---------------------------------------------------------------
Signature (if held jointly)
Dated: -----------------------------------------------------------,1995
Please mark, sign, date and return this proxy card promptly using the
enclosed envelope.
<PAGE>
PROXY PROXY
CLARK EQUIPMENT COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
In accordance with the provisions of the Clark Equipment Company
Leveraged Employee Stock Ownership Plan ("LESOP"), the Clark Savings and
Investment Plan ("CSIP") and the Melroe Savings and Investment Plan ("MSIP"),
the undersigned hereby appoints Leo J. McKernan and Bernard D. Henely,
or either of them, as Proxies, with the full power to appoint their substitutes,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of Common Stock allocated to the account of the undersigned under
the LESOP and held in the account of the undersigned under the CSIP and the
MSIP at the Annual Meeting of Stockholders of Clark Equipment Company to be
held on May 9, 1995, at 9:00 a.m. E.S.T., at the South Bend Marriott Hotel, 123
North St. Joseph Street, South Bend, Indiana, or any adjournment thereof and,
in their discretion, the Proxies are authorized to vote on such other business
as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1 AND 2.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
CLARK EQUIPMENT COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR all
1. ELECTION OF DIRECTORS WITHOLD nominees
Nominees: James C. Chapman, Juanita H. Hinshaw, AUTHORITY (except
James A.D. Geier, Gaynor N. Kelley, Leo J. McKernan, to vote for the
Ray B. Mundt, Frank M. Sims FOR all for all nominees
nominees nominees written below)
INSTRUCTION: To withhold authority to vote for any / / / / / /
individual nominee, print that nominee's name on the
line provided below.
</TABLE>
- ----------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2. RATIFICATION OF APPOINTMENT OF For Against Abstain
INDEPENDENT ACCOUNTANTS. / / / / / /
</TABLE>
Please sign below exactly as name appears here. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in the full corporate name by the President or
other authorized officer. If a partnership, please sign in the
partnership name by an authorized person.
If you do not wish to have this proxy kept confidential in accordance
with Clark Equipment Company's Confidential Voting Policy, as described
in the Proxy Statement, please so indicate by checking the box below.
/ / I do not wish to have this proxy kept confidential.
---------------------------------------------------------------
Signature
---------------------------------------------------------------
Signature (if held jointly)
Dated: -----------------------------------------------------------,1995
Please mark, sign, date and return this proxy card promptly using the
enclosed envelope.
RESOLUTIONS OF THE
BOARD OF DIRECTORS OF CLARK EQUIPMENT COMPANY
---------------------------------------------
WHEREAS, Clark Equipment Company (the
"Corporation") maintains the FlexPlan, as set forth in the
summary of the FlexPlan with pages dated October 1, 1990
and October 1, 1991 (hereinafter referred to as the
"Plan"), to provide for certain medical and insurance
benefits to employees and retirees of the Corporation and
participating subsidiaries and their dependents and
surviving spouses; and
WHEREAS, the Plan under the caption "FlexPlan
Additional Information - Future of the Program" allows the
Corporation to amend the Plan in any manner and at any
time; and
WHEREAS, the Board of Directors of the
Corporation deems it advisable and in the best interests of
the Corporation to amend the Plan in order to address the
concerns of Plan participants regarding the security of
their retiree medical and life insurance benefits under the
Plan and, therefore, further ensure the stability and
motivation of the Corporation's workforce.
NOW, THEREFORE, BE IT
RESOLVED, that the Plan shall be amended to
provide for the following provisions (the "Amendments"):
1. Retiree Benefits Continuation. Notwith-
-----------------------------
standing any provision of the Plan to the contrary, in
the event of a "Change in Control" (as defined below),
(i) any Retiree and his or her Dependent (each as
defined below) shall be entitled to continue to
receive, following such Change in Control and for the
life of such Retiree or Dependent, as the case may be,
retiree medical and life insurance benefits coverage
("Retiree Benefits Coverage") which will be no less
than that which such Retiree or Dependent is eligible
to receive under the terms of the Plan as the Plan was
in effect immediately prior to such Change in Control
and (ii) the Corporation's contribution and the Plan
participant's contribution, if any, to the costs of
the Retiree Benefits Coverage shall be made at the
same percentage or percentages as those in effect with
respect to such Retiree's or Dependent's retiree
<PAGE>
medical and life insurance benefits coverage under the
Plan as the Plan was in effect immediately prior to
such Change in Control. Costs of the Retiree Benefits
Coverage shall be determined for each year as
described in the attached Exhibit 1 to these
resolutions.
2. Definitions. For purposes of the immediately
-----------
preceding section 1 above, this section 2 and the
immediately succeeding sections 3, 4, 5, and 6, the
following definitions shall apply:
(a) "Change in Control" means (i) the
acquisition of beneficial ownership of 25% or more of
the shares of common stock of the Corporation by or
for any person (as such term is defined in Section
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Act")), including for purposes of
calculating such person's ownership, all shares
beneficially owned by the affiliates and associates
(as such terms are defined in Rule 12b-2 of the Act)
of such person, provided, however, that the term
-----------------
"person" shall not include any of the following: the
Corporation, any subsidiary of the Corporation, any
employee benefit plan or employee stock plan of the
Corporation or of any subsidiary of the Corporation,
any dividend reinvestment plan of the Corporation, any
person or entity organized, appointed or established
by the Corporation for or pursuant to the terms of any
such plan, or any person which becomes the beneficial
owner of 25% or more of such shares then outstanding
solely as a result of the acquisition by the
Corporation or any employee benefit plan of the
Corporation of shares of the common stock of the
Corporation, provided that such person does not
thereafter acquire any shares of the common stock of
the Corporation, or (ii) during any period of 24
consecutive months, individuals who at the beginning
of such period constitute the Board of Directors of
the Corporation cease for any reason to constitute a
majority thereof, unless the election, or nomination
for election by the Corporation's stockholders, of
each new director was approved by a vote of at least
two-thirds of the directors then still in office who
were directors at the beginning of such period, or
(iii) the Corporation's stockholders approve (a) the
merger or consolidation of the Corporation with or
into another corporation and the Corporation shall not
be the surviving corporation or (b) an agreement to
-2-
<PAGE>
sell or otherwise dispose of all or substantially all
of the Corporation's assets (including a plan of
liquidation).
(b) "Retiree" means an employee of the
Corporation or of any subsidiary or affiliate of the
Corporation participating in the Plan who (i) retired
on or after August 1, 1986 and prior to a Change in
Control and (ii) was eligible to receive retiree
medical and life insurance benefits coverage under the
Plan as the Plan was in effect immediately prior to
such Change in Control.
(c) "Dependent" means a Retiree's dependent
(meeting the criteria for dependent eligibility set
forth in the Plan) or surviving spouse who is eligible
to receive retiree medical benefits coverage under the
Plan as the Plan was in effect immediately prior to a
Change in Control.
3. Effective on Change in Control. The
------------------------------
immediately preceding sections 1 and 2 shall have no
force or effect unless and until there is a Change in
Control.
4. Future Amendments and Termination. The
---------------------------------
Corporation reserves the right to amend in any manner
the Plan and these Amendments or to terminate the Plan
at any time prior to a Change in Control; provided,
--------
however, that upon a Change in Control and at any time
-------
following such Change in Control, the Plan may not be
terminated and the Plan and these Amendments may not
be amended in any manner if such termination or
amendment could have an adverse effect on the rights
of a Retiree or Dependent under the Plan and these
Amendments (as they may have been amended prior to
such Change in Control) without the express written
consent of each such Retiree or Dependent, as the case
may be.
5. Contract Rights. The Board of Directors of
---------------
the Corporation intends these Amendments and the Plan
to constitute an enforceable contract between the
Corporation and each Plan participant and intends
these Amendments and the Plan to vest rights in such
Plan participants as third party beneficiaries. In no
event shall a Plan participant be obligated to seek
other employment or take any other action by way of
mitigation of the amounts payable or benefits provided
-3-
<PAGE>
to such participant under any of the provisions of
these Amendments and the Plan and such amounts or
benefits shall not be reduced whether or not such
participant obtains other employment. The
Corporation's obligation to make payments or provide
benefits specified by these Amendments and the Plan to
a Plan participant and otherwise to perform its
obligations under these Amendments and the Plan shall
not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action
which the Corporation may have against such
participant or others.
6. Successors and Assigns. These Amendments and
----------------------
the Plan shall be binding upon the Corporation and
upon any assignee or successor in interest to the
Corporation. These Amendments and the Plan shall not
be terminated by any merger or consolidation of the
Corporation whereby the Corporation is or is not the
surviving or resulting corporation or as a result of
any transfer of all or substantially all of the assets
of the Corporation. In the event of any such merger,
consolidation or transfer of assets, the provisions of
these Amendments and the Plan shall be binding upon
the surviving or resulting corporation or the person
or entity to which such assets are transferred. These
Amendments shall inure to the benefit of and be
enforceable by each Retiree and Dependent and his or
her personal or legal representatives, executors,
administrators, successors, heirs, distributees,
devisees and legatees.
And be it further
RESOLVED, that the foregoing resolution shall be
effective as of April 9, 1995; and be it further
RESOLVED, that the Chief Executive Officer or any
Vice President of the Corporation be, and hereby are,
authorized and directed to execute, certify, deliver and
file (or cause to be executed, certified, delivered and
filed) all such further agreements, certificates,
instruments and documents, in the name of and on behalf of
the Corporation, and to do all such further acts and things
as in their discretion they shall deem necessary, advisa-
ble, proper and convenient to carry out the purposes and
intent of the foregoing resolutions; and be it further.
-4-
<PAGE>
RESOLVED, that the Corporation reserves the right
to amend in any manner the Plan and these Amendments or
terminate the Plan at any time prior to a Change in
Control; provided, however, that upon a Change in Control
-------- -------
and at any time following such Change in Control, the Plan
may not be terminated and the Plan and these Amendments may
not be amended in any manner if such termination or
amendment would have an adverse effect on a Plan
participant or his or her eligible dependent or surviving
spouse under the Plan and these Amendments (as they may
have been amended prior to such Change in Control) without
the express written consent of such participant, dependent
or surviving spouse, as the case may be.
-5-
<PAGE>
EXHIBIT 1
---------
DETERMINATION OF COST FOR POSTRETIREMENT MEDICAL BENEFITS
FOR CLARK EQUIPMENT COMPANY RETIREES AFTER 8/1/1986
Cost will mean gross incurred claims from the previous
calendar year on a per capita basis according to retiree or
dependent status after proper separation of gross incurred
claims by Medicare eligibility date. Specifically, four
per capita claims costs will be identified from the
following calculations and used as costs:
Retiree, Pre-Medicare Eligibility Cost = A + B
A = Gross incurred claims before Medicare eligibility date
from previous calendar year for all pre-Medicare
eligible retirees only retired after 8/1/86.
B = Number of retirees (after 8/1/86), eligible to file
claims under the plan in the previous year but not
eligible for Medicare, with partial counting of
retirees who become Medicare eligible during the year
or become newly eligible during the year pro rata for
the portion of the year before Medicare eligibility.
Dependent, Pre-Medicare Cost = C + D
C = Gross incurred claims before Medicare eligibility date
from previous calendar year for all pre-Medicare
eligible dependents of retirees after 8/1/86.
D = Number of dependents (of retirees after 8/1/86),
eligible to file claims under the plan in the previous
year but not eligible for Medicare, with partial
counting of dependents who become Medicare eligible
during the year or become newly eligible during the
year pro rata for the portion of the year before
Medicare eligibility.
-6-
<PAGE>
EXHIBIT 1 (continued)
---------------------
Retiree, Post-Medicare Eligibility Cost = E + F
E = Gross incurred claims after Medicare eligibility date
from previous calendar year for all post-Medicare
eligible retirees only retired after 8/1/86.
F = Number of retirees (after 8/1/86), eligible to file
claims under the plan and under Medicare in the
previous year with partial counting of retirees who
become Medicare eligible during the year or become
newly eligible during the year pro rata for the
portion of the year after Medicare eligibility.
Dependent, Post-Medicare Cost = G + H
G = Gross incurred claims after Medicare eligibility date
from previous calendar year for all post-Medicare
eligible dependents of retirees after 8/1/86.
H = Number of dependents (of retirees after 8/1/86),
eligible to file claims under the plan and under
Medicare in the previous year with partial counting of
dependents who become Medicare eligible during the
year or become newly eligible during the year pro rata
for the portion of the year after Medicare
eligibility.
-7-
RESOLUTIONS OF THE
BOARD OF DIRECTORS OF CLARK EQUIPMENT COMPANY
---------------------------------------------
WHEREAS, Clark Equipment Company (the
"Corporation") maintains the Clark Equipment Company
Corporate Office Reduction-In-Force Policy, as amended and
restated effective 1 October 1990 (hereinafter referred to
as the "Policy"), to provide for a uniform procedure for
administering eligible salaried employee reductions so that
fair, equitable, and consistent treatment of such employees
can be assured; and
WHEREAS, the fourth paragraph of the Policy under
the caption "REFERENCES" allows the Corporation to amend
the Policy at any time; and
WHEREAS, the Board of Directors of the
Corporation deems it advisable and in the best interests of
the Corporation to amend the Policy in order to address the
concerns of Policy participants regarding job security and,
therefore, further ensure the stability of this essential
portion of the Corporation's workforce.
NOW, THEREFORE, BE IT
RESOLVED, that a new Section VIII is hereby added
to the Policy to read as follows:
"VIII. CHANGE IN CONTROL OF THE COMPANY
--------------------------------
Notwithstanding anything set forth in this Clark
Equipment Company Corporate Office Reduction-in-Force
Policy, as amended and restated effective 1 October 1990
(the "Policy"), to the contrary, in the event of a "Change
in Control" (as defined below), the terms of this Policy
shall be modified and amended to the extent set forth in
one or more appendices to the Policy (individually an
"Appendix" and collectively, the "Appendices"), if any,
that may be approved and adopted by resolution of the Board
of Directors (the "Board") of Clark Equipment Company (the
"Company") from time to time prior to any such Change in
Control. Any such Appendix shall have no force or effect
unless and until there is a Change in Control; provided,
--------
however, in the event of a Change in Control, to the extent
-------
there is any ambiguity or inconsistency between an Appendix
and any other provision of the Policy, such Appendix shall
govern.
<PAGE>
For purposes of this Policy (including any Appendix),
"Change in Control" shall mean (i) the acquisition of
beneficial ownership of 25% or more of the shares of common
stock of the Company by or for any person (as such term is
defined in Section 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Act")), including for purposes of
calculating such person's ownership, all shares
beneficially owned by the affiliates and associates (as
such terms are defined in Rule 12b-2 of the Act) of such
person, provided, however, that the term "person" shall not
-------- -------
include any of the following: the Company, any subsidiary
of the Company, any employee benefit plan or employee stock
plan of the Company or of any subsidiary of the Company,
any dividend reinvestment plan of the Company, any person
or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan, or
any person which becomes the beneficial owner of 25% or
more of such shares then outstanding solely as a result of
the acquisition by the Company or any employee benefit plan
of the Company of shares of the common stock of the
Company, provided that such person does not thereafter
acquire any shares of the common stock of the Company, or
(ii) during any period of 24 consecutive months,
individuals who at the beginning of such period constitute
the Board of Directors of the Company cease for any reason
to constitute a majority thereof, unless the election, or
nomination for election by the Company's stockholders, of
each new director was approved by a vote of at least two-
thirds of the directors then still in office who were
directors at the beginning of such period, or (iii) the
Company's stockholders approve (a) the merger or
consolidation of the Company with or into another
corporation and the Company shall not be the surviving
corporation or (b) an agreement to sell or otherwise
dispose of all or substantially all of the Company's assets
(including a plan of liquidation)." and be it further
RESOLVED, that Appendix A to the Policy is hereby
approved and adopted and made a part of the Policy and
shall read as set forth in Exhibit 1 attached hereto; and
be it further
RESOLVED, that the foregoing resolutions are
hereby approved and adopted as amendments of the Policy;
and be it further
RESOLVED, that such amendments shall be effective
as of April 9, 1995; and be it further
-2-
<PAGE>
RESOLVED, that the Chief Executive Officer or any
Vice President of the Corporation be, and hereby are,
authorized and directed to execute, certify, deliver and
file (or cause to be executed, certified, delivered and
filed) all such further agreements, certificates,
instruments and documents, in the name of and on behalf of
the Corporation, and to do all such further acts and things
as in their discretion they shall deem necessary,
advisable, proper and convenient to carry out the purposes
and intent of the foregoing resolutions; and be it further
RESOLVED, that the Corporation reserves the right
to amend in any manner the Policy and Appendix A or
terminate the Policy at any time prior to a Change in
Control; provided that, upon a Change in Control and at any
-------- ----
time following such Change in Control, the Policy and
Appendix A may not be amended in any manner and the Policy
may not be terminated if such amendment or termination
would adversely affect the rights of a Policy participant
or an eligible dependent or surviving spouse of such
participant under the Policy and Appendix A (as they may
have been amended prior to such Change in Control) without
the express written consent of such participant or
dependent or surviving spouse, as the case may be.
-3-
<PAGE>
Exhibit 1
Appendix A (this "Appendix") to the Clark Equipment
Company Corporate Office Reduction-in-Force Policy, as
amended and restated effective 1 October 1990 (the
"Policy")
------------------------------------------------------
All capitalized terms not otherwise defined in this
Appendix are defined in the Policy. This Appendix forms a
part of such Policy. As used in this Appendix, "Company"
shall mean (1) Company as defined in Section VIII of the
Policy and (2) any assignee or successor in interest to
Clark Equipment Company, whether by operation of law or
otherwise.
I. Separation Pay, Welfare Benefits
and Outplacement Services
--------------------------------
A. Eligibility
-----------
Notwithstanding any provision of the Policy to the
contrary, except as provided under Paragraph B of this
Section I of this Appendix and under Section IV of this
Appendix, upon a Change in Control, any person employed at
the corporate office of Clark Equipment Company at the time
of such Change in Control, including but not limited to
each person listed on Exhibit 1-A to this Appendix whose
employment with Clark Equipment Company at the corporate
office has not been terminated prior to such Change in
Control, (all such persons referred to collectively as
"Participants" and individually as a "Participant") shall
be entitled to the payments and benefits described in each
of Paragraphs C, D and E of this Section I of this Appendix
if a "Termination Event," as hereinafter defined, occurs
with respect to such Participant within 24 months
immediately after the date of such Change in Control. A
Termination Event is deemed to have occurred with respect
to such Participant if such Participant (i) is terminated
(as a result of a layoff or otherwise) by the Company or
any subsidiary or affiliate of the Company without "Cause"
(as defined in Section V of this Appendix) or (ii)
terminates employment with the Company or any subsidiary or
affiliate of the Company within six months of "Good Reason"
(as defined in Section VI of this Appendix). Any event
described in clauses (i) and (ii) of the immediately
preceding sentence shall be referred to herein as a
"Termination Event"; provided, however, with respect to any
-------- -------
-4-
<PAGE>
corporate officer of Clark Equipment Company at its
Corporate Office at the vice president level and above
immediately prior to a Change in Control, the term
"Termination Event" shall mean not only the events
described in clauses (i) and (ii) of the immediately
preceding sentence, but shall also mean any termination of
employment "other than for cause" (as defined in such
officer's employment agreement with the Company as in
effect immediately prior to such Change in Control)
following a Change in Control.
B. Benefits of Certain Corporate Officers
--------------------------------------
Any corporate officer of Clark Equipment Company at
its corporate office at the vice-president level and above
immediately prior to a Change in Control shall not be
eligible to receive the Severance Benefit under Paragraph C
of this Section I of this Appendix or Outplacement Benefits
under Paragraph E of this Section I of this Appendix, and
Section IV of this Appendix shall not be applicable to any
such corporate officer.
C. Separation Pay
--------------
Notwithstanding any provision under Section III of the
Policy to the contrary, if there is a Termination Event
with respect to an eligible Participant, the Company shall
pay to such Participant in a single lump sum an amount (the
"Severance Benefit") equal to: his or her base annual
salary (determined either immediately prior to the Change
in Control or immediately prior to such Termination Event,
whichever results in a higher base annual salary) divided
by fifty-two (52) and multiplied by a number equal to one
(1) plus the number of completed years of service with the
Company and its affiliates as of the date of such Termina-
tion Event and multiplied again by three (3); provided,
--------
however, such amount shall be no less than one (1) times
-------
such base annual salary and shall not exceed two (2) times
the amount of such base annual salary; and provided
--- --------
further, that such Severance Benefit shall be equal to an
-------
amount that is two times the amount of such base annual
salary in the case of (i) any participant in the Clark
Equipment Company Incentive Compensation Plan for Corporate
Office Management ("Incentive Compensation Plan")
(including but not limited to Participants listed on
Exhibit 1-A to this Appendix who are participants in the
Incentive Compensation Plan and denoted as such on such
-5-
<PAGE>
Exhibit 1-A by an asterisk) and (ii) such other
Participants listed on Exhibit 1-A designated by an
asterisk. For purposes of the immediately preceding
sentence, a Participant shall be considered a participant
in the Incentive Compensation Plan if such Participant is a
participant in the Incentive Compensation Plan either
immediately prior to the Change in Control or immediately
prior to the Termination Event with respect to such
Participant. Such Severance Benefit shall be paid on the
date of such Termination Event as compensation for services
rendered by such Participant to the Company and its
affiliates. Such Severance Benefit shall replace any other
severance benefit that might have otherwise been provided
to such Participant under Section III of the Policy.
D. Welfare Benefit Continuation
----------------------------
Notwithstanding any provision under Section VII of the
Policy to the contrary, if there is a Termination Event
with respect to an eligible Participant and such
Participant has not attained age 55 as of the date of such
Termination Event, the Company shall provide such
Participant with benefit coverages ("Welfare Benefits")
that are no less than those benefit coverages enumerated in
Paragraphs A and B of Section VII of the Policy (as the
Policy is in effect immediately prior to the Change in
Control) (including any benefits referred to in such
paragraphs (e.g., vacation benefits) as such benefits were
----
in existence immediately prior to the Change in Control)
from the date of such Termination Event until the earliest
to occur of (i) the expiration of the two-year period
immediately following the date of such Termination Event or
(ii) the date such Participant attains age 55, or (iii) the
date such Participant obtains comparable benefit coverages
as the result of comparable employment with another
employer subsequent to such Termination Event (in each
case, the "Welfare Continuation Period"). For such Welfare
Continuation Period, such Welfare Benefits shall be
provided to such Participant at a cost to such Participant
that is no greater than the cost to such Participant
immediately prior to (a) the Change in Control or (b) the
date of such Termination Event, whichever shall result in a
lower cost to such Participant for such Welfare Benefits.
Such Welfare Benefits shall include benefit coverages for
the dependents and surviving spouse of such Participant to
the extent provided in the Company's FlexPlan as such
FlexPlan was in effect immediately prior to such Change in
Control. Welfare Benefits provided under this Paragraph D
-6-
<PAGE>
of this Section I of this Appendix shall replace any other
welfare benefit that might have otherwise been provided to
such Participant under Paragraphs A and B of Section VII of
the Policy.
E. Outplacement Services
---------------------
Notwithstanding any provision under Section VI of the
Policy to the contrary, if there is a Termination Event
with respect to an eligible Participant, the Company shall
pay for the cost of all outplacement and/or any other
similar service that such Participant considers necessary,
in his or her sole discretion, to obtain new employment;
provided, however, that the total amount of payments for
-------- -------
such services shall not exceed fifteen (15) percent of such
Participant's base annual salary (as determined under
Paragraph C of Section I of this Appendix) (such payments
being referred to as "Outplacement Benefits"); and provided
--- --------
further, that such Outplacement Benefits must be provided
-------
by established professional outplacement firms that provide
such outplacement and/or other similar service as a regular
part of such entities' business activities. Any such
payment for Outplacement Benefits shall be made within ten
(10) business days of the Company having received a written
invoice for such services. Such Outplacement Benefits
shall replace any other benefit that might have otherwise
been provided to such Participant under Section VI of the
Policy.
II. Retirement Eligibility
----------------------
Notwithstanding any provision under Paragraph D of
Section VII of the Policy to the contrary, if there is a
Termination Event with respect to a Participant at any time
following a Change in Control and such Participant has
attained at least age 53 but not age 55 coincident with or
prior to such Termination Event, such Participant shall be
deemed to be an employee of the Company on layoff status
for up to 24 months after such Termination Event solely for
purposes of the Clark Equipment Company Retirement Program
for Salaried Employees as in effect immediately prior to
the Change in Control (the "Retirement Plan") and shall be
entitled to an early retirement benefit pursuant to Section
2.2 of the Retirement Plan upon reaching age 55 if such
Participant has completed at least ten (10) years of
credited service under the terms of the Retirement Plan as
of the date of such Termination Event; provided, however,
-------- -------
-7-
<PAGE>
the period of time between the date of such Termination
Event and the date that such Participant attains age 55
shall not be treated as credited service under the
Retirement Plan. The benefits provided to such a
Participant under this Section II shall be referred to
herein as the "Service Benefit." Such Service Benefit
shall replace any other benefit that might have otherwise
been provided to such Participant under Paragraph D of
Section VII of the Policy.
III. Extended Welfare Benefits for Certain Participants
--------------------------------------------------
A. Eligibility
-----------
Notwithstanding any provision under the Policy or
this Appendix to the contrary, if at any time on or after a
Change in Control, (A) a Termination Event occurs with
respect to a Participant who has attained at least age 50
and has at least 4 years of service with the Company or any
affiliate or subsidiary of the Company on the date
immediately prior to such Change in Control, such
Participant shall be eligible for (i) the Welfare Benefits
provided under Paragraph D of Section I of this Appendix
and (ii) the extended Welfare Benefits provided under
Paragraph B of this Section III of this Appendix and (iii)
the Retiree Benefits Coverage (as hereinafter defined)
provided under Paragraph C of this Section III of this
Appendix and (B) a Participant who has attained at least
age 50 and has at least four years of service with the
Company or any affiliate or subsidiary of the Company on
the date immediately prior to such Change in Control and
whose employment with the Company or any affiliate or
subsidiary of the Company terminates (whether voluntarily
or involuntarily) on or after age 55 for any reason shall
be entitled to the Retiree Benefits Coverage under
Paragraph C of this Section III of this Appendix.
B. Extended Welfare Benefits
-------------------------
A Participant eligible under Paragraph A of this
Section III of this Appendix shall be entitled to Welfare
Benefits for the period from the end of the Welfare
Continuation Period or, if such Participant's Welfare
Benefits were suspended under Paragraph D of Section I of
this Appendix because such Participant had obtained
comparable employment with another employer with comparable
benefit coverages, but such coverage was subsequently
reduced or eliminated, from the date of such coverage
-8-
<PAGE>
reduction or elimination ("Benefits Loss Date"), to the
date such Participant attains age 55 (the "Extended Benefit
Period") if such Participant has not attained age 55 as of
the end of the Welfare Continuation Period or the Benefits
Loss Date, whichever is applicable; provided, however, that
-------- -------
if such Participant obtains comparable employment with
another employer with comparable benefit coverages during
the Extended Benefit Period, such extended Welfare Benefits
shall be suspended while such Participant retains such
comparable benefit coverages; and provided further, that
--- -------- -------
during the Extended Benefit Period, such Participant shall
pay the full cost of the Welfare Benefits, the medical
benefits portion of which shall be determined for each year
as described in Exhibit 1-B to this Appendix, for such
period. Such extended Welfare Benefits shall include
benefit coverages for the dependents and surviving spouse
of such Participant to the extent provided in the Company's
FlexPlan as such FlexPlan was in effect immediately prior
to the Change in Control.
C. Retiree Benefits Coverage
-------------------------
Nothwithstanding any provision under the Policy
or this Appendix to the contrary, a Participant who has
attained at least age 50 and has at least four years of
service with the Company or any affiliate or subsidiary of
the Company on the date immediately prior to a Change in
Control shall be entitled to receive upon the later of
attaining age 55 or the termination of employment (for any
reason whether voluntarily or involuntarily) with the
Company and any affiliate or subsidiary of the Company, for
the life of such Participant, retiree medical and life
insurance benefits coverage under the Company's FlexPlan
("Retiree Benefits Coverage") which will be no less than
that which such Participant would have been eligible to
receive under the FlexPlan if such Participant had actually
retired immediately prior to such Change in Control and had
been considered for eligibility purposes under the FlexPlan
to have attained age 55 and to have completed 10 years of
credited service with the Company immediately prior to such
Change in Control, or, if greater, the actual age and/or
number of such Participant's years of credited service at
the time of such Participant's termination of employment
with the Company and its subsidiaries and affiliates. For
purposes of the immediately preceding sentence, the
Company's contribution and the Participant's contribution,
if any, to the costs of the Retiree Benefits Coverage, the
medical benefits portion of which shall be determined for
each year as described in Exhibit 1-B to this Appendix,
-9-
<PAGE>
shall be made at the percentage or percentages which would
have been applicable to such Participant's retiree medical
and life insurance benefits coverage under the FlexPlan, as
the FlexPlan was in effect immediately prior to such Change
in Control, and as if such Participant had attained age 62
and completed 30 years of credited service immediately
prior to such Change in Control. Such Retiree Benefits
Coverage shall include benefits coverage for the dependents
and surviving spouse of such Participant to the extent
provided in the Company's FlexPlan as the FlexPlan was in
effect immediately prior to the Change in Control.
Section IV. Certain Reduction of Benefits
-----------------------------
A. Reduced Amount
--------------
Anything in this Appendix or the Policy to the
contrary notwithstanding, in the event it shall be
determined that any payment or distribution provided by the
Company or any affiliate or subsidiary of the Company to or
for the benefit of a Participant in the nature of
compensation (whether paid or payable or distributed or
distributable pursuant to the terms of this Appendix or the
Policy or otherwise) (a "Payment") would be nondeductible
by the Company or the relevant subsidiary or affiliate of
the Company for Federal income tax purposes because of
Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), then the aggregate Present Value (as
hereinafter defined) of amounts payable or distributable as
a Severance Benefit to such Participant under Paragraph C
of Section I of this Appendix shall be reduced to the
Reduced Amount (as hereinafter defined).
B. Definitions
-----------
(1) The "Reduced Amount" shall equal the amount of the
Severance Benefit payable with respect to a Participant
under Paragraph C of Section I of this Appendix (without
regard to this Section IV of this Appendix), reduced by an
amount such that the amount so reduced together with the
aggregate amount of Payments to such Participant would not
cause any Payment with respect to such Participant to be
nondeductible by the Company or the relevant subsidiary or
affiliate because of Section 280G of the Code; provided,
however, that if, after the reduction of the Severance
Benefit provided under Paragraph C of Section I of this
Appendix to zero, any Payment to such Participant would
still be nondeductible by the Company or any subsidiary or
-10-
<PAGE>
affiliate of the Company because of Section 280G of the
Code, then the Reduced Amount shall equal zero.
(2) "Present Value" shall mean such value determined
in accordance with Section 280G(d)(4) of the Code.
C. Determinations
--------------
All determinations required to be made under this
Section IV of this Appendix shall be made at the expense of
the Company by the Company's independent auditors which
shall provide, within 5 business days of the date of the
Participant's Termination Event or such earlier time as is
requested by the Company, (i) detailed supporting
calculations both to the Company and the Participant and
(ii) an opinion to the Participant whether he or she has
substantial authority not to report any excise tax on his
or her Federal income tax return with respect to any
Payments. Any such determination by the Company's
independent auditors shall be binding upon the Company and
the Participant. Within 5 business days after such
determination, the Company shall pay, distribute or provide
to or for the benefit of the Participant such benefits as
are then due to the Participant under this Appendix and the
Policy.
D. Overpayments and Underpayments
------------------------------
As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial
determination by the Company's independent auditors
hereunder, it is possible that Payments will have been made
by the Company or the relevant subsidiary or affiliate of
the Company which should not have been made ("Overpayment")
or that Payments will not have been made by the Company or
the relevant subsidiary or affiliate of the Company which
could have been made ("Underpayment"), in each case,
consistent with the calculations required to be made under
this Section IV of this Appendix. In the event that the
Company's independent auditors, based upon the assertion of
a deficiency by the Internal Revenue Service against the
Participant or the Company or the relevant subsidiary or
affiliate of the Company which the Company's independent
auditors believe has a high probability of success,
determine that an Overpayment has been made, any such
Overpayment paid or distributed by the Company or the
relevant subsidiary or affiliate of the Company to or for
the benefit of the Participant shall be treated for all
purposes as a loan ab initio to the Participant which the
-- ------
-11-
<PAGE>
Participant shall repay to the Company or the relevant
subsidiary or affiliate of the Company together with
interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code; provided, however, that no
such loan shall be deemed to have been made and no amount
shall be payable to the Company or the relevant subsidiary
or affiliate of the Company if and to the extent such
deemed loan and payment would not either reduce the amount
on which the Participant is subject to tax under Section 1
and Section 4999 of the Code or generate a refund of such
taxes. In the event that the Company's independent
auditors, based upon controlling precedent or other
substantial authority, determine that an Underpayment has
occurred, any such Underpayment shall be promptly paid by
the Company or the relevant subsidiary or affiliate of the
Company to or for the benefit of the Participant together
with interest at 120% of the applicable federal rate
provided for in Section 7872(f)(2) of the Code, compounded
semiannually. All determinations required to be made under
this Paragraph D of this Section IV of this Appendix,
including the determination of the amount of interest to be
paid pursuant to this Paragraph D of this Section IV of
this Appendix shall be made by the Company's independent
auditors at the expense of the Company.
Section V. Cause
-----
A. Definition
----------
For purposes of the Policy and this Appendix, "Cause"
shall mean willful and egregious misconduct by the
Participant in the course of his or her employment with the
Company that is demonstrably and materially injurious to
the Company. In the event that the affected Participant
and the Company cannot, within 15 days immediately
following the Termination Event with respect to the
affected Participant, agree on whether there was "Cause"
for such Participant's termination, the determination of
whether alleged grounds for termination qualify as a
termination for "Cause" shall be made by an "Arbitration
Panel" (as defined in Paragraph B of this Section V).
B. Arbitration Panel
-----------------
For purposes of this Appendix and the Policy, the term
"Arbitration Panel" shall mean three (3) independent
arbitrators, one of whom shall be selected by the Company
within 15 days immediately following the relevant
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<PAGE>
Termination Event with respect to the affected Participant,
one by the relevant Participant and the third shall be
selected by the two other arbitrators. In the event that
agreement cannot, within 15 days immediately after the two
arbitrators have been selected by the Company and the
relevant Participant, be reached on the selection of the
third arbitrator, such arbitrator shall be selected by the
American Arbitration Association. All arbitrators shall be
selected from a list provided by the American Arbitration
Association. All matters presented to the Arbitration
Panel shall be decided by majority vote. All costs of any
arbitration, including the relevant Participant's
attorneys' fees, if any, shall be paid by the Company.
Section VI. Good Reason
-----------
A. Definition
----------
For purposes of this Appendix and the Policy, "Good
Reason" means, without the relevant Participant's express
written consent, the occurrence of any of the following
events: (1) a reduction by the Company (or the relevant
subsidiary or affiliate of the Company) of the relevant
Participant's rate of annual base salary as in effect
immediately prior to the Change in Control or as such
salary may be increased from time to time thereafter, (2)
any requirement of the Company (or the relevant subsidiary
or affiliate of the Company) that the relevant Participant
(i) be based anywhere more than twenty-five (25) miles from
the facility where such Participant is based immediately
prior to the Change in Control or (ii) travel on business
to an extent substantially more burdensome than the travel
obligations of the Participant immediately prior to such
Change in Control, (3) the failure of the Company (or the
relevant subsidiary or affiliate of the Company) to (i)
continue in effect any employee benefit plan or
compensation plan in which the relevant Participant is
participating immediately prior to the Change in Control,
unless such Participant is permitted to participate in
other plans providing such Participant with substantially
comparable benefits, or (ii) provide such Participant and
such Participant's dependents with vacation, welfare and
fringe benefits (including, without limitation, medical,
prescription drug, dental, disability, salary continuance,
employee life, group life, accidental death and travel
accident insurance plans and programs) in accordance with
the most favorable plans, practices, programs and policies
of the Company, its subsidiaries and its affiliates in
-13-
<PAGE>
effect for such Participant immediately prior to the Change
in Control, (4) the taking of any action by the Company (or
the relevant subsidiary or affiliate of the Company) which
would adversely affect such Participant's participation in,
or materially reduce such Participant's benefits under, any
applicable plan, practice, program or policy referred to in
the immediately preceding clause (3), and (5) a change by
the Company (or the relevant subsidiary or affiliate of the
Company) in the Participant's job responsibility existing
immediately prior to the Change in Control.
B. Arbitration
-----------
In the event that the affected Participant and the
Company cannot, within 15 days immediately following the
Termination Event with respect to the affected Participant,
agree on whether there was "Good Reason" for such
Participant's termination, the determination of whether
alleged grounds for termination by such Participant qualify
as termination for "Good Reason" shall be made by an
Arbitration Panel as provided for in Section V of this
Appendix.
Section VII. Termination of Policy and Appendix
----------------------------------
Upon a Change in Control and at any time following
such Change in Control, this Appendix and the Policy may
not be terminated if such termination could have an adverse
effect on the rights of any Participant or his or her
dependent or surviving spouse who is or may thereafter
become eligible for benefits under the Policy and this
Appendix without the express written consent of each such
Participant and each such dependent or surviving spouse, as
the case may be.
Section VIII. Amendment of Policy and Appendix
--------------------------------
This Appendix and the Policy may not be amended in any
manner which could have an adverse effect on the rights of
any Participant or his or her dependent or surviving spouse
who is eligible for benefits under the Policy and this
Appendix without the express written consent of each such
Participant and each such dependent or surviving spouse, as
the case may be.
-14-
<PAGE>
Section IX. Contract Right of Participants;
-------------------------------
No Mitigation; No Setoff
------------------------
The Board of Directors of the Company intends this
Appendix and the Policy to constitute an enforceable
contract between the Company and each Participant and
intends this Appendix and the Policy to vest rights in such
Participants as third party beneficiaries. In no event
shall a Participant be obligated to seek other employment
or take any other action by way of mitigation of the
amounts payable or benefits provided to such Participant
under any of the provisions of this Appendix or the Policy
and, except as expressly provided in Paragraph D of Section
I of this Appendix and Paragraph B of Section III of this
Appendix, such amounts or benefits shall not be reduced
whether or not such Participant obtains other employment.
Except as expressly provided in Paragraph D of Section I of
this Appendix and Paragraph B of Section III of this
Appendix, the Company's obligation to make payments or
provide benefits specified by this Appendix or the Policy
to a Participant and otherwise to perform its obligations
under this Appendix or the Policy shall not be affected by
any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against
such Participant or others.
Section X. Successors and Assigns
----------------------
(a) The Appendix and the Policy shall be binding upon
the Company and upon any assignee or successor in interest
to the Company, whether by operation of law or otherwise.
This Appendix and the Policy shall not be terminated by any
merger or consolidation of the Company whereby the Company
is or is not the surviving or resulting corporation or as a
result of any transfer of all or substantially all of the
assets of the Company. In the event of any such merger,
consolidation or transfer of assets, the provisions of this
Appendix and the Policy shall be binding upon the surviving
or resulting corporation or the person or entity to which
such assets are transferred.
(b) This Appendix and the Policy shall inure to the
benefit of and be enforceable by each Participant's
personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees
and legatees. If a Participant dies while any amounts
would be payable to the Participant under this Appendix or
the Policy had the Participant continued to live, all such
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<PAGE>
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Appendix or the Policy to
such person or persons appointed in writing by the
Participant to receive such amounts or, if no person is so
appointed, to the Participant's estate.
Section XI. Resolution of Disputes
----------------------
If and to the extent that any dispute arising under
this Appendix or the Policy between a Participant and the
Company or any subsidiary or affiliate of the Company
cannot be resolved to the mutual satisfaction of such
parties within 15 days of the date such dispute arises,
such dispute shall be decided by an Arbitration Panel, as
provided for in Section V of this Appendix, within 60 days
of such date. The determination of such Arbitration Panel
shall be final and binding on such parties.
Section XII. Governing Law; Validity
-----------------------
This Appendix and the Policy shall be governed by the
law of the State of Indiana (regardless of the law that
might otherwise govern under applicable Indiana principles
of conflict of laws). The invalidity or unenforceability
of any provision of this Appendix or the Policy shall not
affect the validity or enforceability of any other
provision of this Appendix or the Policy, which other
provisions shall remain in full force and effect.
-16-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 1-A
Soc. Sec. # Name Soc. Sec. # Name
<S> <C> <C> <C>
###-##-#### Jones, Matilda C. ###-##-#### Rosenthal, Richard J.*
###-##-#### Olson, Carol L. ###-##-#### Johnson, Robert D.*
###-##-#### Ultsch, Marjorie A. ###-##-#### Handshaw, Robert G.*
###-##-#### Rossow, Jerry C.* ###-##-#### Ruelle, Arnold J.
###-##-#### Koch, Richard C. ###-##-#### Honaker, Martin V.*
###-##-#### Cash, Claude* ###-##-#### Smart, Edward C.
###-##-#### Spenner, David W. ###-##-#### Schuck, Nancy J.
###-##-#### Runyan, Marion E. ###-##-#### Rowe, Bonnie C.
###-##-#### Boose, Nancy L. ###-##-#### Ciesiolka, Donald H.
###-##-#### Beehler, Dennis D.* ###-##-#### Shikany, Robert J.
###-##-#### Wright, Victoria L. ###-##-#### Gabriel, Lynford E.*
###-##-#### Martin, Foster A.* ###-##-#### Rajchel, Carol L.
###-##-#### Money, Johanna W. ###-##-#### West, Deborah D.
###-##-#### Myers, Harold S. ###-##-#### Young, Margaret A.
###-##-#### Dickey, Arlene G. ###-##-#### Brown, Dale A.
###-##-#### Eigeman, Laurence E. ###-##-#### Flynn, Gabriel P.*
###-##-#### Prenkert, Kirby K. ###-##-#### Schingel, Phillip W.
###-##-#### Van Horn, David L. ###-##-#### Boller, Cynthia A.
###-##-#### Morse, Irvin L., Jr.* ###-##-#### Fimbianti, Joseph P.*
###-##-#### Casto, Ruth A. ###-##-#### Hippenmeyer, Virginia A.
###-##-#### Vandenburg, Marlene L. ###-##-#### Miller, James G.
###-##-#### Walorski, Mitchell J.* ###-##-#### Tucker, Brenda S.
###-##-#### Jones, Thomas B., Jr.* ###-##-#### Hanesworth, L. Michael*
###-##-#### Garvey, Peter M.* ###-##-#### Vergon, Judith A.
###-##-#### Fouche', Charles K. ###-##-#### Sanders, Rebecca R.
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 1-A
Soc. Sec. # Name Soc. Sec. # Name
<S> <C> <C> <C>
###-##-#### Busse, Fred Rodney* ###-##-#### Moran, John J. Jr.*
###-##-#### Livingston, John R.* ###-##-#### Gianoli, Anthony J.*
###-##-#### McIntosh, Jacalyn K. ###-##-#### Burns, Denis M.
###-##-#### Perry, Katherine A. ###-##-#### Jones, David L.
###-##-#### Bowles, Paul R.* ###-##-#### Doepker, Thomas L.*
###-##-#### Harper, William N.* ###-##-#### Henely, Bernard D.*
###-##-#### McKernan, Leo J.* ###-##-#### Sims, Frank M.*
</TABLE>
-18-
<PAGE>
EXHIBIT 1-B
-----------
DETERMINATION OF COST FOR POSTEMPLOYMENT MEDICAL BENEFITS
Cost will mean gross incurred claims from the previous
calendar year on a per capita basis according to former
employee or dependent status after proper separation of
gross incurred claims by Medicare eligibility date.
Specifically, four per capita claims costs will be
identified from the following calculations and used as
costs:
Former Employee, Pre-Medicare Eligibility Cost = A + B
A = Gross incurred claims before Medicare eligibility date
from previous calendar year for all pre-Medicare
eligible retirees only retired after 8/1/86.
B = Number of retirees (after 8/1/86), eligible to file
claims under the plan in the previous year but not
eligible for Medicare, with partial counting of
retirees who become Medicare eligible during the year
or become newly eligible during the year pro rata for
the portion of the year before Medicare eligibility.
Dependent, Pre-Medicare Cost = C + D
C = Gross incurred claims before Medicare eligibility date
from previous calendar year for all pre-Medicare
eligible dependents of retirees after 8/1/86.
D = Number of dependents (of retirees after 8/1/86),
eligible to file claims under the plan in the previous
year but not eligible for Medicare, with partial
counting of dependents who become Medicare eligible
during the year or become newly eligible during the
year pro rata for the portion of the year before
Medicare eligibility.
-19-
<PAGE>
EXHIBIT 1-B (continued)
-----------------------
Former Employee, Post-Medicare Eligibility Cost = E + F
E = Gross incurred claims after Medicare eligibility date
from previous calendar year for all post-Medicare
eligible retirees only retired after 8/1/86.
F = Number of retirees (after 8/1/86), eligible to file
claims under the plan and under Medicare in the
previous year with partial counting of retirees who
become Medicare eligible during the year or become
newly eligible during the year pro rata for the
portion of the year after Medicare eligibility.
Dependent, Post-Medicare Cost = G + H
G = Gross incurred claims after Medicare eligibility date
from previous calendar year for all post-Medicare
eligible dependents of retirees after 8/1/86.
H = Number of dependents (of retirees after 8/1/86),
eligible to file claims under the plan and under
Medicare in the previous year with partial counting of
dependents who become Medicare eligible during the
year or become newly eligible during the year pro rata
for the portion of the year after Medicare
eligibility.
-20-
April 11, 1995
Mr. William D. Anderson
Clark Distribution Services Inc.
7300 South Cicero Avenue
Chicago, Illinois, 60629-5888
Dear Mr. Anderson:
Clark Equipment Company (CLARK) wishes to assure itself and its
subsidiaries of your continued services. Accordingly, in
consideration of services to be rendered by you in the future,
the following Agreement is proposed.
1. Change in Control.
-----------------
1.1 If following a change in control of CLARK, as defined
in Section 1.5 hereof, your employment with CLARK terminates
other than for cause (as defined in Section 1.4), you will be
entitled to the benefits provided for in this Section 1. For the
purpose of this Agreement, employment by a wholly-owned
subsidiary of CLARK in the United States shall be deemed to be
employment by CLARK.
1.2 If any time within two years subsequent to a change in
control of CLARK, you terminate your employment with CLARK within
six months after the occurrence of one or more of the following
events: (i) a change in the location of your employment;
(ii) a reduction in the nature and scope of your employment
responsibilities or duties for the Clark Distribution Services,
Inc. Business Unit; or (iii) any reduction in your compensation,
benefits or perquisites, either separately or in the aggregate,
such termination will be treated as a termination by CLARK other
than for cause.
1.3 If after a change in control of CLARK you are terminated
by CLARK other than for cause (as defined in Section 1.4), CLARK
will pay to you, within fifteen (15) days thereafter, an amount
equal to two times the sum of your then base salary and your
target bonus. For the purpose of this Agreement, "target bonus"
means the difference between average total compensation and
average base salary as determined from the Hay Compensation
Report for Industrial Management for the last year preceding the
year in which such termination occurs, for the number of Hay
Client Points of your position at the time of such termination,
but in any event for not less than the number of Hay Client
Points of your position on the date of this Agreement. In
addition, CLARK will continue to
<PAGE>
Mr. William D. Anderson
April 11, 1995
Page 2
provide health care benefits to you and your dependents of the
type and in the amounts in effect immediately prior to any
termination by CLARK other than for cause and life insurance
coverage to you in the amount of two times your salary, in each
case until the earlier of the date on which you obtain suitable
employment or the second anniversary of the date of such
termination. In addition, CLARK will pay for the cost of
professional outplacement services selected by you, in your sole
discretion, to obtain new employment; provided, however, that the
total cost of such services to be paid by CLARK shall not exceed
fifteen percent (15%) of your base salary as of the date your
employment terminates.
1.4 For the purposes of this Section 1, a termination of
your employment by CLARK shall be "other than for cause" if it is
either (i) treated as such pursuant to Section 1.2 hereof or
(ii) for any reason other than wilful misconduct by you that has
substantially prejudiced the interests of CLARK or its
subsidiaries.
1.5 For purposes of this Agreement, the term "change in
control of CLARK" shall mean any of the following events:
(1) the acquisition of beneficial ownership of 25% or
more of the shares of the Common Stock of CLARK by or for any
person (as such term is defined in Section 14(d)(2) of the
Securities Exchange Act of 1934), including for purposes of
calculating such person's ownership, all shares beneficially
owned by the affiliates and associates (as such terms are defined
in Rule 12b-2 of the Securities Exchange Act of 1934) of such
person, provided, however, that the term "person" shall not
include any of the following: CLARK, any subsidiary of CLARK,
any employee benefit plan or employee stock plan of CLARK or of
any subsidiary of CLARK, any dividend reinvestment plan of CLARK,
any person or entity organized, appointed or established by CLARK
for or pursuant to the terms of any such plan, or any person
which becomes the beneficial owner of 25% or more of such shares
then outstanding solely as a result of the acquisition by CLARK
or any employee benefit plan of CLARK of shares of the Common
Stock of CLARK, provided that such person does not thereafter
acquire any shares of the Common Stock of CLARK, or
(2) during any period of 24 consecutive months,
individuals who at the beginning of such period constitute the
Board of Directors of CLARK cease for any reason to constitute a
majority thereof, unless the election, or nomination for election
by CLARK's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period, or
(3) CLARK's stockholders shall approve (a) the merger
or consolidation of CLARK with or into another corporation and
CLARK shall not be the surviving corporation, or (b) an agreement
to sell or otherwise dispose of all or substantially all of
CLARK's assets (including a plan of liquidation).
<PAGE>
Mr. William D. Anderson
April 11, 1995
Page 3
1.6 In the event of a change in control of CLARK, all
subsequent legal and accounting fees and expenses incurred by you
in connection with, or in prosecuting or defending, any dispute
arising out of or relating to this Agreement shall be paid by
CLARK.
2. Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Indiana.
3. Non-Competition. For such time as you are employed by
---------------
CLARK, and thereafter for a period of two years following the
cessation of your employment with CLARK for any reason, you agree
to refrain from competing with CLARK or any of its subsidiaries
in the United States or elsewhere in the world with respect to
any aspect of the business conducted by the Clark Distribution
Services Inc. Business Unit of CLARK ("CDS") (collectively "the
Business"), including without limitation, the design,
manufacture, sale or distribution of products which are similar
to or competitive with those of CDS, or becoming an employee or
representative of any person, firm or company which competes with
CDS or any of its subsidiaries in the United States or elsewhere
in the world with respect to the Business. If a court shall
finally hold that the time or territory or any other provisions
stated in this Section 3 constitute an unreasonable restriction
upon you, the provisions of this Agreement shall not be rendered
void, but shall instead apply as to time for a period of two
years and as to territory in the continental United States or to
such lesser extent as such court may judicially determine
constitutes a reasonable restriction under the circumstances
involved.
4. Confidential Information. During the course of your
------------------------
employment with CLARK and its subsidiaries, you have received,
developed or otherwise become aware of confidential information
of CLARK and its subsidiaries. For a period of five years
following the cessation of your employment with CLARK for any
reason you will not use, disclose, give, sell or otherwise
divulge to any person, firm or corporation any confidential
information regarding CLARK or any of its subsidiaries. The term
"confidential information" shall include but not be limited to
any aspect of CLARK's (or its subsidiaries') business, trade
secrets, strategies, potential acquisitions or divestitures,
discussions relating to acquisitions or divestitures, financial
statements or other financial information, forecasts, operations,
business plans, prices, discounts, products, product
specifications, designs, plans, processes, data and know-how,
ideas, technical information and
<PAGE>
Mr. William D. Anderson
April 11, 1995
Page 4
intellectual property, except such information as is otherwise
made publicly available by CLARK or its subsidiaries. You will
not remove from CLARK's possession any confidential information,
and shall return to CLARK on or before the termination of your
employment any confidential information which may have previously
been in your possession. The provisions of this Section 4 shall
survive any termination of this Agreement. Any other agreements
between CLARK and you relating to confidentiality shall, to the
extent not inconsistent herewith, remain in effect.
5. Employees. For a period of twenty-four (24) months from
---------
the date of the cessation of your employment with CLARK, you
agree to refrain from suggesting, persuading, or inducing any key
employees of CLARK or its subsidiaries to leave their employ.
If the foregoing is entirely satisfactory to you, please sign and
return the attached copy of this letter, whereupon it shall
constitute an agreement between us as of the date first set forth
above.
Very truly yours,
CLARK EQUIPMENT COMPANY
By: /s/ Leo J. McKernan
---------------------------
Title: Chairman, President and
-------------------------
Chief Executive Officer
-------------------------
Accepted and Agreed to:
/s/ William D. Anderson
-----------------------
4.06.95
<PAGE>
April 11, 1995
Mr. David D. Hunter
Blaw-Knox Construction Equipment Corporation
750 Broadway Avenue East
Mattoon, Illinois 61938-4600
Dear Mr. Hunter:
Clark Equipment Company (CLARK) wishes to assure itself and its
subsidiaries of your continued services. Accordingly, in
consideration of services to be rendered by you in the future,
the following Agreement is proposed.
1. Change in Control.
-----------------
1.1 If following a change in control of CLARK, as defined
in Section 1.5 hereof, your employment with CLARK terminates
other than for cause (as defined in Section 1.4), you will be
entitled to the benefits provided for in this Section 1. For the
purpose of this Agreement, employment by a wholly-owned
subsidiary of CLARK in the United States shall be deemed to be
employment by CLARK.
1.2 If any time within two years subsequent to a change in
control of CLARK, you terminate your employment with CLARK within
six months after the occurrence of one or more of the following
events: (i) a change in the location of your employment;
(ii) a reduction in the nature and scope of your employment
responsibilities or duties for the Blaw-Knox Construction
Equipment Corporation Business Unit of CLARK; or (iii) any
reduction in your compensation, benefits or perquisites, either
separately or in the aggregate, such termination will be treated
as a termination by CLARK other than for cause.
1.3 If after a change in control of CLARK you are
terminated by CLARK other than for cause (as defined in
Section 1.4), CLARK will pay to you, within fifteen (15) days
thereafter, an amount equal to two times the sum of your then
base salary and your target bonus. For the purpose of this
Agreement, "target bonus" means the difference between average
total compensation and average base salary as determined from the
Hay Compensation Report for Industrial Management for the last
year preceding the year in which such termination occurs, for the
number of Hay Client Points of your position at the time of such
termination, but in any event for not less than the number of Hay
Client Points of your position on the date of this Agreement. In
addition, CLARK will continue to
<PAGE>
Mr. David D. Hunter
April 11, 1995
Page 2
provide health care benefits to you and your dependents of the
type and in the amounts in effect immediately prior to any
termination by CLARK other than for cause and life insurance
coverage to you in the amount of two times your salary, in each
case until the earlier of the date on which you obtain suitable
employment or the second anniversary of the date of such
termination. In addition, CLARK will pay for the cost of
professional outplacement services selected by you, in your sole
discretion, to obtain new employment; provided, however, that the
total cost of such services to be paid by CLARK shall not exceed
fifteen percent (15%) of your base salary as of the date your
employment terminates.
1.4 For the purposes of this Section 1, a termination of
your employment by CLARK shall be "other than for cause" if it is
either (i) treated as such pursuant to Section 1.2 hereof or
(ii) for any reason other than wilful misconduct by you that has
substantially prejudiced the interests of CLARK or its
subsidiaries.
1.5 For purposes of this Agreement, the term "change in
control of CLARK" shall mean any of the following events:
(1) the acquisition of beneficial ownership of 25% or
more of the shares of the Common Stock of CLARK by or for any
person (as such term is defined in Section 14(d)(2) of the
Securities Exchange Act of 1934), including for purposes of
calculating such person's ownership, all shares beneficially
owned by the affiliates and associates (as such terms are defined
in Rule 12b-2 of the Securities Exchange Act of 1934) of such
person, provided, however, that the term "person" shall not
include any of the following: CLARK, any subsidiary of CLARK,
any employee benefit plan or employee stock plan of CLARK or of
any subsidiary of CLARK, any dividend reinvestment plan of CLARK,
any person or entity organized, appointed or established by CLARK
for or pursuant to the terms of any such plan, or any person
which becomes the beneficial owner of 25% or more of such shares
then outstanding solely as a result of the acquisition by CLARK
or any employee benefit plan of CLARK of shares of the Common
Stock of CLARK, provided that such person does not thereafter
acquire any shares of the Common Stock of CLARK, or
(2) during any period of 24 consecutive months,
individuals who at the beginning of such period constitute the
Board of Directors of CLARK cease for any reason to constitute a
majority thereof, unless the election, or nomination for election
by CLARK's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period, or
(3) CLARK's stockholders shall approve (a) the merger
or consolidation of CLARK with or into another corporation and
CLARK shall not be the surviving corporation, or (b) an agreement
to sell or otherwise dispose of all or substantially all of
CLARK's assets (including a plan of liquidation).
<PAGE>
Mr. David D. Hunter
April 11, 1995
Page 3
1.6 In the event of a change in control of CLARK, all
subsequent legal and accounting fees and expenses incurred by you
in connection with, or in prosecuting or defending, any dispute
arising out of or relating to this Agreement shall be paid by
CLARK.
2. Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Indiana.
3. Non-Competition. For such time as you are employed by
---------------
CLARK, and thereafter for a period of two years following the
cessation of your employment with CLARK for any reason, you agree
to refrain from competing with CLARK or any of its subsidiaries
in the United States or elsewhere in the world with respect to
any aspect of the business conducted by the Blaw-Knox
Construction Equipment Corporation Business Unit of CLARK ("Blaw-
Knox") (collectively "the Business"), including without
limitation, the design, manufacture, sale or distribution of
products which are similar to or competitive with those of Blaw-
Knox, or becoming an employee or representative of any person,
firm or company which competes with Blaw-Knox or any of its
subsidiaries in the United States or elsewhere in the world with
respect to the Business. If a court shall finally hold that the
time or territory or any other provisions stated in this
Section 3 constitute an unreasonable restriction upon you, the
provisions of this Agreement shall not be rendered void, but
shall instead apply as to time for a period of two years and as
to territory in the continental United States or to such lesser
extent as such court may judicially determine constitutes a
reasonable restriction under the circumstances involved.
4. Confidential Information. During the course of your
------------------------
employment with CLARK and its subsidiaries, you have received,
developed or otherwise become aware of confidential information
of CLARK and its subsidiaries. For a period of five years
following the cessation of your employment with CLARK for any
reason you will not use, disclose, give, sell or otherwise
divulge to any person, firm or corporation any confidential
information regarding CLARK or any of its subsidiaries. The term
"confidential information" shall include but not be limited to
any aspect of CLARK's (or its subsidiaries') business, trade
secrets, strategies, potential acquisitions or divestitures,
discussions relating to acquisitions or divestitures, financial
statements or other financial information, forecasts, operations,
business plans, prices, discounts, products, product
specifications, designs, plans,
<PAGE>
Mr. David D. Hunter
April 11, 1995
Page 4
processes, data and know-how, ideas, technical information and
intellectual property, except such information as is otherwise
made publicly available by CLARK or its subsidiaries. You will
not remove from CLARK's possession any confidential information,
and shall return to CLARK on or before the termination of your
employment any confidential information which may have previously
been in your possession. The provisions of this Section 4 shall
survive any termination of this Agreement. Any other agreements
between CLARK and you relating to confidentiality shall, to the
extent not inconsistent herewith, remain in effect.
5. Employees. For a period of twenty-four (24) months from
---------
the date of the cessation of your employment with CLARK, you
agree to refrain from suggesting, persuading, or inducing any key
employees of CLARK or its subsidiaries to leave their employ.
If the foregoing is entirely satisfactory to you, please sign and
return the attached copy of this letter, whereupon it shall
constitute an agreement between us as of the date first set forth
above.
6. Supplemental Retirement Benefits.
--------------------------------
CLARK agrees to provide you with the benefits of the Clark
Supplemental Executive Retirement Plan for David D. Hunter as set
forth in Exhibit I to this Agreement attached hereto.
Very truly yours,
CLARK EQUIPMENT COMPANY
By: /s/ Leo J. McKernan
---------------------------
Title: Chairman, President and
-------------------------
Chief Executive Officer
-------------------------
Accepted and Agreed to:
/s/ David D. Hunter
-----------------------
4.06.95
<PAGE>
EXHIBIT I
---------
April 11, 1995
Mr. David D. Hunter
750 Broadway Avenue East
Mattoon, Illinois 61938
Dear Mr. Hunter:
In consideration for your service as President of Blaw-Knox Construction
Equipment Corporation ("Blaw-Knox"), Clark Equipment Company ("CLARK") agrees
to provide you with supplemental retirement benefits subject to the terms and
conditions set forth below.
Specifically, CLARK hereby adopts the following plan, to be known as the
Clark Supplemental Executive Retirement Plan for David D. Hunter
(hereinafter, "this Plan"):
1. Eligibility.
-----------
At the time when you or your beneficiary qualify for and begin to receive
pension benefits from the Clark Equipment Company Retirement Program for
Salaried Employees (the "Program"), CLARK will make monthly supplemental
retirement benefit payments to you or your beneficiary, subject to the terms
and conditions set forth herein.
2. Benefit Amount.
--------------
The amount of the monthly supplemental retirement benefits will be the amount
(if any) by which the amount determined under paragraph A. below exceeds the
amount determined under paragraph B. below, subject to the provisions of
paragraph C. below.
A. The amount determined under this paragraph is the amount of monthly
pension benefits that would be payable to you or your beneficiary
under the Program if (i) the limitations of Internal Revenue Code
Sections 415 and 401(a)(17), and of any other provision of such
Code or any other law or regulation that limits either the amount
of pension benefits or the
<PAGE>
Mr. David D. Hunter Page 2 April 11, 1995
amount of compensation that can be used to determine pension
benefits under the Program were disregarded and (ii) your cash
bonus payments received from CLARK, regardless of whether paid
before the Effective Date of this Plan, were included in your basic
annual compensation rate (as defined in the Program) as of January
1 of the year in which each such bonus payment is made.
B. The amount determined under this paragraph is the amount of monthly
pension benefits payable to your or your beneficiary under the
Program.
C. The following provisions apply to this Section 2 and to the
determination of the amounts under paragraphs A. and B. above:
(1) In determining the amounts under paragraphs A. and B., the
offset against benefits payable under the Program for the
value of your account under the CLARK Leveraged Employee Stock
Ownership Plan (as provided in Section 2.14 of the Program)
will be disregarded.
(2) The determinations under both paragraphs A. and B. will be
based on the form of benefit (including any optional form of
benefit) that you elect to receive under the Program, and
subject to the adjustment factors applicable to such form of
benefits.
(3) The supplemental benefit payable hereunder shall be in the
same form as your benefits payable under the Program and
subject to the adjustment factors applicable under the Program
to such form of benefit.
3. Commencement and Duration.
-------------------------
The supplemental benefits payable hereunder shall commence at the same time
as, and continue only so long as, benefits are payable to you or your
beneficiary under the Program.
<PAGE>
Mr. David D. Hunter Page 3 April 11, 1995
4. Beneficiary.
-----------
As used in this Plan, your "beneficiary" is any person, including your
spouse, eligible to receive benefits under the Program or this Plan. Unless
you have, in accordance with rules established from time to time by the
Administrator, designated otherwise, your beneficiary or beneficiaries under
this Plan shall be the same person or persons and in the same proportions and
under the same conditions as your beneficiary or beneficiaries under the
Program.
5. Administrator.
-------------
This Plan will be administered by an "Administrator" which shall be CLARK or
at CLARK's election, one or more employees of CLARK who are designated as
"Administrator" by the Chief Executive Officer of CLARK. No person who is an
Administrator shall be liable for any act or action, whether of commission or
omission, taken by any other person, or by any officer, agent, or employee;
nor, except in circumstances involving his bad faith, for anything done or
omitted to be done by himself; and CLARK shall indemnify and hold each
Administrator harmless from any claims of such liability and all costs
(including attorney's fees) resulting therefrom.
6. Claims.
------
Any claim for benefits or payments under this Plan by you or your Beneficiary
shall be made in writing and delivered to CLARK. If you, or your Beneficiary
following your death (collectively, the "Claimant"), notifies CLARK in
writing that he believes he has been denied any benefit payable under this
Plan, either in total or by the payment of an amount less than the full
benefit or payment to which the Claimant would normally be entitled, CLARK
shall advise the Claimant in writing of the amount of the benefit if any, and
the specific reasons for any denial of benefits. CLARK shall also furnish
the Claimant at that time with a written notice containing:
(a) specific references to pertinent provisions of this Plan;
(b) a description of any additional material or information necessary
for the Claimant to perfect the claim if possible, and an
explanation of why such material or information is needed; and
(c) an explanation of the claim review procedure set forth in this
Section 9.
<PAGE>
Mr. David D. Hunter Page 4 April 11, 1995
Such written notice shall be sent to the Claimant within 90 days of the
date the claim is filed. This 90-day period may be extended by the
Administrator for an additional 90 days, provided a Claimant is notified of
the reason for the extension and a date on which the Claimant may expect to
receive a decision on his claim. Within 60 days of receipt of the
information described above, a Claimant shall, if further review is desired,
file a written request for reconsideration with the Administrator. So long
as the Claimant's request for review is pending (including such 60-day
period), the Claimant or his duly authorized representative may review
pertinent documents and may submit issues and comments in writing to the
Administrator. A decision shall be made by the Administrator within 60 days
of the filing by the Claimant of the request for reconsideration and shall be
conveyed to the Claimant in writing and shall include specific reasons for
the decision, which specifically reference the pertinent provisions of this
Plan on which the decision is based.
7. Interests Not Transferable.
--------------------------
CLARK shall have the right to withhold from any payment under this Plan all
taxes required to be withheld under the laws of the United States or any
State, county, municipality or other taxing authority. Except as to any
withholding of tax under such laws, the interest of you or your Beneficiary
under this Plan is not subject to the claims of their creditors and may not
be voluntarily or involuntarily sold, transferred, assigned, alienated or
encumbered.
8. Facility of Payment.
-------------------
Any amounts payable hereunder to any person under legal disability or who, in
the judgment of the Administrator, is unable to properly manage his financial
affairs may be paid to the legal representative of such person or may be
applied for the benefit of such person in any manner which the Administrator
may select.
9. Gender and Number.
-----------------
Where the context admits, words in the masculine gender shall include the
feminine gender, the plural shall include the singular, and the singular
shall include the plural.
10. Controlling Law.
---------------
To the extent not superseded by the laws of the United States, the laws of
Indiana shall be controlling in all matters relating to this Plan.
<PAGE>
Mr. David D. Hunter Page 5 April 11, 1995
11. Successors.
----------
This Plan is binding on CLARK and will bind and inure to the benefit of any
successor of CLARK, whether by way of purchase, merger, consolidation or
otherwise.
12. Continued Employment.
--------------------
This Plan shall not be construed to give you the right to be retained in the
employment of CLARK, Blaw-Knox, or any of their subsidiaries or affiliates.
13. Qualified Domestic Relations Order.
----------------------------------
In the event your benefit under the Program is subject to a qualified
domestic relations order as defined in Section 414(p) of the Internal Revenue
Code, the benefits provided by this Plan shall be calculated and paid as if
no qualified domestic relations order was in existence.
14. Source of Payments.
------------------
The benefits provided for in this Plan are payable only from the general
assets of CLARK and CLARK is not required to segregate any assets to be used
for the payment of such benefits.
15. Effective Date, Plan Year.
--------------------------
This Plan shall be adopted by CLARK effective as of 1 January 1995 (the
"Effective Date"). The "Plan Year" is the calendar year.
16. Action by CLARK.
---------------
Any action required or permitted to be taken by CLARK under this Plan shall
be by resolution of its Board of Directors (or by the Human Effectiveness
Committee or other duly authorized committee of the Board of Directors) or by
a person or persons authorized by resolution of such Board or committee.
17. No Guarantee of Program Benefits.
--------------------------------
This Plan is intended to pay benefits in addition to, and not in lieu of, any
benefits to which you or your Beneficiary may be entitled under the Program.
If any benefits to which you or your Beneficiary may be entitled under the
Program are not paid for any
<PAGE>
Mr. David D. Hunter Page 6 April 11, 1995
reason, including, but not limited to, the lack of sufficient assets of the
Program to pay such benefits, such benefits shall not be paid from this Plan.
If the foregoing is entirely satisfactory to you, please sign and return the
attached copy of this letter whereupon it shall constitute an agreement
between us as of the date first set forth above.
Very truly yours,
CLARK EQUIPMENT COMPANY
Accepted and Agreed to:
By: /s/ Frank M. Sims
---------------------------
/s/ David D. Hunter Frank M. Sims
--------------------------- Senior Vice President
<PAGE>
April 11, 1995
Mr. James D. Kertz
2501 Lilac Lane N.E.
Fargo, North Dakota 58102
Dear Mr. Kertz:
Clark Equipment Company (CLARK) wishes to assure itself and its
subsidiaries of your continued services. Accordingly, in
consideration of services to be rendered by you in the future,
the following Agreement is proposed.
1. Change in Control.
-----------------
1.1 If following a change in control of CLARK, as defined
in Section 1.5 hereof, your employment with CLARK terminates
other than for cause (as defined in Section 1.4), you will be
entitled to the benefits provided for in this Section 1. For the
purpose of this Agreement, employment by a wholly-owned
subsidiary of CLARK in the United States shall be deemed to be
employment by CLARK.
1.2 If any time within two years subsequent to a change in
control of CLARK, you terminate your employment with CLARK within
six months after the occurrence of one or more of the following
events: (i) a change in the location of your employment;
(ii) a reduction in the nature and scope of your employment
responsibilities or duties for the Melroe Company Business Unit
of CLARK; or (iii) any reduction in your compensation, benefits
or perquisites, either separately or in the aggregate, such
termination will be treated as a termination by CLARK other than
for cause.
1.3 If after a change in control of CLARK you are
terminated by CLARK other than for cause (as defined in
Section 1.4), CLARK will pay to you, within fifteen (15) days
thereafter, an amount equal to two times the sum of your then
base salary and your target bonus. For the purpose of this
Agreement, "target bonus" means the difference between average
total compensation and average base salary as determined from the
Hay Compensation Report for Industrial Management for the last
year preceding the year in which such termination occurs, for the
number of Hay Client Points of position at the time of such
termination, but in any event for not less than the number of Hay
Client Points of your position on the date of this Agreement.
<PAGE>
Mr. James D. Kertz
April 11, 1995
Page 2
1.4 For the purposes of this Section 1, a termination of
your employment by CLARK shall be "other than for cause" if it is
either (i) treated as such pursuant to Section 1.2 hereof or
(ii) for any reason other than wilful misconduct by you that has
substantially prejudiced the interests of CLARK or its
subsidiaries.
1.5 For purposes of this Agreement, the term "change in
control of CLARK" shall mean any of the following events:
(1) the acquisition of beneficial ownership of 25% or
more of the shares of the Common Stock of CLARK by or for any
person (as such term is defined in Section 14(d)(2) of the
Securities Exchange Act of 1934), including for purposes of
calculating such person's ownership, all shares beneficially
owned by the affiliates and associates (as such terms are defined
in Rule 12b-2 of the Securities Exchange Act of 1934) of such
person, provided, however, that the term "person" shall not
include any of the following: CLARK, any subsidiary of CLARK,
any employee benefit plan or employee stock plan of CLARK or of
any subsidiary of CLARK, any dividend reinvestment plan of CLARK,
any person or entity organized, appointed or established by CLARK
for or pursuant to the terms of any such plan, or any person
which becomes the beneficial owner of 25% or more of such shares
then outstanding solely as a result of the acquisition by CLARK
or any employee benefit plan of CLARK of shares of the Common
Stock of CLARK, provided that such person does not thereafter
acquire any shares of the Common Stock of CLARK, or
(2) during any period of 24 consecutive months,
individuals who at the beginning of such period constitute the
Board of Directors of CLARK cease for any reason to constitute a
majority thereof, unless the election, or nomination for election
by CLARK's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period, or
(3) CLARK's stockholders shall approve (a) the merger
or consolidation of CLARK with or into another corporation and
CLARK shall not be the surviving corporation, or (b) an agreement
to sell or otherwise dispose of all or substantially all of
CLARK's assets (including a plan of liquidation).
1.6 In the event of a change in control of CLARK, all
subsequent legal and accounting fees and expenses incurred by you
in connection with, or in prosecuting or defending, any dispute
arising out of or relating to this Agreement shall be paid by
CLARK.
2. Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Indiana.
3. Non-Competition. For such time as you are employed by
---------------
CLARK, and thereafter for a period of two years following the
cessation of your employment with CLARK for any reason, you agree
to refrain from competing with CLARK or any of its subsidiaries
in
<PAGE>
Mr. James D. Kertz
April 11, 1995
Page 3
the United States or elsewhere in the world with respect to any
aspect of the business conducted by the Melroe Company Business
Unit of CLARK ("Melroe") (collectively "the Business"), including
without limitation, the design, manufacture, sale or distribution
of products which are similar to or competitive with those of
Melroe, or becoming an employee or representative of any person,
firm or company which competes with Melroe or any of its
subsidiaries in the United States or elsewhere in the world with
respect to the Business. If a court shall finally hold that the
time or territory or any other provisions stated in this
Section 3 constitute an unreasonable restriction upon you, the
provisions of this Agreement shall not be rendered void, but
shall instead apply as to time for a period of two years and as
to territory in the continental United States or to such lesser
extent as such court may judicially determine constitutes a
reasonable restriction under the circumstances involved.
4. Confidential Information. During the course of your
------------------------
employment with CLARK and its subsidiaries, you have received,
developed or otherwise become aware of confidential information
of CLARK and its subsidiaries. For a period of five years
following the cessation of your employment with CLARK for any
reason you will not use, disclose, give, sell or otherwise
divulge to any person, firm or corporation any confidential
information regarding CLARK or any of its subsidiaries. The term
"confidential information" shall include but not be limited to
any aspect of CLARK's (or its subsidiaries') business, trade
secrets, strategies, potential acquisitions or divestitures,
discussions relating to acquisitions or divestitures, financial
statements or other financial information, forecasts, operations,
business plans, prices, discounts, products, product
specifications, designs, plans, processes, data and know-how,
ideas, technical information and intellectual property, except
such information as is otherwise made publicly available by CLARK
or its subsidiaries. You will not remove from CLARK's possession
any confidential information, and shall return to CLARK on or
before the termination of your employment any confidential
information which may have previously been in your possession.
The provisions of this Section 4 shall survive any termination of
this Agreement. Any other agreements between CLARK and you
relating to confidentiality shall, to the extent not inconsistent
herewith, remain in effect.
5. Employees. For a period of twenty-four (24) months from
---------
the date of the cessation of your employment with CLARK, you
agree to refrain from suggesting, persuading, or inducing any key
employees of CLARK or its subsidiaries to leave their employ.
<PAGE>
Mr. James D. Kertz
April 11, 1995
Page 4
If the foregoing is entirely satisfactory to you, please sign and
return the attached copy of this letter, whereupon it shall
constitute an agreement between us as of the date first set forth
above.
Very truly yours,
CLARK EQUIPMENT COMPANY
By: /s/ Leo J. McKernan
---------------------------
Accepted and Agreed to: Title: Chairman, President and
-------------------------
Chief Executive Officer
-------------------------
/s/ James D. Kertz
-------------------------
4.06.95
<PAGE>
April 11, 1995
Mr. John J. Reynolds
166 Pembrooke Ridge Court
Advance, North Carolina 27006
Dear Mr. Reynolds:
Clark Equipment Company (CLARK) wishes to assure itself and its
subsidiaries of your continued services. Accordingly, in
consideration of services to be rendered by you in the future,
the following Agreement is proposed.
1. Change in Control.
-----------------
1.1 If following a change in control of CLARK, as defined
in Section 1.5 hereof, your employment with CLARK terminates
other than for cause (as defined in Section 1.4), you will be
entitled to the benefits provided for in this Section 1. For the
purpose of this Agreement, employment by a wholly-owned
subsidiary of CLARK in the United States shall be deemed to be
employment by CLARK.
1.2 If any time within two years subsequent to a change in
control of CLARK, you terminate your employment with CLARK within
six months after the occurrence of one or more of the following
events: (i) a change in the location of your employment;
(ii) a reduction in the nature and scope of your employment
responsibilities or duties for the Clark-Hurth Business Unit of
CLARK; or (iii) any reduction in your compensation, benefits or
perquisites, either separately or in the aggregate, such
termination will be treated as a termination by CLARK other than
for cause.
1.3 If after a change in control of CLARK you are
terminated by CLARK other than for cause (as defined in
Section 1.4), CLARK will pay to you, within fifteen (15) days
thereafter, an amount equal to two times the sum of your then
base salary and your target bonus. For the purpose of this
Agreement, "target bonus" means the difference between average
total compensation and average base salary as determined from the
Hay Compensation Report for Industrial Management for the last
year preceding the year in which such termination occurs, for the
number of Hay Client Points of your position at the time of such
termination, but in any event for not less than the number of Hay
Client Points of your position on the date of this Agreement. In
addition, CLARK will continue to provide health care benefits to
you and your dependents of the type and in the amounts in effect
immediately prior to any termination
<PAGE>
Mr. John J. Reynolds
April 11, 1995
Page 2
by CLARK other than for cause and life insurance coverage to you
in the amount of two times your salary, in each case until the
second anniversary of the date of such termination. If, at the
end of such two year period you have not yet attained age 65, you
shall be entitled to continue such health care and life insurance
coverages, by paying to CLARK the full amount of their costs,
until you attain age 65. Upon your attainment of age 65
(regardless of whether you continued such coverages by paying
their cost until then), CLARK will provide you with the group
life and health care benefits, and under the same terms, that
such benefits would have been provided to you under the CLARK
FlexPlan as in effect immediately prior to the change in control
of CLARK if you had retired from employment with CLARK at age 65
and with ten years of service on that date.
1.4 For the purposes of this Section 1, a termination of
your employment by CLARK shall be "other than for cause" if it is
either (i) treated as such pursuant to Section 1.2 hereof or
(ii) for any reason other than wilful misconduct by you that has
substantially prejudiced the interests of CLARK or its
subsidiaries.
1.5 For purposes of this Agreement, the term "change in
control of CLARK" shall mean any of the following events:
(1) the acquisition of beneficial ownership of 25% or
more of the shares of the Common Stock of CLARK by or for any
person (as such term is defined in Section 14(d)(2) of the
Securities Exchange Act of 1934), including for purposes of
calculating such person's ownership, all shares beneficially
owned by the affiliates and associates (as such terms are defined
in Rule 12b-2 of the Securities Exchange Act of 1934) of such
person, provided, however, that the term "person" shall not
include any of the following: CLARK, any subsidiary of CLARK,
any employee benefit plan or employee stock plan of CLARK or of
any subsidiary of CLARK, any dividend reinvestment plan of CLARK,
any person or entity organized, appointed or established by CLARK
for or pursuant to the terms of any such plan, or any person
which becomes the beneficial owner of 25% or more of such shares
then outstanding solely as a result of the acquisition by CLARK
or any employee benefit plan of CLARK of shares of the Common
Stock of CLARK, provided that such person does not thereafter
acquire any shares of the Common Stock of CLARK, or
(2) during any period of 24 consecutive months,
individuals who at the beginning of such period constitute the
Board of Directors of CLARK cease for any reason to constitute a
majority thereof, unless the election, or nomination for election
by CLARK's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period, or
(3) CLARK's stockholders shall approve (a) the merger
or consolidation of CLARK with or into another corporation and
CLARK shall not be
<PAGE>
Mr. John J. Reynolds
April 11, 1995
Page 3
the surviving corporation, or (b) an agreement to sell or
otherwise dispose of all or substantially all of CLARK's assets
(including a plan of liquidation).
1.6 In the event of a change in control of CLARK, all
subsequent legal and accounting fees and expenses incurred by you
in connection with, or in prosecuting or defending, any dispute
arising out of or relating to this Agreement shall be paid by
CLARK.
2. Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Indiana.
3. Non-Competition. For such time as you are employed by
---------------
CLARK, and thereafter for a period of two years following the
cessation of your employment with CLARK for any reason, you agree
to refrain from competing with CLARK or any of its subsidiaries
in the United States or elsewhere in the world with respect to
any aspect of the business conducted by the Clark-Hurth Business
Unit of CLARK ("Clark-Hurth") (collectively "the Business"),
including without limitation, the design, manufacture, sale or
distribution of products which are similar to or competitive with
those of Clark-Hurth, or becoming an employee or representative
of any person, firm or company which competes with Clark-Hurth or
any of its subsidiaries in the United States or elsewhere in the
world with respect to the Business. If a court shall finally
hold that the time or territory or any other provisions stated in
this Section 3 constitute an unreasonable restriction upon you,
the provisions of this Agreement shall not be rendered void, but
shall instead apply as to time for a period of two years and as
to territory in the continental United States or to such lesser
extent as such court may judicially determine constitutes a
reasonable restriction under the circumstances involved.
4. Confidential Information. During the course of your
------------------------
employment with CLARK and its subsidiaries, you have received,
developed or otherwise become aware of confidential information
of CLARK and its subsidiaries. For a period of five years
following the cessation of your employment with CLARK for any
reason you will not use, disclose, give, sell or otherwise
divulge to any person, firm or corporation any confidential
information regarding CLARK or any of its subsidiaries. The term
"confidential information" shall include but not be limited to
any aspect of CLARK's (or its subsidiaries') business, trade
secrets, strategies, potential acquisitions or divestitures,
discussions relating to acquisitions or divestitures, financial
statements or other financial
<PAGE>
Mr. John J. Reynolds
April 11, 1995
Page 4
information, forecasts, operations, business plans, prices,
discounts, products, product specifications, designs, plans,
processes, data and know-how, ideas, technical information and
intellectual property, except such information as is otherwise
made publicly available by CLARK or its subsidiaries. You will
not remove from CLARK's possession any confidential information,
and shall return to CLARK on or before the termination of your
employment any confidential information which may have previously
been in your possession. The provisions of this Section 4 shall
survive any termination of this Agreement. Any other agreements
between CLARK and you relating to confidentiality shall, to the
extent not inconsistent herewith, remain in effect.
5. Employees. For a period of twenty-four (24) months from
---------
the date of the cessation of your employment with CLARK, you
agree to refrain from suggesting, persuading, or inducing any key
employees of CLARK or its subsidiaries to leave their employ.
If the foregoing is entirely satisfactory to you, please sign and
return the attached copy of this letter, whereupon it shall
constitute an agreement between us as of the date first set forth
above.
Very truly yours,
CLARK EQUIPMENT COMPANY
By: /s/ Leo J. McKernan
---------------------------
Title: Chairman, President and
-------------------------
Chief Executive Officer
-------------------------
Accepted and Agreed to:
/s/ John J. Reynolds
------------------------
4.06.95
AMENDMENT to the Agreement dated November 12,
1992, as previously amended by agreements dated May 27,
1993 and January 1, 1995 (hereafter referred to as the
"Agreement") , between CLARK EQUIPMENT COMPANY ("CLARK")
and THOMAS C. CLARKE ("Mr. Clarke").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Mr. Clarke and CLARK have agreed to this
Amendment as a clarification of the terms of the Agreement;
and
WHEREAS, legislative changes to Section 411 of
the Internal Revenue Code of 1986 have resulted in the
deletion of the statutory reference to the interest rate to
be used for certain calculations under the Agreement.
NOW, THEREFORE, in consideration of the premises
and mutual agreements of the parties herein contained, it
is agreed that certain provisions of the Agreement be
amended to clarify the meaning of such provisions:
Section 9.5 of the Agreement is hereby revised to
read in its entirety as follows:
9.5 Present Value Calculation. For purposes of
-------------------------
paragraphs (a) and (b) of Section 9.4, "present
value," will be calculated using the interest rate
that would be used by the Pension Benefit Guaranty
Corporation for
<PAGE>
purposes of determining the present value of a lump
sum distribution on the termination of a plan subject
to Title IV of the Employee Retirement Income Security
Act of 1974, as amended, formerly referred to in
Section 411(a)(11)(B)(ii) of the Internal Revenue Code
of 1986, as of the date of such termination and the
1983 Group Annuitants Mortality Table, or the
mortality table (if it is different) then being used
by CLARK's actuaries for valuation purposes with
respect to CLARK's qualified pension plans. All
calculations for the purposes of Sections 9.4 and 9.7
shall be made, at the expense of CLARK, by the
independent auditors of CLARK. As soon as practicable
after the need for such calculation arises, CLARK
shall provide to its auditors all information needed
to perform such calculations.
-2-
<PAGE>
IN WITNESS WHEREOF, CLARK and Mr. Clarke have
caused this Amendment to the Agreement to be executed as of
the 28th day of March, 1995.
CLARK EQUIPMENT COMPANY
/s/ Thomas C. Clarke By: /s/ Frank M. Sims
-------------------- ----------------------
Thomas C. Clarke Frank M. Sims
Senior Vice President
-3-
<PAGE>
AMENDMENT No. 1 to the Agreement dated
November 12, 1992 (hereafter referred to as the
"Agreement"), between CLARK EQUIPMENT COMPANY ("CLARK") and
THOMAS L. DOEPKER (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Executive remains in the employ of
CLARK and the Executive and CLARK have agreed to this
Amendment No. 1 as a clarification of the terms of the
Agreement; and
WHEREAS, legislative changes to Section 411 of
the Internal Revenue Code of 1986 have resulted in the
deletion of the statutory reference to the interest rate to
be used for certain calculations under the Agreement.
NOW, THEREFORE, in consideration of the premises
and mutual agreements of the parties herein contained, it
is agreed that certain provisions of the Agreement be
amended to clarify the meaning of such provisions:
Section 14.5 of the Agreement is hereby revised
to read in its entirety as follows:
14.5 Present Value Calculation For purposes of
-------------------------
paragraphs (a) and (b) of Section 14.4, "present
value" will be calculated using the interest rate that
would be used by the Pension Benefit Guaranty
Corporation for
<PAGE>
purposes of determining the present value of a lump
sum distribution on the termination of a plan subject
to Title IV of the Employee Retirement Income Security
Act of 1974, as amended, formerly referred to in
Section 411(a)(11)(B)(ii) of the Internal Revenue Code
of 1986, as of the date of such termination and the
1983 Group Annuitants Mortality Table, or the
mortality table (if it is different) then being used
by CLARK's actuaries for valuation purposes with
respect to CLARK's qualified pension plans. All
calculations for the purposes of Sections 14.4 and
14.7 shall be made, at the expense of CLARK, by the
independent auditors of CLARK. As soon as practicable
after the need for such calculation arises, CLARK
shall provide to its auditors all information needed
to perform such calculations.
-2-
<PAGE>
IN WITNESS WHEREOF, CLARK and the Executive have
caused this Amendment No. 1 to the Agreement to be executed
as of the 28th day of March, 1995.
CLARK EQUIPMENT COMPANY
/s/ Thomas L. Doepker By: /s/ Leo J. McKernan
----------------------- ------------------------
Thomas L. Doepker Leo J. McKernan
Chairman, President and
Chief Executive officer
-3-
<PAGE>
AMENDMENT No. 1 to the Agreement dated November
12, 1992 (hereafter referred to as the "Agreement"),
between CLARK EQUIPMENT COMPANY ("CLARK") and WILLIAM N.
HARPER (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Executive remains in the employ of
CLARK and the Executive and CLARK have agreed to this
Amendment No. 1 as a clarification of the terms of the
Agreement; and
WHEREAS, legislative changes to Section 411 of
the Internal Revenue Code of 1986 have resulted in the
deletion of the statutory reference to the interest rate to
be used for certain calculations under the Agreement.
NOW, THEREFORE, in consideration of the premises
and mutual agreements of the parties herein contained, it
is agreed that certain provisions of the Agreement be
amended to clarify the meaning of such provisions:
Section 14.5 of the Agreement is hereby revised
to read in its entirety as follows:
14.5 Present Value Calculation. For purposes of
-------------------------
paragraphs (a) and (b) of Section 14.4, "present
value" will be calculated using the interest rate that
would be used by the Pension Benefit Guaranty
Corporation for
<PAGE>
purposes of determining the present value of a lump
sum distribution on the termination of a plan subject
to Title IV of the Employee Retirement Income Security
Act of 1974, as amended, formerly referred to in
Section 411(a)(11)(B)(ii) of the Internal Revenue Code
of 1986, as of the date of such termination and the
1983 Group Annuitants Mortality Table, or the
mortality table (if it is different) then being used
by CLARK's actuaries for valuation purposes with
respect to CLARK's qualified pension plans. All
calculations for the purposes of Sections 14.4 and
14.7 shall be made, at the expense of CLARK by the
independent auditors of CLARK. As soon as practicable
after the need for such calculation arises, CLARK
shall provide to its auditors all information needed
to perform such calculations.
-2-
<PAGE>
IN WITNESS WHEREOF, CLARK and the Executive have
caused this Amendment No. 1 to the Agreement to be executed
as of the 28th day of March, 1995.
CLARK EQUIPMENT COMPANY
/s/ William N. Harper By:/s/ Leo J. McKernan
------------------------ -----------------------
William N. Harper Leo J. McKernan
Chairman, President and
Chief Executive Officer
-3-
<PAGE>
AMENDMENT No. 1 to the Agreement dated November
12, 1992 (hereafter referred to as the "Agreement"),
between CLARK EQUIPMENT COMPANY ("CLARK") and BERNARD D.
HENELY (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS the Executive remains in the employ of
CLARK and the Executive and CLARK have agreed to this
Amendment No. 1 as a clarification of the terms of the
Agreement; and
WHEREAS, legislative changes to Section 411 of
the Internal Revenue Code of 1986 have resulted in the
deletion of the statutory reference to the interest rate to
be used for certain calculations under the Agreement.
NOW, THEREFORE, in consideration of the premises
and mutual agreements of the parties herein contained, it
is agreed that certain provisions of the Agreement be
amended to clarify the meaning of such provisions:
Section 14.5 of the Agreement is hereby revised to
read in its entirety as follows:
14.5 Present Value Calculation. For purposes of
-------------------------
paragraphs (a) and (b) of Section 14.4, "present
value" will be calculated using the interest rate that
would be used by the Pension Benefit Guaranty
Corporation for
<PAGE>
purposes of determining the present value of a lump
sum distribution on the termination of a plan subject
to Title IV of the Employee Retirement Income Security
Act of 1974, as amended, formerly referred to in
Section 411(a)(11)(B)(ii) of the Internal Revenue Code
of 1986, as of the date of such termination and the
1983 Group Annuitants Mortality Table, or the
mortality table (if it is different) then being used
by CLARK's
actuaries for valuation purposes with respect to
CLARK's qualified pension plans. All calculations for
the purposes of Sections 14.4 and 14.7 shall be made,
at the expense of CLARK, by the independent auditors
of CLARK. As soon as practicable after the need for
such calculation arises, CLARK shall provide to its
auditors all information needed to perform such
calculations.
-2-
<PAGE>
IN WITNESS WHEREOF, CLARK and the Executive have
caused this Amendment No. 1 to the Agreement to be executed
as of the 28th day of March, 1995.
CLARK EQUIPMENT COMPANY
/s/ Bernard D. Henely By:/s/ Leo J. McKernan
------------------------ -------------------------
Bernard D. Henely Leo J. McKernan
Chairman, President and
Chief Executive Officer
-3-
<PAGE>
AMENDMENT No. 1 to the Agreement dated November
12, 1992 (hereafter referred to as the Agreement), between
CLARK EQUIPMENT COMPANY ("CLARK") and LEO J. McKERNAN (the
"Executive")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Executive remains in the employ of
CLARK and the Executive and CLARK have agreed to this
Amendment No. 1 as a clarification of the terms of the
Agreement; and
WHEREAS, legislative changes to Section 411 of
the Internal Revenue Code of 1986 have resulted in the
deletion of the statutory reference to the interest rate to
be used for certain calculations under the Agreement.
NOW, THEREFORE, in consideration of the premises
and mutual agreements of the parties herein contained, it
is agreed that certain provisions of the Agreement be
amended to clarify the meaning of such provisions:
Section 12.5 of the Agreement is hereby revised
to read in its entirety as follows:
12.5 Present Value Calculation. For purposes of
-------------------------
paragraphs (a) and (b) of Section 12.4, "Present
value" will be calculated using the interest rate that
would be used by the Pension Benefit Guaranty
Corporation for
<PAGE>
purposes of determining the present value of a lump
sum distribution on the termination of a plan subject
to Title IV of the Employee Retirement Income Security
Act of 1974, as amended, formerly referred to in
Section 411(a)(11)(B)(ii) of the Internal Revenue Code
of 1986, as of the date of such termination and the
1983 Group Annuitants Mortality Table, or the
mortality table (if it is different) then being used
by CLARK's actuaries for valuation purposes with
respect to CLARK's qualified pension plans. All
calculations for the purposes of Sections 12.4 and
12.7 shall be made, at the expense of CLARK, by the
independent auditors of CLARK. As soon as practicable
after the need for such calculation arises, CLARK
shall provide to its auditors all information needed
to perform such calculations.
-2-
<PAGE>
IN WITNESS WHEREOF, CLARK and the Executive have
caused this Amendment No. 1 to the Agreement to he executed
as of the 28th day of March, 1995.
CLARK EQUIPMENT COMPANY
/s/ Leo J. McKernan By:/s/ Frank M. Sims
---------------------- ---------------------
Leo J. McKernan Frank M. Sims
Senior Vice President
-3-
<PAGE>
AMENDMENT No. 1 to the Agreement dated February
15, 1995 (hereafter referred to as the "Agreement"),
between CLARK EQUIPMENT COMPANY ("CLARK") and FRANK M. SIMS
(the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Executive remains in the employ of
CLARK and the Executive and CLARK, have agreed to this
Amendment No. 1 as a clarification of the terms of the
Agreement; and
WHEREAS, legislative changes to Section 411 of
the Internal Revenue Code of 1986 have resulted in the
deletion of the statutory reference to the interest rate to
be used for certain calculations under the Agreement.
NOW, THEREFORE, in consideration of the premises
and mutual agreements of the parties herein contained, it
is agreed that certain provisions of the Agreement be
amended to clarify the meaning of such provisions:
Section 9.5 of the Agreement is hereby revised to
read in its entirety as follows:
9.5 Present Value Calculation. For purposes of
-------------------------
paragraphs (a) and (b) of Section 9.4, "present value"
will be calculated using the interest rate that would
be used by the Pension Benefit Guaranty Corporation
for
<PAGE>
purposes of determining the present value of a lump
sum distribution on the termination of a plan subject
to Title IV of the Employee Retirement Income Security
Act of 1974, as amended, formerly referred to in
Section 411(a)(11)(B)(ii) of the Internal Revenue Code
of 1986, as of the date of such termination and the
1983 Group Annuitants Mortality Table, or the
mortality table (if it is different) then being used
by CLARK's actuaries for valuation purposes with
respect to CLARK's qualified pension plans. All
calculations for the purposes of Sections 9.4 and 9.7
shall be made, at the expense of CLARK, by the
independent auditors of CLARK. As soon as practicable
after the need for such calculation arises, CLARK
shall provide to its auditors all information needed
to perform such calculations.
-2-
<PAGE>
IN WITNESS WHEREOF, CLARK and the Executive have
caused this Amendment No. 1 to the Agreement to be executed
as of the 28th day of March, 1995.
CLARK EQUIPMENT COMPANY
/s/ Frank M. Sims /s/ Leo J. McKernan
---------------------- --------------------------
Frank M. Sims Leo J. McKernan
Chairman, President and
Chief Executive Officer
-3-
<PAGE>
AMENDMENT No. 1 to the Agreement dated September 1,
1992, (hereafter referred to as the Agreement") , between
CLARK EQUIPMENT COMPANY ("CLARK") and ROBERT N. SPOLUM
("Mr. Spolum")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Mr. Spolum and CLARK have agreed to this
Amendment No. 1 as a clarification of the terms of the
Agreement; and
WHEREAS, legislative changes to Section 411 of the
Internal Revenue Code of 1986 have resulted in the deletion
of the statutory reference to the interest rate to be used
for certain calculations under the Agreement.
NOW, THEREFORE, in consideration of the premises and
mutual agreements of the parties herein contained, it is
agreed that certain provisions of the Agreement be amended
to clarify the meaning of such provisions:
1. Section 17.5 of the Agreement is hereby revised
to read in its entirety as follows:
17.5 Present Value Calculation. For purposes of
-------------------------
paragraphs (a) and (b) of Section 17.4, "present value"
will be calculated using the interest rate that would be
used by the Pension Benefit Guaranty Corporation for
purposes of determining the present value of a lump sum
<PAGE>
distribution on the termination of a plan subject to
Title IV of the Employee Retirement Income Security Act
of 1974, as amended, formerly referred to in Section
411(a)(11)(B) (ii) of the Internal Revenue Code of 1986,
as of the date of such termination and the 1983 Group
Annuitants Mortality Table. All calculations for the
purposes of Sections 17.4 and 17.7 shall be made, at the
expense of CLARK, by the independent auditors of CLARK.
As soon as practicable after the need for such
calculation arises, CLARK shall provide to its auditors
all information needed to perform such calculations.
2. Section 3.5 of the Agreement is hereby revised
by replacing the phrase "calculated using the interest
rate specified in Section 411(a)(11)(B)(ii) of the
Internal Revenue Code of 1986 as of the date of such
termination and the 1983 Group Annuitants Mortality
Table" with the phrase "calculated as described in
Section 17.5".
-2-
<PAGE>
IN WITNESS WHEREOF, CLARK and Mr. Spolum have caused
this Amendment No. 1 to the Agreement to be executed as of
the 28th day of March, 1995.
CLARK EQUIPMENT COMPANY
/s/ Robert N. Spolum By:/s/ Frank R. Sims
------------------------ ----------------------
Robert N. Spolum Frank R. Sims
Senior Vice President
-3-
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL RETIREMENT INCOME PLAN FOR CERTAIN EXECUTIVES
AMENDMENT NO. 1
---------------
WHEREAS, Clark Equipment Company (the "Company")
previously established the Clark Equipment Company Supple-
mental Retirement Income Plan for Certain Executives (the
"Plan"); and
WHEREAS, the Human Effectiveness Committee of the
Board of Directors of the Company has approved the
amendment of the Plan as described below;
NOW, THEREFORE, the Plan is hereby amended effec-
tive as of February 15, 1995 in the following respect:
1. Schedule A, Item 6, of the Plan is amended to
read as follows:
"6. Those benefit obligations provided pursuant
to that certain amended and restated employment
agreement between F.M. Sims and Clark Equipment
Company dated February 15, 1995 as may be amended
from time to time, including but not limited to the
benefits provided for in Sections 3.1, 3.2, 3.3,
3.5, 3.6, 9.4, 9.7, 11.2 and Exhibit A of said
agreement, and any lump sum payment of such benefit
obligations as provided for in Section 4 of said
agreement, but excluding the benefits provided for
in Section 3.4 of said agreement."
WHEREFORE, pursuant to the authority delegated by
the Human Effectiveness Committee of the Board of Directors
of Clark Equipment Company, this Amendment No. 1 is made
and
<PAGE>
executed on this 6th day of March, 1995, to become
effective as specified herein.
CLARK EQUIPMENT COMPANY
By:/s/ Leo J. McKernan
-------------------------
Leo J. McKernan
Chairman, President and
Chief Executive Officer
-2-
<PAGE>
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDMENT NO. 1
---------------
WHEREAS, Clark Equipment Company (the "Company")
previously established the Clark Equipment Company Supple-
mental Executive Retirement Plan (the "Plan"); and
WHEREAS, the Human Effectiveness Committee of the
Board of Directors of the Company has approved the
amendment of the Plan as described below;
NOW, THEREFORE, the Plan is hereby amended effec-
tive as of February 15, 1995 in the following respects:
1. Subsection 2.1 of the Plan is amended by
deleting the penultimate sentence of such subsection, which
had excluded Frank M. Sims from being a Participant in the
Plan.
2. Schedule A of the Plan is amended by adding
thereto a new item 7 reading as follows:
"7. Those benefit obligations provided pursuant
to Section 3.4 of that certain amended and restated
employment agreement between Frank M. Sims and Clark
Equipment Company dated February 15, 1995 as may be
amended from time to time, and any lump sum payment of
such benefit obligations as provided for in Section 4
of said agreement."
WHEREFORE, pursuant to the authority delegated by
the Human Effectiveness Committee of the Board of Directors
of Clark Equipment Company, this Amendment No. 1 is made
and
<PAGE>
executed on this 6th day of March, 1995, to become
effective as specified herein.
CLARK EQUIPMENT COMPANY
By:/s/ Leo J. McKernan
--------------------------
Leo J. McKernan
Chairman, President and
Chief Executive Officer
-2-
<PAGE>
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL RETIREMENT INCOME PLAN FOR CERTAIN EXECUTIVES
AMENDMENT NO. 2
---------------
WHEREAS, Clark Equipment Company (the "Company")
previously established the Clark Equipment Company Supple-
mental Retirement Income Plan for Certain Executives (the
"Plan"); and
WHEREAS, the Human Effectiveness Committee of the
Board of Directors of the Company has approved the
amendment of the Plan as described below;
NOW, THEREFORE, the Plan is hereby amended effec-
tive as of March 27, 1995 in the following respect:
1. Subsection 2.3 and Section 3 of the Plan are
each amended by replacing the phrase "the interest
rate specified in Code Section 411(a)(11)(B)(ii) (or
any successor section thereto)" with the phrase "the
interest rate that would be used by the Pension
Benefit Guaranty Corporation for purposes of
determining the present value of a lump sum
distribution on the termination of a plan subject to
Title IV of the Employee Retirement Income Security
Act of 1974, as amended, formerly referred to in
Section 411(a)(11)(B)(ii) of the Internal Revenue Code
of 1986."
WHEREFORE, pursuant to the authority delegated by
the Human Effectiveness Committee of the Board of Directors
of Clark Equipment Company, this Amendment No. 2 is made
and
<PAGE>
executed on this 28th day of March 1995, to become
effective as specified herein.
CLARK EQUIPMENT COMPANY
By:/s/ Leo J. McKernan
-----------------------
Leo J. McKernan
Chairman, President and
Chief Executive Officer
-2-
<PAGE>
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL RETIREMENT INCOME PLAN FOR CERTAIN EXECUTIVES
AMENDMENT NO. 2
---------------
WHEREAS, Clark Equipment Company (the "Company")
previously established the Clark Equipment Company Supple-
mental Executive Retirement Plan (the "Plan"); and
WHEREAS, the Human Effectiveness Committee of the
Board of Directors of the Company has approved the
amendment of the Plan as described below;
NOW, THEREFORE, the Plan is hereby amended effec-
tive as of March 27, 1995 in the following respects:
1. Subsection 2.2 of the Plan is amended to read
in its entirety as follows:
"2.2. Supplemental Benefits. At the time that a
---------------------
Participant or his Beneficiary is entitled to benefits
under the qualified plan, the Participant or
Beneficiary shall be entitled to the "Supplemental
Benefit" accrued for him hereunder. As of any date a
Participant's accrued Supplemental Benefit shall be
(A) the full amount of the benefit computed for such
Participant using the pension formula under the
qualified plan as of such date (based on total
credited service under the qualified plan) except
that, for such calculation, (1) the limitations of
Code Section 415 and Code Section 401(a)(17), and of
any other provision of the Code or other law or
regulation that limits either the amount of pension
benefits or the amount of compensation that can be
used to determine pension benefits, are disregarded
and (2) except with respect to the Retired Executives
and any other Participants whose employment with the
Company terminated prior to March 1, 1995, the
Participant's cash bonus payments received from an
Employer pursuant to the Company's incentive
compensation plans,
<PAGE>
regardless of whether paid before or after the
effective date of the Plan, are included in his basic
annual compensation rate (as defined in the qualified
plan) as of January 1 of the year in which each such
bonus payment is made, less (B) the maximum amount of
the benefit that can be provided under the terms of
the qualified plan after application of the
limitations imposed by the Code or other laws or
regulations. In computing the Supplemental Benefit,
all offsets against the benefits payable under the
qualified plan due to benefits payable from the Clark
Equipment Company Leveraged Employee Stock Ownership
Plan shall be disregarded. The Supplemental Benefit
shall include all of the surviving spouse and optional
forms of benefits available with respect to benefits
payable from the qualified plan, and be subject to the
same adjustment factors applicable to such forms of
benefits. In determining the Supplemental Benefit for
either of the Retired Executives and any other
Participants whose employment with the Company termi-
nated prior to March 1, 1995, the cash bonus payments
received by them from an Employer pursuant to the Com-
pany's incentive compensation plan shall not be
included in the calculation. Notwithstanding the
foregoing provisions of this subsection 2.2 or any
other provisions of the Plan, with respect to a
Participant who is a party to an employment agreement
listed in Schedule A hereto, if at the time of the
death of such Participant the Section of such
employment agreement first identified in such Schedule
A does not provide for the payment of Supplemental
Benefits to the surviving spouse of such Participant,
no Supplemental Benefits shall be payable to such
spouse under the Plan."
2. Subsection 2.3 and Section 3 of the Plan are
each amended by replacing the phrase "the interest rate
specified in Code Section 411(a)(11)(B)(ii) (or any
successor section thereto)" with the phrase "the interest
rate that would be used by the Pension Benefit Guaranty
Corporation for purposes of determining the present value
of a lump sum distribution on the termination of a plan
subject to Title IV of the Employee Retirement Income
Security Act of 1974, as amended, formerly referred to in
Section 411(a)(11)(B)(ii) of the Internal Revenue Code of
1986."
3. Section 5 of the Plan is amended by inserting
the word "adversely" just before the word "affected" in the
first sentence thereof.
-2-
<PAGE>
WHEREFORE, pursuant to the authority delegated by
the Human Effectiveness Committee of the Board of Directors
of Clark Equipment Company, this Amendment No. 2 is made
and executed on this 28th day of March 1995, to become
effective as specified herein.
CLARK EQUIPMENT COMPANY
By:/s/ Leo J. McKernan
-------------------------
Leo J. McKernan
Chairman, President and
Chief Executive Officer
-3-
AMENDMENT No. 1, dated as of April 9, 1995, to
the AGREEMENT dated December 28, 1994 (the "Trust
Agreement"), between CLARK EQUIPMENT COMPANY (the
"Company") and such subsidiaries of the Company as become
parties to the Trust Agreement (the Company and such
subsidiaries referred to hereinafter collectively as the
"Employers" and sometimes individually as an "Employer"),
and WACHOVIA BANK OF NORTH CAROLINA, N.A., and its
successor or successors and assigns (the "Trustee"),
establishing the Clark Equipment Company Deferred Benefit
Trust (the "Trust").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company, the Employers and the
Trustee have entered into the Trust Agreement establishing
the Trust for purposes of providing a method for the
orderly accumulation of assets to be used to make certain
payments payable under the Clark Equipment Company
Supplemental Retirement Income Plan for Certain Executives
(except as such assets are required to be used to satisfy
the claims of the Employers' creditors); and
WHEREAS, Section 7.1 of the Trust Agreement
provides that the Company may amend the Trust from time to
time (with certain exceptions not relevant herein); and
WHEREAS, the Trustee hereby gives its consent to
the amendments to the Trust Agreement set forth below.
NOW, THEREFORE, in consideration of the mutual
undertakings of the parties hereto, IT IS AGREED by the
Company and the Trustee as follows:
1. Section 2.2 of the Trust Agreement is amended
by adding after the last sentence of the flush language at
the end thereof the following:
"Notwithstanding anything herein to the contrary, upon
and after a Change in Control, as defined in Section
4.20, the assets of the trust fund shall only be
invested in cash, company owned life insurance
policies, high quality money market funds or high
quality fixed income securities. For purposes of the
foregoing, "high quality" shall mean a public debt
rating by Standard & Poor's of BBB or higher or an
equivalent rating by another major rating agency."
<PAGE>
2. Section 4.5 of the Trust Agreement is amended
by adding the following two sentences after the first
sentence thereof:
"The committee shall retain a reputable, independent
actuarial or consulting firm (the "independent party")
to determine the amount of the benefits due and
payable to participants pursuant to the plan. At
least ten (10) days prior to the time an amount is due
and payable to a participant pursuant to the plan,
such "independent party" shall provide to the
committee, the employer and such participant, in
writing, a statement as to such amount due and payable
to the participant pursuant to the plan together with
a copy of the calculations supporting the
determination of such amount."
3. Section 4.5 of the Trust Agreement is further
amended by deleting the fifth sentence thereof (as
determined before such Section 4.5 is amended in accordance
with paragraph 2 above), and adding the following sentence
after the fourth sentence thereof:
"If the committee or the employer does not provide the
trustee with a statement from the "independent party"
as to the proper amount due and payable to the
participant within 30 days of the date the trustee
notified the committee and the employer of the payment
request, or the trustee determines that the party
providing the statement is not "independent," the
trustee shall make the payment or payments requested
by the participant from the trust fund and may
conclusively rely on such payment or payments being
the appropriate amount."
4. Section 4.20 is added to the Trust Agreement
to read in its entirety as follows:
"4.20 Change in Control. For purposes of
-----------------
the trust, "Change in Control" means (i) the
acquisition of beneficial ownership of 25% or more of
the shares of common stock of the company by or for
any person (as such term is defined in Section
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Act")), including for purposes of
calculating such person's ownership, all shares
beneficially owned by the affiliates and associates
(as such terms are defined in Rule 12b-2 of the Act)
of such person, provided, however, that the term
-------- -------
"person" shall not include any of the following: the
company, any subsidiary of the company, any employee
benefit plan or employee stock plan of the company or
04/08/95 -2-
<PAGE>
of any subsidiary of the company, any dividend
reinvestment plan of the company, any person or entity
organized, appointed or established by the company for
or pursuant to the terms of any such plan, or any
person which becomes the beneficial owner of 25% or
more of such shares then outstanding solely as a
result of the acquisition by the company or any
employee benefit plan of the company of shares of the
common stock of the company, provided that such person
does not thereafter acquire any shares of the common
stock of the company, or (ii) during any period of 24
consecutive months, individuals who at the beginning
of such period constitute the Board of Directors of
the company cease for any reason to constitute a
majority thereof, unless the election, or nomination
for election by the company's stockholders, of each
new director was approved by a vote of at least two-
thirds of the directors then still in office who were
directors at the beginning of such period, or (iii)
the company's stockholders approve (a) the merger or
consolidation of the company with or into another
corporation and the company shall not be the surviving
corporation or (b) an agreement to sell or otherwise
dispose of all or substantially all of the company's
assets (including a plan of liquidation)."
5. Section 7.1(b) of the Trust Agreement is
amended by adding the following after the word "creditors"
and before the word "including" in the last line thereof:
"in accordance with Article V,"
6. Except as amended hereby, the Trust Agreement
shall survive and continue in full force and effect.
7. This Amendment No. 1 may be executed in two
or more counterparts, any one of which will be an original
without reference to the others.
04/08/95 -3-
<PAGE>
8. This Amendment No. 1 shall in all respects be
governed by and construed in accordance with the laws of
the State of Indiana.
IN WITNESS WHEREOF, the Company and the Trustee
have caused this Amendment No. 1 to the Trust Agreement to
be duly executed as of the date set forth above by their
respective officers thereunto duly authorized.
CLARK EQUIPMENT COMPANY
Date: By /s/ Bernard D Henely
--------------- ---------------------------
Name: Bernard D Henely
Title: Vice President and
General Counsel
WACHOVIA BANK OF
NORTH CAROLINA, N.A.
Date: By /s/ John N. Smith III
--------------- ---------------------------
Name: John N. Smith III
Title: Vice President
04/08/95 -4-
<PAGE>
AMENDMENT No. 1, dated as of April 9, 1995, to
the AGREEMENT dated December 28, 1994 (the "Retirement
Trust Agreement"), between CLARK EQUIPMENT COMPANY (the
"Company") and such subsidiaries of the Company as become
parties to the Trust Agreement (the Company and such
subsidiaries referred to hereinafter collectively as the
"Employers" and sometimes individually as an "Employer"),
and WACHOVIA BANK OF NORTH CAROLINA, N.A., and its
successor or successors and assigns (the "Trustee"),
establishing the Clark Equipment Company Supplemental
Executive Retirement Trust (the "Retirement Trust").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company, the Employers and the
Trustee have entered into the Retirement Trust Agreement
establishing the Retirement Trust for purposes of providing
a method for the orderly accumulation of assets to be used
to make certain payments payable under the Clark Equipment
Company Supplemental Executive Retirement Plan (except as
such assets are required to be used to satisfy the claims
of the Employers' creditors); and
WHEREAS, Section 7.1 of the Retirement Trust
Agreement provides that the Company may amend the
Retirement Trust from time to time (with certain exceptions
not relevant herein); and
WHEREAS, the Trustee hereby gives its consent to
the amendments to the Retirement Trust Agreement set forth
below.
NOW, THEREFORE, in consideration of the mutual
undertakings of the parties hereto, IT IS AGREED by the
Company and the Trustee as follows:
1. Section 2.2 of the Retirement Trust Agreement
is amended by adding after the last sentence of the flush
language at the end thereof the following:
"Notwithstanding anything herein to the contrary, upon
and after a Change in Control, as defined in Section
4.20, the assets of the trust fund shall only be
invested in cash, company owned life insurance
policies, high quality money market funds or high
quality fixed income securities. For purposes of the
foregoing, "high quality" shall mean a public debt
rating by Standard & Poor's of BBB or higher or an
equivalent rating by another major rating agency."
<PAGE>
2. Section 4.5 of the Retirement Trust Agreement
is amended by adding the following two sentences after the
first sentence thereof:
"The committee shall retain a reputable, independent
actuarial or consulting firm (the "independent party")
to determine the amount of the benefits due and
payable to participants pursuant to the plan. At
least ten (10) days prior to the time an amount is due
and payable to a participant pursuant to the plan,
such "independent party" shall provide to the
committee, the employer and such participant, in
writing, a statement as to such amount due and payable
to the participant pursuant to the plan together with
a copy of the calculations supporting the
determination of such amount."
3. Section 4.5 of the Retirement Trust Agreement
is further amended by deleting the fifth sentence thereof
(as determined before such Section 4.5 is amended in
accordance with paragraph 2 above), and adding the
following sentence after the fourth sentence thereof:
"If the committee or the employer does not provide the
trustee with a statement from the "independent party"
as to the proper amount due and payable to the
participant within 30 days of the date the trustee
notified the committee and the employer of the payment
request, or the trustee determines that the party
providing the statement is not "independent," the
trustee shall make the payment or payments requested
by the participant from the trust fund and may
conclusively rely on such payment or payments being
the appropriate amount."
4. Section 4.20 is added to the Retirement Trust
Agreement to read in its entirety as follows:
"4.20 Change in Control. For purposes of
-----------------
the trust, "Change in Control" means (i) the
acquisition of beneficial ownership of 25% or more of
the shares of common stock of the company by or for
any person (as such term is defined in Section
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Act")), including for purposes of
calculating such person's ownership, all shares
beneficially owned by the affiliates and associates
(as such terms are defined in Rule 12b-2 of the Act)
of such person, provided, however, that the term
-------- -------
04/08/95 -2-
<PAGE>
"person" shall not include any of the following: the
company, any subsidiary of the company, any employee
benefit plan or employee stock plan of the company or
of any subsidiary of the company, any dividend
reinvestment plan of the company, any person or entity
organized, appointed or established by the company for
or pursuant to the terms of any such plan, or any
person which becomes the beneficial owner of 25% or
more of such shares then outstanding solely as a
result of the acquisition by the company or any
employee benefit plan of the company of shares of the
common stock of the company, provided that such person
does not thereafter acquire any shares of the common
stock of the company, or (ii) during any period of 24
consecutive months, individuals who at the beginning
of such period constitute the Board of Directors of
the company cease for any reason to constitute a
majority thereof, unless the election, or nomination
for election by the company's stockholders, of each
new director was approved by a vote of at least two-
thirds of the directors then still in office who were
directors at the beginning of such period, or (iii)
the company's stockholders approve (a) the merger or
consolidation of the company with or into another
corporation and the company shall not be the surviving
corporation or (b) an agreement to sell or otherwise
dispose of all or substantially all of the company's
assets (including a plan of liquidation)."
5. Section 7.1(b) of the Retirement Trust
Agreement is amended by adding the following after the word
"creditors" and before the word "including" in the last
line thereof:
"in accordance with Article V,"
6. Except as amended hereby, the Retirement
Trust Agreement shall survive and continue in full force
and effect.
7. This Amendment No. 1 may be executed in two
or more counterparts, any one of which will be an original
without reference to the others.
04/08/95 -3-
<PAGE>
8. This Amendment No. 1 shall in all respects be
governed by and construed in accordance with the laws of
the State of Indiana.
IN WITNESS WHEREOF, the Company and the Trustee
have caused this Amendment No. 1 to the Retirement Trust
Agreement to be duly executed as of the date set forth
above by their respective officers thereunto duly
authorized.
CLARK EQUIPMENT COMPANY
Date: By /s/ Bernard D Henely
--------------- ---------------------------
Name: Bernard D Henely
Title: Vice President and
General Counsel
WACHOVIA BANK OF
NORTH CAROLINA, N.A.
Date: By /s/ John N. Smith III
--------------- ---------------------------
Name: John N. Smith III
Title: Vice President
04/08/95 -4-
==========================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INGERSOLL-RAND COMPANY,
CEC ACQUISITION CORP.
AND
CLARK EQUIPMENT COMPANY
Dated as of April 9, 1995
==========================================================
<PAGE>
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
----
ARTICLE I THE OFFER . . . . . . . . . . . . . . . . 2
1.01 The Offer . . . . . . . . . . . . . . . . 2
1.02 Company Actions . . . . . . . . . . . . . 4
ARTICLE II THE MERGER AND RELATED MATTERS . . . . . 6
2.01 The Merger . . . . . . . . . . . . . . . 6
2.02 Conversion of Stock . . . . . . . . . . . 7
2.03 Dissenting Stock . . . . . . . . . . . . 8
2.04 Surrender of Certificates . . . . . . . . 9
2.05 Payment . . . . . . . . . . . . . . . . . 10
2.06 No Further Rights of Transfers . . . . . 11
2.07 Stock Option and Other Plans . . . . . . 11
2.08 Certificate of Incorporation of the
Surviving Corporation . . . . . . . . . 13
2.09 By-Laws of the Surviving Corporation . . 13
2.10 Directors and Officers of the Surviving
Corporation . . . . . . . . . . . . . . 13
2.11 Closing . . . . . . . . . . . . . . . . . 14
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . 14
3.01 Representations and Warranties of the
Company . . . . . . . . . . . . . . . . 14
(a) Due Organization, Good Standing and
Corporate Power . . . . . . . . . . 14
(b) Authorization and Validity of
Agreement . . . . . . . . . . . . . 15
(c) Capitalization . . . . . . . . . . . 15
(d) Consents and Approvals; No
Violations . . . . . . . . . . . . 17
(e) Company Reports and Financial
Statements . . . . . . . . . . . . 18
(f) Absence of Other Liabilities . . . . 19
(g) Anticipated Filings . . . . . . . . 20
(i)
<PAGE>
(h) Absence of Certain Changes . . . . . 20
(i) Compliance with Laws . . . . . . . . 21
(j) Litigation . . . . . . . . . . . . . 22
(k) Employee Benefit Plans . . . . . . . 22
(l) Taxes . . . . . . . . . . . . . . . 22
(m) Proxy Statement, Schedule 14D-9 and
Schedule 14D-1 . . . . . . . . . . 23
(n) Broker's or Finder's Fee . . . . . . 24
(o) Environmental Laws and Regulations . 25
(p) State Takeover Statutes and
Supermajority Voting Provisions . . 25
(q) Rights Agreement . . . . . . . . . . 25
3.02 Representations and Warranties of Parent
and Purchaser . . . . . . . . . . . . . 26
(a) Due Organization; Good Standing and
Corporate Power . . . . . . . . . . 26
(b) Authorization and Validity of
Agreement . . . . . . . . . . . . . 26
(c) Consents and Approvals; No
Violations . . . . . . . . . . . . 27
(d) Offer Documents, Schedule 14D-9 and
Proxy Statement . . . . . . . . . . 28
(e) Broker's or Finder's Fee . . . . . . 29
(f) Financing . . . . . . . . . . . . . 29
ARTICLE IV TRANSACTIONS PRIOR TO CLOSING DATE . . . . 29
4.01 Access to Information Concerning Prop-
erties and Records . . . . . . . . . . 29
4.02 Confidentiality . . . . . . . . . . . . . 30
4.03 Conduct of the Business of the Company
Pending the Closing Date . . . . . . . 30
4.04 Proxy Statement . . . . . . . . . . . . . 33
4.05 Stockholder Approval . . . . . . . . . . 34
4.06 Reasonable Best Efforts . . . . . . . . . 34
4.07 Guarantee of Performance . . . . . . . . 35
4.08 Notification of Certain Matters . . . . . 35
4.09 HSR Act . . . . . . . . . . . . . . . . . 36
4.10 Employee Benefits . . . . . . . . . . . . 36
4.11 Directors' and Officers' Insurance;
Indemnification . . . . . . . . . . . . 39
4.12 Financing . . . . . . . . . . . . . . . . 41
4.13 Company Board Representation; Section
(ii)
<PAGE>
14(f) . . . . . . . . . . . . . . . . 41
4.14 No Amendment to the Rights Agreement . . 42
4.15 Disposition of Litigation . . . . . . . . 42
4.16 Proxy Contests . . . . . . . . . . . . . 43
4.17 No Solicitation of Transactions . . . . . 44
4.18 Postponement of Annual Meeting . . . . . 45
4.19 Sale of VME . . . . . . . . . . . . . . . 45
ARTICLE V CONDITIONS PRECEDENT TO MERGER . . . . . 46
5.01 Conditions Precedent to Obligations of
Parent, Purchaser and the Company . . . 46
(a) Approval of Company's Stockholders . 46
(b) HSR Act . . . . . . . . . . . . . . 46
(c) Injunction . . . . . . . . . . . . . 46
(d) Statutes . . . . . . . . . . . . . . 47
(e) Payment for Common Stock . . . . . . 47
ARTICLE VI TERMINATION AND ABANDONMENT . . . . . . . 47
6.01 Termination . . . . . . . . . . . . . . . 47
6.02 Effect of Termination . . . . . . . . . . 51
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . 51
7.01 Fees and Expenses . . . . . . . . . . . . 51
7.02 Extension; Waiver . . . . . . . . . . . . 52
7.03 Public Announcements . . . . . . . . . . 53
7.04 Notices . . . . . . . . . . . . . . . . . 53
7.05 Entire Agreement . . . . . . . . . . . . 54
7.06 Binding Effect; Benefit; Assignment . . . 54
7.07 Amendment and Modification . . . . . . . 55
7.08 Further Actions . . . . . . . . . . . . . 55
7.09 Headings . . . . . . . . . . . . . . . . 55
7.10 Counterparts . . . . . . . . . . . . . . 55
7.11 Applicable Law . . . . . . . . . . . . . 55
7.12 Severability . . . . . . . . . . . . . . 55
7.13 "Person" Defined . . . . . . . . . . . . 56
7.14 Knowledge of the Company . . . . . . . . 56
7.15 Non-Survival of Representations,
Warranties and Agreements . . . . . . . 56
Annexes
-------
Annex A Tender Offer Conditions
(iii)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of
April 9, 1995 (this "Agreement"), by and among INGERSOLL-
RAND COMPANY, a New Jersey corporation ("Parent"), CEC
ACQUISITION CORP., a Delaware corporation and a wholly-
owned subsidiary of Parent ("Purchaser"), and CLARK
EQUIPMENT COMPANY, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors
of Parent, Purchaser and the Company have approved the
acquisition of the Company by Parent;
WHEREAS, Purchaser has outstanding an offer
(such offer as amended pursuant to this Agreement is
hereinafter referred to as the "Offer") to purchase all of
the outstanding shares of Common Stock, $7.50 par value per
share, of the Company (the "Common Stock"; all of the
outstanding shares of Company Common Stock being
hereinafter referred to as "Shares") and the associated
Preferred Stock Purchase Rights (the "Rights") issued
pursuant to the Rights Agreement dated as of March 10,
1987, and amended and restated, as of August 14, 1990,
between the Company and Harris Trust & Savings Bank, as
Rights Agent (as so amended and restated, the "Rights
Agreement"), at a purchase price of $77 per Share (and
associated Right) net to the seller in cash, without
interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated April
3, 1995, and in the related letter of transmittal;
WHEREAS, in consideration of the Company's
entering into this Agreement, Parent is willing to cause
Purchaser to increase the price to be paid pursuant to the
Offer to $86.00 per Share (and associated Right) (such
amount being hereinafter referred to as the "Offer Price");
WHEREAS, to complete such acquisition, the
respective Boards of Directors of Parent, Purchaser and the
Company, have approved the merger of Purchaser with the
Company (the "Merger"), pursuant to and subject to the
terms and conditions of this Agreement; and
<PAGE>
WHEREAS, the Directors of the Company have
unanimously determined that each of the Offer and the
Merger are fair to, and in the best interests of, the
holders of Common Stock, approved this Agreement, the Offer
and the Merger and recommended the acceptance of the Offer
and approval and adoption of this Agreement by the
stockholders of the Company.
NOW, THEREFORE, in consideration of the
premises and of the mutual covenants, representations,
warranties and agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
THE OFFER
1.01 The Offer. (a) Provided that this
---------
Agreement shall not have been terminated in accordance with
Article VI hereof and so long as none of the events set
forth in Annex A hereto (the "Tender Offer Conditions")
shall have occurred and no circumstance shall exist which
would result in a failure to satisfy any of the Tender
Offer Conditions, as promptly as practicable, but in no
event later than the fifth business day after the date of
this Agreement, Purchaser shall amend the Offer (i) to
extend the Offer to May 5, 1995, (ii) to increase the
purchase price offered to $86.00 per share of Common Stock
(and associated Right) and (iii) to modify the conditions
of the Offer to conform to the Tender Offer Conditions.
The obligations of Purchaser to accept for payment and
promptly to pay for any shares of Common Stock tendered
shall be subject only to the Tender Offer Conditions any of
which may be waived; provided, however, that, without the
-------- -------
consent of the Company, Purchaser shall not waive the
condition that there shall have been validly tendered and
not withdrawn prior to the expiration of the Offer a number
of shares of Common Stock which, together with Common Stock
owned by Parent and Purchaser, represent a majority of the
total voting power of all shares of capital stock of the
Company outstanding on a fully diluted basis. The Tender
Offer Conditions are for the sole benefit of Parent and
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<PAGE>
Purchaser and may be asserted by Parent and Purchaser
regardless of the circumstances giving rise to any such
Tender Offer Conditions and, subject to the preceding
sentence, may be waived by Parent and Purchaser in whole or
in part. Without the consent of the Company, Purchaser
shall not (i) reduce the number of shares of Company Common
Stock to be purchased in the Offer, (ii) reduce the Offer
Price, (iii) impose conditions to the Offer in addition to
those set forth in Annex A, (iv) change the form of
consideration payable in the Offer or (v) amend any other
term of the Offer (including the Tender Offer Conditions)
in a manner materially adverse to the holders of the Common
Stock. Parent and Purchaser covenant and agree that,
subject to the terms and conditions of this Agreement,
including but not limited to the Tender Offer Conditions,
unless the Company otherwise consents in writing, Purchaser
will accept for payment and pay for Common Stock as soon as
it is permitted to do so under applicable law; provided,
--------
that Purchaser shall have the right, in its sole
discretion, to extend the Offer from time to time for up to
a maximum of 10 additional business days, notwithstanding
the prior satisfaction of the Tender Offer Conditions.
(b) As soon as practicable after the date
hereof, Parent or Purchaser shall file with the Securities
and Exchange Commission (the "Commission") an amendment to
their Tender Offer Statement on Schedule 14D-1 dated
April 3, 1995 with respect to the Offer which will reflect
the existence of this Agreement, amend the conditions to
the Offer in accordance herewith and contain a supplement
to the Offer to Purchase dated April 3, 1995 and related
letter of transmittal (together with any supplements or
amendments thereto, collectively the "Offer Documents").
The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws.
The information provided and to be provided by the Company,
Parent and Purchaser for use in the Offer Documents shall
not, on the date filed with the Commission and on the date
first published or sent or given to the Company's
stockholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading. Parent,
Purchaser and the Company each agrees promptly to correct
-3-
<PAGE>
any information provided by it for use in the Offer
Documents if and to the extent that it shall have become
false or misleading in any material respect and Parent and
Purchaser further agree to take all steps necessary to
cause the Offer Documents as so corrected to be filed with
the Commission and to be disseminated to holders of Common
Stock, in each case as and to the extent required by
applicable federal securities laws.
1.02 Company Actions. (a) The Company
---------------
hereby approves of and consents to the Offer and the Merger
and represents that (i) its Board of Directors (at a
meeting duly called and held on April 9, 1995) has (1)
determined by the unanimous vote of the Directors that each
of the transactions contemplated hereby, including each of
the Offer and the Merger, is fair to, and in the best
interests of, the holders of Common Stock, (2) approved
this Agreement and the transactions contemplated hereby,
including each of the Offer and the Merger and has
determined that the consummation of any thereof will not
constitute a "Change In Control" for purposes of Section
9.2 of the Clark Equipment Company Leveraged Employee Stock
Ownership Plan, (3) resolved to recommend acceptance of the
Offer and the tender of Shares thereunder and approval and
adoption of this Agreement and the transactions
contemplated hereby by the stockholders of the Company, (4)
taken all other action necessary to render (A) Section 203
of the Delaware General Corporation Law, (B) the Rights
Agreement and (C) Article SIXTH, Paragraph 6, of the
Company's Restated Certificate of Incorporation (as to the
Company, the "Certificate of Incorporation") inapplicable
to the Offer and the Merger and the transactions
contemplated hereby and thereby; provided, however, that
-------- -------
such recommendation or other action may be withdrawn,
modified or amended at any time or from time to time if a
majority of the Board of Directors of the Company
determines, in its good faith judgment, based on the
opinion of independent outside legal counsel to the
Company, that failing to take such action would constitute
a breach of such Board's fiduciary obligations under
applicable law; and (ii) CS First Boston Corporation
("First Boston") has delivered to the Board of Directors of
the Company its opinion that the consideration to be
received by the holders of Common Stock (other than Parent
and Purchaser) pursuant to the Offer and the Merger is fair
-4-
<PAGE>
to the holders of Common Stock from a financial point of
view. The Company has been authorized by First Boston to
permit, subject to prior review and consent by First Boston
(such consent not to be unreasonably withheld), the
inclusion of such fairness opinion (or a reference thereto)
in the Offer Documents and in the Schedule 14D-9 referred
to below and the Proxy Statement referred to in Section
4.04. The Company hereby consents to the inclusion in the
Offer Documents of the recommendations of the Company's
Board of Directors described in this Section 1.02(a).
(b) The Company hereby agrees to file with
the Commission as soon as practicable after the date hereof
a Solicitation/Recommendation Statement on Schedule 14D-9
pertaining to the Offer (together with any amendments or
supplements thereto, the "Schedule 14D-9") containing the
recommendation described in Section 1.02(a) and to promptly
mail the Schedule 14D-9 to the stockholders of the Company.
The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws
and, on the date filed with the Commission and on the date
first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading, except that no
representation is made by the Company with respect to
information supplied by Parent or Purchaser in writing for
inclusion in the Schedule 14D-9. The Company, Parent and
Purchaser each agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the
extent that it shall have become false or misleading in any
material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the Commission and disseminated to the
holders of shares of Common Stock, in each case as and to
the extent required by applicable federal securities laws;
provided, however, that such recommendation or other action
-------- -------
may be withdrawn, modified or amended at any time or from
time to time if a majority of the Board of Directors of the
Company determines, in its good faith judgment, based on
the opinion of independent outside legal counsel to the
Company, that failing to take such action would constitute
a breach of such Board's fiduciary obligations under
-5-
<PAGE>
applicable law.
(c) In connection with the Offer, the Company
will promptly furnish Purchaser with mailing labels,
security position listings, any non-objecting beneficial
owner lists and any available listing or computer list
containing the names and addresses of the record holders of
the Common Stock as of the most recent practicable date and
shall furnish Purchaser with such additional information
(including, but not limited to, updated lists of holders of
Common Stock and their addresses, mailing labels and lists
of security positions and non-objecting beneficial owner
lists) and such other assistance as Purchaser or its agents
may reasonably request in communicating the Offer to the
Company's record and beneficial stockholders. Subject to
the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger,
the Parent, Purchaser and their affiliates, associates,
agents and advisors, shall keep such information
confidential and use the information contained in any such
labels, listings and files only in connection with the
Offer and the Merger and, if this Agreement shall be
terminated, will deliver to the Company all copies of such
information then in their possession.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.01 The Merger. (a) Subject to the terms
----------
and conditions of this Agreement, at the time of the
Closing (as defined in Section 2.11 hereof), a certificate
of merger (the "Certificate of Merger") shall be duly
prepared, executed and acknowledged by Purchaser and the
Company in accordance with Delaware General Corporation Law
and shall be filed on the Closing Date (as defined in
Section 2.11 hereof). The Merger shall become effective
upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in accordance
with the provisions and requirements of the Delaware
General Corporation Law. The date and time when the Merger
shall become effective is hereinafter referred to as the
"Effective Time."
-6-
<PAGE>
(b) At the Effective Time, Purchaser shall be
merged with and into the Company and the separate corporate
existence of Purchaser shall cease, and the Company shall
continue as the surviving corporation under the laws of the
State of Delaware under the name of "Clark Equipment
Company" (the "Surviving Corporation"). At Parent's
election, the Merger may alternatively be structured so
that (i) the Company is merged with and into Parent,
Purchaser or any other direct or indirect subsidiary of
Parent or (ii) any direct or indirect subsidiary of Parent
other than Purchaser is merged with and into the Company.
In the event of such an election, the parties agree to
execute an appropriate amendment to this Agreement in order
to reflect such election.
(c) From and after the Effective Time, the
Merger shall have the effects set forth in Section 259 of
the Delaware General Corporation Law.
2.02 Conversion of Stock. At the Effective
-------------------
Time:
(a) Each share of Common Stock then issued
and outstanding (other than (i) any shares of Common
Stock which are held by any subsidiary of the Company
or in the treasury of the Company, or which are held,
directly or indirectly, by Parent or any direct or
indirect subsidiary of Parent (including Purchaser),
all of which shall be cancelled and none of which
shall receive any payment with respect thereto and
(ii) shares of Common Stock held by Dissenting
Stockholders (as defined in Section 2.03 hereof))
shall, by virtue of the Merger and without any action
on the part of Purchaser, the Company or the holder
thereof, be cancelled, extinguished and converted into
and represent the right to receive an amount in cash,
without interest, equal to the price paid for each
share of Common Stock pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof
less any required withholding taxes; and
(b) Except as otherwise provided in the next
succeeding sentence, each share of common stock, par
value $.01 per share, of Purchaser then issued and
outstanding shall, by virtue of the Merger and without
-7-
<PAGE>
any action on the part of the holder thereof, become
one validly issued, fully paid and nonassessable share
of common stock, $.01 par value, of the Surviving
Corporation.
2.03 Dissenting Stock. Notwithstanding
----------------
anything in this Agreement to the contrary but only to the
extent required by Delaware General Corporation Law, shares
of Common Stock that are issued and outstanding immediately
prior to the Effective Time and are held by holders of
Common Stock who comply with all the provisions of Delaware
law concerning the right of holders of Common Stock to
dissent from the Merger and require appraisal of their
shares of Common Stock ("Dissenting Stockholders") shall
not be converted into the right to receive the Merger
Consideration but shall be entitled to receive such
consideration as may be determined to be due such Dis-
senting Stockholder pursuant to the law of the State of
Delaware; provided, however, that (i) if any Dissenting
-------- -------
Stockholder shall subsequently deliver a written withdrawal
of his or her demand for appraisal (with the written
approval of the Surviving Corporation, if such withdrawal
is not tendered within 60 days after the Effective Time),
or (ii) if any Dissenting Stockholder fails to establish
and perfect his or her entitlement to appraisal rights as
provided by applicable law, or (iii) if within 120 days of
the Effective Time neither any Dissenting Stockholder nor
the Surviving Corporation has filed a petition demanding a
determination of the value of all shares of Common Stock
outstanding at the Effective Time and held by Dissenting
Stockholders in accordance with applicable law, then such
Dissenting Stockholder or Stockholders, as the case may be,
shall forfeit the right to appraisal of such shares and
such shares shall thereupon be deemed to have been
converted into the right to receive, as of the Effective
Time, the Merger Consideration, without interest. The Com-
pany shall give Parent and Purchaser (A) prompt notice of
any written demands for appraisal, withdrawals of demands
for appraisal and any other related instruments received by
the Company, and (B) the opportunity to direct all negoti-
ations and proceedings with respect to demands for apprais-
al. The Company will not, except with the prior written
consent of Parent, voluntarily make any payment with
respect to any demands for appraisal or settle or offer to
settle any demand.
-8-
<PAGE>
2.04 Surrender of Certificates.
-------------------------
(a) Concurrently with or prior to the Effective Time,
Parent shall designate a bank or trust company located in
the United States to act as paying agent (the "Paying
Agent") for purposes of making the cash payments con-
templated hereby. As soon as practicable after the
Effective Time, Parent shall cause the Paying Agent to mail
and/or make available to each holder of a certificate
theretofore evidencing shares of Common Stock (other than
those which are held by any subsidiary of the Company or in
the treasury of the Company or which are held directly or
indirectly by Parent or any direct or indirect subsidiary
of Parent (including Purchaser)) a notice and letter of
transmittal advising such holder of the effectiveness of
the Merger and the procedure for surrendering to the Paying
Agent such certificate or certificates which immediately
prior to the Effective Time represented outstanding Common
Stock (the "Certificates") in exchange for the Merger
Consideration deliverable in respect thereof pursuant to
this Article II. Upon the surrender for cancellation to
the Paying Agent of such Certificates, together with a
letter of transmittal, duly executed and completed in
accordance with the instructions thereon, and any other
items specified by the letter of transmittal, the Paying
Agent shall promptly pay to the Person entitled thereto the
Merger Consideration deliverable in respect thereof. Until
so surrendered, each Certificate shall be deemed, for all
corporate purposes, to evidence only the right to receive
upon such surrender the Merger Consideration deliverable in
respect thereof to which such Person is entitled pursuant
to this Article II. No interest shall be paid or accrued
in respect of such cash payments.
(b) If the Merger Consideration (or any
portion thereof) is to be delivered to a Person other than
the Person in whose name the Certificates surrendered in
exchange therefor are registered, it shall be a condition
to the payment of the Merger Consideration that the
Certificates so surrendered shall be properly endorsed or
accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be
proper and that the Person requesting such transfer pay to
the Paying Agent any transfer or other taxes payable by
reason of the foregoing or establish to the satisfaction of
the Paying Agent that such taxes have been paid or are not
-9-
<PAGE>
required to be paid.
(c) In the event any Certificate shall have
been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, the Paying
Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration deliverable
in respect thereof as determined in accordance with this
Article II, provided that, the Person to whom the Merger
--------
Consideration is paid shall, as a condition precedent to
the payment thereof, give the Surviving Corporation a bond
in such sum as it may direct or otherwise indemnify the
Surviving Corporation in a manner satisfactory to it
against any claim that may be made against the Surviving
Corporation with respect to the Certificate claimed to have
been lost, stolen or destroyed.
2.05 Payment. Concurrently with or
-------
immediately prior to the Effective Time, Parent or
Purchaser shall deposit in trust with the Paying Agent cash
in United States dollars in an aggregate amount equal to
the product of (i) the number of shares of Common Stock
outstanding immediately prior to the Effective Time (other
than shares of Common Stock which are held by any sub-
sidiary of the Company or in the treasury of the Company or
which are held directly or indirectly by Parent or any
direct or indirect subsidiary of Parent (including
Purchaser) or a Person known at the time of such deposit to
be a Dissenting Stockholder) and (ii) the Merger Considera-
tion (such amount being hereinafter referred to as the
"Payment Fund"). The Payment Fund shall be invested by the
Paying Agent as directed by Parent in direct obligations of
the United States, obligations for which the full faith and
credit of the United States is pledged to provide for the
payment of principal and interest, commercial paper rated
of the highest quality by Moody's Investors Services, Inc.
or Standard & Poor's Ratings Group or certificates of
deposit, bank repurchase agreements or bankers' acceptances
of a commercial bank having at least $100,000,000 in assets
(collectively, "Permitted Investments") or in money market
funds which are invested in Permitted Investments, and any
net earnings with respect thereto shall be paid to Parent
as and when requested by Parent. The Paying Agent shall,
pursuant to irrevocable instructions, make the payments re-
-10-
<PAGE>
ferred to in Section 2.02(a) hereof out of the Payment
Fund. The Payment Fund shall not be used for any other
purpose except as otherwise agreed to by Parent. Promptly
following the date which is three months after the
Effective Time, the Paying Agent shall return to Parent all
cash, certificates and other instruments in its possession
that constitute any portion of the Payment Fund (other than
net earnings on the Payment Fund which shall be paid to
Parent), and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate may surrender such
Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws)
receive in exchange therefor the Merger Consideration,
without interest, but shall have no greater rights against
the Surviving Corporation or Purchaser than may be accorded
to general creditors of the Surviving Corporation or
Purchaser under applicable law. Notwithstanding the
foregoing, neither the Paying Agent nor any party hereto
shall be liable to a holder of a Certificate for any Merger
Consideration delivered to a public official pursuant to
applicable abandoned property, escheat and similar laws.
2.06 No Further Rights of Transfers. At and
------------------------------
after the Effective Time, each holder of a Certificate
shall cease to have any rights as a stockholder of the
Company, except for, in the case of a holder of a
Certificate (other than shares to be cancelled pursuant to
Section 2.02(a) hereof and other than shares held by
Dissenting Stockholders), the right to surrender his or her
Certificate in exchange for payment of the Merger
Consideration or, in the case of a Dissenting Stockholder,
to perfect his or her right to receive payment for his or
her shares pursuant to Delaware law if such holder has
validly perfected and not withdrawn his or her right to
receive payment for his or her shares, and no transfer of
shares of Common Stock shall be made on the stock transfer
books of the Surviving Corporation. Certificates presented
to the Surviving Corporation after the Effective Time shall
be cancelled and exchanged for cash as provided in this
Article II. At the close of business on the day of the
Effective Time the stock ledger of the Company with respect
to Common Stock shall be closed.
2.07 Stock Option and Other Plans.
----------------------------
(a) Prior to the Effective Time, the Board of Directors of
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<PAGE>
the Company (or, if appropriate, any Committee thereof)
shall adopt appropriate resolutions and take all other
actions necessary to provide for the cancellation, effec-
tive at the Effective Time, of all the outstanding stock
options, stock appreciation rights, limited stock apprecia-
tion rights and performance units (the "Options")
heretofore granted under any stock option, performance unit
or similar plan of the Company (the "Stock Plans").
Immediately prior to the Effective Time, (i) each Option,
whether or not then vested or exercisable, shall no longer
be exercisable but shall entitle each holder thereof, in
cancellation and settlement therefor, to payments in cash
(subject to any applicable withholding taxes, the "Cash
Payment"), at the Effective Time, equal to the product of
(x) the total number of shares of Common Stock subject or
related to such Option, whether or not then vested or exer-
cisable, and (y) the excess of the Merger Consideration
over the exercise price per share of Common Stock subject
or related to such Option, each such Cash Payment to be
paid to each holder of an outstanding Option at the
Effective Time; provided, however, that with respect to any
-------- -------
Person subject to Section 16 of the Exchange Act, any such
amount shall be paid as soon as practicable after the first
date payment can be made without liability to such Person
under Section 16(b) of the Exchange Act, and (ii) each
share of Common Stock previously issued in the form of
grants of restricted stock or grants of contingent shares
shall fully vest. As provided herein, the Stock Plans and
any other plan, program or arrangement (excluding the
Melroe Savings and Investment Plan and the Clark Equipment
Company Savings and Investment Plan (collectively, the
"Savings Plans"), and the Clark Equipment Company Leveraged
Employee Stock Ownership Plan ("the LESOP")) providing for
the issuance or grant of any other interest in respect of
the capital stock of the Company or any subsidiary
(collectively with the Stock Plans, referred to as the
"Stock Incentive Plans") shall terminate as of the Effec-
tive Time; provided, however, that on and after the
-------- -------
Effective Time, the Savings Plans and the LESOP shall not
be required to provide for any investment in the capital
stock of the Surviving Corporation or any subsidiary of the
Surviving Corporation. The Company will take all rea-
sonable steps to ensure that none of the Parent, the Com-
pany or any of their respective subsidiaries is or will be
bound by any Options, other options, warrants, rights or
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<PAGE>
agreements which would entitle any Person, other than
Parent or its affiliates, to own any capital stock of the
Surviving Corporation or any of its subsidiaries or to
receive any payment in respect thereof. The Company will
use its reasonable best efforts to obtain all necessary
consents to ensure that after the Effective Time, the only
rights of the holders of Options to purchase shares of
Common Stock in respect of such Options will be to receive
the Cash Payment in cancellation and settlement thereof.
(b) All Stock Plans shall terminate as of
the Effective Time and the Company shall ensure that
following the Effective Time no holder of an Option or any
participant in any Stock Plans shall have any right
thereunder to acquire any capital stock of the Company,
Parent or the Surviving Corporation, except as provided in
the proviso to clause (i) of Section 2.07(a).
2.08 Certificate of Incorporation of the
-----------------------------------
Surviving Corporation. The Certificate of Incorporation of
---------------------
the Company, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation
of the Surviving Corporation until amended in accordance
with applicable law.
2.09 By-Laws of the Surviving Corporation.
------------------------------------
The By-Laws of the Company, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the
Surviving Corporation until amended in accordance with
applicable law.
2.10 Directors and Officers of the Surviving
---------------------------------------
Corporation. At the Effective Time, the directors of
-----------
Purchaser immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation, each of
such directors to hold office in accordance with the appli-
cable provisions of the Certificate of Incorporation and
By-Laws of the Surviving Corporation. At the Effective
Time, the officers of the Company immediately prior to the
Effective Time shall, subject to the applicable provisions
of the Certificate of Incorporation and By-Laws of the
Surviving Corporation, be the officers of the Surviving
Corporation until their respective successors shall be duly
elected or appointed and qualified.
-13-
<PAGE>
2.11 Closing. The closing of the Merger (the
-------
"Closing") shall take place as soon as practicable after
the last of the conditions set forth in Article V hereof is
fulfilled or waived (subject to applicable law) at such
place as Parent and the Company shall mutually agree (the
"Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the
-------------------------------------
Company. The Company hereby represents and warrants to
-------
Parent and Purchaser as follows (provided, that from and
--------
after the consummation of the transactions contemplated by
the Stock Purchase Agreement, dated March 5, 1995, by and
among the Company, AB Volvo and Clark-Hurth Components
Marketing Company (the "VME Sale Agreement") the Company
shall be deemed not to make any representation or warranty
for the purpose of this Agreement with respect to its
interest in VME Group, N.V.):
(a) Due Organization, Good Standing and
-----------------------------------
Corporate Power. Each of the Company and its
---------------
subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation and each such
corporation has all requisite corporate power and
authority to own, lease and operate its properties and
to carry on its business as now being conducted except
where the failure to be so organized, existing and in
good standing or to have such power and authority
would not, individually or in the aggregate,
reasonably be expected to have a material adverse
effect on the business, assets, financial condition or
results of operations ("Condition") of the Company and
its subsidiaries taken as a whole; each of the Company
and its subsidiaries is duly qualified or licensed as
a foreign corporation to do business and is in good
standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or
license necessary, except where the failure to be so
qualified or licensed and in good standing would not
-14-
<PAGE>
reasonably be expected to have a material adverse
effect on the Condition of the Company and its sub-
sidiaries taken as a whole. The Company has made
available to Parent and Purchaser complete and correct
copies of the Restated Certificate of Incorporation
and By-Laws of the Company and its subsidiaries, in
each case as amended to the date of this Agreement.
(b) Authorization and Validity of Agreement.
---------------------------------------
The Company has full corporate power and authority to
execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the
transactions contemplated hereby. The execution,
delivery and performance of this Agreement by the
Company, and the consummation by it of the
transactions contemplated hereby, have been duly
authorized and approved by its Board of Directors and
no other corporate action on the part of the Company
is necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby
(other than, with respect to the Merger, the approval
of this Agreement by the holders of a majority of the
shares of Common Stock). This Agreement has been duly
executed and delivered by the Company and is a valid
and binding obligation of the Company.
(c) Capitalization. (i) The authorized
--------------
capital stock of the Company consists of 40,000,000
shares of Common Stock and 3,000,000 shares of
preferred stock, $1.00 par value (the "Preferred
Stock"). As of April 7, 1995, (1) 17,101,396 shares
of Common Stock were issued and outstanding, (2)
97,438 shares of Common Stock were reserved for
issuance pursuant to outstanding Options granted under
the Stock Incentive Plans, (3) no shares of Preferred
Stock were issued and outstanding and (4) 2,093,288
shares of Common Stock were held in the Company's
treasury. All issued and outstanding shares of Common
Stock have been validly issued and are fully paid and
nonassessable, and are not subject to, nor were they
issued in violation of, any preemptive rights. Except
as set forth in this Section 3.01(c)(i) or on Schedule
3.01(c)(i) of the Disclosure Schedule delivered by the
Company to Parent on or prior to the date hereof (the
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<PAGE>
"Disclosure Schedule"), (i) there are no shares of
capital stock of the Company authorized, issued or
outstanding and (ii) there are not as of the date
hereof, and at the Effective Time there will not be,
any outstanding or authorized options, warrants,
rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or other-
wise, relating to Common Stock or any other shares of
capital stock of the Company, pursuant to which the
Company is or may become obligated to issue shares of
Common Stock, any other shares of its capital stock or
any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of
the capital stock of the Company, and there are no
outstanding obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise
acquire any securities described in this sentence.
Since April 7, 1995, no options to purchase shares of
Company Common Stock have been granted and no shares
of Company Common Stock have been issued. Schedule
3.01(c)(i) sets forth the number of Options and shares
of restricted stock outstanding and, in the case of
the Options, the exercise price therefor. The Company
has no authorized or outstanding bonds, debentures,
notes or other indebtedness the holders of which have
the right to vote (or convertible or exchangeable into
or exercisable for securities having the right to
vote) with the stockholders of the Company or any of
its subsidiaries on any matter.
(ii) Set forth in Schedule 3.01(c)(ii) of the
Disclosure Schedule is a list of all of the Company's
significant subsidiaries (as such term is defined in
the Securities Exchange Act of 1934, as amended).
Except for VME Group N.V. and its subsidiaries, the
Company is, directly or indirectly, the record and/or
beneficial owner of all of the shares of capital stock
of each of the subsidiaries. Except as set forth on
Schedule 3.01(c)(ii), no securities of any of the sub-
sidiaries are or may become required to be issued,
transferred or sold for any reason and all of the out-
standing securities of each subsidiary are validly
issued, fully paid and nonassessable and are owned
free and clear of any claim, lien, encumbrance or
-16-
<PAGE>
agreement with respect thereto. No entity in which
the Company owns, directly or indirectly, less than a
50% equity interest is, individually or when taken
together with all such other entities, material to the
business of the Company and its subsidiaries taken as
a whole.
(d) Consents and Approvals; No Violations.
-------------------------------------
Assuming (i) the filings required under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and Regulation (EEC) No.
4064/89 of the European Community, are made and the
waiting periods thereunder have been terminated or
have expired, (ii) the requirements of the Exchange
Act and any applicable state securities, "blue sky" or
takeover law are met, (iii) the filing of the Certifi-
cate of Merger and other appropriate merger documents,
if any, as required by Delaware General Corporation
Law, is made and (iv) approval of the Merger by a
majority of the holders of Common Stock, if required
by Delaware General Corporation Law, is received and
except as disclosed in Schedule 3.01(d) of the
Disclosure Schedule, the execution and delivery of
this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby
will not: (1) violate any provision of the
Certificate of Incorporation, as amended, or By-Laws
of the Company or any of its subsidiaries; (2) violate
any statute, ordinance, rule, regulation, order or
decree of any court or of any governmental or regula-
tory body, agency or authority applicable to the Com-
pany or any of its subsidiaries or by which any of
their respective properties or assets may be bound;
(3) require any filing with, or permit, consent or
approval of, or the giving of any notice to, any
governmental or regulatory body, agency or authority;
or (4) result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right
of termination, cancellation, payment or acceleration)
under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its sub-
sidiaries under, any of the terms, conditions or pro-
visions of any note, bond, mortgage, indenture,
-17-
<PAGE>
license, franchise, permit, agreement, lease, fran-
chise agreement or other instrument or obligation to
which the Company or any of its subsidiaries is a
party, or by which it or any of their respective
properties or assets are bound, except for such
filings, permits, consents, approvals or violations
which would not reasonably be expected to have a
material adverse effect on the Condition of the Com-
pany and its subsidiaries, taken as a whole, or would
not individually or in the aggregate reasonably be
expected to prevent or materially delay consummation
of the transactions contemplated by this Agreement.
(e) Company Reports and Financial
-----------------------------
Statements. (i)Since January 1, 1993, the Company has
----------
filed all forms, reports and documents with the
Commission required to be filed by it pursuant to the
federal securities laws and the Commission rules and
regulations thereunder, and except as described in
Schedule 3.01(e) of the Disclosure Schedule, all
forms, reports and documents filed with the Commission
have complied in all material respects with all
applicable requirements of the federal securities laws
and the Commission rules and regulations promulgated
thereunder. The Company has, prior to the date of
this Agreement, made available to Parent true and
complete copies of all forms, reports, registration
statements and other filings filed by the Company with
the Commission since January 1, 1993 (such forms, re-
ports, registration statements and other filings,
together with any exhibits, any amendments thereto and
information incorporated by reference therein, are
sometimes collectively referred to as the "Commission
Filings"). Except as described in Schedule 3.01(e) of
the Disclosure Schedule, as of their respective dates,
the Commission Filings (including but not limited to
any financial statements or schedules included or
incorporated by reference therein) did not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading. Except as described in Schedule 3.01(e)
of the Disclosure Schedule, and except to the extent
revised or superseded by a subsequent filing with the
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<PAGE>
Commission, none of the Commission Filings filed by
the Company since December 31, 1994 (excluding any
filings in connection with the transactions
contemplated by this Agreement) and prior to the date
hereof contains any untrue statement of a material
fact or omits to state a material fact required to be
stated or incorporated by reference therein or
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading. Each of the consolidated
balance sheets as of the end of the fiscal years ended
December 31, 1994, 1993 and 1992 and the consolidated
statements of operations, consolidated statements of
stockholders' equity and consolidated statements of
changes in financial position for the fiscal years
ended December 31, 1994, 1993 and 1992 and included in
the Commission Filings and the consolidated pro forma
financial statements of the Company included in its
Current Report on Form 8-K filed with the Commission
as of March 13, 1995 (the "March 13 8-K") were
prepared in accordance with generally accepted
accounting principles (as in effect from time to time)
applied on a consistent basis (except as may be indi-
cated therein or in the notes or schedules thereto)
and fairly present the consolidated financial position
of the Company and its consolidated subsidiaries as of
the dates thereof and the results of their operations
and changes in financial position for the periods then
ended and on a pro forma basis for 1994 in the case of
the March 13 8-K.
(f) Absence of Other Liabilities. Except as
----------------------------
and to the extent set forth on the consolidated
balance sheet of the Company and its subsidiaries at
December 31, 1994, including the notes thereto, and
the pro forma consolidated balance sheet of the
Company and its subsidiaries at March 31, 1995,
including the notes thereto, neither the Company nor
any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be
reflected on a balance sheet or in the notes thereto
prepared in accordance with generally accepted
accounting principles, except for liabilities or
obligations incurred in the ordinary course of
-19-
<PAGE>
business since December 31, 1994 and as a result of
the acquisition of Club Car, Inc., which would not,
individually or in the aggregate, reasonably be
expected to have a material adverse effect on the
Condition of the Company and its subsidiaries taken as
a whole.
(g) Anticipated Filings. The Company has
-------------------
heretofore furnished to Parent a complete and correct
copy of any amendments or modifications which have not
yet been filed with the Commission to agreements
(including the Rights Agreement), documents or other
instruments which previously had been filed by the
Company with the Commission pursuant to the Securities
Act and the rules and regulations promulgated
thereunder or the Exchange Act and the rules and
regulations promulgated thereunder.
(h) Absence of Certain Changes. Except as
--------------------------
previously disclosed in the Commission Filings or as
otherwise disclosed in Schedule 3.01(h) of the
Disclosure Schedule or as otherwise contemplated by
this Agreement, since December 31, 1994 (i) there has
not been any material adverse change in the Condition
of the Company and its subsidiaries taken as a whole
(without regard, however, to changes in conditions
generally applicable to the industries in which the
Company and its subsidiaries are involved or general
economic conditions); (ii) the businesses of the Com-
pany and each of its subsidiaries have been conducted
only in the ordinary course and in a manner consistent
with past practice; (iii) neither the Company nor any
of its subsidiaries has incurred any material liabili-
ties (direct, contingent or otherwise) or engaged in
any material transaction or entered into any material
agreement outside the ordinary course of business;
(iv) neither the Company nor any of its subsidiaries
has taken any action referred to in Section 4.03
hereof except as permitted thereby; (v) there has not
been any damage, destruction or loss (whether or not
covered by insurance) with respect to any assets of
the Company or any of its subsidiaries which would
reasonably be expected to, individually or in the
aggregate, have a material adverse effect on the
Condition of the Company and its subsidiaries taken as
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<PAGE>
a whole, (vi) there has not been any revaluation by
the Company of any of its material assets, including
but not limited to writing down the value of inventory
or writing off notes or accounts receivable other than
in the ordinary course of business, (vii) there has
not been any entry by the Company or any of its
subsidiaries into any commitment or transactions
material to the Company and its subsidiaries taken as
a whole, except for the acquisition of Club Car, Inc.
and the sale of the Company's 50% interest in VME
Group N.V., (viii) there has not been any declaration,
setting aside or payment of any dividends or
distributions in respect of the Shares or any
redemption, purchase or other acquisition of any of
its securities, except for the repurchase of 305,000
Shares under a share repurchase plan announced by the
Company on February 3, 1995, (ix) there has not been
any issuance of any shares of capital stock of the
Company of any of its subsidiaries or any grant or
issuance of any options, calls, warrants, or other
rights, agreements, arrangements or commitments of any
kind or character relating to the issuance of capital
stock of the Company or any of its subsidiaries; (x)
there has not been any increase in or establishment of
any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing,
stock option (including, without limitation, the
granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock
purchase or other employee benefit plan or agreement
or arrangement, or any other increase in the
compensation payable or to become payable to any
present or former directors, officers or key employees
of the Company or any of its subsidiaries, except for
increases in base compensation in the ordinary course
of business consistent with past practice, or any
employment, consulting or severance agreement or
arrangement entered into with any such present or
former directors, officers or key employees; and (xi)
there has been no change by the Company in accounting
principles, practices or methods.
(i) Compliance with Laws. Except as
--------------------
disclosed in the Commission Filings, the Company and
its subsidiaries are in compliance with all applicable
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<PAGE>
laws, regulations, orders, judgments and decrees
except where the failure to so comply would not
reasonably be expected to have a material adverse
effect on the Condition of the Company and its
subsidiaries taken as a whole.
(j) Litigation. Except as disclosed in the
----------
Commission Filings, there is no action, suit,
proceeding at law or in equity, or any arbitration or
any administrative or other proceeding by or before
(or to the best knowledge of the Company any
investigation by) any governmental or other instrumen-
tality or agency, pending, or, to the best knowledge
of the Company, threatened, against or affecting the
Company or any of its subsidiaries, or any of their
properties or rights which would reasonably be
expected to have a material adverse effect on the
Condition of the Company and its subsidiaries taken as
a whole. Except as disclosed in the Commission Fil-
ings, neither the Company nor any of its subsidiaries
is subject to any judgment, order, award or decree
entered in any lawsuit or proceeding which has a
material adverse effect on the Condition of the
Company and its subsidiaries taken as a whole.
(k) Employee Benefit Plans. All "employee
----------------------
benefit plans" ("Employee Plans") as defined in
Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained
or contributed to by the Company and its subsidiaries
are in compliance with the applicable provisions of
ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"), except for instances of non-
compliance that individually or in the aggregate would
not reasonably be expected to have a material adverse
effect on the Condition of the Company and its
subsidiaries taken as a whole.
(l) Taxes. The Company and each of its
-----
subsidiaries, and any consolidated, combined, unitary
or aggregate group for tax purposes of which the
Company or any of its subsidiaries is or has been a
member, has filed or caused to be filed, or will file
or cause to be filed on or prior to the Closing Date
(as defined in Section 2.11), all Tax returns and Tax
-22-
<PAGE>
reports which are required to be filed by, or with
respect to, it on or prior to the Closing Date (taking
into account any extension of time to file granted to
or on behalf of the Company or any subsidiary)
(collectively, the "Returns"). Such Returns reflect
accurately all material liability for Taxes for the
periods covered thereby. All material Taxes payable
by, or due from, the Company or any of its
subsidiaries have been fully paid or adequately
disclosed and provided for on the financial statements
of the Company and its subsidiaries in accordance with
generally accepted accounting principles. Except as
set forth in Schedule 3.01(l) of the Disclosure
Schedule, all Taxes (as defined below) shown to be due
and payable on the Returns by or with respect to the
Company or any of its subsidiaries have been, or prior
to the Closing Date will be, paid. Except as dis-
closed on Schedule 3.01(l), (i) no material claim for
unpaid Taxes (x) to the best knowledge of the Company,
has become a lien or encumbrance of any kind against
the property of the Company or any of its subsidiaries
or (y) is being asserted against the Company or any of
its subsidiaries; (ii) no audit of any Return of the
Company or any of its subsidiaries is being conducted
by a Tax authority; and (iii) no extension of the
statute of limitations on the assessment of any Taxes
has been granted by the Company or any of its
subsidiaries and is currently in effect. As used
herein, "Taxes" shall mean any taxes of any kind,
including but not limited to those on or measured by
or referred to as income, gross receipts, capital,
sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance,
stamp, occupation, premium, value added, property or
windfall profits taxes, customs, duties or similar
fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties,
additions to tax or additional amounts imposed by any
governmental authority, domestic or foreign.
(m) Proxy Statement, Schedule 14D-9 and
-----------------------------------
Schedule 14D-1. The definitive proxy statement and
--------------
related materials, if required, to be furnished to the
holders of Common Stock in connection with the Merger
pursuant to Section 4.04 hereof (together with any
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<PAGE>
amendments or supplements thereto, the "Proxy
Statement") will comply as to form in all material
respects with the Exchange Act and the rules and
regulations thereunder. Notwithstanding the
foregoing, no representation or warranty is made with
respect to any information with respect to Parent or
Purchaser or its officers, directors or affiliates
provided to the Company by Parent or Purchaser in
writing for inclusion in the Proxy Statement. The
Proxy Statement will not, at the date such information
is supplied, at the time of the stockholders' meeting
referred to in Section 4.05 hereof and at the Effec-
tive Time, contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstance under
which they are made, not misleading or necessary to
correct any statement in any earlier communication
with respect to the solicitation of proxies for such
stockholders' meeting which has become false or
misleading. None of the information in the Schedule
14D-9 or supplied by the Company in writing for
inclusion in the Offer Documents or any amendment or
supplement to any thereof, at the respective times the
Schedule 14D-9 or such amendment or supplement is
filed with the Commission, will contain any untrue
statement of a material fact or omit to state a
material fact necessary in order to make the
statements made, in light of the circumstances under
which they are made, not misleading. Notwithstanding
the foregoing, no representation or warranty is made
with respect to any information with respect to Parent
or Purchaser or its officers, directors or affiliates
provided to the Company by Parent or Purchaser in
writing for inclusion in the Schedule 14D-9. The
Schedule 14D-9 will comply as to form in all material
respects with the Exchange Act and the rules and
regulations thereunder.
(n) Broker's or Finder's Fee. Except for
------------------------
First Boston (whose fees and expenses will be paid by
the Company in accordance with the Company's agreement
with such firm, a true and correct copy of which has
been previously delivered to Parent by the Company),
no agent, broker, Person or firm acting on behalf of
-24-
<PAGE>
the Company is, or will be, entitled to any fee,
commission or broker's or finder's fees from any of
the parties hereto, or from any Person controlling,
controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or
any of the transactions contemplated hereby.
(o) Environmental Laws and Regulations.
----------------------------------
Except as disclosed in the Commission Filings or in
Schedule 3.01(o) of the Disclosure Schedule, the
Company and its subsidiaries are in material
compliance with all applicable federal and state laws
and regulations, as in effect on the date hereof,
relating to the protection of the environment (collec-
tively, "Environmental Laws"), except for violations,
of Environmental Laws that, individually or in the
aggregate, would not reasonably be expected to have a
material adverse effect on the Condition of the
Company and its subsidiaries, taken as a whole.
(p) State Takeover Statutes and
---------------------------
Supermajority Voting Provisions. The Board of
-------------------------------
Directors of the Company has approved the Offer, the
Merger and this Agreement and such approval is
sufficient to render inapplicable to the Offer, the
Merger, this Agreement and the other transactions
contemplated by this Agreement, the provisions of
Section 203 of the Delaware General Corporation Law
and of the supermajority stockholder voting
requirements of paragraph (6) of Article SIXTH of the
Company's Certificate of Incorporation.
(q) Rights Agreement. The Company and the
----------------
Board of Directors of the Company have taken all
necessary action so that none of the execution of this
Agreement, the making of the Offer, the acquisition of
shares of Common Stock pursuant to the Offer or the
consummation of the Merger will (i) cause any Rights
issued pursuant to the Rights Agreement to become
exercisable, (ii) cause Parent, Purchaser or any of
their Affiliates (as defined in the Rights Agreement)
or Associates (as defined in the Rights Agreement) to
be an Acquiring Person (as defined in the Rights
Agreement) or (iii) give rise to a Distribution Date
or a Triggering Event (as each such term is defined in
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<PAGE>
the Rights Agreement). The Company has delivered to
Parent a complete and correct copy of the Rights
Agreement as amended and supplemented to the date of
this Agreement.
3.02 Representations and Warranties of Parent
----------------------------------------
and Purchaser. Each of Parent and Purchaser represents and
-------------
warrants to the Company as follows:
(a) Due Organization; Good Standing and
-----------------------------------
Corporate Power. Parent is a corporation duly
---------------
organized, validly existing and in good standing under
the laws of the State of New Jersey and has all
requisite corporate power and authority to own, lease
and operate its properties and to carry on its
business as now being conducted except where the
failure to be so organized, existing and in good
standing or to have such power or authority, would
not, individually or in the aggregate, reasonably be
expected to prevent or materially delay consummation
of the transactions contemplated by this Agreement.
Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware and has all requisite corporate
power and authority to own, lease and operate its
properties and to carry on its business as now being
conducted except where the failure to be so organized,
existing and in good standing or to have such power or
authority would not, individually or in the aggregate,
reasonably be expected to prevent or materially delay
consummation of the transactions contemplated by this
Agreement.
(b) Authorization and Validity of Agreement.
---------------------------------------
Each of Parent and Purchaser has full corporate power
and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Parent
and Purchaser, and the consummation by each of them of
the transactions contemplated hereby, have been duly
authorized and approved by the respective Boards of
Directors of Parent and Purchaser. No other corporate
action on the part of either of Parent or Purchaser is
necessary to authorize the execution, delivery and
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<PAGE>
performance of this Agreement by each of Parent and
Purchaser and the consummation of the transactions
contemplated hereby (other than, with respect to the
Merger, the approval of this Agreement by the sole
stockholder of Purchaser, if required by Delaware
General Corporation Law). This Agreement has been
duly executed and delivered by each of Parent and
Purchaser and is a valid and binding obligation of
each of Parent and Purchaser.
(c) Consents and Approvals; No Violations.
-------------------------------------
Assuming (i) the filings required under the HSR Act
and Regulation (EEC) No. 4064/89 of the European
Community, are made and the waiting periods thereunder
have been terminated or have expired, (ii) the
requirements of the Exchange Act and any applicable
state securities, "blue sky" or takeover law are met,
(iii) the filing of the Certificate of Merger and
other appropriate merger documents, if any, as re-
quired by Delaware General Corporation Law is made and
(iv) approval of this Agreement by the sole stock-
holder of Purchaser if required by Delaware General
Corporation Law, the execution and delivery of this
Agreement by Parent and Purchaser and the consummation
by Parent and Purchaser of the transactions con-
templated hereby will not: (1) violate any provision
of the Certificate of Incorporation or By-Laws of
Parent or Purchaser; (2) violate any statute, ordin-
ance, rule, regulation, order or decree of any court
or of any governmental or regulatory body, agency or
authority applicable to Parent or Purchaser or by
which either of their respective properties or assets
may be bound; (3) require any filing with, or permit,
consent or approval of, or the giving of any notice
to, any governmental or regulatory body, agency or
authority; or (4) result in a violation or breach of,
conflict with, constitute (with or without due notice
or lapse of time or both) a default (or give rise to
any right of termination, cancellation, or
acceleration) under, or result in the creation of any
lien, security interest, charge or encumbrance upon
any of the properties or assets of the Parent,
Purchaser or any of their subsidiaries under, any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit,
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<PAGE>
agreement, lease, or other instrument or obligation to
which Parent or Purchaser or any of their subsidiaries
is a party, or by which they or their respective
properties or assets are bound except for such
filings, permits, consents, approvals or violations,
which would not, individually or in the aggregate,
reasonably be expected to prevent or materially delay
consummation of the transactions contemplated by this
Agreement.
(d) Offer Documents, Schedule 14D-9 and
-----------------------------------
Proxy Statement. The Offer Documents will comply as
---------------
to form in all material respects with the Exchange Act
and the rules and regulations thereunder. The Offer
Documents, will not, at the time such Offer Documents
are filed with the Commission or are first published,
sent or given to the Company's stockholders, as the
case may be, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not mislead-
ing or necessary to correct any statement in any
earlier Offer Documents which has become false or
misleading. If at any time prior to the expiration or
termination of the Offer any event occurs which should
be described in an amendment or supplement to the
Schedule 14D-1 or any amendment or supplement thereto,
Purchaser will file and disseminate, as required, an
amendment or supplement which complies in all material
respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws.
None of the information in the Offer Documents or
supplied or to be supplied by Parent and/or Purchaser
in writing for inclusion in the Proxy Statement and/or
the Schedule 14D-9 of the Company or any amendment or
supplement to any thereof, at the respective times the
Offer Documents or the Schedule 14D-9, such amendment
or supplement, is filed with the Commission or, with
respect to the Proxy Statement, at the time such Proxy
Statement is first mailed to stockholders, at the time
of the Company's stockholders' meeting or at the
Effective Time, will contain any untrue statement of a
material fact or omit to state a material fact neces-
sary in order to make the statements made, in light of
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<PAGE>
the circumstances under which they are made, not mis-
leading. Notwithstanding the foregoing, no represent-
ation or warranty is made with respect to any informa-
tion with respect to the Company or its officers,
directors and affiliates provided to Parent or
Purchaser by the Company in writing for inclusion in
the Offer Documents.
(e) Broker's or Finder's Fee. Except for
------------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated
(whose fees and expenses as financial advisor to
Parent and Purchaser will be paid by Parent or
Purchaser in accordance with the Parent's agreement
with such firm), no agent, broker, Person or firm
acting on behalf of Parent or Purchaser is, or will
be, entitled to any fee, commission or broker's or
finder's fees from any of the parties hereto, or from
any Person controlling, controlled by, or under common
control with any of the parties hereto, in connection
with this Agreement or any of the transactions
contemplated hereby.
(f) Financing. Parent has a commitment to
---------
provide the financing for, and shall provide Purchaser
with, the funds necessary to consummate the Offer and
the Merger and the transactions contemplated thereby
in accordance with the terms hereof and thereof.
ARTICLE IV
TRANSACTIONS PRIOR TO CLOSING DATE
4.01 Access to Information Concerning Prop-
--------------------------------------
erties and Records. During the period commencing on the
------------------
date hereof and ending on the Closing Date, the Company
shall, and shall cause each of its subsidiaries and other
agents to, upon reasonable notice, afford Parent and
Purchaser, and their respective counsel, accountants,
consultants and other authorized representatives who agree
to be bound by the Parent Confidentiality Agreement
(defined below), reasonable access during normal business
hours (to the extent feasible without undue interference
with or disruption to the operation of the Company, or any
of its business units) to the employees, properties,
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<PAGE>
offices, plants and other facilities and to all books and
records of the Company and its subsidiaries in order that
they may have the opportunity to make such investigations
as they shall desire of the affairs of the Company and its
subsidiaries. The Company shall furnish promptly to Parent
and Purchaser (a) a copy of each report, schedule,
registration statement and other document filed by it or
its subsidiaries during such period pursuant to the
requirements of Federal or state securities laws and (b)
all other information concerning its or its subsidiaries'
business, properties and personnel as Parent and Purchaser
may reasonably request. The Company agrees to cause its
officers and employees to furnish such additional financial
and operating data and other information and respond to
such inquiries as Parent and Purchaser shall from time to
time reasonably request.
4.02 Confidentiality. Information obtained
---------------
by Parent and Purchaser pursuant to Section 4.01 hereof
shall be subject to the provisions of the Confidentiality
Agreement between the Company and Parent dated April 9,
1995 (the "Parent Confidentiality Agreement").
4.03 Conduct of the Business of the Company
--------------------------------------
Pending the Closing Date. The Company agrees that, except
------------------------
as permitted, required or specifically contemplated by, or
otherwise described in, this Agreement or otherwise
consented to or approved in writing by Parent, during the
period commencing on the date hereof and ending on the
Closing Date:
(a) The Company and each of its subsidiaries
will conduct their respective operations only
according to their ordinary and usual course of
business consistent with past practice and, except for
actions taken in the ordinary course of business, will
use their reasonable best efforts to preserve intact
their respective business organization, keep available
the services of their officers and employees and
maintain satisfactory relationships with licensors,
suppliers, distributors, clients and others having
business relationships with them;
(b) Neither the Company nor any of its
subsidiaries (other than VME Group, N.V.) shall (i)
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<PAGE>
make any change in or amendment to its Certificate of
Incorporation or By-Laws (or comparable governing
documents); (ii) issue or sell any shares of its
capital stock (other than in connection with the
exercise of Options outstanding on the date hereof) or
any of its other securities (including but not limited
to stock appreciation rights or phantom stock), or
issue any securities convertible into, or options,
warrants or rights to purchase or subscribe to, or
enter into any arrangement or contract with respect to
the issuance or sale of, any shares of its capital
stock or any of its other securities, or make any
other changes in its capital structure; (iii) sell or
pledge or agree to sell or pledge any stock owned by
it in any of its subsidiaries; (iv) declare, pay, set
aside or make any dividend or other distribution or
payment with respect to, or split, combine, redeem or
reclassify, purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock; (v) other
than in the ordinary course of business consistent
with past practice, transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of,
encumber or subject to any lien, any material assets
or incur or modify any indebtedness other than any
indebtedness incurred in connection with the
acquisition of Club Car, Inc. or other liability or
issue any debt securities or assume, guarantee or
endorse or otherwise as an accommodation become
responsible for the obligations of any person; (vi)
make any tax election or settle or compromise any
material tax liability; (vii) except as may be
required as a result of a change in law or in
generally accepted accounting principles, make any
material change in its method of accounting; (viii)
(A) acquire (by merger, consolidation or acquisition
of stock or assets) any corporation, partnership or
other business organization or division thereof; (B)
enter into any contract or agreement other than in the
ordinary course of business consistent with past
practice that would be material to the Company and its
subsidiaries taken as a whole; (C) to the extent not
included in the Company's capital budget for 1995
previously approved by the Company's Board of
Directors, for 150 days after the date of this
Agreement, authorize any single capital expenditure in
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<PAGE>
excess of $1.5 million or capital expenditures of $10
million in the aggregate; or (D) enter into or
materially amend any contract, agreement, commitment
or arrangement with respect to any of the matters set
forth in this Section 4.03(b)(viii); (ix) except to
the extent required under existing employee and
director benefit plans, agreements or arrangements as
in effect on the date of this Agreement, increase the
compensation or fringe benefits of any of its
directors, officers or employees, except for increases
in salary or wages of employees of the Company or its
subsidiaries who are not officers of the Company in
the ordinary course of business in accordance with
past practice, or grant any severance or termination
pay not currently required to be paid under existing
severance plans or enter into any employment, con-
sulting or severance agreement or arrangement with any
present or former director, officer or other employee
of the Company or any of its subsidiaries (other than
employment contracts with the individuals listed on
Schedule 4.03(b)(ix) of the Disclosure Schedule), or
establish, adopt, enter into or amend or terminate any
collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment,
termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of
any directors, officers or employees; (x) adopt a plan
of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization
or other reorganization of the Company or any of its
subsidiaries not constituting an inactive subsidiary
(other than the Merger); (xi) pay, discharge or
satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected
or reserved against in the financial statements of the
Company or incurred in the ordinary course of business
and consistent with past practice; or (xii) agree, in
writing or otherwise, to take any of the foregoing
actions. Notwithstanding anything contained in this
Agreement to the contrary, the Company shall be
permitted in anticipation of, or otherwise with
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<PAGE>
respect to, a change in control of the Company, as de-
fined in the agreement between Leo J. McKernan and the
Company, dated November 12, 1992 (a "Change in
Control"), to fully fund, through the Clark Equipment
Company Supplemental Executive Retirement Trust and/or
the Clark Equipment Company Deferred Benefit Trust,
(collectively, "the Rabbi Trusts"), all amounts
payable, or which may become payable, to employees of
the Company and its subsidiaries upon a Change in
Control (including additional amounts (up to a maximum
of $23 million) required to be paid to such employees
to gross up such payments for any income or other
taxes incurred with respect thereto); provided,
--------
however, in no event shall such additional amounts be
-------
contributed to either of such Rabbi Trusts until the
Company has obtained the consents referred to in
Section 4.10(f) hereof from all participants (other
than retired participants) of the Clark Equipment
Company Supplemental Retirement Income Plan for
Certain Executives; and
(c) The Company shall not, and shall not
permit any of its subsidiaries other than VME Group,
N.V. to, (i) take any action, engage in any
transaction or enter into any agreement which would
cause any of the representations or warranties set
forth in Section 3.01 hereof to be untrue as of the
Closing Date, or (ii) purchase or acquire, or offer to
purchase or acquire, any shares of capital stock of
the Company.
4.04 Proxy Statement. If stockholder
---------------
approval of the Merger is required by law, as promptly as
practicable after the consummation of the Offer, the
Company will prepare and file a preliminary Proxy Statement
with the Commission and will use its reasonable best
efforts to have it cleared by the Commission. Parent,
Purchaser and the Company will cooperate with each other in
the preparation of the Proxy Statement; without limiting
the generality of the foregoing, each of Parent and
Purchaser will furnish to the Company the information
relating to it required by the Exchange Act to be set forth
in the Proxy Statement. The Company, Parent and Purchaser
each agree to use its reasonable best efforts, after
consultation with the other parties hereto, to respond
-33-
<PAGE>
promptly to any comments made by the Commission with
respect to the Proxy Statement and any preliminary version
thereof filed by it and cause such Proxy Statement to be
mailed to the Company's stockholders at the earliest
practicable time.
4.05 Stockholder Approval. (a) Promptly
--------------------
after the consummation of the Offer, if required by
Delaware General Corporation Law in order to consummate the
Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable law and the Company's
Restated Certificate of Incorporation and By-laws duly
call, give notice of and convene a meeting of the holders
of Common Stock for the purpose of voting upon this
Agreement and the Merger and the Company agrees that this
Agreement and the Merger shall be submitted at such
meeting. The Company shall use its reasonable best efforts
to solicit from its stockholders proxies and, subject
always to the fiduciary obligations of the Company's
directors under applicable law, shall take all other action
necessary and advisable, to secure the vote of stockholders
required by applicable law to obtain the approval for this
Agreement and the Merger. Subject always to the fiduciary
obligations of the Company's directors under applicable
law, the Company agrees that it will include in the Proxy
Statement the recommendation of its Board of Directors that
holders of Common Stock approve and adopt this Agreement
and approve the Merger. Parent and Purchaser will cause
all shares of Common Stock owned by them and their sub-
sidiaries to be voted in favor of the approval and adoption
of this Agreement and the Merger.
(b) Notwithstanding the foregoing, in the
event that Purchaser shall acquire at least 90% of the
outstanding Company Common Stock, the Company agrees, at
the request of Purchaser, subject to Article V, to take all
necessary and appropriate action to cause the Merger to
become effective as soon as reasonably practicable after
such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the
Delaware General Corporation Law.
4.06 Reasonable Best Efforts. Subject to the
-----------------------
terms and conditions provided herein, each of the Company,
Parent and Purchaser shall, and the Company shall cause
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<PAGE>
each of its subsidiaries to, cooperate and use their
respective reasonable best efforts to take, or cause to be
taken, all appropriate action, and to make, or cause to be
made, all filings necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement,
including but not limited to cooperation in the preparation
and filing of the Offer Documents, the Schedule 14D-9, the
Proxy Statement, any required filings under the HSR Act,
Regulation (EEC) No. 4064/89 of the European Community or
other foreign filings and any amendments to any thereof,
and including, without limitation, their respective
reasonable best efforts to obtain, prior to the Closing
Date, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Company and
its subsidiaries as are necessary for consummation of the
transactions contemplated by this Agreement and to fulfill
the conditions to the Offer and the Merger. In case at any
time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party
to this Agreement shall use their reasonable best efforts
to take all such necessary action.
4.07 Guarantee of Performance. Parent hereby
------------------------
guarantees the performance by Purchaser of its obligations
under this Agreement and the obligations of the Surviving
Corporation pursuant to Sections 4.10 and 4.11 hereof.
4.08 Notification of Certain Matters. The
-------------------------------
Company shall give prompt notice to Parent and Purchaser,
and Parent and Purchaser shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would be
reasonably likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in
any material respect and (ii) any failure of the Company,
Parent or Purchaser, as the case may be, to comply with or
satisfy any covenants, condition or agreement to be
complied with or satisfied by it hereunder or, in the case
of Parent and Purchaser, under the financing arrangements
with respect to the Offer and the Merger. Each of the
Company, Parent and Purchaser shall give prompt notice to
the other parties of any notice or other communication from
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<PAGE>
any third party alleging that the consent of such third
party is or may be required in connection with the
transactions contemplated by this Agreement.
4.09 HSR Act. The Company shall, no later
-------
than the close of business on April 13, 1995, file a
Notification and Report Form under the HSR Act with the
Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust
Division"). The Company and Parent shall use their
reasonable best efforts to respond as promptly as
practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or
documentation.
4.10 Employee Benefits. (a) Parent agrees
-----------------
that, during the period commencing at the Effective Time
and ending on December 31, 1996, the employees of the
Company and its subsidiaries (other than those employees
covered by a collective bargaining agreement) will continue
to be provided with employee benefit plans which in the
aggregate are substantially comparable to those currently
provided by the Company and its subsidiaries to such em-
ployees (other than plans involving or related to the
securities of the Company except the Savings Plans (as in
effect on April 3, 1995 and disregarding the effect of the
transactions contemplated herein on such plans)).
Employees covered by collective bargaining agreements shall
be provided with such benefits as shall be required under
the terms of any applicable collective bargaining
agreement.
(b) Parent hereby unconditionally agrees to
cause the Surviving Corporation to honor and continue to
perform, without modification, all benefit obligations
(including, without limitation, benefits payable (i)
pursuant to the Clark Equipment Company Supplemental
Executive Retirement Plan and the Clark Equipment Company
Supplemental Retirement Income Plan for Certain Executives,
(ii) pursuant to the Company's Directors Retirement Plan
and the health care plan set forth in Schedule 4.10(b)(ii)
of the Disclosure Schedule and (iii) to employees who shall
have retired from the Company and its subsidiaries before
the Effective Time), contracts and agreements (including,
but not limited to, employment, consulting and severance
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<PAGE>
obligations, contracts and agreements, but excluding any
Stock Plans) of the Company or any of its subsidiaries
authorized by the Company or any of its subsidiaries on or
prior to the date of this Agreement which apply to any cur-
rent or former employee or current or former director of
the Company or any of its subsidiaries. Parent agrees for
itself and its subsidiaries that after the Effective Time
the Surviving Corporation or its subsidiaries will pay all
amounts provided under all contracts and agreements of the
Company and its subsidiaries and all benefit obligations of
the Company and its subsidiaries, including, without
limitation, the change in control agreements entered into
between the Company and its subsidiaries and their officers
(the "Change in Control Agreements") (or honor the
provisions of the Change in Control Agreements in the case
where no payment by the Surviving Corporation or its
subsidiaries is required) conditioned on a change in
control of the Company, in accordance with the terms of
such Change in Control Agreements (or will cause any
related trusts to make such payments in the case of funded
plans). A true and complete list of such benefit
obligations, contracts and agreements containing "change in
control" provisions is attached as Schedule 4.10(b) of the
Disclosure Schedule. Notwithstanding anything in this
Section 4.10 to the contrary, nothing herein shall prevent
Parent or the Surviving Corporation from terminating the
employment of any person.
(c) For purposes of all employee benefit
plans, programs and arrangements maintained by or
contributed to by Parent and its subsidiaries (including,
without limitation, the Surviving Corporation), Parent
shall, or shall cause its subsidiaries to, cause each such
plan, program or arrangement to treat the prior service
with the Company and its subsidiaries of each person who is
an employee of the Company or its subsidiaries immediately
prior to the Effective Time (a "Clark Employee") (to the
same extent such service is recognized under analogous
plans, programs or arrangements of the Company or its
subsidiaries prior to the Effective Time) as service
rendered to Parent or its subsidiaries, as the case may be,
for purposes of eligibility to participate and for all
benefits and vesting thereunder; provided, however, that
-------- -------
any benefits provided under the Parent Plans (as defined
below) shall be reduced by benefits in respect of the same
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<PAGE>
years of service under analogous plans, programs and
arrangements maintained by or contributed to by the
Company, the Surviving Corporation or their subsidiaries.
(d) Each Clark Employee who becomes an
employee of Parent or any of its subsidiaries (other than
the Surviving Corporation and its subsidiaries) following
the Effective Time (each a "Continued Employee") shall be
entitled, as an employee of Parent or of any of its
subsidiaries (other than the Surviving Corporation and its
subsidiaries), to participate in whatever employee benefit
plans, as defined in Section 3(3) of ERISA, or whatever
nonqualified employee benefit or deferred compensation
plans, stock option, bonus or incentive plans or other
employee benefit or fringe benefit programs, that may be in
effect generally for employees of Parent or its
subsidiaries from time to time ("Parent Plans") if such
Continued Employee shall be eligible for participation
therein and otherwise shall not be participating in a
similar plan which continues to be maintained by the
Surviving Corporation and its subsidiaries. Parent or
Parent's subsidiaries shall cause their respective tax-
qualified defined benefit pension plans in which any
Continued Employee will become a participant on or after
the Effective Time to be amended to recognize, for purposes
of vesting, eligibility and benefit accrual thereunder,
each Clark Employee's compensation and term of service with
the Company and its subsidiaries to the same extent
recognized under analogous plans of the Company and its
subsidiaries prior to the Effective Time; provided,
--------
however, that any benefits under such plans shall be
-------
reduced by benefits in respect of the same years of service
under analogous plans, programs and arrangements maintained
by or contributed to by the Company, the Surviving
Corporation or their subsidiaries. Subject to the
provisions hereof, Continued Employees will be eligible to
participate on the same basis as similarly situated
employees of Parent or its subsidiaries. All such
participation shall be subject to such terms of such plans
as may be in effect from time to time.
(e) Notwithstanding anything to the contrary
in the Clark Equipment Company Supplemental Executive
Retirement Plan ("SERP 1"), the Clark Equipment Company
Supplemental Executive Retirement Trust ("SERP 1 Trust"),
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<PAGE>
the Clark Equipment Company Supplemental Retirement Income
Plan for Certain Executives ("SERP 2") or the Clark
Equipment Company Deferred Benefit Trust ("SERP 2 Trust"),
the terms (i) "committee," as used in the SERP 1 Trust and
SERP 2 Trust, (ii) "Administrator," as used in the SERP 1
and SERP 2, (iii) "Chief Executive Officer" as used in
Section 2.3 of the SERP 1 and SERP 2, and (iv) "Company" as
used in Section 4.2 of the SERP 1 and SERP 2, shall in each
instance mean, at all times on and after the Effective
Time, the Parent's benefits committee.
(f) As soon as practicable after the date
hereof, the Company shall use its best efforts to obtain
the requisite consents of all participants and
beneficiaries of the Rabbi Trusts so that the Company may
amend the Clark Equipment Company Supplemental Executive
Retirement Plan and the Clark Equipment Company
Supplemental Retirement Income Plan for Certain Executives
to permit either the Parent, the Company or any of their
respective subsidiaries to a one-time withdrawal of assets
from the Rabbi Trusts to the extent such assets exceed 100%
of the "Plan benefit value" (as such term is used in
Section 3 of each of the Clark Equipment Company
Supplemental Executive Retirement Plan and the Clark
Equipment Company Supplemental Retirement Income Plan for
Certain Executives), such funding level to be first
certified by the actuary for the Company's tax-qualified
Plan. After such withdrawal, the right to withdraw amounts
from either such Rabbi Trust shall continue as in effect
prior to the amendments contemplated hereby.
4.11 Directors' and Officers' Insurance;
-----------------------------------
Indemnification. (a) The certificate of incorporation and
---------------
the by-laws of the Surviving Corporation shall contain
provisions with respect to indemnification and exculpation
from liability no less favorable than those set forth in
the Company's certificate of incorporation and by-laws on
the date of this Agreement, which provisions shall not be
amended, repealed or otherwise modified for a period of six
years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who
on or prior to the Effective Time were directors, officers,
employees or agents of the Company, unless such
modification is required by law.
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<PAGE>
(b) The Company shall, regardless of whether
or not the Merger is consummated, and for six years from
the Effective Time, the Surviving Corporation shall either
(x) maintain in effect the Company's current directors' and
officers' liability insurance covering those persons who
are currently covered on the date of this Agreement by the
Company's directors' and officers' liability insurance
policy (the "Indemnified Parties"); provided, however, that
-------- -------
in no event shall Parent be required to expend in any one
year an amount in excess of 175% of the annual premiums
currently paid by the Company for such insurance which the
Company represents to be $697,500 for the twelve month
period ending March 25, 1996; and; provided further, that
----------------
if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation shall be obligated
to obtain a policy with the greatest coverage available for
a cost not exceeding such amount; provided further, that
----------------
the Surviving Corporation may substitute for such Company
policies, policies with at least the same coverage
containing terms and conditions which are no less
advantageous and provided that said substitution does not
result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time or (y) cause
the Parent's, directors' and officers' liability insurance
then in effect to cover those persons who are covered on
the date of this Agreement by the Company's directors' and
officers' liability insurance policy with respect to those
matters covered by the Company's directors' and officers'
liability policy.
(c) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section, upon
learning of any such claim, action, suit, proceeding or in-
vestigation, shall promptly notify Parent thereof. In the
event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the
Effective Time), (i) Parent or the Surviving Corporation
shall have the right, from and after the purchase of shares
of Common Stock pursuant to the Offer, to assume the
defense thereof and Parent shall not be liable to such
Indemnified Parties for any legal expenses of other counsel
or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof,
(ii) the Indemnified Parties will cooperate in the defense
of any such matter and (iii) Parent shall not be liable for
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<PAGE>
any settlement effected without its prior written consent;
and provided further that Parent shall not have any
----------------
obligation hereunder to any Indemnified Party when and if a
court of competent jurisdiction shall ultimately determine,
and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
4.12 Financing. Pursuant to the commitment
---------
letter received by Parent from the Chase Manhattan Bank
(National Association), Parent shall provide Purchaser with
the funds necessary to consummate the Offer and the Merger
and the transactions contemplated hereby in accordance with
the terms hereof.
4.13 Company Board Representation; Section
-------------------------------------
14(f). (a) Promptly upon the purchase by Purchaser of
-----
Shares pursuant to the Offer, and from time to time
thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as shall
give Purchaser representation on the Board of Directors
equal to the product of the total number of directors on
such Board (giving effect to the directors elected pursuant
to this sentence) multiplied by the percentage that the
aggregate number of shares of Company Common Stock
beneficially owned by Purchaser or any affiliate of
Purchaser bears to the total number of shares of Company
Common Stock then outstanding, and the Company shall, at
such time, promptly take all action necessary to cause
Purchaser's designees to be so elected, including either
increasing the size of the Board of Directors or securing
the resignations of incumbent directors or both. At such
times, the Company will use its best efforts to cause
persons designated by Purchaser to constitute the same
percentage as is on the Board of (i) each committee of the
Board, (ii) each board of directors of each domestic
subsidiary of the Company and (iii) each committee of each
such board, in each case only to the extent permitted by
law. Until Purchaser acquires a majority of the
outstanding shares of Company Common Stock on a fully
diluted basis, the Company shall use its reasonable best
efforts to ensure that all the members of the Board and
such boards and committees as of the date hereof who are
not employees of the Company shall remain members of the
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Board and such boards and committees.
(b) The Company's obligations to appoint
designees to its Board of Directors shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take
all actions required pursuant to Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this
Section 4.13 and shall include in the Schedule 14D-9 or a
separate Rule 14f-1 information statement provided to
stockholders such information with respect to the Company
and its officers and directors as is required under Section
14(f) and Rule 14f-1 to fulfill its obligations under this
Section 4.13. Parent or Purchaser will supply to the
Company and be solely responsible for any information with
respect to either of them and their nominees, officers,
directors and affiliates required by Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of
Purchaser's designees pursuant to this Section 4.13 and
prior to the Effective Time, any amendment of this
Agreement or the Certificate of Incorporation or By-Laws of
the Company, any termination of this Agreement by the
Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of
Purchaser or waiver of any of the Company's rights
hereunder, and any other consent or action by the Board of
Directors hereunder, will require the concurrence of a
majority of the directors of the Company then in office who
are neither designated by Purchaser nor are employees of
the Company.
4.14 No Amendment to the Rights Agreement.
------------------------------------
The Company covenants and agrees that it will not amend the
Rights Agreement, except as expressly contemplated by this
Agreement.
4.15 Disposition of Litigation. (a) The
-------------------------
Company agrees to dismiss without prejudice Clark Equipment
---------------
Company v. Ingersoll-Rand Company, Civil Action Docket
---------------------------------
No. 95 CIV 2130 (CSH) (S.D.N.Y. 1995). The Company agrees
that it will not settle any litigation currently pending,
or commenced after the date hereof, against the Company or
any of its directors by any stockholder of the Company
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relating to the Offer or this Agreement, without the prior
written consent of Parent.
(b) The Company will not voluntarily
cooperate with any third party which has sought or may
hereafter seek to restrain or prohibit or otherwise oppose
the Offer or the Merger and will cooperate with Parent and
Purchaser to resist any such effort to restrain or prohibit
or otherwise oppose the Offer or the Merger.
4.16 Proxy Contests. (a) Parent and
--------------
Purchaser hereby agree to withdraw and rescind and shall
promptly cause to be withdrawn and rescinded (i) the
notice, dated April 3, 1995, pursuant to Article II Section
10 of the Company's By-Laws and (ii) the Schedule 14A filed
with the Commission, in each case, relating to the
nomination of the persons named in such notice for election
to the Company's Board of Directors at the Annual Meeting
of the Company's Stockholders.
(b) From and after the date hereof until the
earlier of (i) the Effective Time and (ii) the termination
of this Agreement, neither Parent nor Purchaser nor any of
their affiliates or associates (as such terms are defined
in Rule 12b-2 promulgated under the Exchange Act) will,
except as otherwise expressly permitted or required by this
Agreement, directly or indirectly, alone or through or with
others, in any manner
(i) solicit, make, or in any way participate in,
directly or indirectly, any "solicitation" of
"proxies" (as such terms are used in the proxy rules
of the Securities and Exchange Commission promulgated
pursuant to Section 14(a)-11 of the Exchange Act) from
the stockholders of the Company, become a
"participant" in any "election contest" (as such terms
are defined or used in Rule 14(a)-11 under the
Exchange Act) with respect to the Board of Directors
of the Company, solicit or execute any written consent
in lieu of a meeting of holders of voting securities
except to support the nominees or directors of the
Board of Directors of the Company or any affiliate
thereof or call or seek to have called any meeting of
the stockholders of the Company or any affiliate
thereof;
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<PAGE>
(ii) except as otherwise provided herein, otherwise
seek election to or seek to place a representative on
the Board of Directors of the Company or any affiliate
thereof, or seek the removal of any member of the
Board of Directors of the Company or any affiliate
thereof.
4.17 No Solicitation of Transactions. The
--------------------------------
Company, its affiliates and their respective officers,
directors, employees, representatives and agents shall
immediately cease any existing discussions or negotiations,
if any, with any parties conducted heretofore with respect
to any acquisition or exchange of all or any material
portion of the assets of, or any equity interest in, the
Company or any of its subsidiaries (except pursuant to the
VME Sale Agreement) or any business combination with the
Company or any of its subsidiaries. The Company, its
subsidiaries, directors, employees, representatives and
agents may, directly or indirectly, furnish information and
access, in each case only in response to a request for such
information or access to any person made after the date
hereof which was not initiated, solicited or knowingly
encouraged by the Company or any of its affiliates or any
of its or their respective officers, directors, employees,
representatives or agents after the date hereof (with
respect to confidential information, pursuant to appro-
priate confidentiality agreements), and may participate in
discussions and negotiate with such entity or group con-
cerning any merger, sale of assets, sale of shares of
capital stock or similar transaction (including an exchange
of stock or assets) involving the Company or any subsidiary
or division of the Company, if such entity or group has
submitted a bona fide proposal to the Board relating to any
such transaction and if a majority of the Board of
Directors of the Company determines, in its good faith
judgment, based on the opinion of independent outside legal
counsel to the Company, that failing to take such action
would constitute a breach of such Board's fiduciary
obligations under applicable law. The Company shall
promptly notify Parent if any proposal or offer, or any
inquiry or contact with any person with respect thereto, is
made and shall, in any such notice to Parent, indicate in
reasonable detail the identity of the offeror and the terms
and conditions of any proposal or offer, or any such
inquiry or contact. The Company shall keep Parent
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<PAGE>
promptly advised of all developments which could reasonably
be expected to culminate in the Board of Directors
withdrawing, modifying or amending its recommendation of
the Offer, the Merger and other transactions contemplated
by this Agreement. Except as set forth in this Section
4.17, neither the Company or any of its affiliates, nor any
of its or their respective officers, directors, employees,
representatives or agents, shall, directly or indirectly,
knowingly encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any
information to, any corporation, partnership, person or
other entity or group (other than Parent and Purchaser, any
affiliate or associate of Parent and Purchaser, or any
designees of Parent or Purchaser) concerning any merger,
sale of assets, sale of shares of capital stock or similar
transactions (including an exchange of stock or assets)
involving the Company or any subsidiary or division of the
Company; provided, that nothing in this Section 4.17 shall
--------
prevent the Company or the Board from taking, and
disclosing to the Company's stockholders, a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the
Exchange Act with regard to any tender offer or from making
such disclosure to the Company's stockholders which, as
advised in an opinion of counsel, is required under appli-
cable law; provided further, that the Board shall not
----------------
recommend that the stockholders of the Company tender their
Shares in connection with any such tender offer unless the
Board by a majority vote determines in its good faith
judgment based on the opinion of independent outside legal
counsel to the Company, that failing to take such action
would constitute a breach of the Board's fiduciary duty
under applicable law.
4.18 Postponement of Annual Meeting. The
------------------------------
Company shall as soon as possible indefinitely postpone its
annual meeting of stockholders currently scheduled for May
9, 1995, and shall take no action unless compelled by legal
process to reschedule such annual meeting or to call a
special meeting of stockholders of the Company except in
accordance with this Agreement unless and until this
Agreement has been terminated in accordance with its terms.
4.19 Sale of VME. The Company shall use its
-----------
reasonable best efforts to take or cause to be taken all
such action necessary (i) to consummate the transactions
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<PAGE>
contemplated by the VME Sale Agreement (which agreement is
described in the Company's Current Report on Form 8-K filed
with the Commission on March 6, 1995) prior to completion
of the Offer, including selling its 50% interest in VME
Group N.V. for cash proceeds of not less than $573 million,
or (ii) failing such consummation, to prevent cancellation
or termination of the VME Sale Agreement, amendment thereof
in a manner that would reasonably be expected to have a
material adverse effect on the Company, or any other event
which shall cause the VME Sale Agreement to no longer
remain in full force and effect.
ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.01 Conditions Precedent to Obligations of
--------------------------------------
Parent, Purchaser and the Company. The respective
---------------------------------
obligations of Parent and Purchaser, on the one hand, and
the Company, on the other hand, to effect the Merger are
subject to the satisfaction or waiver (subject to
applicable law) at or prior to the Effective Time of each
of the following conditions:
(a) Approval of Company's Stockholders. To
----------------------------------
the extent required by applicable law, this Agreement
and the Merger shall have been approved and adopted by
holders of a majority of the Common Stock of the
Company in accordance with applicable law (if required
by applicable law) and the Company's Certificate of
Incorporation and By-Laws;
(b) HSR Act. Any waiting period (and any
-------
extension thereof) under the HSR Act applicable to the
Merger shall have expired or been terminated;
(c) Injunction. No preliminary or permanent
----------
injunction or other order shall have been issued by
any court or by any governmental or regulatory agency,
body or authority which prohibits the consummation of
the Offer or the Merger and the transactions
contemplated by this Agreement and which is in effect
at the Effective Time, provided, however, that, in the
-------- -------
case of any such decree, injunction or other order,
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<PAGE>
each of the parties shall have used reasonable best
efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any
decree, injunction or other order that may be entered;
(d) Statutes. No statute, rule, regulation,
--------
executive order, decree or order of any kind shall
have been enacted, entered, promulgated or enforced by
any court or governmental authority which prohibits
the consummation of the Offer or the Merger or has the
effect of making the purchase of the Common Stock
illegal; and
(e) Payment for Common Stock. Purchaser
------------------------
shall have accepted for payment and paid for the
shares of Common Stock tendered pursuant to the Offer;
provided, that the foregoing will not be a condition
--------
to Parent's and Purchaser's obligation to consummate
the Merger if Purchaser's failure to purchase Shares
of Common Stock violates the terms of the Offer.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.01 Termination. This Agreement may be
-----------
terminated and the transactions contemplated hereby may be
abandoned, at any time prior to the Effective Time, whether
before or after approval of the Merger by the Company's
stockholders:
(a) by mutual written consent of the
Company, on the one hand, and of Parent and Purchaser,
on the other hand;
(b) by either Parent, on the one hand, or
the Company, on the other hand, if any governmental or
regulatory agency located or having jurisdiction
within the United States or any country or economic
region in which either the Company or Parent, directly
or indirectly, has material assets or operations shall
have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or
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<PAGE>
otherwise prohibiting the acceptance for payment of,
or payment for, shares of Common Stock pursuant to the
Offer or the Merger and such order, decree or ruling
or other action shall have become final and
nonappealable; provided, that Parent shall, if
--------
necessary to prevent the taking of such action, or the
enaction, enforcement, promulgation, amendment,
issuance or application of any statute, rule, regula-
tion, legislation, interpretation, judgment, order or
injunction, offer to accept an order to divest such of
the Company's or Parent's assets and businesses as may
be necessary to forestall such injunction or order and
to hold separate such assets and business pending such
divestiture, but only if the amount of such assets and
businesses is not material to the assets or profit-
ability of Parent and its subsidiaries taken as a
whole;
(c) by Parent, on the one hand, or the
Company, on the other hand, if due to an occurrence or
circumstance which would result in a failure to
satisfy any of the Tender Offer Conditions, Purchaser
shall have failed to pay for Shares pursuant to the
Offer on or prior to the Outside Date, unless such
failure has been caused by or results from the failure
of the party seeking to terminate this Agreement to
perform in any material respect any of its respective
covenants or agreements contained in this Agreement.
As used herein, the term "Outside Date" shall mean the
latest (not to exceed 150 days) of (A) 60 days
following the date hereof, (B) the date on which
either the applicable waiting period under the HSR Act
shall have expired or been terminated or the final
terms of a consent decree between Parent and the Anti-
trust Division of the Department of Justice (the
"Antitrust Division") (the "Consenting Parties"), with
respect to the Offer and the Merger have been agreed
to by the Consenting Parties, or an order of a Federal
District Court adjudging that the Merger does not vio-
late the Federal antitrust laws shall have been issued
or the Antitrust Division shall have otherwise author-
ized the Parent to acquire Shares pursuant to the
Offer, or (C) 10 business days following the
conclusion of any ongoing proceedings before the
European Commission in connection with its review of
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<PAGE>
the transactions contemplated hereby or any similar
delay pursuant to any other material antitrust or
competitive law or regulation;
(d) by Parent, on the one hand, or the
Company, on the other hand, if the Offer is terminated
or expires in accordance with its terms without
Purchaser having purchased any Common Stock thereunder
due to a failure of any of the conditions set forth in
Annex A hereto to be satisfied, unless such
termination or expiration has been caused by or
results from the failure of the party seeking to
terminate this Agreement to perform in any material
respect any of its respective covenants or agreements
contained in this Agreement;
(e) by the Company, if the Board of
Directors of the Company determines that a proposal
for a Third Party Acquisition is a Superior Proposal
and a majority of the Board of Directors of the
Company determines, in its good faith judgment, based
on the opinion of independent legal outside counsel to
the Company, that a failure to terminate this
Agreement would constitute a breach of such Board's
fiduciary obligations under applicable law; provided,
--------
that any such termination by the Company under this
clause (e) shall not be effective until the Company
has made payment of the full fee and expense
reimbursement required by Section 7.01(a) hereof;
(f) prior to the consummation of the Offer,
by the Company, if (i) any of the representations and
warranties of Parent or Purchaser contained in this
Agreement were untrue or incorrect in any material
respect when made or have since become, and at the
time of termination remain, incorrect in any material
respect, or (ii) Parent or Purchaser shall have
breached or failed to comply in any material respect
with any of their respective obligations under this
Agreement, which breach shall not have been cured
prior to the earlier of (A) 10 days following notice
of such breach and (B) two business days prior to the
date on which the Offer expires; or
(g) by Parent prior to the purchase of
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<PAGE>
Shares pursuant to the Offer, if (i) there shall have
been a breach of any representation or warranty on the
part of the Company contained in this Agreement which
would reasonably be expected to have a material
adverse effect on the Condition of the Company and its
subsidiaries taken as a whole or which would
reasonably be expected to prevent (or materially
delay) the consummation of the Offer, (ii) there shall
have been a breach of any covenant or agreement on the
part of the Company contained in this Agreement which
would reasonably be expected to have a material
adverse effect on the Condition of the Company and its
subsidiaries taken as a whole or which would
reasonably be expected to prevent (or materially
delay) the consummation of the Offer, which shall not
have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two business
days prior to the date on which the Offer expires,
(iii) the Board shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a
manner adverse to Purchaser its approval or
recommendation of the Offer, this Agreement or the
Merger and shall not have reinstated such approval or
recommendation within three business days thereof,
shall have approved or recommended another offer or
transaction, or shall have resolved to effect any of
the foregoing, or (iv) the Minimum Condition (as
defined in Annex A) shall not have been satisfied by
the expiration date of the Offer and on or prior to
such date (A) any person (other than Parent or
Purchaser) shall have made a proposal or public
announcement or communication to the Company with re-
spect to a Third Party Acquisition at a price in
excess of $86.00 per Share or (B) any person
(including the Company or any of its affiliates or
subsidiaries), other than Parent or any of its
affiliates, shall have become the beneficial owner of
more than 20.0% of the Shares.
"Third Party Acquisition" shall mean the
occurrence of any of the following events: (i) the
acquisition of the Company by merger, tender offer or
otherwise by any person other than Parent, Purchaser or any
affiliate thereof (a "Third Party"); (ii) the acquisition
by a Third Party of 20.0% or more of the assets of the
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<PAGE>
Company and its subsidiaries, taken as a whole; (iii) the
acquisition by a Third Party of more than 20.0% of the
outstanding Shares; (iv) the adoption by the Company of a
plan of liquidation or the declaration or payment of an
extraordinary dividend; or (v) the repurchase by the
Company or any of its subsidiaries of 20.0% or more of the
outstanding Shares.
"Superior Proposal" shall mean a bona fide
proposal made by a Third Party to acquire all of the
outstanding shares of the Company pursuant to a tender
offer or a merger, or to purchase all or substantially all
of the assets of the Company, on terms which a majority of
the members of the Board of Directors of the Company
determines in its good faith reasonable judgment (based on
the advice of its financial and legal advisors) to be more
favorable to the Company and its stockholders than the
transactions contemplated hereby.
6.02 Effect of Termination. In the event of
---------------------
the termination of this Agreement pursuant to Section 6.01,
this Agreement shall forthwith become void and there shall
be no liability on the part of any party hereto except as
set forth in Sections 4.02, 7.01 and 7.15; provided,
--------
however, that nothing herein shall relieve any party from
-------
liability for any breach hereof.
ARTICLE VII
MISCELLANEOUS
7.01 Fees and Expenses. (a) If:
-----------------
(i) Parent terminates this Agreement pursuant
to Section 6.01(g)(iv)(A) hereof, and within twelve
months thereafter:
(A) the Company enters into an agreement
with respect to a Third Party Acquisition, or
a Third Party Acquisition occurs, involving
any party (or any affiliate or associate
thereof) (x) with whom the Company (or its
agents) had any discussions with respect to a
Third Party Acquisition, (y) to whom the
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<PAGE>
Company (or its agents) furnished information
with respect to or with a view to a Third
Party Acquisition or (z) who had submitted a
proposal or expressed any interest publicly or
to the Company in a Third Party Acquisition,
in the case of each of clauses (x), (y) and
(z) prior to such termination; or
(B) the Company enters into an agreement
with respect to a Third Party Acquisition, or
a Third Party Acquisition occurs, that
contemplates a direct or indirect
consideration (or implicit valuation) for
Shares (including the value of any stub
equity) in excess of $86.00 per Share; or
(ii) the Company terminates this Agreement
pursuant to Section 6.01(e) hereof or Parent
terminates this Agreement pursuant to Section
6.01(g)(iii) or 6.01(g)(iv)(B) hereof;
then the Company shall pay to Parent and Purchaser, within
one business day following the execution and delivery of
such agreement or such occurrence, as the case may be, or
simultaneously with any termination contemplated by Section
7.01(a)(ii) above, a fee, in cash, of $35 million,
provided, however, that the Company in no event shall be
-------- -------
obligated to pay more than one such fee with respect to all
such agreements and occurrences and such termination.
(b) Except as otherwise specifically provided
herein, all costs and expenses incurred in connection with
this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring
such costs and expenses.
7.02 Extension; Waiver. Subject to Section
-----------------
4.13, at any time prior to the Effective Time, the parties
hereto, by action taken by or on behalf of the respective
Boards of Directors of the Company, Parent or Purchaser,
may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii)
waive any inaccuracies in the representations and
warranties contained herein by any other applicable party
or in any document, certificate or writing delivered
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<PAGE>
pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of any party
to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such
party.
7.03 Public Announcements. The Company, on
--------------------
the one hand, and Parent and Purchaser, on the other hand,
agree to consult promptly with each other prior to issuing
any press release or otherwise making any public statement
with respect to the Offer, the Merger and the other trans-
actions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to
such consultation and review by the other party of a copy
of such release or statement, unless required by applicable
law or any listing agreement with a securities exchange.
7.04 Notices. All notices, requests,
-------
demands, waivers and other communications required or
permitted to be given under this Agreement shall be in
writing and shall be deemed to have been duly given if
delivered in person or mailed, certified or registered mail
with postage prepaid, or sent by telex, telegram or
telecopier, as follows:
(a) if to the Company, to it at:
Clark Equipment Company
100 North Michigan Street
P.O. Box 7008
South Bend, Indiana 46634
Attention: Bernard D. Henely, Esq.
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
(b) if to either Parent or Purchaser, to it
at:
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Ingersoll-Rand Company
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Attention: Patricia Nachtigal, Esq.
with an additional copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Robert L. Friedman, Esq.
or to such other Person or address as any party shall
specify by notice in writing to each of the other parties.
All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the
date of delivery unless if mailed, in which case on the
third business day after the mailing thereof except for a
notice of a change of address, which shall be effective
only upon receipt thereof.
7.05 Entire Agreement. This Agreement, the
----------------
Disclosure Schedule, the Parent Confidentiality Agreement
and the annex and other documents referred to herein or
delivered pursuant hereto, collectively contain the entire
understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior
agreements and understandings, oral and written, with
respect thereto.
7.06 Binding Effect; Benefit; Assignment.
-----------------------------------
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of
the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior
written consent of the other parties, except that Parent
and Purchaser may assign all or any of their respective
rights and obligations hereunder, other than those set
forth in Section 4.07, to any direct or indirect wholly-
owned subsidiary or subsidiaries of Parent, provided that
--------
no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform
such obligations. Nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the
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<PAGE>
parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except for Section
4.11, which is intended to be for the benefit of the
persons referred to therein, and may be enforced by such
persons.
7.07 Amendment and Modification. Subject to
--------------------------
Section 4.13 and applicable law, this Agreement may be
amended, modified and supplemented in writing by the
parties hereto in any and all respects before the Effective
Time (notwithstanding any stockholder approval of the
Merger), by action taken by the respective Boards of
Directors of Parent, Purchaser and the Company or by the
respective officers authorized by such Boards of Directors,
provided, however, that after any such stockholder
-------- -------
approval, no amendment shall be made which by law requires
further approval by such stockholders without such further
approval.
7.08 Further Actions. Each of the parties
---------------
hereto agrees that, subject to its legal obligations, it
will use its reasonable best efforts to fulfill all
conditions precedent specified herein, to the extent that
such conditions are within its control, and to do all
things reasonably necessary to consummate the transactions
contemplated hereby.
7.09 Headings. The descriptive headings of
--------
the several Articles and Sections of this Agreement are
inserted for convenience only, do not constitute a part of
this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
7.10 Counterparts. This Agreement may be
------------
executed in several counterparts, each of which shall be
deemed to be an original, and all of which together shall
be deemed to be one and the same instrument.
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<PAGE>
7.11 Applicable Law. This Agreement and the
--------------
legal relations between the parties hereto shall be
governed by and construed in accordance with the laws of
the State of Delaware, without regard to the conflict of
laws rules thereof.
7.12 Severability. If any term, provision,
------------
covenant or restriction contained in this Agreement is held
by a court of competent jurisdiction or other authority to
be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants
and restrictions contained in this Agreement shall remain
in full force and effect and shall in no way be affected,
impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely
as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the
fullest extent possible.
7.13 "Person" Defined. "Person" shall mean
----------------
and include an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization, a
group and a government or other department or agency
thereof.
7.14 Knowledge of the Company. As to any
------------------------
matter represented herein as being within the Company's
knowledge, to the knowledge or best knowledge of the
Company or any equivalent limitation, such knowledge shall
be deemed to exist only if the matter is within the actual
knowledge of the Chief Executive Officer or any Vice
President of the Company.
7.15 Non-Survival of Representations,
--------------------------------
Warranties and Agreements. The representations, warranties
-------------------------
and agreements in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement
pursuant to Section 6.01 as the case may be, except that
the agreements set forth in Article II, Section 4.07,
Section 4.10, Section 4.11 and Article VII shall survive
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<PAGE>
the Effective Time indefinitely and those set forth in
Section 4.02 and Article VII shall survive termination
indefinitely.
-57-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser
and the Company have caused this Agreement to be executed
by their respective officers thereunto duly authorized, all
as of the date first above written.
INGERSOLL-RAND COMPANY
By /s/ James E. Perrella
---------------------------
Name: James E. Perrella
Title: President and Chief
Executive Officer
CEC ACQUISITION CORP.
By /s/ Thomas McBride
---------------------------
Name: Thomas McBride
Title: President
CLARK EQUIPMENT COMPANY
By /s/ Leo J. McKernan
---------------------------
Name: Leo J. McKernan
Title: Chairman, President
and Chief Executive Officer
<PAGE>
ANNEX A
-------
to
Agreement and
Plan of Merger
--------------
The capitalized terms used in this Annex A shall
have the meanings set forth in the Agreement to which it is
annexed, except that the term "Merger Agreement" shall be
deemed to refer to the Agreement to which this Annex A is
appended.
-----------------------------------------------------------
Notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment or
subject to any applicable rules and regulations of the
Commission, including Rule 14e-1c under the Exchange Act
(relating to Purchaser's obligation to pay for or return
tendered shares promptly after termination or withdrawal of
the Offer), pay for any shares of Common Stock tendered and
may terminate or amend the Offer in accordance with the
Merger Agreement and may postpone the acceptance of, and
payment for, shares of Common Stock, if (i) there shall not
have been validly tendered and not withdrawn prior to the
expiration of the Offer a number of shares of Common Stock
which, together with Common Stock owned by Parent and
Purchaser, represent a majority of the total voting power
of all shares of capital stock of the Company outstanding
on a fully diluted basis (the "Minimum Condition"), (ii)
subject to the proviso contained in paragraph (a) below,
any appli-
<PAGE>
ANNEX A
Page 2
cable waiting period under the HSR Act or under any
applicable foreign statutes or regulations in a
jurisdiction where Parent or the Company, directly or
indirectly, has material operations or a material amount of
assets shall not have expired or been terminated or (iii)
at any time on or after the date of the Merger Agreement
and at or before the time of payment for any such shares of
Common Stock (whether or not any shares of Common Stock
have theretofore been accepted for payment or paid for
pursuant to the Offer) any of the following shall occur:
(a) there shall be any action taken, or any stat-
ute, rule, regulation, legislation, interpretation, judg-
ment, order or injunction enacted, enforced, promulgated,
amended, issued or deemed applicable to the Offer, by any
legislative body, court, government or governmental,
administrative or regulatory authority or agency,
domestic or foreign, other than the routine application
of the waiting period provisions of the HSR Act to the
Offer or to the Merger, that would reasonably be expected
to: (i) make illegal or otherwise prohibit or materially
delay consummation of the Offer or the Merger or seek to
obtain material damages or make materially more costly
the making of the Offer, (ii) prohibit or materially
limit the ownership or operation by Parent or Purchaser
of all or any material portion of the business or assets
of the Company or any of its subsidiaries taken as a
whole or compel Parent or Purchaser to dispose of or hold
separately all or any material portion of the business or
assets of Parent or Purchaser or the Company or any of
its subsidiaries taken as a whole, or seek to impose any
material limitation on the ability of Parent or Purchaser
to conduct its business or own such assets, (iii) impose
material limitations on
<PAGE>
ANNEX A
Page 3
the ability of Parent or Purchaser effectively to
acquire, hold or exercise full rights of ownership of the
shares of Common Stock, including, without limitation,
the right to vote any shares of Common Stock acquired or
owned by Purchaser or Parent on all matters properly
presented to the Company's stockholders, or (iv) require
divestiture by Parent or Purchaser of any shares of
Common Stock; provided, that Parent shall, if necessary
--------
to prevent the taking of such action, or the enaction,
enforcement, promulgation, amendment, issuance or
application of any statute, rule, regulation,
legislation, interpretation, judgment, order or injunc-
tion, offer to accept an order to divest such of the
Company's or Parent's assets and businesses as may be
necessary to forestall such injunction or order and to
hold separate such assets and business pending such
divestiture, but only if the amount of such assets and
businesses is not material to the assets or profitability
of Parent and its subsidiaries taken as a whole;
(b) there shall have occurred any development that
has, or would reasonably be expected to have, a material
adverse effect on the business, assets, financial
condition or results of operations of the Company and its
subsidiaries taken as a whole;
(c) there shall have occurred (i) any general sus-
pension of trading in, or limitation on prices for,
securities on the New York Stock Exchange, (ii) any
decline in the Standard & Poor's 500 in excess of 25%
measured from the close of business on the trading day
next preceding the date of the Merger Agreement, (iii) a
declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iv)
any material limitation by any U.S., federal or state
government or governmental, administrative or regulatory
authority or agency on the extension of credit by banks
or other lending institutions, or (v) a commencement or
escalation of a war or armed hostilities or other
national or international calamity directly or indirectly
involving the United States and having a material adverse
effect on the business, assets, financial condition or
results of operations of the Company and its subsidiaries
taken as a whole or materially
<PAGE>
ANNEX A
Page 4
adversely affecting (or materially delaying) the consummation
of the Offer;
(d)(i) it shall have been publicly disclosed or
Purchaser shall have otherwise learned that beneficial
ownership (determined for the purposes of this paragraph
as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 20.0% of the outstanding Shares has
been acquired by any corporation (including the Company
or any of its subsidiaries or affiliates), partnership,
person or other entity or group (as defined in Section
13(d)(3) of the Exchange Act), other than Parent or any
of its affiliates, or (ii) (A) the Board of Directors of
the Company or any committee thereof shall have withdrawn
or modified in a manner adverse to Parent or Purchaser
the approval or recommendation of the Offer, the Merger
or the Merger Agreement, or approved or recommended any
takeover proposal or any other acquisition of Shares
other than the Offer and the Merger, (B) any corporation,
partnership, person or other entity or group shall have
entered into a definitive agreement or an agreement in
principle with the Company with respect to a tender offer
or exchange offer for any Shares or a merger,
consolidation or other business combination with or
involving the Company or any of its subsidiaries, or (C)
the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing;
(e) any of the representations and warranties of
the Company set forth in the Merger Agreement that are
qualified as to materiality shall not be true and
correct, or any such representations and warranties that
are not so qualified shall not be true and correct in any
respect which would reasonably be expected to have a
material adverse effect on the business, assets, results
of operations or financial condition of the Company and
its subsidiaries taken as a whole, in each case as if
such representations and warranties were made at the time
of such determination except as to any such
representation or warranty which speaks as of a specific
date, which must be untrue or incorrect in the foregoing
respects as of such specific date;
<PAGE>
ANNEX A
Page 5
(f) the Company shall have failed to perform in any
material respect any obligation or to comply in any
material respect with any agreement or covenant of the
Company to be performed or complied with by it under the
Merger Agreement;
(g)(x) the Company shall not have consummated the
sale of its 50% interest in VME Group N.V. for cash
proceeds of not less than $573 million and (y) the
definitive agreement to sell such interest to AB Volvo
of Sweden described in the Company's Current Report on
Form 8-K filed with the Commission on March 6, 1995
shall have been cancelled or terminated, or shall have
been amended in a manner that is materially adverse to
the Company, or shall otherwise no longer remain in
full force and effect; or
(h) the Merger Agreement shall have been terminated
in accordance with its terms;
which, in the reasonable judgment of Purchaser, in any such
case and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with such
acceptance for payment or payment.
The foregoing conditions (including those set forth
in clauses (i)-(iii) above) are for the sole benefit of
Purchaser and may be asserted by Purchaser, or may be
waived by Purchaser, in whole or in part at any time and
from time to time in its sole discretion. The failure by
Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and
each such right shall
<PAGE>
ANNEX A
Page 6
be deemed an ongoing right which may be asserted at any
time and from time to time. Any determination by Purchaser
concerning the events described in this Annex A will be
final and binding upon all parties.
[Clark Letterhead]
April 12, 1995
Dear Stockholder:
On April 9, 1995, Clark Equipment Company entered into a merger agreement with
Ingersoll-Rand Company and one of its subsidiaries that provides for the
acquisition of Clark Equipment Company by Ingersoll-Rand Company at a price of
$86.00 per share. Under the terms of the proposed transaction, an Ingersoll-Rand
Company subsidiary is today amending its tender offer for all outstanding shares
of Clark Equipment Company common stock to increase the offering price to $86.00
per share.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE INGERSOLL-RAND COMPANY
OFFER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND
IN THE BEST INTERESTS OF CLARK EQUIPMENT COMPANY STOCKHOLDERS. ACCORDINGLY, THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL CLARK EQUIPMENT COMPANY
STOCKHOLDERS ACCEPT THE INGERSOLL-RAND COMPANY OFFER AND TENDER THEIR SHARES TO
INGERSOLL-RAND COMPANY.
Following the successful completion of the tender offer, upon approval by the
required stockholder vote, the Ingersoll-Rand Company subsidiary will be merged
with Clark Equipment Company and all shares not purchased in the tender offer
will be converted into the right to receive $86.00 per share in cash in the
merger.
In arriving at its recommendations, the Board of Directors gave careful
consideration to a number of factors. These factors included the opinion of CS
First Boston Corporation, financial advisor to Clark Equipment Company, that the
consideration of $86.00 per share to be received by the stockholders pursuant to
the Ingersoll-Rand Company offer and the merger is fair to Clark Equipment
Company stockholders from a financial point of view.
Accompanying this letter is a copy of the Clark Equipment Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is
Ingersoll-Rand Company's Offer to Purchase and related materials, including a
Letter of Transmittal for use in tendering shares. We urge you to read the
enclosed materials carefully. The management and directors of Clark Equipment
Company thank you for the support you have given the Company.
On behalf of the Board of Directors,
Sincerely,
Leo J. McKernan
Chairman of the Board,
President and Chief Executive Officer
[CS First Boston Letterhead]
April 9, 1995
Board of Directors
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Members of the Board:
You have asked us to advise you with respect to the fairness to
the stockholders of Clark Equipment Company (the "Company"),
other than Ingersoll-Rand Company ("Ingersoll-Rand") and CEC
Acquisition Corp. (the "Purchaser"), from a financial point of
view of the consideration to be received by such holders pursuant
to the terms of the Agreement and Plan of Merger, dated as of
April 9, 1995 (the "Merger Agreement"), among the Company,
Ingersoll-Rand and the Purchaser. The Merger Agreement provides
that the cash tender offer by the Purchaser for all of the issued
and outstanding shares of common stock, par value $7.50 per
share, of the Company (the "Common Stock"), will be increased to
$86.00 per share, net to the seller (the "Tender Offer"), and for
the subsequent merger of the Purchaser with and into the Company
pursuant to which each outstanding share of Common Stock (other
than shares owned by Ingersoll-Rand, the Purchaser or any other
affiliate of Ingersoll-Rand or shares as to which dissenters'
rights have properly been exercised) will be converted into the
right to receive $86.00 in cash (the "Merger" and together with
the Tender Offer the "Transaction").
In arriving at our opinion, we have reviewed certain publicly
available business and financial information relating to the
Company and Ingersoll-Rand, in addition to a draft of the Merger
Agreement. We have also reviewed certain other information,
including financial forecasts for the Company, provided to us by
the Company, and have met with the Company's management to
discuss the business and prospects of the Company.
We have also considered certain financial and stock market data
of the Company and Ingersoll-Rand, and we compared that data with
similar data for other publicly held companies in businesses
similar to those of the Company and Ingersoll-Rand, and we have
considered the financial terms of certain other business
combinations which have recently been effected. We also
considered
<PAGE>
[CS First Boston Letterhead]
such other information, financial studies, analyses and
investigations and financial, economic and market criteria which
we deemed relevant.
In connection with our review, we have not assumed any
responsibility for independent verification of any of the
foregoing information and have relied on its being complete and
accurate in all material respects. With respect to the financial
forecasts, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available
estimates and judgments of the Company's management as to the
future financial performance of the Company. In addition, we
have not made an independent evaluation or appraisal of the
assets of the Company, nor have we been furnished with any such
evaluations or appraisals. There has been no public solicitation
of indications of interest in a possible acquisition of the
Company. However, in connection with our engagement, we have
made several inquiries of third parties concerning their possible
interest in a transaction with the Company.
We have acted as financial advisor to the Company in connection
with the Transaction and will receive a fee for our services,
including rendering this opinion, a significant portion of which
is contingent upon the consummation of the Transaction.
In the past, CS First Boston has separately performed certain
investment banking services for the Company and received
customary fees for such services. In the ordinary course of our
business, CS First Boston and its affiliates may actively trade
the debt and equity securities of both the Company and Ingersoll-
Rand for their own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in
such securities.
It is understood that this letter is solely for the benefit and
use of the Board of Directors of the Company in its consideration
of the Transaction and may not be relief upon by any other
person, used for any other purpose or reproduced, disseminated,
quoted or referred to at any time, in any manner or for any
purpose without our prior written consent. This letter does not
constitute a recommendation to any stockholder with respect to
whether to tender shares of Common Stock pursuant to the Tender
Offer or whether to vote in favor of the Merger.
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the consideration to be received by the
stockholders of the Company (other than Ingersoll-Rand and the
Purchaser) in the Tender Offer and the Merger is fair to such
stockholders form a financial point of view.
Very truly yours,
CS FIRST BOSTON CORPORATION
SIXTH. (1) In furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is
expressly authorized to make, alter or repeal the by-laws
of the Corporation.
(2) The number of Directors of the Corporation shall be
fixed by, or in the manner provided in, the by-laws;
provided that such number of Directors shall not be less
than three.
(3) Elections of Directors need not be by written ballot
unless the by-laws of the Corporation shall so provide.
(4) A director of this Corporation shall under no
circumstances have any personal liability to the
Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for those
specific breaches and acts or omissions with respect to
which the Delaware General Corporation Law expressly
provides that this
<PAGE>
provision shall not eliminate or limit such personal
liability of directors.
The Corporation shall indemnify, to the fullest extent
permitted by applicable law, any person made or threatened
to be made a party to any action, suit or proceeding by
reason of the fact that he (or she) is or was a Director or
officer of the Corporation. The Board of Directors shall
have full authority as contemplated by paragraph (1) of
this Article SIXTH, to implement the mandatory
indemnification hereby provided by means of appropriate
provisions in the Corporation's By-Laws.
NOTE: Paragraph (4) is set forth as amended by the
stockholders on May 12, 1987.
(5) The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer,
employee or agent of, or participant in, another
corporation, partnership, joint venture, trust and other
enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have
the power to
-2-
<PAGE>
indemnify him against such liability under the provisions
of paragraph (4) above or otherwise.
(6) (a) Except as set forth in subparagraph (d) of this
paragraph (6), the affirmative vote or consent of the
holders of four-fifths of all classes of stock of the
Corporation entitled to vote in elections of directors
considered for the purposes of this paragraph (6) as
one class, shall be required (i) for the adoption of
any agreement for the merger or consolidation of the
Corporation with or into any other corporation, or
(ii) to authorize any sale or lease of all or any
substantial part of the assets of the Corporation to,
or any sale or lease to the Corporation or any
subsidiary thereof in exchange for securities of the
Corporation of any assets (except assets having an
aggregate fair market value of less than $10,000,000)
of, any other corporation, person or other entity, if,
in either case, as of the record date for the
determination of the stockholders of the Corporation
entitled to notice thereof and to vote thereon or
consent thereto such other corporation, person or
entity is the beneficial owner, directly or
indirectly, of more than 10% of the outstanding shares
of stock of the Corporation entitled to vote in
elections of directors, considered for the purposes of
-3-
<PAGE>
this paragraph (6) as one class. Such affirmative
vote or consent shall be in addition to the vote or
consent of the holders of the stock of the Corporation
otherwise required by law or any agreement between the
Corporation and any national securities exchange.
(b) For the purposes of this paragraph (6), (i) any
corporation, person or other entity shall be deemed to
be the beneficial owner of any shares of stock of the
Corporation (A) which it has the right to acquire
pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise,
or (B) which are beneficially owned, directly or
indirectly (including shares deemed owned through
application of clause (A) above), by any other
corporation, person or entity with which it or its
"affiliate", or "associate" (as defined below) has any
agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of
stock of the Corporation, or which is its "affiliate"
or "associate" as those terms are defined in Rule
12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect on
January 1, 1969, and (ii) the outstanding shares of
any class of stock of the Corporation shall include
shares deemed owned through application of
-4-
<PAGE>
clauses (A) and (B) above but shall not include any
other shares which may be issuable pursuant to any
agreement, or upon exercise of conversion rights,
warrants or options, or otherwise.
(c) The Board of Directors shall have the power and
duty to determine for the purposes of this paragraph
(6), on the basis of information known to the
Corporation, whether (i) such other corporation,
person or other entity beneficially owns more than 10%
of the outstanding shares of stock of the Corporation
entitled to vote in elections of directors, (ii) a
corporation, person, or entity is an "affiliate" or
"associate" (as defined above) of another, (iii) the
assets being acquired by the Corporation, or any
subsidiary thereof, have an aggregate fair market
value of less than $10,000,000, and (iv) a memorandum
of understanding or a letter of intent referred to
below is substantially consistent with the transaction
covered thereby. Any such determination shall be
conclusive and binding for all purposes of this
paragraph (6).
(d) The provisions of this paragraph (6) shall not be
applicable to (i) any merger or consolidation of the
Corporation with or into any other corporation, or any
-5-
<PAGE>
sale or lease of all or any substantial part of the
assets of the Corporation to, or any sale or lease to
the Corporation or any subsidiary thereof in exchange
for securities of the Corporation of any assets of,
any corporation if the Board of Directors of the
Corporation shall by resolution have approved a memorandum
of understanding or a letter of intent with such other
corporation with respect to and substantially
consistent with such transaction prior to the time
that such other corporation shall have been a holder
of more than 10% of the outstanding shares of stock of
the Corporation entitled to vote in elections of
directors; or (ii) any merger or consolidation of the
Corporation with, or any sale or lease to the
Corporation or any subsidiary thereof of any of the
assets of, any corporation of which a majority of the
outstanding shares of all classes of stock entitled to
vote in elections of directors is owned of record or
beneficially by the Corporation and its subsidiaries.
(e) No amendment to the Certificate of Incorporation
of the Corporation shall amend, alter, change or
repeal any of the provisions of this paragraph (6),
unless the amendment affecting such amendment,
alteration, change or repeal shall receive the
affirmative vote or consent
-6-
<PAGE>
of the holders of four-fifths of all classes of stock
of the Corporation entitled to vote in elections of
directors, considered for the purposes of this
paragraph (6) as one class.
-7-
April 9, 1995
LETTER OF INTENT
----------------
Gentlemen:
Ingersoll-Rand Company, through a designated subsidiary, hereby proposes to
acquire Clark Equipment Company ("the Company"). We are prepared to make an
offer to acquire 100% of the Company's common stock for a cash purchase price
of $86.00 per share subject to the execution of the attached agreement and
plan of merger.
In submitting this proposal it is our understanding that it is not deemed
self-executing and that our respective legal obligations shall arise solely
from the definitive merger agreement described above.
Very truly yours,
INGERSOLL-RAND COMPANY
By /s/ James E. Perrella
---------------------------
Title: President and Chief
Executive Officer
Agreed to as of
April 9, 1995
CLARK EQUIPMENT COMPANY
By: /s/ Leo J. McKernan
--------------------------
Title: President and Chief
Executive Officer
___________________________________________________________
RESOLUTIONS
OF
THE BOARD OF DIRECTORS
OF
CLARK EQUIPMENT COMPANY
___________________________________________________________
WHEREAS, pursuant to a tender offer disclosed in
a Tender Offer Statement on Schedule 14D-1, dated
April 3, 1995, of CEC Acquisition Corp., a Delaware
corporation ("Acquisition"), and a wholly-owned
subsidiary of Ingersoll-Rand Company, a New Jersey
corporation ("Ingersoll"), Acquisition has offered to
purchase all of the outstanding shares of common
stock, par value $7.50 per share, of the Company (the
"Shares"), including the associated preferred stock
purchase rights (the "Rights") to be issued pursuant
to the Rights Agreement, dated March 10, 1987, as
amended and restated as of August 14, 1990, between
the Company and Harris Trust and Savings Bank, as
Rights Agent (the "Rights Agreement"), at a price of
$77.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the
Offer to Purchase, dated April 3, 1995, and the
related Letter of Transmittal (together, the "Offer");
WHEREAS, the Board of Directors of the Company
(the "Board") has reviewed and considered with its
financial and legal advisors the Agreement and Plan of
Merger (the "Merger Agreement"), by and among the
Company, Ingersoll and Acquisition in the draft form
presented to this meeting pursuant to which
Acquisition would increase the per Share price of the
Offer to $86.00, net to the Seller in cash (the
"Revised Offer");
<PAGE>
NOW, THEREFORE BE IT
RESOLVED, that after review of the Revised Offer
with the Company's financial and legal advisors, the
Board has determined that the Revised Offer is fair
and otherwise in the best interests of the Company and
its stockholders and that it be, and it hereby is,
approved and that the Board will recommend acceptance
of the Revised Offer and that the Company's
stockholders tender their Shares pursuant to the
Revised Offer in a Solicitation/Recommendation
Statement on Schedule 14D-9 to be filed with the
Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended;
RESOLVED, that after review of the Merger
Agreement and the transactions contemplated thereby
with the Company's financial and legal advisors, the
Board has determined that the execution and delivery
of the Merger Agreement and the consummation by the
Company of the transactions contemplated thereby are
fair to and in the best interests of the Company and
its Stockholders, and that the Merger Agreement be,
and it hereby is, approved and adopted, and the
Chairman of the Board, Chief Executive Officer and
President of the Company be, and hereby is,
authorized, empowered and directed to execute and
deliver the Merger Agreement substantially in the form
presented to this meeting, and any amendments thereto,
with such changes, additions and modifications thereto
as such officer deems necessary, appropriate or
advisable, such necessity, appropriateness or
advisability to be conclusively evidenced by such
officer's execution and delivery thereof;
RESOLVED, that, for purposes of Section 203(a)(1)
of the Delaware General Corporation Law, the
execution, delivery and performance by the Company of
the terms of the Merger Agreement are hereby approved.
RESOLVED, that the Letter of Intent, dated April
9, 1995, by and among Ingersoll and the Company, is
hereby approved and that the proper officers of the
Company are hereby authorized and directed to execute
and deliver, by and on behalf of the Company, the
Letter of Intent, substantially in the form presented
-2-
<PAGE>
to this meeting, and that such Letter of Intent shall
satisfy the requirements of Article SIXTH, paragraph
6(d) of the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") for
purposes of rendering the supermajority voting
requirements of Article SIXTH, paragraph 6(a) of the
Certificate of Incorporation inapplicable to the
Offer, the Merger Agreement and the transactions
contemplated thereby;
RESOLVED, that the Company's annual stockholders'
meeting scheduled for May 9, 1995 is hereby postponed
indefinitely;
RESOLVED, that the proper officers of the Company
be and hereby are authorized to file, on behalf of the
Company, all documents with the Securities and
Exchange Commission (the "Commission"), national
securities exchanges or other person as they deem
necessary, appropriate or advisable to comply with the
requirements of the Securities Exchange Act of 1934,
as amended, and the rules promulgated by the
Commission thereunder, or any other applicable laws,
rules or regulations in connection with the Merger
Agreement, the Revised Offer and the transactions and
other actions contemplated thereby, including without
limitation, the filing of a Schedule 14D-9, and any
amendments thereto, in such form as such officers
shall deem necessary, appropriate or advisable, such
necessity, appropriateness or advisability to be
conclusively evidenced by such officers' execution
thereof;
RESOLVED, that in order for the Company to comply
with all applicable requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act") and the rules and regulations
thereunder, including the filings required to be made
thereunder, the proper officers of the Company are
hereby authorized, empowered and directed on behalf
and in the name of the Company to prepare, with the
assistance of counsel for the Company, execute and
file or cause to be filed all reports, statements,
documents and information required to be filed by the
Company pursuant to the HSR Act and to respond to all
requests for additional information and to meet and
-3-
<PAGE>
confer, or to cause counsel to meet or confer, with
officials of the Federal Trade Commission or the
Antitrust Division of the Department of Justice
relating to the transactions contemplated by the
Merger Agreement;
RESOLVED, that the form, terms and provisions of
the Amendment (the "Amendment"), to the Rights
Agreement, substantially in the form presented to this
meeting, be, and it hereby is, approved and adopted in
all respects, and the performance of all of the terms
thereof is hereby approved;
RESOLVED, that the Chairman of the Board, the
President, or any Vice President of the Corporation
be, and each of them hereby is, authorized, in the
name and on behalf of the Company, to execute the
Amendment substantially in the form presented to this
meeting, with such modifications thereto as the
officer executing the same shall approve, such
approval to be conclusively evidenced by such
execution;
RESOLVED, that the Chairman of the Board, the
President or any Vice President, the Treasurer or any
Assistant Treasurer and the Secretary or any Assistant
Secretary of the Company be, and each of them hereby
is, authorized, in the name and on behalf of the
Corporation, to execute and file amendments and
supplements to any application or applications with
respect to the listing of the Rights, file such other
papers and documents, pay any and all applicable
listing fees, and take such other action as may be
necessary or desirable to maintain the listing of the
Rights and the securities of the Company issuable upon
exercise of the Rights on the New York Stock Exchange,
Inc. and on any other stock exchanges deemed
appropriate by the proper officers of the Company, and
the execution by such officers of any such paper or
agreement or the doing by them of any act in
connection with the foregoing matters shall
conclusively establish their authority therefor from
the Company and the approval and ratification by the
Company of the papers so executed and the action so
taken;
-4-
<PAGE>
RESOLVED, that the Board hereby adopts as if
expressly set forth herein the form of any resolution
required by any authority to be filed in connection
with any applications, consents to service, issuer's
covenants or other documents if (1) in the opinion of
any officer of the Company executing the same, the
adoption of such resolutions is necessary or
desirable, and (2) the Secretary or an Assistant
Secretary of the Company evidences such adoption by
inserting in the minutes of this meeting copies of
such resolutions, which will thereupon be deemed to be
adopted by the Board of Directors with the same force
and effect as if presented at this meeting;
RESOLVED, that the CS First Boston Engagement
Letter, substantially in the form presented to this
meeting, be and hereby is approved.
RESOLVED, that any actions taken by the proper
officers of the Company in connection with matters
contemplated by the foregoing resolutions on or prior
to the date of this meeting are hereby ratified,
confirmed and approved as the act and deed of the
Corporation.
RESOLVED, that the Chief Executive Officer and
other appropriate officers of the Company be, and
hereby are, authorized and directed to execute,
certify, deliver and file (or cause to be executed,
certified, delivered and filed) all such further
agreements, certificates, instruments and documents in
the name of and on behalf of the Company, and to do
all such further acts and things as in their
discretion they shall deem necessary, advisable,
proper and convenient to carry out the purposes and
intent of the foregoing resolutions.
Dated: April 9, 1995
-5-
AMENDMENT
---------
AMENDMENT, dated as of April 10, 1995 to the
Rights Agreement, dated as of March 10, 1987 and amended
and restated as of August 14, 1990 (the "Rights
Agreement"), between Clark Equipment Company, a Delaware
corporation (the "Company"), and Harris Trust and Savings
Bank, an Illinois banking corporation (the "Rights Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company and the Rights Agent have
heretofore executed and entered into the Rights Agreement;
and
WHEREAS, pursuant to Section 26 of the Rights
Agreement, the Company and the Rights Agent may from time
to time supplement or amend the Rights Agreement in accor-
dance with the provisions of Section 26 thereof; and
WHEREAS, all actions necessary to make this
Amendment a valid agreement, enforceable according to its
terms have been taken, and the execution and delivery of
this Amendment by the Company and the Rights Agent have
been in all respects duly authorized by the Company and the
Rights Agent;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements set forth herein, the Company and
the Rights Agent agree as follows:
1. A new Section 34 shall be added which states
the following:
"34. Exemption of Ingersoll-Rand Offer and
-------------------------------------
Merger: Notwithstanding anything to the contrary
------
contained in this Agreement, the provisions of Sec-
tions 3(a), 11(a)(ii) and 13(a) shall not apply with
respect to any transaction undertaken by Ingersoll-
Rand Company ("IR") or any of its Affiliates (as
defined in the Rights Agreement) or Associates (as
defined in the Rights Agreement) pursuant to the
Agreement and Plan of Merger, dated April 9, 1995, by
and among IR, CEC Acquisition Corp. and Clark
Equipment Company nor shall IR or any of its
Affiliates (as defined in the Rights Agreement) or
Associates (as defined in the Rights Agreement) be
<PAGE>
deemed to be an Acquiring Person (as defined in the
Rights Agreement) as a result of any such
transactions."
2. This Amendment shall be deemed to be a co-
ntract made under the laws of the State of Delaware and for
all purposes shall be governed by and construed in accor-
dance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
3. Except as hereinabove expressly provided, all
provisions of the Rights Agreement shall continue in full
force and effect.
4. This Amendment may be executed in one or more
counterparts all of which shall be considered one and the
same instrument and shall become effective as of the date
hereof when one or more counterparts have been signed by
each of the parties and delivered to each of the other
parties.
IN WITNESS WHEREOF, the parties hereto have
caused this Amendment to be duly executed and their
respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: CLARK EQUIPMENT COMPANY
By /s/ John J. Moran, Jr By /s/ William N. Harper
----------------------- -----------------------
Name: John J. Moran, Jr Name: William N. Harper
Title: Assistant Secretary Title: Vice President and
Controller
Attest: HARRIS TRUST AND SAVINGS BANK
By /s/ Wendy A. Dyter By /s/ Thomas D. Grady
----------------------- -----------------------
Name: Wendy A. Dyter Name: Thomas D. Grady
Title: Trust Officer and Title: Vice President
Assistant Secretary
-2-
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - - x
RALPH DIETSCHE, :
: Civil Action No. 14156
Plaintiff, :
:
-against- :
:
LEO J. McKERNAN, JAMES C. CHAPMAN, :
DONALD N. FREY, JAMES A.D. GEIER, :
GAYNOR N. KELLEY, RAY B. MUNDT, :
FRANK M. SIMMS and CLARK EQUIPMENT :
COMPANY, :
:
Defendants. :
- - - - - - - - - - - - - - - - - - x
CLASS ACTION COMPLAINT
----------------------
Plaintiff, by his attorneys, for his Complaint alleges,
upon information and belief, except as to the allegations
contained in paragraph 2, which plaintiff alleges upon knowledge,
as follows:
NATURE OF ACTION
----------------
1. Plaintiff brings this class action on behalf of
himself and all other shareholders of defendant Clark Equipment
Company ("Clark" or the "Company") similarly situated (the
"Class") for declaratory and injunctive relief, and/or
compensatory damages arising from defendants' breach of fiduciary
duty to the shareholders of Clark. As detailed herein,
defendants have acted contrary to the best interests of Clark's
<PAGE>
public shareholders by, among other things, failing to
investigate and consider fully an offer by Ingersoll-Rand Co.
("Ingersoll-Rand") to purchase all outstanding shares of the
Company for up to $75 per share, which represents a premium of
more than 40% above the recent market price of the Company's
common stock. Defendants' who currently own or control less than
1% of the Company's common stock outstanding, have taken these
unlawful actions in violation of their fiduciary duties, for the
purpose of entrenching themselves in managerial and directorial
positions.
PARTIES
-------
2. Plaintiff Ralph Dietsche is and was at all time
material hereto the owner of common shares of defendant Clark.
3. Defendant Clark is a Delaware corporation with
principal executive offices located at 100 North Michigan Street,
Southbend, Indiana 46634. Clark produces and sells construction
machinery, fork lift trucks, transmissions for on-highway trucks
and axles and transmissions for off-highway equipment worldwide.
As of March 13, 1995, the Company had approximately 17,132,696
shares of common stock outstanding. For the fiscal year ended
December 31, 1994, the Company reported net earnings of $161.9
million, or $9.30 per share. At the close of fiscal 1994, Clark
reported assets of $1.194 billion against liabilities of $741.7
million.
-2-
<PAGE>
4. At all relevant times herein, defendant Leo J.
McKernan was President and Chief Executive Officer of the
Company, as well as the Chairman of its Board of Directors (the
"Board").
5. At all relevant times hereto, the following
defendants were members of the Company's Board:
James C. Chapman
Donald N. Frey
James A. D. Geier
Gaynor N. Kelley
Ray B. Mundt
Frank M. Simms
For the fiscal year ended December 31, 1994, these individual
defendants, as a group, received cash compensation from the
Company of nearly $3 million. As of March 13, 1995, however, the
individual defendants collectively owned or controlled less than
1% of the Company's outstanding common stock.
CLASS ACTION ALLEGATIONS
------------------------
6. Plaintiff brings this action pursuant to rule 23
of the rules of the Court of Chancery, for declaratory,
injunctive and other relief on his own behalf and as a class
action, on behalf of all common stockholders of Clark (except
defendants herein and any person, firm, trust, corporation or
other entity related to or affiliated with any of the defendants)
and their successors in interest, who are being deprived of the
-3-
<PAGE>
opportunity to maximize the value of their Clark shares by the
wrongful acts of the defendants described herein.
7. This action is properly maintainable as a class
action for the following reasons:
(a) The class of stockholders for whose benefit
this action is brought is so numerous that joinder of all class
members is impracticable. As of March 13, 1995, Clark had
approximately 17,132,696 shares of common stock duly issued and
outstanding, owned by thousands of shareholders. Members of the
Class are scattered throughout the United States.
(b) There are questions of law and fact which are
common to the members of the Class and which predominate over any
questions affecting any individual members. The common questions
include, interalia, the following:
---------
(i) whether the defendants, in bad faith and for
improper motives, have impeded or erected barriers to
other offers for the Company, including Ingersoll-
Rand's all-cash tender offer of $75-77 per share;
(ii) whether the defendants have engaged in
conduct constituting unfair dealing to the detriment of
the public stockholders of Clark; and
(iii) whether the defendants have breached their
fiduciary and common law duties owed by them to
plaintiff and the other members of the Class.
-4-
<PAGE>
(c) The claims of plaintiff are typical of the claims
of the other members of the Class, and plaintiff has no interests
that are adverse of antagonistic to the interest of the Class.
(d) Plaintiff is committed to the vigorous prosecution
of this action and has retained competent counsel experienced in
litigation of this nature. Accordingly, plaintiff is an adequate
representative of the Class and will fairly and adequately
protect the interests of the Class.
(e) The prosecution of separate actions by individual
members of the Class would create a risk of inconsistent or
varying adjudications with respect to individual members of the
Class, which would establish incompatible standards of conduct
for the party opposing the Class.
(f) Defendants have acted and are about to act on
grounds generally applicable to the Class, thereby making
appropriate final injunctive or corresponding declaratory relief
with respect to the Class as a whole.
CLAIM FOR RELIEF
----------------
8. Clark produces and sells construction machinery,
fork lift trucks, transmissions for on-highway trucks and axles
and transmissions for off-highway equipment worldwide. In March
1994, Ingersoll-Rand approached Clark, to propose an acquisition
of Clark by Ingersoll-Rand. Ingersoll-Rand is a leading
manufacturer of compressed air systems and other industrial
-5-
<PAGE>
equipment and trucks. Ingersoll-Rand viewed Clark's strengths as
complimentary to Ingersoll-Rand's strengths and specifically
viewed that the two companies products, customers and
distribution capabilities would enable the combined entity
competitor in the global market place.
9. After reaching an all-time high of $71 per share
in August 1994, the price of Clark common stock began to decline
substantially as its earnings growth subsided. Specifically, on
November 21, 1994, Dow Jones New Service reported that Clark
---------------------
expected to report earnings for the fourth quarter of the fiscal
year ending December 31, 1994 "to be reasonably consistent" with
third quarter earnings of $1.86 per share. Following this
announcement of flattening earnings, the price of Clark common
stock fell to $56.625 per share, signifying a decline of nearly
10% from the prior day's closing price. The price of Clark
common stock continued to fall during the ensuring months,
closing as low as $51.25 per share on November 15, 1994.
10. On or about January 26, 1995, Clark reported 1994
net income of $161.9 million, or $9.30 per share. Despite the
announcement of these positive results, the stock failed to
recover the value it lost following Clark's November 21, 1994
earnings projection, closing at $55.625 per share on the day
following the January 26 announcement.
11. In a purported effort to recover this lost value,
on or about February 3, 1995, the Company announced that its
-6-
<PAGE>
Board authorized the Company to purchase up to 3 million shares
of the company's common stock, in what amounts to a share "buy-
back" program to maximize the value of the Clark shareholders'
equity interest in the Company.
12. On March 28, 1995, Ingersoll-Rand mounted a $1.34
billion hostile tender offer for Clark, representing a more than
40% premium to its current market value. In announcing the all
cash bid of $75 to $77 a share, Ingersoll-Rand disclosed that it
made the offer privately to Clark earlier this month but was
rebuffed by Clark's board of directors. James E. Perrella,
Ingersoll-Rand's chairman of the board, noted in a letter to
Clark that "we have proposed a transaction that is so compelling
for the stockholders of both our companies that we that we feel
obligated to pursue it notwithstanding your board's rejection."
The letter also stated "we would have thought that an acquisition
proposal at a 50% premium over the price at which Clark common
stock has recently been trading -- and a price exceeding Clark's
all-time high stock price -- would have lead to a more
constructive dialogue between us."
13. In commenting on Clark's rejection of Ingersoll-
Rand's proposal, Leo J. McKernan, Clark's Chairman of the Board
and President and Chief Executive Officer, stated that "the
management team at Clark . . . has been successfully implementing
a strategic plan which has benefitted our shareholders
materially." However, Clark's shareholders have yet to benefit
-7-
<PAGE>
from any strategic plan implemented by Clark thus far and the
significant benefit to shareholder value presented by the
Ingersoll-Rand offer outweighs the nebulous long-term value which
could be realized through management's plan.
14. By virtue of the acts and conduct alleged herein,
the defendants are carrying out a preconceived plan to entrench
management to the detriment of Clark's public stockholders. As a
result, the public shareholders of Clark will be deprived of
their ability to avail themselves of the significantly lucrative
offer for their shares submitted by Ingersoll-Rand, and not
adequately considered by defendants.
15. On August 14, 1990, the Clark Board adopted a
Rights Agreement or "Poison Pill", a defensive measure designed
to afford the Company protection upon any initiation of a hostile
offer to acquire the Company. The Poison Pill was in place at
the time Ingersoll-Rand made initial overtures to the Clark Board
regarding a corporate transaction and still is operative. The
Board's failure to adequately consider the Ingersoll-Rand offer
and deliberate failure to negotiate, while the Company was
afforded the protections of the Poison Pill, further demonstrates
that the Board and Clark management are failing to exercise their
fiduciary responsibilities and are continuing their plan of
entrenchment.
16. The defendants have committed further breaches of
their fiduciary duty to the public stockholders of Clark.
-8-
<PAGE>
Specifically, prior to announcing the tender offer by Ingersoll-
Rand the Individual Defendants failed to (i) undertake an
adequate valuation of Clark's worth as a potential merger or
acquisition candidate; (ii) give adequate consideration to the
offer for Clark submitted by Ingersoll-Rand; and/or (iii) act so
that the interests of the public stockholders of Clark were
protected.
17. Unless enjoined by this Court, defendants will
continue to breach their fiduciary duties owed to plaintiff and
the other members of the Class, and will succeed in thwarting a
value maximizing transaction, all to the irreparable harm of the
Class.
18. Plaintiff and the other members of the Class have
no adequate remedy at law in that it is impossible to ascertain
what price would be realized for plaintiff and the Class as the
result of an open and vigorous auction of the Company.
WHEREFORE, plaintiff demands judgment and relief in its
favor and in favor of the Class and against defendants, as
follows:
A. Declaring that this action be certified as a
proper class action and certifying plaintiff as class
representative;
B. Declaring that the defendants and each of them
have committed a gross abuse of trust and have breached their
fiduciary duties to plaintiff and other members of the Class;
-9-
<PAGE>
C. Ordering that the defendants take appropriate
measures to comply with their duty to maximize shareholder value;
E. Awarding compensatory damages in an amount to be
determined upon the proof submitted to the Court;
F. Awarding the costs and disbursements of this
action;
G. Awarding plaintiff's counsel fees; and
H. Awarding such other and further relief which the
Court may deem just and proper.
Dated: March 29, 1995
ROSENTHAL, MONHAIT, GROSS
& GODDESS
By:/s/ Joseph Rosenthal
------------------------
Joseph Rosenthal
First Federal Plaza
Suite 214
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LITOWITZ BERGER
& GROSSMANN
Vincent R. Cappucci
Ivan J. Dolowich
1285 Avenue of the Americas
New York, New York 10019
(212) 554-1400
-10-
Richard J. Holwell (RJH-5098)
Robert M. Kelly (RMK-7204)
WHITE & CASE
1155 Avenue of the Americas
New York, New York 10036
Telephone: (212) 819-8200
Attorneys for Plaintiff
Clark Equipment Company
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------x
:
CLARK EQUIPMENT COMPANY, : 95 Civ. 2130 (CSH)
:
Plaintiff, :
:
-against- :
:
INGERSOLL-RAND COMPANY, : COMPLAINT
---------
:
Defendant. :
:
--------------------------------x
Plaintiff, Clark Equipment Company ("Clark"), complain-
ing against defendant, Ingersoll-Rand Company ("Ingersoll"),
alleges as follows:
NATURE OF THE ACTION
--------------------
1. This action arises from an offer to purchase
Clark's stock which was publicly announced by defendant on March
28, 1995.
2. Plaintiff claims that the offer, if consummated,
will violate the federal antitrust laws.
3. Plaintiff seeks an injunction prohibiting defendant
from taking any further action to acquire control of Clark.
<PAGE>
JURISDICTION AND VENUE
----------------------
4. This Court has subject matter jurisdiction pursu-
ant to Section 16 of the Clayton Act, 15 U.S.C. Sec. 26, and Sec-
tions 1331 and 1337 of the Judicial Code, 28 U.S.C. Sec.Sec. 1331 and
1337.
5. Venue is proper in this District pursuant to
Section 12 of the Clayton Act, 15 U.S.C. Sec. 22, and Section 1391
of the Judicial Code, 28 U.S.C. Sec. 1391. Plaintiff and defendant
both transact business in this District.
THE PARTIES
-----------
6. Plaintiff Clark is a corporation organized and
existing under the laws of Delaware and having its principal
place of business in Indiana. Clark is engaged in the business
of designing, manufacturing and selling various machinery and
equipment, including self-propelled asphalt paving equipment.
Clark is a publicly held corporation and its stock is listed and
traded on the New York Stock Exchange.
7. Defendant Ingersoll is a corporation organized and
existing under the laws of New Jersey and having its principal
place of business in New Jersey. Ingersoll is engaged in the
business of designing, manufacturing and selling various machin-
ery and equipment, including self-propelled asphalt paving
equipment. Ingersoll is a publicly held corporation and its
stock is listed and traded on the New York Stock Exchange.
-- 2 --
<PAGE>
THE ASPHALT PAVING INDUSTRY
---------------------------
8. One of the principal lines of business in which
both plaintiff Clark and defendant Ingersoll are engaged is the
design, manufacture and sale of self-propelled asphalt paving
equipment.
9. Asphalt paving equipment is used principally for
purposes of paving roads and highways. The bulk of the work for
which such equipment is used consists of public works projects
that are performed by private contractors pursuant to competitive
bidding awards. In addition, a lesser proportion of asphalt
paving equipment is sold directly to governmental agencies for
highway and road maintenance purposes. A certain portion of
asphalt paving work (which is usually done by private paving
contractors) consists of paving large parking lots. Finally, a
certain proportion of asphalt paving work (which is typically
done by private paving contractors using a different type of
equipment) consists of paving small projects such as driveways,
bike and golf paths and small parking lots.
10. Due to differences in applications, the asphalt
paving equipment industry can be divided into distinct market
segments depending upon the size of the equipment manufactured
and sold.
11. For purposes of this lawsuit, the relevant product
market consists of large asphalt pavers, i.e., those weighing
more than approximately 15,000 pounds. Asphalt pavers in this
market classification are used for large scale projects such as
road paving, highway construction, and large parking lots.
-- 3 --
<PAGE>
12. For purposes of this lawsuit, the relevant geo-
graphic market consists of all asphalt pavers in the relevant
product market which are sold for use in the United States. The
relevant product market and the relevant geographic market will
hereafter be referred to collectively as "the Relevant Market."
13. Within the Relevant Market, there are two separate
product submarkets: (1) asphalt pavers weighing approximately
15,000 to 30,000 pounds and (2) asphalt pavers weighing more than
30,000 pounds. For purposes of this lawsuit, the relevant
product submarket market consists of asphalt pavers weighing
approximately 15,000 to 30,000 pounds. The relevant product
submarket will hereafter be referred to as "the Relevant
Submarket."
14. Plaintiff Clark and defendant Ingersoll are direct
competitors in the Relevant Market and Submarket.
15. Plaintiff Clark is the largest supplier of asphalt
pavers in the Relevant Market and Submarket. Plaintiff presently
controls a market share of approximately 30 percent of the
Relevant Market and more than 45 percent of the Relevant
Submarket.
16. Defendant Ingersoll presently controls a market
share of approximately 10 percent of the Relevant Market and more
than 25 percent of the Relevant Submarket.
17. The Relevant Market is highly concentrated. In
addition to Clark and Ingersoll, only three other companies
compete in the Relevant Market: (1) Caterpillar Paving Products,
Inc. (including its wholly-owned subsidiary Barber-Greene Compa-
ny), (2) Cedarapids, Inc. (which is a wholly-owned subsidiary of
Raytheon
-- 4 --
<PAGE>
Company), and (3) Roadtec, Inc. (which is a wholly-owned subsid-
iary of Astec Industries, Inc.).
18. The Relevant Submarket is even more concentrated.
In addition to Clark and Ingersoll, only two companies compete in
the Relevant Submarket: Caterpillar and Cedarapids.
19. In addition to the unusually high levels of
concentration, the Relevant Market and Submarket have significant
barriers to entry. For example, it is necessary to have access
to a well-developed dealer network in order to compete effective-
ly in this market. Due to the high cost of downtime and machine
malfunction, customers insist on a reliable dealer network to
service machines and supply replacement parts. Dealers normally
handle one supplier's product line exclusively and, because of
the importance of parts sales, dealers have a strong incentive to
stay with an existing supplier with an established market share
rather than switch to a new supplier. The resulting lack of
access to an established distribution network was a significant
factor in the unsuccessful attempt of several foreign manufactur-
ers to enter the U.S. market.
20. The cost and inconvenience of having to train
operators and maintenance personnel in new equipment, customer
loyalty to established product lines, and interchange of replace-
ment parts with existing product base also constitute significant
barriers to entry in the Relevant Market and Submarket.
21. Should Ingersoll acquire Clark, the level of
concentration in both the Relevant Market and Submarket would
radically increase. The combined entity would have a market
share
-- 5 --
<PAGE>
of more than 50 percent in the Relevant Market and more then 65
percent of the Relevant Submarket. In light of these market
shares and given the significant barriers to entry in the indus-
try, the proposed acquisition would substantially lessen competi-
tion and tend to create a monopoly in the Relevant Market and
Submarket.
THE OFFER
---------
22. On March 28, 1995, defendant Ingersoll publicly
announced that it had made an offer to acquire control of Clark.
James Perrella, Ingersoll's Chairman and Chief Executive Officer,
sent a letter to Clark indicating that Ingersoll intended to
proceed with its offer. The letter was publicly released by
Ingersoll on March 28, 1995, and on March 29, 1995, Ingersoll's
intention to launch a hostile tender offer was widely reported in
the press, including both The Wall Street Journal and The New
York Times.
23. If the tender offer is allowed to proceed and
Clark is acquired by Ingersoll, there will be a massive reduction
of competition in, and defendant's total domination and monopoli-
zation of, both the Relevant Market and the Relevant Submarket.
FIRST CLAIM FOR RELIEF
----------------------
(Violation of Section 7
of the Clayton Act)
----------------------
24. Plaintiff repeats the allegations contained in
paragraphs 1 through 23.
25. Clark and Ingersoll are both engaged in commerce
and in activities affecting commerce.
-- 6 --
<PAGE>
26. The effect of the proposed acquisition of Clark by
Ingersoll will be substantially to lessen competition and tend to
create a monopoly in the Relevant Market and Submarket.
27. Defendant is thereby threatening to violate
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18.
28. Plaintiff will sustain irreparable injury by
reason of defendant's threatened violation of the antitrust laws
and is entitled to the relief requested herein.
29. Plaintiff has no adequate remedy at law.
SECOND CLAIM FOR RELIEF
-----------------------
(Violation of Section 2
of the Sherman Act)
---------------------------
30. Plaintiff repeats the allegations contained in
paragraphs 1 through 29.
31. Defendant, acting with specific intent to do so,
is attempting to monopolize the Relevant Market and Submarket.
32. There is a dangerous probability that defendant
will achieve monopoly power in the Relevant Market and Submarket
through its actions.
33. As a result of the forgoing acts, defendant has
violated and, unless enjoined by this Court, will continue to
violate Section 2 of the Sherman Act, 15 U.S.C. Sec. 2.
34. Plaintiff will sustain irreparable injury by
reason of defendants' violation of the antitrust laws and is
entitled to the relief requested herein.
35. Plaintiff has no adequate remedy at law.
-- 7 --
<PAGE>
WHEREFORE, plaintiff respectfully prays that judgment
be entered as follows:
(a) Declaring that the proposed acquisition of plain-
tiff by defendant violates Section 7 of the Clayton Act and
Section 2 of the Sherman Act;
(b) Preliminarily and permanently enjoining defendant,
its officers, directors, employees and agents, and all other
persons acting on their behalf or in concert with them, from
proceeding with the proposed tender offer;
(c) Granting plaintiff its costs and disbursements in
this action, including attorneys' fees; and
(d) Granting plaintiff such other and further relief
as the Court deems appropriate.
Dated: New York, New York
March 29, 1995
WHITE & CASE
By: /s/ Richard J. Holwell
-----------------------------
Richard J. Holwell (RJH-5098)
Robert M. Kelly (RMK-7204)
1155 Avenue of the Americas
New York, New York 10036
Telephone (212) 819-8200
Attorneys for Plaintiff
Clark Equipment Company
-- 8 --
Richard J. Holwell (RJH-5098)
Robert M. Kelly (RMK-7204)
WHITE & CASE
1155 Avenue of the Americas
New York, New York 10036
Telephone: (212) 819-8200
Attorneys for Plaintiff
Clark Equipment Company
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------x
:
CLARK EQUIPMENT COMPANY, : 95 Civ. 2130 (CSH)
:
Plaintiff, :
:
-against- :
:
INGERSOLL-RAND COMPANY : NOTICE OF DISMISSAL
-------------------
:
Defendant. :
:
------------------------------x
PLEASE TAKE NOTICE that, pursuant to Rule 41(a)(1) of
the Federal Rules of Civil Procedure, plaintiff, Clark Equipment
Company, hereby dismisses the above-referenced action without
prejudice and without costs to any party.
Dated: New York, New York
April 10, 1995
WHITE & CASE
By: /s/ Robert M. Kelly
-----------------------------
Richard J. Holwell (RJH-5098)
Robert M. Kelly (RMK-7204)
1155 Avenue of the Americas
New York, New York 10036
Telephone (212) 819-8200
Attorneys for Plaintiff
Clark Equipment Company
