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SCHEDULE 14A
(RULE 14A)
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:
[X]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
COMMERCIAL INTERTECH CORP.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[_]$125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i) (1), 14a-6(i) (2) or
Item 22(a) (2) of Schedule 14A.
[X]$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:
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PRELIMINARY MATERIALS DATED AUGUST 2, 1996
THE INFORMATION INCLUDED HEREIN IS AS IT IS EXPECTED TO BE WHEN THE DEFINITIVE
PROXY SOLICITATION STATEMENT IS MAILED TO SHAREHOLDERS OF COMMERCIAL INTERTECH
CORP.
THIS PROXY SOLICITATION STATEMENT WILL BE REVISED TO REFLECT ACTUAL FACTS
AT THE TIME OF FILING OF THE DEFINITIVE PROXY STATEMENT.
----------------
PROXY STATEMENT
OF
BOARD OF DIRECTORS
IN OPPOSITION TO THE PROPOSALS MADE BY
UNITED DOMINION INDUSTRIES LIMITED AND
OPUS ACQUISITION CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
OF
COMMERCIAL INTERTECH CORP.
INTRODUCTION
This proxy statement (the "Proxy Statement") and the accompanying LIGHT-
GREEN proxy card are being furnished by the Board of Directors (the "Board of
Directors") of Commercial Intertech Corp., an Ohio corporation (the "Company")
to holders of outstanding Shares (as defined below) in connection with the
solicitation of proxies by the Board of Directors for use at a special meeting
(the "Special Meeting") that may be held, and at any adjournment or
adjournments thereof. The Special Meeting may be called pursuant to a demand
by United Dominion Industries Limited, a Canadian corporation ("United
Dominion"), and Opus Acquisition Corporation, a Delaware corporation and an
indirect wholly owned subsidiary of United Dominion ("OAC") should United
Dominion and OAC obtain the Requisite Holders (as defined). This Proxy
Statement and the enclosed LIGHT-GREEN proxy card are first being mailed to
shareholders on or about August [ ], 1996.
The purpose of the Special Meeting is to consider proposals made by United
Dominion and OAC, and opposed by the Board of Directors and management of the
Company, to, among other things, remove the incumbent members of the Board of
Directors without cause and replace the Board of Directors with United
Dominion and OAC's own nominees (the "Special Meeting Proposals"). In the
Board of Directors' opinion, the Special Meeting Proposals are not in the best
interests of Company, its shareholders, employees, customers, suppliers, labor
organizations, the communities in which the Company does business and its
other constituencies, but rather are being made in furtherance of United
Dominion and OAC's attempt to take control of the Company pursuant to their
tender offer to acquire all outstanding Common Shares, $1.00 par value, of the
Company (the "Common Shares"), at a purchase price of $30.00 per Common Share,
which your Board of Directors has determined is inadequate and not in the best
interests of the Company, its shareholders and other constituencies. The Board
of Directors vigorously opposes the Special Meeting Proposals and is
soliciting proxies in opposition to the Special Meeting Proposals.
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE SPECIAL MEETING PROPOSALS BY
UNITED DOMINION AND OAC AND URGES YOU TO (A) SIGN, DATE AND RETURN THE
ENCLOSED LIGHT-GREEN PROXY CARD TO VOTE AGAINST THE SPECIAL MEETING PROPOSALS
AND (B) DISCARD ANY PROXY CARD SENT TO YOU BY UNITED DOMINION AND OAC. IN THE
EVENT OF AN ELECTION OF DIRECTORS, THE BOARD OF
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DIRECTORS RECOMMENDS THAT YOU SUPPORT YOUR BOARD BY VOTING "FOR" THE BOARD OF
DIRECTORS' NOMINEES.
WHETHER OR NOT YOU HAVE PREVIOUSLY EXECUTED A GOLD-STRIPED PROXY CARD, THE
BOARD OF DIRECTORS URGES YOU TO SIGN, DATE, AND DELIVER THE ENCLOSED LIGHT-
GREEN PROXY CARD AS PROMPTLY AS POSSIBLE, BY FAX OR BY MAIL (USING THE
ENCLOSED ENVELOPE), TO MORROW & CO., INC., 909 THIRD AVENUE, 20TH FLOOR, NEW
YORK, NEW YORK, 10022, FAX: (212) 754-8362.
Under the Ohio Revised Code (the "ORC") and the Code of Regulations of the
Company (the "Regulations"), a special meeting of the Company's shareholders
may be called at any time by, among others, the holders of at least 40% of the
outstanding Shares (the "Requisite Holders"). United Dominion and OAC are,
simultaneously with the solicitation of proxies for use at the Special
Meeting, if held, soliciting by means of a Solicitation Statement dated July
24, 1996 (the "Solicitation Statement"), appointments of Designated Agents
("Agent Designations") to appoint agents of the Company's shareholders to call
a Special Meeting. The Board of Directors are also, simultaneously with the
solicitation of proxies for use at the Special Meeting, if held, opposing by
means of a Revocation Solicitation Statement (the "Revocation Statement"), the
solicitation to call such a Special Meeting. According to the Solicitation
Statement, United Dominion and OAC commenced on July 25, 1996 the solicitation
of Agent Designations and intend to seek to call the Special Meeting as soon
as possible after the date on which United Dominion and OAC have received
Agent Designations from holders of 40% of the Shares (excluding Agent
Designations from holders of Shares who are not holders on the date United
Dominion and OAC deliver a written request to the Company to call the Special
Meeting). The Company is currently soliciting revocations of any Agent
Designations which United Dominion and OAC may receive. As of the date of this
Proxy Statement, there are 13,671,332 Common Shares and 1,039,657 shares of
the ESOP Convertible Preferred Stock-Series B, no par value (the "Preferred
Shares" and, together with the Common Shares, the "Shares") outstanding.
Under the ORC, the Board of Directors may fix a record date for the purpose
of determining the holders of Shares who are entitled to receive notice of and
to vote at the Special Meeting, if held (the "Special Meeting Record Date"),
which shall not be earlier than the date on which the Special Meeting Record
Date is fixed nor more than 60 days preceding the date of the Special Meeting.
Such a Special Meeting Record Date will only be fixed if United Dominion and
OAC obtain the Requisite Holders and deliver a written request to the Company
to call such Special Meeting.
According to a preliminary Proxy Statement, filed by United Dominion and OAC
with the Securities and Exchange Commission (the "SEC") on July 24, 1996 (the
"UDI/OAC Proxy Statement"), United Dominion and OAC intend to call a Special
Meeting by delivering a written request as soon as possible after the date, if
at all, United Dominion and OAC receive the Requisite Holders.
THE ENCLOSED LIGHT-GREEN PROXY CARD WILL NOT CONSTITUTE A REVOCATION CARD TO
PREVENT THE CALLING OF A SPECIAL MEETING. SHAREHOLDERS ARE URGED TO PROMPTLY
SIGN AND RETURN THE LIGHT-GREEN REVOCATION CARDS FURNISHED WITH THE REVOCATION
STATEMENT OF THE BOARD OF DIRECTORS AS WELL AS THE LIGHT-GREEN SPECIAL MEETING
PROXY CARD AND THE LIGHT-GREEN PROXY CARD FOR THE OHIO CONTROL SHARE
ACQUISITION MEETING (AS DEFINED HEREIN).
Subject to the provisions for cumulative voting in the election of
directors, as described below, each Share is entitled to one vote on all
matters brought before the Company's shareholders for a vote.
Certain Shares are held of record by LaSalle National Trust, N.A. (which
succeeded Mellon Bank, N.A. as trustee as of July 26, 1996), as trustee (the
"ESOP Trustee") for the Commercial Intertech Employee Stock Ownership Plan and
Commercial Intertech Retirement Stock Ownership and Savings Plan (the
"ESOPs"). The trusts for these plans (the "ESOP Trusts") contain pass-through
voting provisions for the participants of the
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ESOPs, with Shares that are allocated to a participant's account to be voted
by the ESOP Trustee as instructed by the participant and Shares that either
are not allocated to any participant's account or are allocated but for which
no instruction from the participant has been received by the ESOP Trustee
voted by the ESOP Trustee proportionately as the allocated Shares for which
instructions were received are voted. PARTICIPANTS IN THE ESOPS CAN ONLY
EXECUTE THE LIGHT-GREEN PROXY CARD WITH RESPECT TO SHARES HELD IN THE ESOPS ON
THEIR BEHALF BY INSTRUCTING THE TRUSTEE ON THE FORM THAT WILL BE PROVIDED TO
PARTICIPANTS FOR THAT PURPOSE. According to the UDI/OAC Proxy Statement,
United Dominion and OAC believe that, notwithstanding the express terms of the
trust document, the ESOP Trustee has a fiduciary duty under the Employee
Retirement Income Security Act of 1974 ("ERISA") to exercise its discretion
with respect to voting Shares held in the ESOPs which are allocated to any
participant's account but for which no instructions are received by it and for
all Shares held in ESOPs which are not allocated to any participant's account.
United Dominion and OAC also believe, according to the UDI/OAC Proxy
Statement, that the indemnification provisions in favor of the ESOP Trustee
contained in the trust documents, which provide full indemnification for the
ESOP Trustee only for actions taken upon the written direction of the
participants and in accordance with the terms of the ESOP, violate ERISA.
According to the UDI/OAC Proxy Statement, United Dominion and OAC believe that
the Department of Labor has successfully advanced similar positions in a
federal district court case, Reich v. NationsBank of Georgia, N.A., and Martin
v. NationsBank of Georgia, N.A., an earlier opinion in the same proceeding.
In addition, Common Shares are held of record by National City Bank, N.E.,
as trustee (the "Plan Trustee") for the Non-Qualified Stock Purchase Plan of
Commercial Intertech Corp. and the Employee Savings and Stock Purchase Plan of
Commercial Intertech Corp. (the "Plans"). The trusts for these plans (the
"Plan Trusts") contain pass-through voting provisions for the participants of
the Plans, with Common Shares that are allocated to any participant's account
voted by the Plan Trustee as instructed by the participant and Common Shares
for which no instruction from the participant has been received by the Plan
Trustee voted by the Plan Trustee, in its sole discretion. Participants in the
plans can only vote Common Shares held in the plans on their Behalf by
instructing the Plan Trustee on THE TRUSTEE INSTRUCTION CARD that will be
provided to participants for that purpose.
Proxies representing Common Shares held of record will include Common Shares
allocated to participants under the Automatic Dividend Reinvestment Plan (the
"Dividend Reinvestment Plan") for shareholders of the Company. The form of
Proxy accompanying this Proxy Statement can be used to vote such Common Shares
held under the Dividend Reinvestment Plan.
IF YOU PREVIOUSLY SIGNED AND RETURNED A PROXY CARD TO UNITED DOMINION AND
OAC, YOU HAVE EVERY RIGHT TO CHANGE YOUR MIND. WHETHER OR NOT YOU SIGNED THE
GOLD-STRIPED PROXY CARD SENT TO YOU BY UNITED DOMINION AND OAC, THIS BOARD OF
DIRECTORS URGES YOU TO REJECT THE SPECIAL MEETING PROPOSALS AND, IF AN
ELECTION OF DIRECTORS IS NECESSARY, VOTE "FOR" THE BOARD OF DIRECTORS'
NOMINEES BY COMPLETING, SIGNING, DATING AND RETURNING THE ENCLOSED LIGHT-GREEN
PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. REGARDLESS OF THE NUMBER OF
SHARES YOU OWN, YOUR PROXY CARD IS IMPORTANT. PLEASE ACT TODAY.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE, WE
URGE YOU TO CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR
HER TO EXECUTE A LIGHT-GREEN PROXY CARD ON YOUR BEHALF, VOTING AS RECOMMENDED
BY THE COMPANY'S BOARD OF DIRECTORS.
If you have any questions concerning the Company's solicitation of Proxy
Cards, or United Dominion and OAC's solicitation of Proxy Cards, please
contact Morrow & Co., Inc. at 1-800-566-9061 (Toll-Free).
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PURPOSE OF THIS SOLICITATION OF PROXIES
On July 11, 1996, United Dominion and OAC commenced an unsolicited tender
offer to purchase all of the Company's outstanding Common Shares and
associated Rights (as defined below) (the Common Shares and the Rights
hereinafter referred to as the Common Shares), for a purchase price of $27.00
per Share, net to the seller in cash, without interest thereon (the "Original
Offer"). On July 15, 1996, the purchase price of the Original Offer was
increased to $30.00 per Common Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in a
Revised Offer to Purchase dated July 16, 1996 (the "Revised Offer"). As
discussed below in more detail, the Board of Directors has unanimously
determined that the Revised Offer is inadequate, and not in the best interests
of the Company, its shareholders, employees, customers, suppliers, labor
organizations, the communities in which the Company does business and its
other constituencies, and does not adequately reflect the long term value or
prospects of the Company.
The purpose of the Board of Directors soliciting proxies is to oppose the
Special Meeting Proposals (discussed below), and if an election of directors
is necessary, to solicit votes for the election of the Board of Directors'
nominees to the Board of Directors. The purpose of the Special Meeting
Proposals is to facilitate the consummation of the Revised Offer, which the
current Board of Directors and management have determined to be inadequate.
According to the UDI/OAC Proxy Statement, United Dominion and OAC intend for
the specific Special Meeting Proposals to be as follows: (i) a proposal to
appoint [ ] to preside as chairman of the Special Meeting ("Chairman
Proposal"), (ii) a proposal to call upon the Company's incumbent directors to
redeem the preferred share purchase rights (the "Rights") associated with the
Common Shares pursuant to the Company's Rights Agreement, dated as of November
29, 1989, between the Company and The Mahoning National Bank of Youngstown, as
rights agent (the "Rights Agreement") (the "Rights Redemption Proposal"),
(iii) a proposal to remove all incumbent directors of the Company, and to
amend the Regulations to reduce the size of the Company's Board of Directors
from 12 members to three members and to provide that the directors shall serve
as a single class having the same term of office and shall not be divided into
three classes having staggered terms ("Director Removal Proposal"), (iv) a
proposal to amend the Regulations to provide that Section 1701.831 of the ORC
(the "Ohio Control Share Acquisition Law") shall not apply to "control share
acquisitions" of Common Shares (the "Control Share Proposal"), (v) a proposal
to elect three new directors nominated by United Dominion and OAC, if the
Director Removal Proposal is approved (the "Election Proposal"), (vi) a
proposal to call for a recess of the Special Meeting (the "Recess Proposal"),
(vii) a proposal to amend the Company's Amended and Restated Articles of
Incorporation (the "Articles") to repeal Article SIXTH thereof (the "Article
SIXTH Repeal Proposal") and (viii) a proposal to have United Dominion and
OAC's proxy agents be authorized to adjourn the Special Meeting at any time
(the "Adjournment Proposal").
THIS BOARD OF DIRECTORS URGES YOU TO REJECT THE SPECIAL MEETING PROPOSALS
AND, IF AN ELECTION OF DIRECTORS IS NECESSARY, VOTE "FOR" THE BOARD OF
DIRECTORS' NOMINEES. SEE "ELECTION OF DIRECTORS."
BACKGROUND OF RECENT EVENTS
On January 23, 1996, at a meeting of the Executive Committee of the Board of
Directors, the Executive Committee discussed a number of strategic initiatives
with respect to the Company, including the possibility of spinning off the
Company's Cuno Incorporated fluid filtration and purification subsidiary
("Cuno") or its Astron metal buildings division.
On March 5, 1996, Paul J. Powers, Chairman and Chief Executive Officer of
the Company, telephoned Tom Walker of Goldman, Sachs & Co. ("Goldman Sachs")
to brief Goldman Sachs on strategic initiatives being considered by the
Company, and requested that Goldman Sachs meet with senior management of the
Company on March 22, 1996, to discuss possible actions to enhance shareholder
value.
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On March 22, 1996, senior executives of the Company met with Goldman Sachs
to discuss possible actions that would enhance shareholder value. The
discussion focused upon the value of the higher growth, higher multiple
business of Cuno, the fact that Cuno had not previously received appropriate
market recognition because of the Company's mix of lower multiple industrial
businesses, Cuno's difficulties in attracting and retaining qualified
personnel in light of the Company's existing compensation schemes, and the
impact on Cuno of not having an appropriate equity currency for acquisitions
of other technology companies. On April 17, 1996, representatives of Goldman
Sachs met again with senior executives of the Company. At the April 17
meeting, Goldman Sachs discussed a broad range of strategic alternatives which
could enhance shareholder value, including a 100% spin-off of certain
subsidiaries, an initial public offering of certain subsidiaries, and
divestitures.
On April 26, 1996, the Company telephoned its legal counsel, Katten Muchin &
Zavis ("Katten Muchin"), and instructed Katten Muchin to assemble a
transaction team to prepare for a proposed spin-off of Cuno.
On May 6, 1996, representatives from Goldman Sachs again met with senior
executives of the Company. This meeting focused on the alternative of a 100%
spin-off of Cuno. Goldman Sachs explained the mechanics of a spin-off and the
market perception of such a transaction. Cuno's ability to make acquisitions
using its stock after the spin-off was discussed.
On May 10, 1996, at the request of William R. Holland, the Chief Executive
Officer of United Dominion, Mr. Holland met with Paul J. Powers, the Chairman
and Chief Executive Officer of the Company, in Youngstown, Ohio. During this
meeting, Mr. Holland expressed the view that a combination of the Company with
United Dominion would be attractive and suggested a price of $27.00 per share.
Mr. Powers indicated that the Company has a policy of independence, and that
he believed the Company's prospects on a stand-alone basis were strong.
By May 16, 1996, the Company was focused upon unlocking shareholder value
through a transaction involving Cuno. Representatives from Goldman Sachs and
Katten Muchin met with Company officials on that date. At that time, Goldman
Sachs outlined a series of options with respect to Cuno, including: a 100%
spin-off; an up to 20% initial public offering to be followed by a spin-off; a
sale for cash; a sale for stock; and a leveraged buyout.
On May 21, 1996, the Finance Committee of the Board of Directors met with
Goldman Sachs and Katten Muchin to discuss strategic alternatives for Cuno.
Goldman Sachs made a presentation on three alternatives at that meeting: an up
to 20% initial public offering and a subsequent spin-off, a 100% spin-off and
a sale. The discussions focused upon either an up to 20% public offering to be
followed by a spin-off or 100% spin-off.
At a June 18, 1996 Board of Directors meeting, the Board of Directors
determined to pursue an up to 20% initial public offering of Cuno, to be
followed by a spin-off. The Board of Directors concluded that an up to 20%
public offering of Cuno had certain potential advantages over an immediate
100% spin-off, which included: establishing an initial trading market for Cuno
to enable the company to begin developing market recognition; permitting Cuno
to develop a following among analysts in the fluid filtration industry; and
generating immediate cash for the Company. The Board of Directors recognized,
however, that the value inherent in Cuno, the ability to attract and the
ability to use Cuno stock as acquisition currency could only be realized by a
complete separation of Cuno and the Company in the near future. The officers
of the Company contacted Katten Muchin and Goldman Sachs to pursue this
strategy and prepare a registration statement. Meetings were scheduled with
advisers and potential underwriters.
On June 27, 1996, Mr. Holland faxed to Mr. Powers a letter, which was
released to the news media on the same day, containing an unsolicited proposal
to acquire the Company pursuant to a transaction in which the Company's
shareholders would receive $27.00 in cash for their Common Shares.
On June 28, 1996, the Company retained Goldman Sachs as its financial
advisor with respect to United Dominion's proposal.
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At a meeting on June 29, 1996, the Board of Directors of the Company
discussed United Dominion's June 27 letter. On June 30, 1996, the Company
issued a press release which stated that the Board of Directors of the
Company, at its meeting on June 29, 1996, reaffirmed the Company's long-
standing objective of creating shareholder value as an independent public
company and indicated that the Board of Directors would review the United
Dominion proposal in consultation with its legal and investment advisers. In
addition, the Company announced that, as part of its ongoing strategic plans,
the Company was preparing a public offering of up to 20% of the stock of Cuno.
The Company continued to prepare for the public offering of Cuno until the
first week of July 1996. At that time, however, the Board of Directors
recognized that, if United Dominion's proposal were rejected, and United
Dominion continued to pursue its proposal, shareholders of the Company would
not, under that proposal, be able to realize the true value of the Company's
investment in Cuno. In addition, the Board of Directors believed, after
consultation with its financial advisor, that it would not be practicable to
pursue the public offering given the uncertainties created by United
Dominion's proposal. Accordingly, at their meetings on July 8 and July 11,
1996, the Board of Directors again focused on alternatives for unlocking the
value of Cuno, and concluded that such value could more readily be realized
through an immediate spin-off.
On July 11, 1996, United Dominion and OAC announced an unsolicited tender
offer to purchase all of the Company's outstanding Common Shares and the
associated Rights for a purchase price of $27.00 per Share, net to the seller
in cash, without interest thereon (the "Original Offer"). On the same date,
the Board of Directors unanimously determined that the Original Offer was
inadequate, and not in the best interests of the Company, its shareholders,
employees, customers, suppliers, labor organizations, the communities in which
the Company does business and its other constituencies, and did not adequately
reflect the long-term value or prospects of the Company. At that meeting, the
Board of Directors unanimously determined not to proceed with a public
offering of up to 20% of the stock of Cuno, but instead to proceed with a spin
off of 100% of the stock of Cuno to the Company's shareholders (the "Spin-
Off"), subject to customary conditions, including the receipt of an opinion of
counsel with respect to the tax-free nature of the Spin-Off. The Board of
Directors also unanimously approved a program to repurchase up to 2,500,000
Common Shares in open market and privately negotiated transactions (the
"Repurchase Program"). On July 12, 1996, United Dominion and OAC filed with
the Company an Acquiring Person Statement under the Ohio Control Share
Acquisition Law in order to cause the Company to call a special meeting of
Company shareholders under the Ohio Share Acquisition Law (the "831 Special
Meeting").
On July 15, 1996, the purchase price of the Original Offer was increased to
$30.00 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in a Revised Offer to
Purchase, dated July 16, 1996 (the "Revised Offer"). The stated purpose of the
Revised Offer is to acquire control of, and the entire equity interest in, the
Company. According to a Revised Offer to Purchase, dated July 16, 1996 (the
"Revised Offer to Purchase"), United Dominion intends, following completion of
the Revised Offer, to seek to have the Company consummate a merger or similar
business combination with OAC or another subsidiary of United Dominion at the
same price per Common Share to be paid in the Revised Offer (the "Proposed
Merger"), subject to the terms and conditions described in the Revised Offer
to Purchase. According to the Revised Offer to Purchase, the Revised Offer is
conditioned upon, among other things, the following significant matters:
(1) The Minimum Condition. There must be validly tendered and not
properly withdrawn prior to expiration of the Revised Offer a number of
Common Shares which, when added to the Common Shares beneficially owned by
OAC and its affiliates, constitutes at least two-thirds of the total voting
power of all Common Shares outstanding on a fully diluted basis on the date
of purchase.
(2) The Control Share Condition. The approval of the Control Share
Acquisition shall have been obtained from the Company's shareholders or OAC
shall be satisfied, in its sole discretion, that the Ohio Control Share
Acquisition Law is invalid or inapplicable to the acquisition of Common
Shares pursuant to the Revised Offer.
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(3) The Business Combination Condition. OAC must be satisfied, in its
sole discretion, that the restrictions contained in Chapter 1704 (the "Ohio
Business Combination Law") of the ORC will not apply to the acquisition of
Common Shares pursuant to the Revised Offer or to the Proposed Merger.
The Ohio Business Combination Law prohibits certain combinations and
other transactions (each, a "Chapter 1704 Transaction"), such as the
Proposed Merger, between an issuing public corporation (such as the
Company) and any "Interested Shareholder" (defined generally as any person
that, directly or indirectly, is entitled to exercise or direct the
exercise of 10% or more of the outstanding voting power of a corporation in
the election of directors) for a period of three years after the date the
person becomes an Interested Shareholder. After such three year period, a
Chapter 1704 Transaction between an issuing public corporation and such
Interested Shareholder is prohibited unless either certain "fair price"
provisions are complied with or the Chapter 1704 Transaction is approved by
certain supermajority shareholder votes. The Ohio Business Combination Law
restrictions do not apply to a Chapter 1704 Transaction with an Interested
Shareholder if either the acquisition of the corporation's shares that
would cause the Interested Shareholder to become an Interested Shareholder,
or the Chapter 1704 Transaction, is approved by a resolution of the board
of directors of the corporation adopted prior to the date on which the
Interested Shareholder became an Interested Shareholder.
(4) The Rights Condition. The Rights shall have been redeemed by the
Company or OAC shall be satisfied, in its sole discretion, that the Rights
have been invalidated or are otherwise inapplicable to the Revised Offer
and the Proposed Merger.
(5) The Articles Amendment Condition. Article SIXTH of the Articles
(which requires a 95% vote to approve a business combination which does not
meet certain "fair price" and procedural criteria) shall have been repealed
or otherwise amended with the effect that, or OAC shall be otherwise
satisfied, in its sole discretion, that, the provisions of such Article
will not apply to the Proposed Merger.
On July 17, 1996, the Board of Directors unanimously concluded that the
Revised Offer is inadequate, and not in the best interests of the Company, its
shareholders, employees, customers, suppliers, labor organizations, the
communities in which the Company does business and its other constituencies,
and does not adequately reflect the long-term value or prospects of the
Company. At that meeting, the Board of Directors unanimously reaffirmed the
Company's prior determination to proceed with the Spin-Off. The Board of
Directors also unanimously reaffirmed the Repurchase Program. In addition, the
Board of Directors fixed September 3, 1996 as the record date for the
solicitation of Agent Designations (on July 25, 1996, the District Court for
the Southern District of Ohio declined to issue an injunction restraining
United Dominion and OAC from seeking Agent Designations without regard to such
record date) and fixed August 7, 1996 and August 30, 1996 as the record date
and meeting date, respectively, for the 831 Special Meeting.
On July 25, 1996, United Dominion and OAC commenced the solicitation of
Agent Designations. In connection with such solicitation, United Dominion and
OAC are providing the Company's shareholders with a Solicitation Statement and
an Agent Designation. A shareholder's execution of an Agent Designation
designates specific persons as agents for the shareholder with authority to
take all actions necessary to convene the Special Meeting. SIGNING AND
RETURNING AN AGENT DESIGNATION FURTHERS THE INTERESTS OF UNITED DOMINION AND
OAC IN PURSUING THE REVISED OFFER, WHICH YOUR BOARD OF DIRECTORS HAS
DETERMINED IS INADEQUATE AND NOT IN THE BEST INTERESTS OF THE COMPANY, ITS
SHAREHOLDERS AND OTHER CONSTITUENCIES. UNITED DOMINION AND OAC'S NOMINEES, IF
ELECTED, ARE COMMITTED TO ENSURING THAT A FUTURE BOARD OF DIRECTORS OF THE
COMPANY APPROVES THEIR INADEQUATE REVISED OFFER. UNLIKE THE COMPANY'S CURRENT
BOARD OF DIRECTORS, FOLLOWING THE SPECIAL MEETING THE BOARD OF DIRECTORS WOULD
BE COMPRISED OF UNITED DOMINION AND OAC'S HAND-PICKED REPRESENTATIVES. NEITHER
UNITED DOMINION NOR OAC HAS ANY FIDUCIARY OBLIGATION TO PROTECT YOUR
INTERESTS; THEIR SOLE OBLIGATIONS ARE TO THEIR OWN SHAREHOLDERS.
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If a shareholder signs and returns an Agent Designation to United Dominion
and OAC, such shareholder purportedly authorizes United Dominion and OAC to
call the Special Meeting. The Agent Designations also provide that the agenda
for the Special Meeting will include the Special Meeting Proposals.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS NOT RETURN
THE GOLD-STRIPED PROXY REQUESTED BY UNITED DOMINION AND OAC AND COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED LIGHT-GREEN PROXY CARD IN ORDER TO PREVENT
UNITED DOMINION AND OAC FROM USING YOUR SHARES TO FURTHER THEIR INADEQUATE
REVISED OFFER.
WHY YOU SHOULD VOTE "AGAINST" THE SPECIAL MEETING PROPOSALS
At a meeting of the Board of Directors held on July 11, 1996, the Board of
Directors met with its financial and legal advisers and reviewed the Original
Offer of $27.00 per Share. At that meeting, the Board of Directors unanimously
concluded that the Original Offer was inadequate and not in the best interests
of the Company, its shareholders, employees, customers, suppliers, labor
organizations, the communities in which the Company does business and its
other constituencies, and did not adequately reflect the long-term value or
prospects of the Company. In connection with its determination, the Board of
Directors considered numerous factors, including, but not limited to, the
factors described in clauses (i) through (ix) of the third succeeding
paragraph. At that meeting, the Board of Directors unanimously determined to
proceed with the Spin-Off. The Board also unanimously approved the Repurchase
Program.
On July 15, 1996, United Dominion and OAC issued a press release announcing
the Revised Offer.
On July 17, 1996, the Board of Directors of the Company met to review the
Revised Offer with its financial and legal advisors. The Board of Directors
unanimously concluded that the Revised Offer is inadequate and not in the best
interests of the Company, its shareholders, employees, customers, suppliers,
labor organizations, the communities in which the Company does business and
its other constituencies, and does not adequately reflect the long-term value
or prospects of the Company. At that meeting, the Board of Directors
unanimously reaffirmed the Company's prior determination to proceed with the
Spin-Off. The Board of Directors also unanimously reaffirmed the Repurchase
Program.
In reaching its conclusions referred to above, the Board of Directors
considered numerous factors, including but not limited to:
(i) the Board of Directors' familiarity with the business, financial
condition, prospects and current business strategy of the Company, the
nature of the businesses in which the Company operates and the Board of
Directors' belief that the Revised Offer does not reflect the long-term
values inherent in the Company;
(ii) the Company's financial performance in recent years, including its
record results for its 1995 fiscal year and three consecutive years of
improving operating results, including strong improvements in operating
performance and profitability by Cuno;
(iii) the Company's long-term strategic plan to build value for its
shareholders by growing its core businesses (the strategic plan includes,
with respect to the Company, the launch of new products, reductions in
corporate and operating unit overhead, continued improvement in the
Company's German businesses, and increased penetration by the Building
Systems division in Central and Eastern European markets and, with respect
to Cuno, the development of new products from Cuno's core technologies,
decreasing product development cycles, increased customer focus, improved
distribution, improved operating efficiencies, and growth though selective
acquisitions);
(iv) the Company's plan to proceed with the Spin-Off, in light of the
belief of the Board of Directors and management that:
--the Spin-Off should enhance the abilities of the managements of both
the Company and Cuno to focus more closely on the objectives of their
respective businesses, enhance the two companies' ability to create
incentives that align the interests of their management and employees
with the performance of their respective companies, and permit Cuno to
use its publicly traded stock as a currency for expansion through
acquisitions; and
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--the Spin-Off should enable shareholders of the Company to benefit in
the near term from the value of a high-growth, high-multiple business,
which has not previously received appropriate market recognition because
of the Company's mix of industrial businesses, which typically trade at
lower multiples. The Board of Directors took into consideration that
there is some risk that the tax-free nature of the Spin-Off could be
impacted, with attendant adverse tax consequences to the Company and
certain of its shareholders, in the event of an acquisition of the
Company by certain third parties (including United Dominion) following a
spin-off;
(v) the Board of Directors' belief that the Repurchase Program will
provide investors who desire to obtain liquidity for their investment in
the Company with an opportunity to sell all or a portion of their
investment in the Company; these shareholders may be more likely to support
actions that would make it more difficult for the Company to resist an
inadequate bid, which in the view of the Board of Directors would not be in
the best interests of the Company, its shareholders and its other
constituencies; accordingly, the Repurchase Program may stabilize the
Company's base of long-term shareholders and may give long-term
shareholders who desire to participate in the benefits of the Spin-Off and
the future growth of the Company and Cuno a greater opportunity to do so;
the Board of Directors also considered the fact that the Repurchase Program
is expected to be accretive to the Company's earnings per Common Share
(assuming the repurchase of 2,500,000 Common Shares at an average price of
$29.00 per Common Share and the incurrence by the Company of additional
debt of $72.5 million bearing interest at 9% per annum, the Repurchase
Program would add an estimated $0.06 to fiscal 1996 earnings per Common
Share and an estimated $0.14 to fiscal 1997 earnings per Common Share);
(vi) the Board of Directors' belief, in light of the Company's strategic
plan and its plan to proceed with the Spin-Off, that this is not the
appropriate time to sell the Company (the Board of Directors' belief was
based upon its view that the Spin-Off would unlock the value of a high-
growth, high-multiple business which had not received appropriate market
recognition because of the Company's mix of industrial businesses, which
typically trade at lower multiples, and its view that the Company's
strategic plan, including the Spin-Off, would result in greater value to
the Company and its shareholders over the long-term);
(vii) the Board of Directors' belief, based upon its review of the
Company's strategic plan described in clause (iii) above, the benefits of
the Spin-Off described in clause (iv) above, and the benefits of the
Repurchase Program described in clause (v) above, that the interests of the
Company, its shareholders and other constituencies would best be served by
the Company continuing as an independent entity, proceeding with its plans
to effect the Spin-Off, and effecting the Repurchase Program;
(viii) the oral opinion of Goldman Sachs, the Company's financial
advisor, after reviewing with the Board of Directors many of the factors
referred to above and other financial criteria used in assessing an offer,
that the Revised Offer is inadequate; and
(ix) the disruptive effect consummation of the Revised Offer would have
on the Company's employees, suppliers, customers and the communities where
the Company operates.
On July 29, 1996, the Board of Directors declared a dividend to the holders
of Common Shares of 100% of the common stock of Cuno (the "Cuno Common
Stock"). The Cuno Common Stock will be distributed on the basis of one share
of Cuno Common Stock for each outstanding Common Share, payable to holders of
record of Common Shares as of the close of business on August 9, 1996. The
distribution of the Cuno Common Stock to the Company's shareholders is
expected to take place on the later of either August 19, 1996 or the earliest
practicable date after approval of the Cuno Common Stock for trading on the
Nasdaq National Market and the commencement of trading. The Spin-Off is also
subject to there not being in effect on the distribution date any injunction,
order or decree of any court or governmental authority which prohibits or
makes illegal the Spin-Off.
In connection with the Spin-Off, the Company received opinions from Katten
Muchin and Fried, Frank, Harris, Shriver & Jacobson to the effect that the
Spin-Off should qualify as tax-free under Section 355 of the Internal Revenue
Code of 1986 (the "Code"). Such opinions specifically assume, however, that
the Revised
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Offer will not be accepted by shareholders of the Company and neither the
Company nor Cuno is acquired in a transaction after the Spin-Off which was
initiated prior to the Spin-Off or that could reasonably be anticipated to
occur as of the date of the Spin-Off. If that assumption proves inaccurate,
there is a significant risk that the Spin-Off will not qualify as a tax-free
distribution under Section 355 of the Code. If the Spin-Off does not qualify
under Section 355 of the Code, then the Company will be treated as if it sold
the stock of Cuno in a taxable transaction, resulting in a substantial tax
liability to the Company. In addition, the shareholders who receive the Cuno
Common Stock in the Spin-Off will be treated as if they have received a
taxable dividend (to the extent of Cuno's accumulated and current earnings and
profits) in the amount of the full fair market value of the Cuno Common Stock
received. In addition, legislation proposed by the Clinton Administration
would render the Spin-Off taxable to the Company if within two years following
the Spin-Off there is a more than 50% change in control transaction involving
either the Company or Cuno which is related to the Spin-Off. The explanation
to the proposed legislation indicates that a hostile acquisition commenced
before the Spin-Off occurs may be related. The Clinton Administration proposed
that this legislation apply to all transactions occurring after March 19,
1996, although Congressional leaders have indicated that it would not be
effective until after appropriate Congressional action. Stockholders who
acquire Cuno Common Stock after the Spin-Off will not have any individual
federal tax obligation with respect to this potential liability. However, such
new stockholders will be impacted by the effect, if any, on Cuno's earnings,
financial condition and results of operations from such tax liabilities.
The certificate of incorporation and the bylaws of Cuno contain provisions
that (i) limit a stockholder's ability to act by written consent, (ii) provide
for a staggered board of directors, (iii) require an affirmative vote of 80%
of the stockholders entitled to vote to remove directors (who can only be
removed for cause), to amend certain provisions of the certificate of
incorporation or to repeal or amend the bylaws, and (iv) allow the Board of
Directors of Cuno, without obtaining stockholder approval, to issue shares of
preferred stock having rights that could adversely affect the voting power and
economic rights of holders of the Cuno Common Stock. Cuno has also adopted a
stockholder rights agreement. Also, Section 203 of the Delaware General
Corporation Law restricts certain business combinations with any "interested
stockholder" as defined by such statute. Any of the foregoing factors may
delay, defer or prevent a change in control of Cuno.
In connection with the Spin-Off, the Company has entered into a new $190
million credit facility with a group of banks led by Mellon Bank, N.A., which
will provide funds for Cuno and, among other purposes, completion of the
Repurchase Program. Also, on July 29, 1996, the Board of Directors declared a
regular quarterly cash dividend on the Common Shares of $0.135 per share,
payable September 13, 1996 to shareholders of record on August 30, 1996.
On July 30, 1996, the Company filed a Registration Statement on Form 10 (the
"Form 10") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), relating to the registration of the Cuno Common Stock under
the Exchange Act.
IN LIGHT OF THE BOARD OF DIRECTORS' CONCLUSIONS THAT THE REVISED OFFER IS
INADEQUATE, IS NOT IN THE BEST INTERESTS OF THE COMPANY, ITS SHAREHOLDERS AND
OTHER CONSTITUENCIES, AND DOES NOT ADEQUATELY REFLECT THE LONG-TERM VALUE OR
PROSPECTS OF THE COMPANY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS DISCARD THE GOLD-STRIPED PROXY CARD SENT TO YOU BY UNITED
DOMINION AND OAC. TO STOP UNITED DOMINION AND OAC FROM USING YOUR SHARES TO
FURTHER THEIR INADEQUATE OFFER, THE BOARD OF DIRECTORS URGES THAT YOU SIGN,
DATE AND RETURN THE ENCLOSED LIGHT-GREEN PROXY CARD AS SOON AS POSSIBLE.
THE RETURN OF A SIGNED PROXY CARD BY A SHAREHOLDER IS INDEPENDENT OF ANY
DECISION BY SUCH SHAREHOLDER WHETHER OR NOT TO TENDER SHARES PURSUANT TO
UNITED DOMINION AND OAC'S INADEQUATE OFFER. THE RETURN OF A SIGNED PROXY CARD
BY A SHAREHOLDER IS ALSO INDEPENDENT OF ANY REVOCATION CARD OR PROXY
PREVIOUSLY EXECUTED BY SUCH SHAREHOLDER IN CONNECTION WITH THE 831 SPECIAL
MEETING.
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VOTING PROCEDURES
IN ORDER TO STOP UNITED DOMINION AND OAC FROM USING YOUR SHARES TO FURTHER
THEIR INADEQUATE OFFER, PLEASE MARK, SIGN AND DATE THE ENCLOSED LIGHT-GREEN
PROXY CARD AND RETURN IT TO COMMERCIAL INTERTECH CORP., c/o MORROW & CO., 909
THIRD AVENUE, 20TH FLOOR, NEW YORK, NEW YORK 10022, FAX (212) 754-8362.
EXECUTION OF THE LIGHT-GREEN PROXY CARD WILL NOT PRECLUDE YOU FROM ATTENDING
THE SPECIAL MEETING, IF HELD, AND TO VOTE IN PERSON.
Only holders of record as of the close of business on the record date of the
Special Meeting (the "Special Meeting Record Date") will be entitled to vote
at the Special Meeting. The holders of the Common Shares and Preferred Shares
are each entitled to one vote per share, voting as a single class, on each
matter submitted to a vote at the Special Meeting. The shareholders present,
in person or by proxy, at any meeting constitute a quorum in the determination
of the number of or election of directors, or for the consideration of and
action upon reports present at the meeting. For any other purpose, the
holders, present in person or by proxy, of a majority of the voting stock of
the Company constitute a quorum at the Special Meeting for the transaction of
business.
Whether or not you plan to attend the meeting, you are urged to vote by
proxy. Duly executed and unrevoked proxies received by the Company prior to
the Special Meeting will be voted in accordance with the shareholder's
specifications marked thereon. If no specifications are marked thereon, the
LIGHT-GREEN proxies distributed by your Board of Directors will be voted
AGAINST the Special Meeting Proposals and FOR the Board of Directors' nominees
for election to the Board of Directors. Any shareholder giving a proxy may
revoke it at any time prior to voting at the Special Meeting by (i) filing
with the Company, c/o Morrow & Co., Inc. at the address indicated above, a
duly executed revocation, (ii) by submitting a later dated proxy with respect
to the same Shares or (iii) by attending the Special Meeting and voting in
person (although attendance at the Special Meeting will not in and of itself
constitute a revocation of your proxy).
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE PROPOSALS MADE BY UNITED
DOMINION AND OAC, UNANIMOUSLY RECOMMENDS VOTING "FOR" THE BOARD OF DIRECTORS'
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS, SHOULD SUCH ELECTION BE
NECESSARY, AND UNANIMOUSLY RECOMMENDS THAT YOU DISCARD ANY GOLD-STRIPED PROXY
CARD SENT TO YOU BY UNITED DOMINION AND OAC. WHETHER OR NOT YOU HAVE
PREVIOUSLY EXECUTED A GOLD-STRIPED PROXY CARD, THE BOARD OF DIRECTORS URGES
YOU TO MARK, SIGN, DATE AND DELIVER THE ENCLOSED LIGHT-GREEN CARD AS PROMPTLY
AS POSSIBLE, BY FAX OR BY MAIL (USING THE ENCLOSED ENVELOPE), TO MORROW & CO.,
INC., 909 THIRD AVENUE, 20TH FLOOR, NEW YORK, NEW YORK, 10022, FAX: (212) 754-
8362.
Certain Shares are held of record by LaSalle National Trust, N.A., as ESOP
Trustee for Commercial Intertech's ESOPs. The ESOP Trusts contain pass-through
voting provisions for the participants of the ESOPs, with Shares that are
allocated to a participant's account to be voted by the ESOP Trustee as
instructed by the participant and Shares that either are not allocated to any
participant's account or are allocated but for which no instruction from the
participant has been received by the ESOP Trustee voted by the ESOP Trustee
proportionately as the allocated Shares for which instructions were received
are voted. PARTICIPANTS IN THE ESOPS CAN ONLY EXECUTE THE LIGHT-GREEN PROXY
CARD WITH RESPECT TO SHARES HELD IN THE ESOPS ON THEIR BEHALF BY INSTRUCTING
THE TRUSTEE ON THE FORM THAT WILL BE PROVIDED TO PARTICIPANTS FOR THAT
PURPOSE. According to the UDI/OAC Proxy Statement, United Dominion and OAC
believe that, notwithstanding the express terms of the trust document, the
ESOP Trustee has a fiduciary duty under ERISA to exercise its discretion with
respect to voting Shares held in the ESOPs which are allocated to any
participant's account but for which no instructions are received by it and for
all Shares held in ESOPs which are not allocated to any participant's account.
United Dominion and OAC also believe, according to the UDI/OAC Proxy
Statement, that the indemnification provisions in favor of the ESOP Trustee
contained in the trust documents, which provide full indemnification for
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the ESOP Trustee only for actions taken upon the written direction of the
participants and in accordance with the terms of the ESOP, violate ERISA.
According to the UDI/OAC Proxy Statement, United Dominion and OAC believe that
the Department of Labor has successfully advanced similar positions in a
federal district court case, Reich v. NationsBank of Georgia, N.A., and Martin
v. NationsBank of Georgia, N.A., an earlier opinion in the same proceeding.
In addition, Common Shares are held of record by National City Bank, N.E.,
as trustee (the "Plan Trustee") for the Company's Non-Qualified Stock Purchase
Plan and the Employee Savings and Stock Purchase Plan (the "Plans"). The
trusts for these plans (the "Plan Trusts") contain pass-through voting
provisions for the participants of the Plans, with Common Shares that are
allocated to a participant's account voted by the Plan Trustee as instructed
by the participant and Common Shares for which no instruction from the
participant has been received by the Plan Trustee voted by the Plan Trustee,
in its sole discretion. PARTICIPANTS IN THE PLANS CAN ONLY VOTE COMMON SHARES
HELD IN THE PLANS ON THEIR BEHALF BY INSTRUCTING THE PLAN TRUSTEE ON THE
TRUSTEE INSTRUCTION CARD THAT WILL BE PROVIDED TO PARTICIPANTS FOR THAT
PURPOSE.
Proxies representing Common Shares held of record will include Common Shares
allocated to participants under the Automatic Dividend Reinvestment Plan (the
"Dividend Reinvestment Plan") for shareholders of the Company. The form of
Proxy accompanying this Proxy Statement can be used to vote such Common Shares
held under the Dividend Reinvestment Plan.
Prior to the Repurchase Program, the Preferred Shares represented
approximately 6.2% of the voting power of the Company's outstanding voting
securities. In addition, Common Shares held in employee benefit plans
represented approximately 4.9% of the voting power of the Company's
outstanding voting securities. Assuming the repurchase of 2,500,000 shares
pursuant to the Repurchase Program, the Series B Shares would represent
approximately 7.3%, and such other Common Shares would represent approximately
5.8%, of the voting power of the Company's outstanding voting securities. If
the Preferred Shares were converted to Common Shares and assuming completion
of the repurchase, a total of 1,301,082 Common Shares would be issued,
representing approximately 9.2% of the voting power of the Company's then
outstanding voting securities.
In connection with the Spin-Off, the ESOP Trustee would have to make a
determination, in its discretion whether to continue to hold the Preferred
Shares or to convert prior to the Spin-Off record date into Common Shares and
receive Cuno Common Stock in the Spin-Off. If the ESOP Trustee were to convert
prior to the record date, based on the number of Common Shares which would be
held by the ESOPs, it could continue to hold the Cuno shares following the
Spin-Off. If the ESOP Trustee did not convert, however, under the anti-
dilution provisions of the Preferred Shares, the Preferred Shares would be
entitled to an adjustment in the conversion ratio equal to the result obtained
by multiplying the conversion price by a fraction, the numerator of which
would be the trading value of the Common Shares prior to the Spin-Off less the
fair market value of the Cuno Common Stock, and the denominator of which would
be trading value of the Common Shares prior to the Spin-Off.
REVOCATION
Either a GOLD STRIPED Proxy Card or a LIGHT-GREEN Proxy Card may be revoked
by written notice of revocation to the Company by fax or by mail (using the
enclosed envelope), to Morrow & Co., Inc., 909 Third Avenue, 20th Floor, New
York, New York, 10022, Fax: (212) 754-8362. Such revocation may be in any
form, but must be signed and dated and must clearly express your intention to
revoke your previously executed Proxy Card. Your latest dated card will
supersede any earlier-dated card.
Also, revocation of a previously executed proxy card can be effected by
attending the Special Meeting and voting in person (although attendance at the
Special Meeting will not in and of itself constitute a revocation of your
proxy).
If you have any questions concerning the Company's solicitation of Proxy
Cards, or United Dominion and OAC's solicitation of Proxy Cards, please
contact Morrow & Co., Inc., at 1-800-566-9061 (Toll-Free).
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SPECIAL MEETING PROPOSALS BY UNITED DOMINION AND OAC
According to the UDI/OAC Proxy Statement, United Dominion and OAC intend to
raise at the Special Meeting, if held, and the Board of Directors and
management unanimously recommend AGAINST each of, the following Special
Meeting Proposals: (i) the Chairman Proposal, (ii) the Right Redemption
Proposal, (iii) the Director Removal Proposal, (iv) the Control Share
Proposal, the (v) Election Proposal, (vi) the Recess Proposal, (vii) the
Article SIXTH Repeal Proposal and (viii) the Adjournment Proposal.
The election of new directors nominated by United Dominion and OAC (the
Election Proposal) is contingent on the shareholders' approval of the proposal
to remove all of the incumbent directors without cause (the Director Removal
Proposal). If the Director Removal Proposal is not approved, there will be no
election of directors at the Special Meeting. If the Director Removal Proposal
is approved, three members of the current Board of Directors listed on page
[29] will stand for election in opposition to United Dominion's and OAC's
nominees. See "Election of Directors."
The purpose of seeking the adoption of the Special Meeting Proposals is to
facilitate the consummation of the Revised Offer, which the current Board of
Directors and management of the Company has determined to be inadequate and
not in the best interest of the Company, its shareholders, employees,
customers, suppliers, labor organizations, the communities in which the
Company does business and its other constituencies, and not to adequately
reflect the long-term value or prospects of the Company. THE BOARD OF
DIRECTORS VIGOROUSLY OPPOSES EACH OF THE SPECIAL MEETING PROPOSALS, WHICH ARE
DESCRIBED IN GREATER DETAIL IN THE SUBSECTIONS BELOW.
RESOLUTION CALLING FOR [ ] TO PRESIDE AT THE SPECIAL MEETING, IF HELD
According to the UDI/OAC Proxy Statement, United Dominion and OAC intend to
propose at the Special Meeting, if held, a resolution calling for [ ] to be
designated chairman of the Special Meeting. The purpose of this proposal is to
have such chairman cause the order of business of the Special Meeting to be as
set forth in the UDI/OAC Proxy Statement. In accordance with the Regulations,
adoption of this resolution requires the affirmative vote of the holders of a
majority of the voting Shares represented and entitled to vote at the Special
Meeting, if held. If the resolution is not adopted, Paul J. Powers, Chairman
of the Board and Chief Executive Officer, will serve as chairman of the
Special Meeting.
THIS PROPOSAL IS AN ATTEMPT BY UNITED DOMINION AND OAC TO INSERT THEIR HAND-
PICKED REPRESENTATIVE IN A POSITION WHERE SUCH PERSON CAN FURTHER UNITED
DOMINION AND OAC'S OWN INTERESTS BY SEEKING TO CONTROL THE CONDUCT OF BUSINESS
AT THE SPECIAL MEETING. THE BOARD OF DIRECTORS URGES YOU TO VOTE "AGAINST"
THIS PROPOSAL.
RESOLUTION CALLING FOR REDEMPTION OF RIGHTS
According to the UDI/OAC Proxy Statement, United Dominion and OAC intend to
propose at the Special Meeting a resolution calling on the Company's incumbent
directors to redeem the Rights prior to the time such directors are removed
from office. This resolution, if adopted by the shareholders of the Company,
will not be binding on the Board of Directors. In the event the Board of
Directors fails to redeem the Rights or to take other action under the Rights
Agreement to render the Rights inapplicable to the Revised Offer and the
Proposed Merger, according to the UDI/OAC Proxy Statement, United Dominion and
OAC may be unable or unwilling to purchase Common Shares in the Revised Offer
and/or to consummate the Proposed Merger, or the purchase of Common Shares in
the Revised Offer and the consummation of the Proposed Merger may, due to the
restrictions on certain actions by a Board of Directors which is comprised of
an Interested Majority (as defined below) described below (the "180-Day
Provisions"), be delayed by 180 days from the time nominees of United Dominion
are elected as directors of the Company.
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THE RIGHTS, INCLUDING THE 180-DAY PROVISIONS DESCRIBED BELOW, WERE DESIGNED
TO PROTECT THE COMPANY AGAINST INADEQUATE OFFERS SUCH AS THE REVISED OFFER,
AND TO ENSURE THAT, IN THE EVENT OF A CHANGE IN CONTROL OF THE BOARD WHICH IS
DESIGNED TO FACILITATE AN INADEQUATE OFFER, THERE IS AN OPPORTUNITY FOR OTHER
INTERESTED PARTIES TO PROPOSE ALTERNATIVES TO SHAREHOLDERS. THE BOARD OF
DIRECTORS URGES YOU TO VOTE "AGAINST" THIS PROPOSAL.
On November 29, 1989, the Board of Directors declared a dividend
distribution of one Right for each outstanding Common Share to shareholders of
record (the "Rights Record Date") on December 13, 1989. As a result of a 3 for
2 stock split effective as of September 1, 1994, two-thirds of one Right is
attached to each outstanding Common Share. When exercisable, each full Right
entitles the holder thereof to purchase one one-hundredth of a share of Series
A Participating Preferred Shares, no par value, at $75 per share, subject to
adjustment. The description and terms of the Rights are set forth in the
Rights Agreement.
The Rights are currently attached to all certificates representing Common
Shares outstanding and no separate Rights certificates have been distributed.
On the earlier of (i) a public announcement that, without the prior approval
of the Company, a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired or obtained the right to acquire the
beneficial ownership of securities having 20% or more of the voting power of
all outstanding voting securities of the Company or (ii) 10 days (unless such
date is extended by the Board of Directors) following the commencement of, or
a public announcement of an intention to make, a tender offer or exchange
offer which would result in any person or group of related persons becoming an
Acquiring Person (the earlier of such dates, the "Distribution Date"), the
Rights become exercisable. At its July 17, 1996 meeting, the Board of
Directors of the Company resolved to delay a "Distribution Date" under the
Rights Agreement pursuant to clause (ii) of the preceding sentence until
either (i) the close of business on August 7, 1996 or (ii) such earlier date
prior to the expiration date of the Revised Offer as the Board of Directors,
or any duly authorized committee thereof, but subsequent resolution duly
approved, shall designate.
Once exercisable, the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Rights Record Date, by such
Common Share certificate together with the Summary of Rights attached as
Exhibit C to the Rights Agreement. The Rights Agreement provides that, until
the Distribution Date, the Rights will be transferred with and only with
Common Share certificates. From as soon as practicable after the Rights Record
Date and until the Distribution Date (or earlier redemption or expiration of
the Rights), new certificates for Common Shares issued after the Rights Record
Date upon transfer or new issuance of the Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Rights Record Date (with or without the Summary of Rights attached) will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
If an Acquiring Person becomes such, holders of Rights (other than the
Acquiring Person its affiliates and associates) have, for a period of 60 days,
the right to receive upon exercise that number of Common Shares having a
market value of two times the exercise price of the Right, to the extent
available, and then a Common Share equivalent having a market value of two
times the exercise price of the Right (such Rights collectively, the
"Subscription Rights"). If the Revised Offer is consummated, unless the Rights
have previously been redeemed or otherwise rendered inapplicable to the
purchase of Common Shares pursuant to the Revised Offer, the Subscription
Rights would be triggered, which could result in substantial dilution of the
interests of United Dominion and OAC. Accordingly, the Company believes that,
unless and until the Rights are redeemed or otherwise rendered inapplicable to
the Revised Offer, the Revised Offer will not be consummated. Moreover,
pursuant to the 180-Day Provisions, if nominees of United Dominion and OAC
were to constitute a majority of the Board of Directors, they would be
prohibited from redeeming the Rights for 180 days following their election.
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After the public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such (the date of such announcement, the "Shares
Acquisition Date"), if (i) a merger or other business combination occurs in
which the Common Shares are exchanged or changed (other than a merger with a
person or group who acquired Common Shares pursuant to a Permitted Offer (as
defined below) and is offering in the merger not less than the price paid
pursuant to the Permitted Offer and the same form of consideration paid) or
(ii) 50% or more of the Company's assets or earning power are sold in one
transaction or a series of transactions, each holder of a Right (other than
such Acquiring Person) has the right to receive upon exercise that number of
Common Shares of the acquiring company having a market value of two times the
exercise price of the Right.
A "Permitted Offer" means a tender offer or exchange offer for all
outstanding shares of Common Shares at a price and on terms determined, prior
to the purchase of such shares under such tender offer or exchange offer, by
at least a majority of the members of the Board of Directors who are not
officers of the Company, to be both adequate and otherwise in the best
interests of the Company, its shareholders (other than the person on whose
behalf the offer is being made) and other relevant constituencies that the
Board of Directors may consider under Ohio law, including, without limitation,
the constituencies described in Section 1701.59(E) of the ORC. However, in the
event that a majority of the Board of Directors is comprised of (i) persons
elected at a meeting of shareholders or by shareholder action by written
consent who were not nominated by the directors in office immediately prior to
such meeting or action by written consent and/or (ii) successors of such
persons elected to the Board of Directors for the purpose of either
facilitating a transaction with an Interested Person (as defined below) or
circumventing directly or indirectly the provisions of the Rights Agreement
(such majority, an "Interested Majority"), then for a period of 180 days
following the effectiveness of such action no offer by an Interested Person
may be deemed a Permitted Offer. "Interested Person" with respect to a
transaction means (x) any person who (i) is or will become an Acquiring Person
if the transaction were to be consummated without regard to any required
approval of the Company and (ii) directly or indirectly proposed or nominated
a director of the Company which director (or a successor of such person
elected to the Board of Directors for the purpose of either facilitating a
transaction with such Interested Person or circumventing directly or
indirectly the provisions of the Rights Agreement) is in office at the time of
consideration of the transaction in question, or (y) an affiliate or associate
of such person. In the event that a majority of the Board of Directors is
comprised of an Interested Majority, then for 180 days following the
effectiveness of such action, the Company may not exclude from the definition
of an Acquiring Person any Interested Person who acquires 20% or more of the
Company's outstanding Common Shares.
At any time prior to the earlier of (i) a person becoming an Acquiring
Person or (ii) the expiration of the Rights, the Company may, upon action by
the Board of Directors in their sole discretion, redeem the Rights, in whole
but not in part, at a price of $.01 in cash per Right (the "Redemption
Price"), which redemption shall be effective upon action of the Board of
Directors in the exercise of their sole discretion. In addition, following the
Shares Acquisition Date, the Company may redeem the then outstanding Rights in
whole, but not in part, at the Redemption Price provided that such redemption
is (i) in connection with a merger or other business combination transaction
or series of transactions involving the Company in which all holders of Common
Shares are treated alike, but not involving an Acquiring Person or any person
who was an Acquiring Person or (ii) following an event giving rise to, and the
expiration of the exercise period for, the Subscription Rights, if and for as
long as no person beneficially owns securities representing 20% or more of the
voting power of the Company's voting securities. However, if a majority of the
Board of Directors is an Interested Majority, then (x) the Rights may not be
redeemed for 180 days after such election if such redemption is reasonably
likely to have the purpose of facilitating a transaction with an Interested
Person and (y) the Rights may not be redeemed if during the 180 day period the
Company enters into any agreement reasonably likely to facilitate a
transaction with an Interested Person and the redemption is reasonably likely
to facilitate such a transaction.
The Rights expire on the earlier of (i) November 29, 1999, (ii) consummation
of a merger transaction with a person or group who acquired Common Shares
pursuant to a Permitted Offer, and is offering in the merger the same form of
consideration and not less than the price per share paid pursuant to the
Permitted Offer or (iii) redemption by the Company.
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Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or receive dividends.
Any of the provisions of the Rights Agreement may be amended or supplemented
by the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be amended
or supplemented by the Board of Directors in order to cure any ambiguity,
defect or inconsistency, or to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person). However, if the majority of the Board of Directors is an Interested
Majority, then for a period of 180 days following the effectiveness of such
action the Rights Agreement may not be amended or supplemented in any manner
reasonably likely to have the purpose or effect of facilitating certain
business combination transactions with an Interested Person.
In the event that United Dominion or any affiliates or associates of United
Dominion, acting as group, acquire beneficial ownership of 20% or more of the
Common Shares pursuant to the Revised Offer or otherwise, such persons will be
an Acquiring Person as defined in the Rights Agreement and a Shares
Acquisition Date will have occurred.
United Dominion and OAC commenced litigation against the Company and its
directors on July 11, 1996 in The United States District Court for the
Southern District of Ohio, Eastern Division (the "Ohio Federal District
Court"), seeking, among other things, an order requiring the Board of
Directors of the Company to redeem the Rights. See "CERTAIN LEGAL MATTERS"
below.
RESOLUTION TO REMOVE THE CURRENT BOARD OF DIRECTORS AND REDUCE THE SIZE OF THE
COMPANY'S BOARD
According to the UDI/OAC Proxy Statement, at the Special Meeting, United
Dominion and OAC intend to propose that all incumbent directors of the Company
be removed from office and that the size of the Board of Directors be reduced
from twelve to three members. The persons appointed by the proxies to be
solicited by United Dominion and OAC for the Special Meeting would vote the
Shares represented by such proxies in favor of United Dominion and OAC's
proposals to remove all of the incumbent directors of the Company and, as
described below, to amend the Regulations to reduce the size of the Board of
Directors from twelve to three members (and, in connection with such reduction
in size, to provide that the directors shall serve as a single class with the
same term of office).
Removal of all incumbent directors requires the affirmative vote of a
majority of the total voting power of the outstanding Shares. Removal of the
current Board of Directors will allow an election of directors, at which
United Dominion and OAC propose to elect their handpicked nominees to the
Board of Directors.
UNITED DOMINION AND OAC'S NOMINEES, IF ELECTED, ARE COMMITTED TO ENSURING
THAT A FUTURE BOARD OF DIRECTORS OF THE COMPANY APPROVES THEIR REVISED OFFER,
WHICH YOUR BOARD OF DIRECTORS HAS DETERMINED TO BE INADEQUATE. UNLIKE THE
COMPANY'S CURRENT BOARD OF DIRECTORS, FOLLOWING THE SPECIAL MEETING THE BOARD
OF DIRECTORS WOULD BE COMPRISED OF UNITED DOMINION AND OAC'S HAND-PICKED
REPRESENTATIVES, WHO WILL NEGOTIATE THE TERMS OF UNITED DOMINION AND OAC'S
ACQUISITION OF THE COMPANY. NEITHER UNITED DOMINION NOR OAC HAS ANY FIDUCIARY
OBLIGATION TO PROTECT YOUR INTERESTS; THEIR SOLE OBLIGATIONS ARE TO THEIR OWN
SHAREHOLDERS. THE BOARD OF DIRECTORS URGES YOU TO VOTE "AGAINST" THIS
PROPOSAL.
According to the UDI/OAC Proxy Statement, United Dominion and OAC intend to
propose at the Special Meeting a resolution to amend Article II of the
Regulations by replacing Sections 1 and 2 in their entirety with the following
language:
SECTION 1. NUMBER. Until changed in accordance with the provisions of
Section 2 hereof, the Board of Directors of the corporation shall consist
of three (3) directors."
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SECTION 2. ELECTION AND TERM. Each director shall hold office until the
next annual meeting of shareholders and until his or her successor is
elected, or until his or her earlier resignation, removal from office, or
death. The election of directors shall, if the number of persons nominated
shall be greater than the number of directorships to be filled, be by
ballot."
The number of directors may be increased or decreased (subject to the
condition that in no event shall the number of directors be less than three
(3)), by resolution adopted by shareholders entitled to exercise a majority
of the voting power on such proposal present in person or by proxy at any
annual meeting or at any special meeting called for that purpose, provided
that no decrease in the number of directors shall of itself have the effect
of shortening the term of any incumbent director."
The Board of Directors may adopt such further regulations governing the
elections of directors, not inconsistent with the foregoing, as shall to
the Board of Directors seem proper and expedient."
The Regulations require the affirmative vote of a majority of the total
voting power of the outstanding Shares to approve this amendment to the
Regulations.
RESOLUTION CALLING FOR OPTING OUT OF OHIO CONTROL SHARE ACQUISITION LAW
As stated in the UDI/OAC Proxy Statement, United Dominion and OAC intend, if
the approval of the Control Share Acquisition has not been obtained or OAC has
not otherwise been satisfied, in its sole discretion, that the Ohio Control
Share Acquisition Law is invalid or inapplicable to the acquisition of Common
Shares pursuant to the Revised Offer by the date of the Special Meeting, to
propose at the Special Meeting a resolution to amend the Regulations by adding
the following Article XI to the Regulations:
"ARTICLE XI
CONTROL SHARE ACQUISITION STATUTE NOT APPLICABLE"
"Section 1701.831 of the Ohio Revised Code does not apply to "control
share acquisitions' (as such term is defined in division (Z)(1) of Section
1701.01 of the Ohio Revised Code) of shares of the corporation."
The Regulations require the affirmative vote of a majority of the total
voting power of the outstanding Shares to approve this amendment to the
Regulations.
THE BOARD OF DIRECTORS VIEWS THIS PROPOSAL AS ANOTHER ATTEMPT TO STRIP THE
COMPANY OF STRUCTURAL MECHANISMS CURRENTLY IN PLACE TO PROTECT IT FROM
INADEQUATE OFFERS SUCH AS THE REVISED OFFER. ONE PURPOSE OF THIS PROPOSAL IS
TO ELIMINATE THE APPLICATION OF THE OHIO CONTROL SHARE ACQUISITION LAW IF
SHAREHOLDERS HAVE PREVIOUSLY VOTED AGAINST THE AUTHORIZATION OF A CONTROL
SHARE ACQUISITION BY UNITED DOMINION AND OAC. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" THIS PROPOSAL.
RESOLUTION TO CALL FOR ELECTION OF NEW DIRECTORS
According to the UDI/OAC Proxy Statement, United Dominion and OAC also
intend to propose that, if the Director Removal Proposal is approved, nominees
of United Dominion be elected as directors of the Company to fill all of the
vacancies created by the removal of the incumbent directors and the reduction
of the size of the Board of Directors, each to hold office until a successor
has been elected and qualified or until death, resignation or removal.
According to the UDI/OAC Proxy Statement, Company shareholders have been
provided with information concerning United Dominion's nominees in a proxy
statement relating to the Special Meeting which was forwarded to Company
shareholders prior to the Special Meeting.
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UNITED DOMINION AND OAC'S NOMINEES, IF ELECTED, ARE COMMITTED TO ENSURING
THAT A FUTURE BOARD OF DIRECTORS OF THE COMPANY APPROVES THEIR REVISED OFFER,
WHICH YOUR BOARD OF DIRECTORS HAS DETERMINED TO BE INADEQUATE. UNLIKE THE
COMPANY'S CURRENT BOARD OF DIRECTORS, FOLLOWING THE SPECIAL MEETING THE BOARD
OF DIRECTORS WOULD BE COMPRISED OF UNITED DOMINION AND OAC'S HAND-PICKED
REPRESENTATIVES WHO WILL NEGOTIATE THE TERMS OF UNITED DOMINION AND OAC'S
ACQUISITION OF THE COMPANY. NEITHER UNITED DOMINION NOR OAC HAS ANY FIDUCIARY
OBLIGATION TO PROTECT YOUR INTERESTS; THEIR SOLE OBLIGATIONS ARE TO THEIR OWN
SHAREHOLDERS.
Accordingly, the Board of Directors, in the event an election of directors
is necessary due to the approval of the Director Removal Proposal, has
proposed its own nominees for election to the Board of Directors. See
"Election of Directors." Should the Director Removal Proposal be approved,
only three director positions will exist.
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR" THE BOARD OF DIRECTORS'
NOMINEES AS DIRECTORS OF THE COMPANY.
The laws of the State of Ohio, under which the Company is organized, provide
for cumulative voting for the election of directors if any shareholder gives
notice in writing to the President, a Vice President or the Secretary of the
Company, not less than 48 hours (unless notice of the meeting has not been
given at least 10 days before the date fixed for the meeting, in which case 24
hours) before the time fixed for holding the meeting that such shareholder
desires that the voting for the election of directors shall be cumulative,
provided that announcement of the giving of such notice is made upon the
convening of the meeting by the Chairman or the Secretary of the Company or by
or on behalf of such shareholder. Each shareholder shall then have the right
to vote his or her Shares cumulatively at the election; that is, each
shareholder shall be entitled to cast a number of votes as shall equal the
number of votes represented by such shareholder's Shares on the Special
Meeting Record Date multiplied by the number of directors to be elected. A
shareholder may cast all such cumulative votes for a single nominee or may
allocate them among as many nominees as that shareholder sees fit. In the
event the election of directors at the Special Meeting is to be by cumulative
voting, both the Board of Directors and United Dominion (according to the
UDI/OAC Proxy Statement) intend to seek to have as many of their nominees
elected as possible.
Again, the election of new directors nominated by United Dominion and OAC
(the Election Proposal) is contingent on the shareholders' approval of the
Director Removal Proposal. If the Director Removal Proposal is not approved,
there will be no election of directors at the Special Meeting. IN ORDER TO
SUPPORT YOUR CURRENT BOARD OF DIRECTORS AND TO PREVENT UNITED DOMINION FROM
FURTHERING ITS INADEQUATE REVISED OFFER, PLEASE VOTE "FOR" THE BOARD OF
DIRECTORS' NOMINEES.
RESOLUTION CALLING FOR RECESS OF SPECIAL MEETING
According to the UDI/OAC Proxy Statement, United Dominion and OAC intend to
call for a resolution that the Special Meeting be recessed for one hour, or
for such other reasonable period of time as it shall take the duly appointed
inspectors of election for the Special Meeting to determine the results of the
votes theretofore taken at this Special Meeting
According to the UDI/OAC Proxy Statement, the purported purpose of the
Recess Proposal is to give the inspectors of election for the Special Meeting
an opportunity to confirm the results of the election of the Company's Board
of Directors, so as to enable the newly elected Board of Directors to
recommend unanimously the repeal of said Article SIXTH to the Company's
shareholders, as described below.
According to the UDI/OAC Proxy Statement, United Dominion and OAC believe
that, if the Chairman Proposal is approved by the shareholders, the designated
Special Meeting chairman would be able to recess the
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Special Meeting without the vote of the Company's shareholders. However,
according to the UDI/OAC Proxy Statement, United Dominion and OAC are
presenting the proposal for a vote in order to eliminate any questions as to
validity.
RESOLUTION CALLING FOR AMENDMENT OF THE ARTICLES
Article SIXTH of the Articles ("Article SIXTH") provides that the
affirmative vote of holders of 95% of all shares of stock of the Company
entitled to vote in the election of directors shall be required to authorize a
business combination (as defined in the Articles) with any entity that,
directly or indirectly, beneficially owns 30% or more of the Shares as of the
record date for the meeting of shareholders at which such authorization is
sought unless the consideration to be offered to holders of the outstanding
shares complies with certain "fair price" requirements (the "Article SIXTH
Requirements"). According to the UDI/OAC Proxy Statement, United Dominion and
OAC intend to propose that the Articles be amended to repeal Article SIXTH in
its entirety.
Article SIXTH may be amended or repealed only by the affirmative vote of 95%
of all shares of stock of the Company entitled to vote in the election of
directors, or by the affirmative vote of at least two-thirds of the
outstanding Shares upon the unanimous recommendation of the Board of Directors
provided that all of the directors qualify as "continuing directors" at the
time such recommendation is made. "Continuing director" is defined to include
directors holding office prior to the time that any entity proposing a
business combination has acquired 10% or more of the outstanding stock of the
Company. Because the Special Meeting will occur prior to the time OAC
purchases Common Shares in the Revised Offer, United Dominion's nominees, if
elected at the Special Meeting, will qualify as "continuing directors" for
purposes of Article SIXTH.
United Dominion and OAC have requested that the Company's Board of Directors
unanimously recommend to the Company shareholders that Article SIXTH be
repealed or otherwise amended such that its provisions are inapplicable to the
Proposed Merger. According to the UDI/OAC Proxy Statement, if the Special
Meeting were to be called, OAC expects United Dominion's nominees, if all such
persons are elected at the Special Meeting, to take such action as shall
result in a unanimous recommendation by the Board of Directors to the
Company's shareholders that Article SIXTH be repealed. In the event such
recommendation is made, pursuant to Article SIXTH and the ORC, the affirmative
vote of holders of two-thirds of the voting power of the total number of
outstanding Shares would be sufficient to approve the proposal to repeal
Article SIXTH. THE BOARD OF DIRECTORS OPPOSES ANY ACTION BY UNITED DOMINION
AND OAC TO REPEAL OR AMEND ARTICLE SIXTH SUCH THAT ITS PROVISIONS ARE
INAPPLICABLE TO THE PROPOSED MERGER. IF THE "FAIR PRICE" PROVISIONS OF ARTICLE
SIXTH WOULD BE APPLICABLE TO A TRANSACTION WITH UNITED DOMINION OR OAC, YOUR
BOARD OF DIRECTORS BELIEVES THAT UNITED DOMINION AND OAC SHOULD BE REQUIRED TO
COMPLY WITH ARTICLE SIXTH. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST"
THIS PROPOSAL.
RESOLUTION CALLING FOR ADJOURNMENT OF SPECIAL MEETING BYUDI/OAC PROXY AGENTS
According to the UDI/OAC Proxy Statement, United Dominion and OAC intend to
call for a resolution that allows their proxy agents to adjourn the Special
Meeting at such time and for such purposes as such proxy agents may determine.
This resolution would give United Dominion and OAC authority to initiate and
vote for a proposal to adjourn the Special Meeting at any time and for any
reason, including to allow the solicitation of additional votes, if necessary,
to approve the Special Meeting Proposals. In other words, United Dominion and
OAC want the opportunity to essentially "call off the election" in
circumstances where an immediate tabulation of the shareholder votes would
result in the defeat of United Dominion and OAC's proposals. THE BOARD OF
DIRECTORS BELIEVES IT IS INAPPROPRIATE AND WHOLLY UNFAIR TO THE SHAREHOLDERS
TO
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ALLOW UNITED DOMINION AND OAC TO AVOID THE CONSEQUENCES OF A VALID VOTE OF A
QUORUM OF SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS VIGOROUSLY OPPOSES
THIS MANIPULATION AND RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
SUMMARY RECOMMENDATION OF THE BOARD OF DIRECTORSWITH RESPECT TO SPECIAL
MEETING PROPOSALS
The above listed proposals are designed to facilitate the consummation of
the Revised Offer, which your Board of Directors and management have
determined to be inadequate and not in the best interest of the Company, its
shareholders, employees, customers, suppliers, labor organizations, the
communities in which the Company does business and its other constituencies,
and not to adequately reflect the long-term value or prospects of the Company.
THE BOARD OF DIRECTORS THEREFORE UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE AGAINST EACH OF UNITED DOMINION AND OAC'S PROPOSALS DESCRIBED ABOVE AND
ANY OTHER PROPOSALS BROUGHT BEFORE THE SPECIAL MEETING WHICH ARE DESIGNED TO,
OR HAVE THE EFFECT OF, FACILITATING UNITED DOMINION'S INADEQUATE OFFER. THE
BOARD OF DIRECTORS ALSO URGES YOU TO VOTE "FOR" THE BOARD OF DIRECTORS'
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS, SHOULD SUCH ELECTION BE
NECESSARY.
CERTAIN LEGAL MATTERS
On July 11, 1996, United Dominion and OAC commenced litigation (the
"District Court Litigation") in the Federal District Court for the Southern
District of Ohio, Eastern Division (the "Court"), against the Company, the
Board of Directors, the acting Commissioner of Securities of the Ohio Division
of Securities, the Ohio Director of Commerce and the State of Ohio. Plaintiffs
sought declarations that, among other things, (i) Section 1701.01(CC)(2) of
Ohio's Control Share Acquisition Law is unconstitutional because it is claimed
to conflict with the United States Constitution, and (ii) the Rights Agreement
and the Rights are invalid, unlawful, null and void. Plaintiffs also sought,
among other things, to enjoin (i) the enforcement of Sections 1701.01(CC)(2)
and 1701.831(E) of Ohio's Control Share Acquisition Law, (ii) the Company's
directors from taking any action to enforce or amend the Rights Agreement
(other than to redeem the Rights or to amend certain provisions that limit the
ability of the Company to redeem the Rights), and (iii) the Company from
commencing or prosecuting in any court other than the court in which the
action was filed, any action or proceeding relating to the plaintiff's tender
offer. Further, the plaintiffs sought an order to compel the Company to redeem
the Rights and to amend certain provisions of the Rights Agreement that limit
the ability of the Company to redeem the Rights. On July 15, 1996, the Court
scheduled a hearing for July 29, 1996 with respect to United Dominion and
OAC's motion to enjoin preliminarily the enforcement of Sections
1701.01(CC)(2) and 1701.831(E) of the Ohio Control Share Acquisition Law and
the parties are commencing discovery with respect thereto.
On July 15, 1996, United Dominion and OAC filed an amended complaint
asserting as additional claims that the directors of the Company had violated
their fiduciary duties to the Company's shareholders by determining to
undertake the Repurchase Program, undertaking to effect the Spin-Off and
refusing to negotiate with United Dominion and OAC; that the Company's
Schedule 14D-9 contained false and misleading statements in violation of the
Securities and Exchange Act of 1934 (the "Exchange Act"); and that the
Company's repurchase of shares in the Repurchase Program violated the Exchange
Act. The plaintiffs sought to enjoin preliminarily and permanently: (1) the
Board of Directors from refusing to negotiate with United Dominion and OAC;
(2) the Repurchase Program; and (3) the Company from refusing to amend its
Schedule 14D-9 with respect to the Repurchase Program and the Spin-Off.
On July 18, 1996, the Company filed its answer to the amended complaint of
United Dominion and OAC denying all substantive allegations and raising, as
counterclaims, that there were disclosure violations in the state and federal
filing by United Dominion and OAC associated with the Revised Offer. The
Company also sought a declaratory judgment that, if United Dominion and OAC
obtain proxies representing more than 10% of the voting
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power of the Company's Common Shares in the election of directors, United
Dominion and OAC would be "interested shareholders" within the meaning of the
Ohio Business Combination Law and thus be prohibited from engaging in certain
transactions with the Company, including completing their Proposed Merger, for
a minimum of three years and thereafter, unless they comply with the Ohio
Business Combination Law.
On July 19, 1996, United Dominion filed a motion in its litigation against
the Company seeking leave of the Court to file a Second Amended Complaint. On
July 22, 1996, the Company filed a brief opposing United Dominion's motion and
challenging its standing to bring additional claims contained in the proposed
Second Amended Complaint. Also, on July 23, 1996, the Company filed a motion
seeking an order enjoining the Revised Offer and United Dominion's and OAC's
associated proxy and Agent Designation solicitations because of certain false
and misleading disclosures in materials filed with the SEC. The Company seeks
an order requiring United Dominion to make curative disclosures to correct the
false and misleading disclosures and enjoining United Dominion's tender offer
and associated proxy and agent designation solicitations for a period of time
following the curative disclosures.
On July 24, 1996, United Dominion and OAC filed their reply memorandum in
support of their motion for leave to file a Second Amended Complaint. The
Court had indicated in a hearing on July 19, 1996, that the Court would
endeavor to rule on that motion by the close of business on July 25, 1996, but
to date no ruling has been issued.
On July 25, 1996, the Company filed a motion seeking a temporary restraining
order to prevent United Dominion and OAC from distributing proxy solicitation
materials seeking Agent Designations for the purpose of calling a Special
Meeting. This same issue had been raised in the Company's July 23, 1996,
motion for a preliminary injunction, but the Company determined that more
expeditious action was warranted in light of United Dominion's and OAC's
indications that they intended to begin sending the solicitations of Agent
Designations from the Company's shareholders on July 25, 1996. At a hearing
held on July 25, 1996, the Court denied the Company's motion.
On July 31, 1996, the Court said that it would deny United Dominion's motion
for a preliminary injunction to declare unconstitutional certain provisions of
Ohio's takeover legislation. The Court stated it would enter written opinion
and order in a few days. At the 831 Special Meeting, United Dominion's
purchase of Shares must be approved by two separate votes: (1) a majority of
all Shares represented at the Special Meeting and (2) a majority of all such
Shares that are not "interested shares." The result of the denial of United
Dominion's injunction motion is that "interested shares" will include Shares
acquired after June 27, 1996 by any persons who paid over $250,000 for such
Shares.
SOLICITATION OF PROXIES
The costs of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, directors, officers and regular employees of
the Company may solicit proxies in person, by telephone, by personal
interview, e-mail, or by telecopier, none of whom will receive additional
compensation for such solicitations. The Company will request banks, brokerage
houses and other custodians, nominees and fiduciaries to forward its
solicitation materials to the beneficial owners of the Common Shares they hold
of record and obtain authorization for, and appropriate certification in
connection with, the execution of Revocation Cards. The Company will reimburse
these record holders for customary mailing expenses incurred by them in
forwarding these materials. The Company also has retained Morrow & Co., Inc.
to assist the Company in connection with communications with shareholders and
to provide other services in connection with (i) this solicitation, (ii) the
revocation solicitation, (iii) the solicitation of proxies for the Ohio
Control Share Acquisition Meeting and (v) the Revised Offer. The Company will
pay Morrow & Co., Inc. reasonable and customary fees for its services,
including reimbursement for reasonable expenses, and provide customary
indemnities.
Except as described above, neither the Company nor, to the best of the
Company's knowledge, any person acting on its behalf has retained any other
person to make solicitations or recommendations to security holders on its
behalf in connection with the transactions contemplated by the Revised Offer.
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OTHER FEES
Pursuant to a letter agreement dated June 28, 1996 (the "Letter Agreement"),
the Company has retained Goldman Sachs as financial advisor with respect to
the Revised Offer and certain other possible transactions and Goldman Sachs
will act as exclusive financial advisor with respect to any proxy or consent
solicitation (including this proxy solicitation) involving United Dominion and
OAC. Pursuant to the Letter Agreement, the Company has agreed to pay to
Goldman Sachs:
(a) a fee of $250,000 payable on the date of the Letter Agreement;
(b) an additional fee of $250,000 in the event of the commencement by
United Dominion or any affiliate or other party of a tender offer, payable
upon the commencement of the tender offer;
(c) if 15% or more of the outstanding Shares of the Company are acquired
by United Dominion or any other person or group (including the Company), in
one or a series of transactions or if all or substantially all of the
assets of the Company are transferred, in one or a series of transactions,
by way of a sale, distribution or liquidation, an additional fee equal to
0.85% of the aggregate value of all such transactions (in the event at
least 50% of the outstanding Shares of the Company are acquired by United
Dominion or any other person or group, including the Company, such
aggregate value shall be determined as if such acquisition were of 100% of
the Shares of the Company);
(d) if the Company or any other entity formed or owned in substantial
part or controlled by the Company or one or more members of senior
management of the Company or any employee benefit plan of the Company or
any of its subsidiaries effects certain recapitalization transactions not
covered by subparagraph (c), a fee (to be negotiated) equal to between
0.85% and 1.0% of the aggregate value of such transaction;
(e) in the event that the Company acquires the securities or assets of
another company or sells, distributes or liquidates all or a portion of the
assets of the Company, including any pension-related assets, or sells or
distributes securities of the Company, whether such distribution is made by
dividend or otherwise, and no fee has become payable to Goldman Sachs with
respect to such transaction pursuant to subparagraphs (c) and (d) above,
additional fees customary to such transactions based on the aggregate value
of the transaction; and
(f) subject to certain conditions, in the event no transaction of the
type described in subparagraphs (c) and (d) has been consummated by January
1, 1997, a fee of $500,000 on each such date as of which no transaction has
been consummated: January 1, 1997, April 1, 1997, July 1, 1997, October 1,
1997, January 1, 1998 and April 1, 1998 less any amounts paid under
subparagraphs (a) and (b) above.
Any fees paid pursuant to subparagraphs (a), (b) and (f) above shall be
credited against any fees payable pursuant to subparagraphs (d) and (e) above.
Pursuant to the Letter Agreement, if the Company becomes the subject of, or
is threatened with, a contested proxy or consent solicitation by United
Dominion or any other party, Goldman Sachs will act as the Company's exclusive
financial advisor with regard to such proxy or consent solicitation.
The Company has also agreed to reimburse Goldman Sachs periodically for its
reasonable out-of-pocket expenses, including the fees and disbursements of its
attorneys, plus any sales, use or similar taxes (including additions to such
taxes, if any) arising in connection with any matter referred to in the Letter
Agreement. In addition, the Company has agreed to indemnify Goldman Sachs
against certain liabilities, including liabilities under federal securities
laws.
Cuno has entered into a financial advisory agreement with each of Cleary
Gull Reiland & McDevitt Inc. and Robert W. Baird & Co. Incorporated (each, an
"Advisor"). Each Advisor has agreed to provide assistance in preparing the
Form 10 and perform over-the-counter market making and research activities for
Cuno following the Spin-Off. Cuno has agreed to pay each Advisor $250,000 for
such services plus reimbursement for reasonable expenses. Each agreement
contains customary indemnification provisions.
22
<PAGE>
ELECTION OF DIRECTORS
An election of directors will only become necessary should the Director
Removal Proposal be approved. As noted earlier, the Director Removal Proposal
includes an amendment to the Regulations to reduce the size of the Board of
Directors to three members and to eliminate classification of directors. As
such, three directors will be elected should an election of directors become
necessary.
Unless otherwise instructed, the proxy holders for the Board of Directors
will vote the LIGHT-GREEN proxies received by them FOR the election of your
Board of Directors three nominees named below. If, for any reason, any of the
Board of Directors' nominees listed below should cease to be a candidate for
election, it is intended that all properly signed proxies in the form enclosed
will be voted for a substitute nominee designated by the Board of Directors.
Each of your Board of Directors' nominees listed below has consented to serve
as a director; and the Board of Directors has no reason to believe that any
nominee will be unwilling or unable to serve, if elected.
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR" THE BOARD OF DIRECTORS'
NOMINEES AS DIRECTORS OF THE COMPANY.
The following sets forth information on your Board of Directors' nominees
for election of directors, if such election becomes necessary:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
NAME (AGE) EXPERIENCE DURING THE LAST FIVE YEARS
---------- -------------------------------------------
<C> <S>
Paul J. Powers (60).............. Chairman, President, Chief Executive
Officer and Chief Operating Officer of the
Company. Mr. Powers received his bachelor's
degree in Economics from Merrimack College
and his master's degree in Business
Administration from George Washington
University. Mr. Powers joined the Company
in 1982 as Group Vice President of
Hydraulics, was elected President and Chief
Operating Officer and a director in 1984
and was elected Chairman and Chief
Executive Officer in 1987. Mr. Powers is a
director of Ohio Edison Company, Akron,
Ohio, Twin Disc, Inc., Racine, Wisconsin,
and Global Marine, Inc., Houston, Texas.
Mr. Powers is also Chairman and Chief
Executive Officer of Cuno. Principal
Business Address: 1775 Logan Avenue,
Youngstown, PA 44501.
[OTHER NOMINEES]
</TABLE>
23
<PAGE>
BOARD MEETINGS AND COMMITTEE INFORMATION
The Board of Directors held six meetings during fiscal year 1995 and has
established four committees to assist in the discharge of its
responsibilities. These are the Executive, Audit, Pension Investment and
Compensation Committees. There is no nominating committee; the Board as a
whole nominates directors for election after receiving recommendations from
the Executive Committee. During fiscal year 1995, all directors attended 75%
or more of the aggregate of meetings of the Board and the Board committees to
which they were assigned. The attendance at the meetings of the Board of
Directors and committee meetings during the year was 99%.
The Executive Committee, during the intervals between the meetings of the
Board of Directors, possesses and may exercise all the powers of the Board of
Directors in the management of the business and affairs of the corporation in
so far as may be permitted by law, except that no obligations or indebtedness
other than those properly pertaining to current business shall be contracted
without authorization by the Board of Directors; and such Executive Committee
shall have such other powers and perform such other duties as shall from time
to time be prescribed by the Board of Directors. The committee is also
responsible for making recommendations to the Board of Directors on candidates
for election to the Board and on the qualifications, retirement and
compensation of directors. During fiscal year 1995 the committee held eight
meetings. The committee consists of five members as follows: Messrs. Powers
(Chairman), Humphrey, McDonough, Nelson and Tucker (Secretary).
The Audit Committee has the responsibility for recommending the selection of
independent auditors by the Board of Directors; reviewing with such auditors,
prior to the commencement of or during such audit for each fiscal year, the
scope of the examination to be made; reviewing with such auditors the audited
financial reports, any changes in accounting policies, the services rendered
by such auditors (including management consulting services) and the effect of
such services on the independence of such auditors; reviewing the
corporation's internal audit and control functions; considering such other
matters relating to such audits and to the accounting procedures employed by
the corporation as the Audit Committee may deem appropriate; and reporting to
the full Board of Directors regarding all of the foregoing. During fiscal year
1995, the committee held four meetings with the auditors. This committee
consists of five members as follows: Messrs. Hill (Chairman), Charles Cushwa,
Galvin, Nelson and Smart. None of the members of the Audit Committee is an
employee of the Company.
The Pension Investment Committee has the responsibility for overseeing and
evaluating the investments of the corporation's pension plan trusts, selecting
fund managers and reviewing their performance and designating the proportion
of pension contributions to be assigned to such managers. During the past
year, the committee held two meetings. The committee consists of six members:
Messrs. McDonough (Chairman), Charles Cushwa, Humphrey, Midgley, Smart and
Tucker. None of the members of the Pension Investment Committee is an employee
of the Company.
The Compensation Committee has the authority to determine annual salaries
and bonuses for all elected officers and senior management; constitutes the
"Committee" contemplated by the corporation's various stock option and award
plans with the responsibility for administering such plans; and has the
authority to approve incentive and deferred compensation plans, and funding
arrangements related thereto, for elected officers and senior management.
During the past year, the committee held six meetings. The committee consists
of five members: Messrs. Humphrey (Chairman), Galvin, Hill, McDonough and
Midgley. None of the members of the Compensation Committee is an employee of
the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
24
<PAGE>
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended October 31, 1995 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with; except that,
inadvertently, one report of two transactions was filed late by Charles B.
Cushwa III and one report of three transactions was filed late by William W.
Cushwa.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERALL POLICY AND ADMINISTRATION
The Company's executive compensation program, as developed by the
Compensation Committee, is designed to preserve and enhance shareholder value.
Within a strategy that links executive and shareholder financial interests,
the executive compensation program is designed to:
--Motivate executives toward long term strategic management of the
Company's assets and operations through stock programs that focus
executive attention on increasing shareholder value;
--Recognize and reward individual contributions and achievements as well
as overall business performance via annual incentives which are tied to
annual operating, financial and strategic objectives;
--Provide a competitive salary structure to attract and retain the
executive talent necessary to ensure the Company's continued profitable
growth.
The executive compensation program is administered by the Compensation
Committee of the Board of Directors of the Company (the Committee), which is
comprised of five independent directors, none of whom has interlocking or
other relationships which might be considered conflicts of interest. The
Committee establishes salaries for corporate officers and administers the
Company's Senior Management Target Incentive Plan (SMTIP), Salaried Employee
Incentive Plan (SEIP) and Stock Option and Award Plans. In its decision-making
process, the Committee utilizes independent compensation consultants and may
periodically seek input from appropriate Company executives.
To further the Committee's strategy of linking executive and shareholder
financial interests, in recent years the Committee has adjusted the mix of an
executive's overall compensation components to increase the emphasis on
performance based (annual cash incentive awards; stock options; performance
shares) versus fixed (base salary and restricted stock) compensation.
BASE SALARIES
In establishing base salaries of Company executives, the Committee generally
targets market median (50th percentile) compensation levels of senior
executives and other corporate officers in comparably sized durable goods
manufacturing companies. Other factors such as availability of talent, the
recruiting requirements of the particular situation, experience and
anticipated performance are considered in determining individual base salary
compensation levels and may result in salaries above or below the stated
target.
The Committee uses data from several executive compensation surveys. The
number of participant companies appearing in these surveys is more extensive
than the peer group established for performance graph purposes, reflecting the
broader group of companies with which the Company competes for executive
talent.
Any adjustments in the base salaries of senior executives and other
corporate officers are normally effective as of January 1 each year and are
dependent upon such factors as the executive's current responsibilities and
experience, competitive compensation practices at comparably sized durable
goods manufacturing companies, and the Committee's judgment regarding the
performance of the executive.
ANNUAL INCENTIVE COMPENSATION
Beginning in fiscal 1995, the Committee administers two annual incentive
plans. The SMTIP was approved by shareholders in 1995 and is a performance-
based plan in which payouts are set in accordance with the requirements of
Internal Revenue Code Section 162(m). These requirements are:
--The compensation must be payable on account of the attainment of one or
more pre-established objective performance goals;
25
<PAGE>
--The performance goals must be established by a Compensation Committee
of the Board of Directors that is comprised solely of two or more
"outside directors";
--The terms of the compensation and the performance criteria must be
disclosed to and approved by shareholders before payment;
--The Compensation Committee must certify in writing that the performance
goals have been satisfied before payment.
In addition, the Committee also administers the SEIP which provides
compensation that is not performance-based as defined in Code Section 162(m),
but which is based on both objective and subjective evaluations of individual
executive performance.
THE SENIOR MANAGEMENT TARGET INCENTIVE PLAN
The SMTIP provides annual incentive compensation to the Company's eight
senior executives based solely on the achievement of predetermined financial
performance objectives, including group operating income and corporate net
income, return on group sales and return on group assets. Target awards, as a
percent of salary, range from 22.5 to 52.5 percent.
THE SALARIED EMPLOYEE INCENTIVE PLAN
The SEIP provides senior and top managers an opportunity to earn annual cash
payments (target incentive awards) based primarily on the achievement of
important financial goals (operating and net income, return on sales, and
return on assets) as well as individual objectives. A threshold level of net
income must be achieved before any payments are made.
Selection of participants by the Committee, which in 1995 totaled 145
individuals, and accompanying target award ranges (from 7.5 to 30 percent of
base salary) are determined according to individual responsibility levels,
business judgment and market median data for comparably sized durable goods
manufacturing companies.
To enhance the Company's objectives of encouraging additional executive
stock ownership and increasing Company cash flow, about one-half of
participants in the SEIP may elect to receive their earned awards in cash or
stock or a combination of the two. If the participant elects to receive all or
part of an earned award in restricted stock, the Company increases the stock
award by a fixed percentage. The vesting period associated with the stock
award is three years, and in the event a participant voluntarily leaves the
Company or is terminated "for cause," the shares are forfeited.
THE STOCK OPTION AND AWARD PLANS; FORM OF OPTION AGREEMENT
The Company's Stock Option and Award Plans allow for the grant of a variety
of stock incentive instruments, including nonqualified (i.e., not tax-
preferred) and incentive stock options, stock appreciation rights, restricted
stock and performance shares. For many years, the Company has granted stock
options to its key executives to create a direct link between shareholder and
executive interests. In the past the Company has also periodically granted
time-lapse restricted stock to its key executives.
The performance share program, first initiated in fiscal 1993, is a longer-
term incentive program designed to motivate key executives whose efforts
result in the achievement of sustained financial results leading to increased
shareholder value. Designed to replace substantially the restricted stock
grants previously made to key executives, the Management Evaluation and
Compensation Committee of the Board of Directors (the "Committee") believes
performance shares better align executive and shareholder financial interests.
The Committee selected 63 executives throughout the Company for participation
in the performance share program.
Depending on responsibilities within the Company, performance shares are
earned based on average corporate and/or group Return On Equity ("ROE"),
divisional operating income and, for certain executives, individual specific
objectives over a three-year performance period. In future years, the
Committee may consider other measures of shareholder value and performance
periods, as appropriate, in light of the Company's strategic objectives.
Threshold levels of ROE and, in certain cases, operating income must be
achieved before any distributions are made.
26
<PAGE>
Historically the Company has granted stock options on an annual basis while
performance shares are granted every other year. In determining stock option
awards, the Committee considers such factors as median competitive award
levels, the size of previous stock option awards and Company and individual
performance.
The Company has modified its practice of awarding restricted stock to key
executives. Restricted stock is now used only in special circumstances, such
as to attract new key executives for employment with the Company and in other
similar non-recurring circumstances.
Pursuant to the terms of the Company's Stock Option and Award Plan of 1989,
the Stock Option and Award Plan of 1993 and the Stock Option and Award Plan of
1995 (collectively, the "Stock Option and Award Plans"), the Committee may
provide, upon a change of control (as defined in the Stock Option and Award
Plans and which would include the consummation of the Revised Offer), that (i)
any and all stock appreciation rights outstanding on the date that such change
of control is determined to have occurred and any and all stock options
awarded under the Stock Option and Award Plans not previously exercisable and
vested shall become fully exercisable and vested and (ii) restrictions
applicable to any and all restricted stock and performance share awards shall
lapse and such shares and awards shall be fully vested.
Similarly, pursuant to the terms of the Company's form of Option Agreement,
the options granted thereunder and not yet exercisable shall become
exercisable and vested upon a change of control or a potential change of
control (as both terms are defined in the Option Agreement and which would
include the consummation of the Revised Offer).
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Powers' annual base salary for 1995 was $481,667. This rate was based on
the Committee's judgment regarding his performance, his service to the Company
and competitive compensation levels for CEOs of comparably sized durable goods
manufacturing companies. For performance in fiscal 1995, Mr. Powers received a
payment under the SMTIP of $331,013. This payment was based on a predetermined
formula based on corporate net income set by the Committee and certified by
the Committee in accordance with the provisions of Code Section 162(m). In
addition, Mr. Powers received a payment from the SEIP of $218,987 based on the
Committee's judgment on Mr. Powers' achievement of personal goals and
objectives during 1995.
Mr. Powers received options to purchase 34,000 shares of Common Stock in
1995. In determining this grant, the Committee considered Company and
individual performance, the size of previous awards and market median long-
term incentive statistics.
INTERNAL REVENUE SECTION 162(M)
A 1993 Internal Revenue Code amendment caps the allowable federal income tax
deduction for compensation paid to each of the proxy-reported officers of a
public company. The deduction limit, which was effective in 1994, does not
apply to compensation paid under a plan that meets certain requirements for
performance-based compensation. It is the Committee's general policy to
structure the major components of the Company's incentive compensation
programs to satisfy the requirements of performance-based compensation and
preserve the deductibility of compensation paid to executive officers on an
ongoing basis.
To implement the above policy, the Company asked for and received
shareholder approval of the Stock Option and Award Plan of 1995. Such approval
preserved the full tax deductibility of Stock Options, Performance Shares and
Annual Incentive Awards awarded to the Company's executive officers. The Stock
Option and Award Plan of 1995 links compensation to the attainment of key
financial objectives leading to increases in shareholder value.
By: The Compensation Committee
Neil D. Humphrey, Chairman Gerald C. McDonough
John M. Galvin C. Edward Midgley
Richard J. Hill
27
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
--------------------------------- ------------------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS ALL OTHER
POSITION YEAR ($) ($) ($) ($)(4) (#) COMPENSATION
------------------ ---- ------- ------- ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul J. Powers 1995 481,667 440,000 0 131,995 34,000 15,810 (5)
Chairman, President, 1994 461,667 400,000 0 835,634 37,500 15,876
Chief Executive Officer 1993 434,500 165,000 0 0 36,000 16,105
and Chief Operating
Officer
Mark G. Kachur(1) 1995 247,500 135,000 38,414 24,008 15,000 0
Senior Vice President-- 1994 134,300 120,000 0 174,375 15,000 0
Fluid Purification 1993 -- -- -- -- -- --
Group
Bruce C. Wheatley 1995 223,833 90,000 0 36,002 7,500 8,075 (6)
Senior Vice President-- 1994 216,500 50,000 0 59,996 7,500 5,428
Administration 1993 207,500 45,000 4,539 0 7,500 0
Philip N. Winkelstern(2) 1995 201,125 112,000 0 0 0 7,394 (7)
Former Senior Vice 1994 256,167 51,250 0 184,499 15,000 9,704
President and Chief 1993 235,167 68,000 0 0 15,000 10,073
Financial Officer
Hubert Jacobs van 1995 204,777 67,200 7,193 20,152 7,500 1,085 (8)
Merlen(3) 1994 -- -- -- -- -- --
Senior Vice President 1993 -- -- -- -- -- --
and Chief Financial
Officer
John Gilchrist 1995 194,167 30,000 0 11,995 7,000 6,930 (9)
Group Vice President 1994 160,000 75,000 0 29,998 7,500 5,913
1993 132,500 25,000 0 0 7,500 5,506
</TABLE>
- --------
(1) Mr. Kachur became an employee of the Company on April 11, 1994.
(2) Mr. Winkelstern retired from the Company on August 1, 1995.
(3) Mr. Jacobs van Merlen became Senior Vice President and Chief Financial
Officer of the Company on August 1, 1995.
(4) This column shows the market value of restricted share awards on the date
of award. The aggregate holdings/value of Restricted Stock held on October
31, 1995 by the individuals listed in this table, not including awards
which were earned after the end of the fiscal year as part of the SEIP and
were elected to be taken in the form of restricted stock, as described in
the Compensation Committee Report on Executive Compensation, are: Paul J.
Powers--75,059 shares/$1,266,621; Mark G. Kachur--11,250 shares/$189,844;
Bruce C. Wheatley--7,154 shares/$120,724; Philip N. Winkelstern--17,218
shares/$290,554; Hubert Jacobs van Merlen--2,413 shares/$40,719; and John
Gilchrist--2,302 shares/$38,846. Regular quarterly dividends are paid on
Restricted Stock held by these individuals.
(5) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $10,475; Company matching
contributions pursuant to the 401(k) Plan in the amount of $3,975; and
Company contribution pursuant to the Employee Stock Ownership Plan in the
amount of $1,360.
(6) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $2,740; Company matching
contributions pursuant to the 401(k) Plan in the amount of $3,975; and
Company contribution pursuant to the Employee Stock Ownership Plan in the
amount of $1,360.
(7) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $3,184; Company matching
contributions pursuant to the 401(k) Plan in the amount of $2,850; and
Company contribution pursuant to the Employee Stock Ownership Plan in the
amount of $1,360.
(8) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $1,085.
(9) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $1,850; Company matching
contributions pursuant to the 401(k) Plan in the amount of $3,720; and
Company contribution pursuant to the Employee Stock Ownership Plan in the
amount of $1,360.
28
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM (2)
------------------------------------------- --------------------------
% OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME GRANTED (#)(1) FISCAL YEAR PRICE ($/SHARE)(1) DATE 5%($) 10%
- ---- ------------------ ------------- ------------------ ---------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Paul J. Powers.......... 34,000 29.1% $19.375 1/24/05 $ 414,354 1,050,048
Mark G. Kachur.......... 15,000 12.8 19.375 1/24/05 182,803 463,256
Bruce C. Wheatley....... 7,500 6.4 19.375 1/24/05 91,402 231,628
Philip N. Winkelstern... 0 -- -- -- -- --
Hubert Jacobs van
Merlen................. 7,500 6.4 18.50 7/31/05 87,274 221,168
John Gilchrist.......... 7,000 6.0 19.375 1/24/05 85,308 216,186
</TABLE>
- --------
(1) The options listed in the above table were granted subject to a three-year
vesting period, with 50% of the options granted becoming exercisable on
the second anniversary of the grant date and 50% on the third anniversary.
No SARs were granted. The exercisability of the options may be accelerated
in the event of a change in control or a potential change in control.
(2) Potential Realizable Value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise.
These amounts represent certain assumed rates of appreciation only. Actual
gains are dependent on the future performance of the Company's Common
Stock and the option holders' continued employment throughout the vesting
period. The amounts reflected in the table may not necessarily be
achieved.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END (#) AT FY-END ($)(1)
--------------------------- ---------------------------
SHARES ACQUIRED
NAME ON EXERCISE (#) VALUE REALIZED (#) EXERCISEABLE/UNEXERCISEABLE EXERCISEABLE/UNEXERCISEABLE
- ---- --------------- ------------------ --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Paul J. Powers.......... 15,000 $118,125 115,500/89,500 $532,437/$205,810
Mark G. Kachur.......... 0 0 0/30,000 0/20,625
Bruce C. Wheatley....... 7,500 61,562 3,750/18,750 13,906/41,718
Philip N. Winkelstern... 18,000 153,000 60,000/0 259,999/0
Hubert Jacobs van
Merlen................. 0 0 0/7,500 0/0
John Gilchrist.......... 0 0 8,862/18,250 39,253/41,718
</TABLE>
- --------
(1) The value per option is calculated by subtracting the exercise price from
the October 31, 1995 closing price of the Company's Common Stock on the
New York Stock Exchange of $16.875.
29
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS TABLE
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS
NUMBER OF OTHER PERIOD UNDER NON-STOCK PRICE BASED PLANS
SHARES, UNITS OR UNTIL MATURATION ---------------------------------
NAME OTHER RIGHTS(#) OR PAYOUT(1) THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ---- ---------------- ---------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Paul J. Powers.......... 42,750 1/25/98 21,375 42,750 64,125
Mark G. Kachur.......... 12,000 1/25/98 6,000 12,000 18,000
Bruce C. Wheatley....... 7,000 1/25/98 3,500 7,000 10,500
Philip N. Winkelstern... 0 -- -- -- --
Hubert Jacobs van
Merlen................. 6,000 1/25/98 3,000 6,000 9,000
John Gilchrist.......... 6,000 1/25/98 3,000 6,000 9,000
</TABLE>
- --------
(1) The date in the column represents the date on which award payments will be
made. The amounts of the awards are based on the three-year performance
period ending October 31, 1997.
Payouts of awards are tied to achieving specified levels of return on equity
("ROE") over a three-year period. At Threshold ROE, 50% of shares will be
distributed. 100% of award will be paid at Target and 150% of award at
Maximum. The Compensation Committee of the Board of Directors may, at or after
grant, accelerate the vesting of all or part of any Performance Share Award.
RETIREMENT BENEFITS
Employees may retire from the Company with unreduced benefits under the
Company's retirement plans at age 65 or later with 25 or more years of
service. The table below shows the estimated annual pension benefits provided
under the Company's defined benefit retirement plans for employees in higher
salary classifications retiring at age 65 or later.
ESTIMATED TOTAL ANNUAL RETIREMENT BENEFITS
UNDER THE PENSION PLAN FOR SALARIED EMPLOYEES
AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
REMUNERATION ($) 15 20 25 30 35
- ---------------- -------- -------- -------- -------- --------
$150,000 $ 40,684 $ 54,245 $ 67,806 $ 71,196 $ 74,587
<S> <C> <C> <C> <C> <C>
200,000 55,684 74,245 92,806 97,446 102,087
250,000 70,684 94,245 117,806 123,696 129,587
300,000 85,684 114,245 142,806 149,946 157,087
400,000 115,684 154,245 192,806 202,446 212,087
500,000 145,684 194,245 242,806 254,946 267,087
600,000 175,684 234,245 292,806 307,446 322,087
700,000 205,684 274,245 342,806 359,946 377,087
800,000 235,684 314,245 392,806 412,446 432,087
900,000 265,684 354,245 442,806 464,946 487,087
</TABLE>
Benefits under the plans are calculated generally under a formula of 50% of
the participant's final average compensation reduced by 50% of the
participant's estimated social security benefits, reflected in the table in
the form of a straight life annuity. The compensation covered by the pension
plan is base salary as set forth in the Salary column of the Summary
Compensation Table on page [36]. The compensation covered by the supplemental
executive retirement plans is also base salary for those executives
participating other than the Chief Executive Officer, for which the
compensation covered is base salary plus bonus as set forth in the Summary
Compensation Table. As of November 30, 1995, the following executive officers
had the following credited years of service with the Company; Mr. Powers, 13;
Mr. Kachur, 1; Mr. Wheatley, 3; Mr. Jacobs van Merlen, 8; Mr. Gilchrist, 28.
30
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG COMMERCIAL INTERTECH
CORP., NYSE AND DOW JONES INDUSTRIAL DIVERSIFIED INDUSTRY GROUP INDICES
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
TEC................................... 100.00 116.93 149.81 167.04 240.07 215.23
NYSE.................................. 100.00 131.75 140.72 166.94 173.15 203.26
DJID.................................. 100.00 139.82 151.60 189.82 195.39 220.73
</TABLE>
Assumes $100 invested on October 31, 1990.
Total return assumes reinvestment of dividends.
Data as of October 31 of each year.
In accordance with SEC guidelines, the New York Stock Exchange (NYSE) Index
was selected as the broad market indicator because Commercial Intertech (TEC)
shares are traded on the NYSE.
The Dow Jones Industrial Diversified (DJID) Index was selected as the
industry index because TEC is included in said index along with a number of
competitors and other companies involved in two or more industries or whose
products are used in many different industries.
EMPLOYMENT AGREEMENTS
On July 27, 1994, the Company entered into an Employment Agreement with Paul
J. Powers. Mr. Powers' Employment Agreement expires on February 28, 2000. The
Employment Agreement provides for the payment of a base salary which can be
increased at the discretion of the Company. Mr. Powers' annual base salary for
1995 was $481,667. Additionally, Mr. Powers shall be eligible to (1) receive
cash bonuses as part of the Company's Salaried Employee Incentive Plan
("SEIP"); and (2) participate in other incentive, stock option, profit sharing
and similar plans maintained by the Company for the benefit of its executives.
In addition, the employment agreement with Mr. Powers provides that in the
event of his termination without cause (as defined in his employment
agreement), Mr. Powers shall receive a lump sum payment equal to two and one-
half times his most recent annual cash compensation. Finally, Mr. Powers will
be included in all other employee benefit plans to the extent that he is
eligible. Such plans include, but are not limited to, group life insurance
plans, hospitalization and medical plans and long-term disability plans.
On May 18, 1992, the Company entered into an Employment Agreement with Bruce
C. Wheatley and on December 3, 1993, the Company entered into an Employment
Agreement with Mark G. Kachur. Mr. Wheatley's Employment Agreement is for a
term of three years and Mr. Kachur's Employment Agreement is for a term of
three years. The Employment Agreement with Mr. Wheatley provides for a base
salary of $200,000 and Mr. Kachur's Employment Agreement provides for a base
salary of $240,000. Both employment agreements provide for participation in
the Company's SEIP as well as other Company benefit programs, including group
life insurance, hospitalization and medical plans. The Employment Agreements
also provide for the grant of stock options under certain stock option plans,
subject to vesting requirements, and also provide for participation in a
supplemental deferred compensation arrangement. In the event of a change in
control of the Company, the Employment Agreements provide for a lump sum
severance payment in the amount of two years' cash compensation as well as
continued participation in Company benefit programs for two years following
termination.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual retainer
fee in the amount of $16,000, plus $1,000 for attending each meeting of the
Board of Directors. They also receive $750 for attending each committee
meeting. Directors who are employees of the Company do not receive
compensation for serving as directors.
31
<PAGE>
Non-employee directors who retire with at least ten years of non-employee
Board service will be paid a retirement benefit consisting of an annual amount
equal to the Board retainer being paid to such directors at the time of
retirement. Retiring directors with less than ten years of non-employee Board
service will receive proportionally decreased amounts. Non-employee directors
are entitled to receive automatically a non-qualified stock option to purchase
2,250 shares of Common Stock upon the outside director's election to a new
three-year term during the term of the Stock Option and Award Plan of 1995.
Mr. Don E. Tucker, former Senior Vice President and Chief Administrative
Officer of the Company, provides consulting services to the Company. Fees paid
for those services during fiscal 1995 were $48,000.
TERMINATION BENEFITS
On February 15, 1988, the Company entered into a Severance Compensation and
Consulting Agreement with Paul J. Powers. On September 28, 1989, the Company
entered into separate Severance Compensation Agreements with each of Gilbert
M. Manchester, William W. Cushwa, Steven J. Hewitt, Edward J. Barnard, Patrick
C. Reardon, Kenneth W. Marcum and Robert A. Calcagni. On June 25, 1992, the
Company entered into a Severance Compensation Agreement with John Gilchrist,
on July 20, 1992 with Bruce C. Wheatley, on March 25, 1995 with Mark G. Kachur
and on February 29, 1996 with Hubert Jacobs van Merlen. The Severance
Compensation and Consulting Agreement and the Severance Compensation
Agreements are referred to collectively as the "Agreements." The Agreements
were the result of a determination by the Board of Directors that it is
appropriate and in the best interest of the Company and its shareholders that,
in the event of a possible change in control of the Company, the stability and
continuity of management would be maintained, free of the distractions
incident to any change in control.
For purposes of the Agreements, a "change in control" shall be deemed to
have occurred if (i) there shall be consummated (a) any consolidation or
merger of the Company in which the Company is not the continuing surviving
corporation or pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior
to the merger have substantially the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (b) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company,
or (ii) the shareholders of the Company shall approve any plan or proposal for
the liquidation or dissolution of the Company, or (iii) any person (as such
term is used in Section 13(d) and 14(d)(2) of the Exchange Act), other than
the Company or a subsidiary or any employee benefit plan sponsored by the
Company or a subsidiary, shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act) of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors, as a
result of a tender or an exchange offer, open market purchases, privately
negotiated purchases or otherwise, or (iv) at any time during a period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company shall cease for any reason to constitute
at least the majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such two-
year period is approved by a vote of at least two-thirds of the directors then
still in office who were directors in the beginning of such two-year period.
Benefits are payable under the Agreements only if a change in control has
occurred and within two years after such change in control the officer's
employment is terminated involuntarily without cause or voluntarily by the
officer for reasons such as demotion, reduction in base salary, relocation,
loss of benefits or other changes. The principal benefits to be provided to
Mr. Powers under his Agreement are (i) a lump sum payment equal to two times
his annual cash compensation (base salary and incentive compensation), (ii)
continued participation in the Company's employee benefit programs for three
years following termination, and (iii) a consulting fee equal to his annual
cash compensation in consideration for consulting services over a one-year
period after termination. The principal benefits to be provided to Messrs.
Manchester, Cushwa, Hewitt, Barnard, Reardon, Marcum, Jacobs van Merlen,
Calcagni, Kachur, Wheatley, and Gilchrist under the Agreements are (i) a lump
sum payment
32
<PAGE>
equal to two times the officer's annual cash compensation (base salary and
incentive compensation) and (ii) continued participation in the Company's
employee benefit programs for two years following termination. If the
officer's termination occurs after age 62, separation payments are reduced by
a factor based upon the number of months remaining until the officer reaches
age 65. The Agreements are not employment agreements, and do not impair the
right of the Company to terminate the employment of the executive with or
without cause prior to a change in control, or the right of the executive to
voluntarily terminate his employment. Each Agreement generally terminates on
the earlier of the date on which the officer reaches age 65 or five years from
the date of the Agreement, provided that the term of the Agreement will be
automatically extended for additional one-year periods until the officer
reaches age 65 or the Company or the officer determines not to extend the
Agreement.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of June 30, 1996 (unless a
different date is specified in the notes to the table) with respect to (a)
each current director of the Company, (b) each of the Named Executive Officers
(as defined in Item 402(a)(3) of Regulation S-K of the Exchange Act) and (c)
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP VOTING SHARES**
------------------------ ----------------------------- ---------------
<S> <C> <C> <C>
William J. Bresnahan............. 300 *
Charles B. Cushwa III............ 220,380 (1)(4)(5) 1.50%
(8)(12)(16)
William W. Cushwa................ 238,925 (1)(2)(3)(4)(6)(7) 1.62%
(8)(13)(14)(16)(17)
John M. Galvin................... 5,750 (8) *
John Gilchrist................... 32,032 (8)(10)(14) *
Richard J. Hill.................. 10,397 (8)(9) *
Neil D. Humphrey................. 6,635 (8)(9) *
Hubert Jacobs van Merlen......... 13,103 *
Mark G. Kachur................... 32,086 (8) *
William E. Kassling.............. 5,000 *
Gerald C. McDonough.............. 4,500 (8) *
C. Edward Midgley................ 10,000 *
Paul J. Powers................... 329,041 (2)(8)(10)(14) 2.24%
George M. Smart.................. 2,750 (8) *
Don E. Tucker.................... 136,855 (1)(2)(8)(11) *
Bruce E. Wheatley................ 34,714 (8)(15) *
All Directors and Executive Offi-
cers as a Group (19 people)..... 1,198,805 8.15%
</TABLE>
- --------
* less than 1%
** Percent of All Voting Shares based on total outstanding Common Shares and
Preferred Shares as of August 2, 1996.
(1) Does not include Common Shares owned by the members of the above-
mentioned directors' families who share their homes, as follows: of Mr.
Charles Cushwa--947 shares; of Mr. William Cushwa--26,278 shares; and of
Mr. Tucker--1,146 shares. Beneficial ownership thereof is disclaimed by
the respective directors.
(2) Includes the beneficial interest in Common Shares (fractional shares not
shown) credited to the accounts of the above-mentioned beneficial owners
by the Trustee acting under the provisions of the Company's Employee
Savings and Stock Purchase Plan of Commercial Intertech Corp., as
follows: Mr. William Cushwa--4,347 shares; Mr. Powers--1,630 shares; and
Mr. Tucker--9,446 shares.
(3) Includes Common Shares held by the directors as custodians for their
minor children as follows: minor children of Mr. William Cushwa--4,011
shares.
33
<PAGE>
(4) Charles B. Cushwa III and William W. Cushwa are two of three
beneficiaries of a trust, of which they are not trustees, which consists
of 294,000 Common Shares the income from which will be paid to the
beneficiaries equally during their lives. These shares are not included
in the amounts shown in the table.
(5) Includes 44,000 Common Shares held in trust, in which the children of
Charles B. Cushwa III have a remainder interest, and of which National
City Bank, N.E. and Charles B. Cushwa III are co-trustees. Beneficial
ownership thereof is disclaimed by Mr. Charles B. Cushwa III.
(6) Does not include 11,250 Common Shares held in trust, of which William W.
Cushwa is not a trustee, for the benefit of his child and of which
beneficial ownership is disclaimed by Mr. William W. Cushwa.
(7) Includes 44,000 Common Shares held in trust, in which the children of
William W. Cushwa have a remainder interest, and of which National City
Bank, N.E. and William W. Cushwa are co-trustees. Beneficial ownership
thereof is disclaimed by Mr. William W. Cushwa.
(8) Includes Common Shares acquirable within 60 days of June 30, 1996 upon
exercise of options issued under the Company's Stock Option and Award
Plans as follows: Mr. Charles Cushwa--2,250 shares; Mr. William Cushwa--
1,875 shares; Mr. Galvin--2,250 shares; Mr. Gilchrist --11,250 shares;
Mr. Hill--2,250 shares; Mr. Humphrey--1,500 shares; Mr. McDonough--2,250
shares; Mr. Powers--137,250 shares; Mr. Wheatley--11,250 shares; Mr.
Kachur--7,500 shares; Mr. Smart--750 shares; and Mr. Tucker--750 shares.
(9) Includes Common Shares (fractional shares not shown) credited to the
accounts of the above-mentioned beneficial owners by the administrator of
the Company's Automatic Dividend Reinvestment Plan, as follows: Mr.
Hill--3,147 shares; and Mr. Humphrey--1,485 shares.
(10) Includes in each case 317 Preferred Shares (fractional shares not shown)
and the following number of Common Shares (fractional shares not shown)
credited to the accounts of the above-mentioned beneficial owners by the
Trustee acting under the provisions of the Company's 401(k) plan: Mr.
Gilchrist--441 shares; and Mr. Powers--5,011 shares.
(11) Includes 206 Preferred Shares (fractional shares not shown) and 5,036
Common Shares (fractional shares not shown) credited by the Trustee
acting under the provisions of the Company's 401(k) plan.
(12) Includes 38,396 Common Shares held in trust, in which the children of
Charles B. Cushwa III have a remainder interest, and of which National
City Bank, N.E. and Charles B. Cushwa III are co-trustees. Beneficial
ownership thereof is disclaimed by Mr. Charles B. Cushwa III.
(13) Includes 61,000 Common Shares held in trust, in which the children of
William W. Cushwa have a remainder interest, and of which National City
Bank, N.E. and William W. Cushwa are co-trustees. Beneficial ownership
thereof is disclaimed by Mr. William W. Cushwa.
(14) Includes in each case two Common Share (fractional shares not shown) as a
result of participation in the Commercial Intertech Employee Stock
Ownership Plan and the following number of Preferred Shares (fractional
shares not shown) as a result of participation in the Commercial
Intertech Employee Stock Ownership Plan: Mr. William Cushwa--324 shares;
Mr. Gilchrist--398 shares; and Mr. Powers--719 shares.
(15) Includes 96 Preferred Shares (fractional shares not shown) and 1,890
Common Shares (fractional shares not shown) held under the provisions of
the Company's 401(k) plan. Includes 110 Preferred Shares (fractional
shares not shown) as a result of participation in the Commercial
Intertech Employee Stock Ownership Plan.
(16) Charles B. Cushwa III and William W. Cushwa are two of three
beneficiaries of a trust, of which they are not trustees, containing
75,000 shares distribution of which is dependent upon the resolution of
certain probate estate matters. The shares are not included in the
amounts shown in the table.
(17) Includes 300 Preferred Shares (fractional shares not shown) and 903
Common Shares (fractional shares not shown) credited by the trustee
acting under the provisions of the Company's 401(K) Plan.
The information set forth above concerning the security holdings of the
beneficial owners is based on information received from the persons named.
None of such beneficial owners, directly or indirectly, owns beneficially any
equity securities of any subsidiary of the Company.
34
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The name of any person or "group" (as that term is used in the Exchange Act)
known by the Company to be the beneficial owner of more than five percent (5%)
of any class of the Company's voting securities as of June 30, 1996 is set
forth below:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS** ALL VOTING SHARES**
-------------- ----------------------- -------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Common National City Bank N.E. 989,707(1) 7.24% 6.73%
P.O. Box 450
Youngstown, OH 44501
Series B Preferred Mellon Bank N.A. 1,039,657(2) 100.00% 7.07%
P.O. Box 444
Pittsburgh, PA 15230
</TABLE>
- --------
** Percentage of All Voting Shares and Percent of Class based on total
outstanding Common Shares and Preferred Shares as of August 2, 1996.
(1) This figure includes 172,409 Common Shares held in trust by National City
Bank, N.E. (trustee) for the benefit of participants in the Commercial
Intertech Corp. Employee Savings and Stock Purchase Plan. This figure
includes 1,597 Common Shares held in trust by National City Bank (trustee)
for the benefit of participants in the Non-Qualified Stock Purchase Plan
of Commercial Intertech Corp.
National City Bank has sole voting power over 644,032 shares, shared voting
power over 170,806 shares and no voting power over 174,869 shares. National
City Bank has sole investment power over 277,613 shares and shared
investment power over 712,094 shares.
(2) This figure represents all of the outstanding Preferred Shares held of
record by Mellon Bank N.A. (trustee) for the benefit of participants in
the ESOPs. The trust for these plans contains provisions for pass-through
voting rights to the employee participants in the plans.
Mellon Bank has shared voting power and shared investment power over all
Preferred Shares.
PARTICIPANTS IN THE SOLICITATION OF PROXIES
Under applicable regulations of the Securities and Exchange Commission, each
of the directors and certain of the officers of the Company are (or may be)
deemed to be "participants" in the Company's solicitation of proxies and
Goldman Sachs and certain of its general partners and employees may be deemed
to be "participants." Appendix I to this Proxy Statement provides certain
additional information with respect to the directors and certain of the
officers of the Company and Appendix II to this Proxy Statement provides
certain additional information with respect to Goldman Sachs.
INFORMATION REGARDING OWNERSHIP OF THE COMPANY'S SECURITIES BY PARTICIPANTS
Mr. Calcagni owns beneficially 58,463 Shares, Mr. Manchester owns
beneficially 33,994 Shares and Mr. Hewitt owns beneficially 23,880 Shares
(such amounts include Common Shares issuable pursuant to options exercisable
within 60 days of June 30, 1996). The share ownership of the remaining
participants is set forth above under "Security Ownership of Management."
None of the participants owns any of the Company's securities of record but
not beneficially. Messrs. Powers, Kachur and Manchester own qualifying shares
in certain subsidiaries of the Company in trust for the Company.
Certain members of Mr. Manchester's family who share his home own 305 Common
Shares, the beneficial ownership of which Mr. Manchester disclaims.
35
<PAGE>
Except as disclosed below and elsewhere in the Proxy Statement and to the
best of the Company's knowledge: (a) none of the participants identified above
was or is a party to a contract, arrangement or understanding with respect to
the Company's securities; (b) there are no contracts, arrangements or
understandings between the Company and participants and associates of
participants with respect to employment by the Company and its affiliates or
with respect to transactions in which the Company or any of its affiliates are
or will be parties; and no securities of the Company are owned by any
associates of the participants except as disclosed below and elsewhere in the
Proxy Statement.
DISSENTER RIGHTS
Dissenter rights are not available to the shareholders in connection with
the Special Meeting Proposals.
SHAREHOLDER PROPOSALS
Proposals of security holders to be presented at the 1997 Annual Meeting of
shareholders of the Company must be in proper form and must be received by the
Company by October 1, 1996.
By Order of the Board of Directors,
/s/ Shirley M. Shields,
Shirley M. Shields,
Secretary
Youngstown, Ohio
August , 1996
36
<PAGE>
ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, business or residence address,
principal occupation or employment at the present time and during the last
five years, and the name, principal business and address of any corporation or
other organization in which such employment is conducted or was conducted of
each director and executive officer of the Company. Each of the Company's
directors and executive officers is a citizen of the United States. The
business address of each executive officer of the Company is 1775 Logan
Avenue, Youngstown, Ohio 44501. Each occupation set forth opposite a person's
name, unless otherwise indicated, refers to employment with the Company.
Directors are indicated by an asterisk (*).
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
MATERIAL OCCUPATION FOR
PAST FIVE YEARS,
NAME, PRINCIPAL BUSINESS
ADDRESS AND YEAR FIRST YEAR
ADDRESS OF PRINCIPAL ELECTED A TERM
NAME (AGE) OFFICE OF EMPLOYER DIRECTOR EXPIRES
---------- ------------------------ ---------- -------
<C> <S> <C> <C>
William J. Bresnahan (45)*....... President of Hynes 1995 1997
Industries. Mr.
Bresnahan received his
bachelor of science
degree in Business
Administration from
Youngstown State
University and his
master's degree in
Business Administration
from the University of
Pittsburgh. He held
sales and marketing
positions with Proctor &
Gamble and Pharmacia,
Inc. before joining
Hynes Industries in
1980. He held sales and
general management
positions at Hynes
Industries until he was
named President in 1989.
Mr. Bresnahan is a
director of the Mahoning
National Bank,
Youngstown, Ohio.
Business address: Hynes
Industries, Inc., 3760
Oakwood, Youngstown, OH
44515
William W. Cushwa (58)*.......... Vice President Planning 1975 1997
and Assistant Treasurer
of the Company. Mr.
Cushwa received his
bachelor of arts degree
from the University of
Notre Dame and his
master's degree in
Business Administration
from Case Western
Reserve University. Mr.
Cushwa joined the
Company in 1960, was
elected Assistant
Treasurer in 1969, and
Director of Corporate
Planning in 1977 and was
elected to his current
position in 1983.
Neil D. Humphrey (67)*........... President Emeritus of 1985 1997
Youngstown State
University, having
retired as President in
1992 after eight years
in that position. Dr.
Humphrey received his
bachelor of arts degree
from Idaho State
University, his master
of science degree in
Government Management
from the School of
Business Administration
of the University of
Denver, and his
doctorate degree in
Education from Brigham
Young University. His
prior experience
includes 10 years as
Chancellor of the
University of Nevada
System. He also served
as Budget Director for
the State of Nevada.
Resident Address: 3161
Oakshire Court, Reno, NV
89509.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
MATERIAL OCCUPATION FOR
PAST FIVE YEARS,
NAME, PRINCIPAL BUSINESS
ADDRESS AND YEAR FIRST YEAR
ADDRESS OF PRINCIPAL ELECTED A TERM
NAME (AGE) OFFICE OF EMPLOYER DIRECTOR EXPIRES
---------- ------------------------ ---------- -------
<C> <S> <C> <C>
C. Edward Midgley (58)*.......... Advisory Director, 1995 1997
PaineWebber,
Incorporated. Mr.
Midgley received his
bachelor of arts degree
in Economics from
Princeton University and
his master's degree in
Business Administration
from Harvard Business
School. Until 1994, he
was Co-Head of
Investment Banking,
Executive Managing
Director, Head of
Mergers and Acquisitions
and Member of the Board
of Directors of Kidder,
Peabody & Co.
Incorporated. He has
served as Managing
Director, Partner and
Head of Corporate
Finance/Client Coverage
Group at Bankers Trust
Company; Vice Chairman,
Office of the Chief
Executive at Fieldcrest
Cannon, Inc.; and Vice
Chairman at Amoskeag
Company. Business
Address: PaineWebber
Incorporated, Investment
Banking Division, 1285
Avenue of the Americas,
New York, NY 10019.
Gerald C. McDonough (67)*........ Retired in July 1988 as 1992 1998
Chairman of the Board of
Directors and Chief
Executive Officer of
Leaseway Transportation
Corporation. Mr.
McDonough received his
bachelor's degree in
Business Administration
from Case Western
Reserve University. Mr.
McDonough is a director
of York International,
York, Pennsylvania,
Ohio, Brush-Wellman
Corporation, Cleveland,
Ohio, and Associated
Estates Realty
Corporation, Cleveland,
Ohio, and a Trustee of
the Fidelity Funds,
Boston, Massachusetts.
Residence Address:
135 Aspenwood Drive,
Moreland Hills, OH 44022
Paul J. Powers (60)*............. Chairman, President, 1984 1998
Chief Executive Officer
and Chief Operating
Officer of the Company.
Mr. Powers received his
bachelor's degree in
Economics from Merrimack
College and his master's
degree in Business
Administration from
George Washington
University. Mr. Powers
joined the Company in
1982 as Group Vice
President of Hydraulics,
was elected President
and Chief Operating
Officer in 1984 and was
elected Chairman and
Chief Executive Officer
in 1987. Mr. Powers is a
director of Ohio Edison
Company, Akron, Ohio,
Twin Disc, Inc., Racine,
Wisconsin, and Global
Marine, Inc., Houston,
Texas. Mr. Powers is
also Chairman and Chief
Executive Officer of
Cuno.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
MATERIAL OCCUPATION FOR
PAST FIVE YEARS,
NAME, PRINCIPAL BUSINESS
ADDRESS AND YEAR FIRST YEAR
ADDRESS OF PRINCIPAL ELECTED A TERM
NAME (AGE) OFFICE OF EMPLOYER DIRECTOR EXPIRES
---------- ------------------------ ---------- -------
<C> <S> <C> <C>
George M. Smart (50)*............ President and Chairman 1995 1998
of the Board of
Directors of Phoenix
Packaging Corporation.
Mr. Smart received his
bachelor of science
degree from The Defiance
College and his master's
degree in Business
Administration from
Wharton School,
University of
Pennsylvania. He was
President and CEO of
Central States Can Co.
from 1978 to 1993. He
has been President and
Chairman of Phoenix
Packaging Corporation
since 1993. Mr. Smart is
a director of Phoenix
Packaging Corporation,
North Canton, Ohio,
Belden & Blake
Corporation, North
Canton, Ohio, Ohio
Edison Company, Akron,
Ohio, and The Defiance
College, Defiance, Ohio.
Business Address:
Phoenix Packaging
Corporation, 3075
Brookline Rd. N.W.,
North Canton, OH 44720
Don E. Tucker (67)*.............. Retired Senior Vice 1977 1998
President and Chief
Administrative Officer
of the Company. Mr.
Tucker received his
bachelor of arts degree
from Aurora College and
his bachelor of law
degree from Yale
University. Mr. Tucker
joined the Company in
1972 as General Counsel
and Assistant Secretary,
was elected Senior Vice
President and Chief
Administrative Officer
in 1984 and retired in
1993. Mr. Tucker is a
director of Bank One
Youngstown N.A.,
Youngstown, Ohio.
Residence Address: 7850
Garfield Road, Salem, OH
44460
Charles B. Cushwa, III (61)*..... Director of Cushwa 1972 1999
Center for
Entrepreneurship,
Youngstown State
University since 1988.
Mr. Cushwa received his
bachelor of arts degree
in Sociology and his
master of arts degree in
Economics from the
University of Notre
Dame. Mr. Cushwa joined
the Company in 1961 and
held various management
positions with the
Company until retiring
in 1988 as the Secretary
of the Company. Mr.
Cushwa is a director of
Home Savings and Loan
Company of Youngstown,
Youngstown, Ohio.
Business Address: Cushwa
Center for
Entrepreneurship, 241
Federal Plaza West,
Youngstown, OH 44503
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
MATERIAL OCCUPATION FOR
PAST FIVE YEARS,
NAME, PRINCIPAL BUSINESS
ADDRESS AND YEAR FIRST YEAR
ADDRESS OF PRINCIPAL ELECTED A TERM
NAME (AGE) OFFICE OF EMPLOYER DIRECTOR EXPIRES
---------- ------------------------ ---------- -------
<C> <S> <C> <C>
John M. Galvin (63)*............. Private Investor and 1993 1999
consultant following
retirement in 1992. He
was Vice Chairman and
director of The Irvine
Company from 1987 to
1992. He received his
bachelor's degree in
Business administration
from Indiana University.
He has served as
President of the Rust
Group of Austin, Texas;
as Senior Vice President
of Aetna Life and
Casualty; and as Chief
Executive Officer of
Aetna's International
and Diversified Business
Division. Mr. Galvin is
a Director of Global
Marine, Inc. of Houston,
Texas and Oasis
Residential Inc. of Las
Vegas, Nevada. Residence
Address: 377 Holden
Road, Avon, CO 81620
Richard J. Hill (65)*............ Retired in 1990 as 1993 1999
Certified Public
Accountant with Hill,
Barth & King, CPAs, a
regional certified
public accounting firm
operating in Ohio,
Pennsylvania and
Florida. Mr. Hill
formerly was a general
partner and chairman of
the Executive Committee
of Hill, Barth & King.
He received his
bachelor's degree in
Business Administration
from Youngstown State
University. Mr. Hill is
a director of
Penelmatic, Inc.,
Youngstown, Ohio.
Residence Address: 8440
N. Lima Road,
Poland, OH 44514
William E. Kassling (51)*........ Chairman, Chief 1996 1999
Executive Officer and
President of
Westinghouse Air Brake
Company. Mr. Kassling
received his bachelor of
science degree in
Industrial Management
from Purdue University
and his master's degree
in Business
Administration. Business
Address:
Westinghouse Air Brake
Company,
P.O. Box 67, Wilmerding,
PA 15148
John Gilchrist................... Group Vice President- n/a n/a
Hydraulic Systems of the
Company. Mr. Gilchrist
was elected Vice
President General
Manager-Hydraulic Pump
Division in August, 1990
and was then elected to
his present position in
February 1992.
Hubert Jacobs van Merlen......... Senior Vice President n/a n/a
and Chief Financial
Officer of the Company.
Mr. Jacobs van Merlen
was European Finance
Director for Commercial
Intertech, S.A. (a
subsidiary) from 1987 to
February 1995, was
elected Vice President-
Accounting and Finance
of the Company in March
1995 and was elected to
his present position in
August 1995.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
MATERIAL OCCUPATION FOR
PAST FIVE YEARS,
NAME, PRINCIPAL BUSINESS
ADDRESS AND YEAR FIRST YEAR
ADDRESS OF PRINCIPAL ELECTED A TERM
NAME (AGE) OFFICE OF EMPLOYER DIRECTOR EXPIRES
---------- ------------------------ ---------- -------
<C> <S> <C> <C>
Mark G. Kachur................... Senior Vice President- n/a n/a
Fluid Purification of
the Company. Prior to
joining the Company, Mr.
Kachur was with AMF Cuno
from 1966 to 1972; Pall
Corporation from 1972 to
1991 as Group Vice
President-Process and
Hydraulics and a member
of the Operating
Committee; and Biotage
Inc. from 1992 to 1994
as President and Chief
Executive Officer. Mr.
Kachur started with the
Company as Senior Vice
President-Asian
Marketing for Commercial
Intertech, S.A. (a
subsidiary) in April 1994 and was in
June 1994 as well as
elected president of
Cuno Incorporated (a
subsidiary) in July
1994. Mr. Kachur is also
President, Chief
Operating Officer and
Director.
Bruce C. Wheatley................ Senior Vice President- n/a n/a
Administration of the
Company. Prior to
joining the Company, Mr.
Wheatley served as Vice
President of Public
Affairs for the P.I.E.
Mutual Insurance Co.,
Cleveland, Ohio, from
June 1990 to December
1991, then Senior Vice
President-Marketing &
Public Affairs of such
company from January
1992 to July 1992. Mr.
Wheatley joined the
Company in July 1992,
serving as Vice
President-Administration
until July 1995, when he
was elected to his
present position.
Robert A. Calcagni............... Group Vice President- n/a n/a
Building Systems and
Metal Products of the
Company. Mr. Calcagni
was a Vice President of
the Company from 1986
until July 1992 when he
was elected to his
present position.
Gilbert M. Manchester............ Vice President, General n/a n/a
Counsel and Assistant
Secretary of the
Company. Mr. Manchester
was General Counsel and
Secretary of the Company
from August 1988 until
March 1994 at which time
he was elected to his
present position.
Steven J. Hewitt................. Vice President and n/a n/a
Controller of the
Company. Mr. Hewitt was
Controller of the
Company from April 1981
until March 1996, when
he was elected to his
present position.
</TABLE>
41
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The principal Executive Officers of the Company and their recent business
experience are as follows:
<TABLE>
<CAPTION>
NAME OFFICE HELD AGE
---- ----------- ---
<C> <S> <C>
Paul J. Powers................. Chairman of the Board of Directors, 60
President and Chief Executive Officer
Hubert Jacobs van Merlen....... Senior Vice President and Chief Financial 41
Officer
Bruce C. Wheatley.............. Senior Vice President-Administration 54
Mark G. Kachur................. Senior Vice President-Fluid Purification 52
Robert A. Calcagni............. Group Vice President-Building Systems and 55
Metal Products
John Gilchrist................. Group Vice President-Hydraulic Systems 50
William G. Welker.............. Group Vice President 65
William W. Cushwa.............. Vice President-Planning, Assistant 58
Treasurer & Director
Gilbert M. Manchester.......... Vice President and General Counsel 51
Steven J. Hewitt............... Controller 46
</TABLE>
None of the Executive Officers are related and they are elected from year to
year or until their successors are duly elected and qualified.
All of the Executive Officers have been continuously employed by the Company
for more than five years except Mr. Mark Kachur and Mr. Bruce Wheatley.
42
<PAGE>
Except as set forth below in the table below, none of the participants has
purchased or sold or otherwise disposed of any securities of the Company since
July 31, 1994.
<TABLE>
<CAPTION>
Transaction Amount of
Date Shares
----------- ---------
<S> <C> <C>
WILLIAM BRESHAHAN
12/13/95 300
ROBERT CALCAGNI
7/31/94 5.37 (1)
6/30/94 2.81 (2)
9/15/94 67.34
7/1/94-8/31/94 7.73 (2)
10/31/94 7.65 (1)
9/30/94 4.71 (2)
12/15/94 70.21
11/30/94 7.02 (2)
1/27/95 (463)
1/31/95 7.61 (1)
12/31/94 7.24 (2)
1/31/95 2.38 (2)
3/15/95 61.87
2/28/95 1.52 (2)
4/30/95 7.37 (1)
3/31/95 4.28 (2)
6/15/95 70.82 (1)
4/1/95-5/31/95 7.17 (2)
7/31/95 6.81 (1)
6/30/95 6.46 (2)
9/15/95 69.80
7/1/95-8/31/95 6.89 (2)
11/30/95 7.90 (1)
9/1/95-10/31/95 10.26 (2)
11/30/95 2.96 (2)
12/15/95 79.39
12/13/95 3,015.00
12/13/95 (1,506)
1/30/96 (741)
1/31/96 9.19 (1)
1/95 4.08
12/31/95 238.77 (2)
4/30/96 8.56 (1)
6/14/96 38.95
3/15/96 43.34
CHARLES B. CUSHWA III
7/22/94 350
7/22/94 350
4/21/94 (100)
12/1/94 (1,550)
12/15/94 (210)
12/1/94 1,100 (3)
12/20/94 (1,700) (3)
12/29/94 (108) (3)
1/4/95 (6,000)
1/11/95 530
2/27/95 (1,000)
3/1/95 (2,000)
2/27/95 (700)
3/1/95 (1,800)
1/5/95 (1,200)
8/29/95 (500) (3)
1/5/95 1,200 (3)
8/30/95 (1,200) (3)
12/20/95 (1,250)
12/20/95 1,200 (3)
</TABLE>
<TABLE>
<CAPTION>
Transaction Amount of
Date Shares
----------- ---------
<S> <C> <C>
9/5/95 (500)
9/6/95 (2,000)
9/6/95 (500)
1/2/96 16,208
1/2/96 (1,200) (3)
1/10/96 (548) (3)
2/23/96 (300) (3)
WILLIAM CUSHWA
7/22/94 350
7/22/94 350
7/31/94 19.53 (1)
7/22/94 (19.53) (3)
7/22/94 350 (3)
6/30/94 2.49 (2)
10/31/94 27.82 (1)
9/30/94 3.83 (2)
12/19/94 1,000 (3)
12/13/94 2,179
12/19/94 (4,550)
1/11/95 530 (3)
1/31/95 27.68 (1)
1/11/95 530 (3)
1/11/95 530
1/27/95 (494)
3/8/95 (350)
3/27/95 (1,000)
2/27/95 (1,500)
2/28/95 (3,500)
3/1/95 (1,200)
4/30/95 26.79 (1)
7/31/95 24.74 (1)
9/7/95 1,500
11/30/95 28.72 (1)
11/30/95 28.72 (1)
12/6/95 1,000 (3)
12/6/95 (6,600)
12/13/95 1,500
12/13/95 2,062
1/2/96 (240) (3)
1/31/96 33.39 (1)
1/2/96 16,208
1/2/96 1,500
1/2/96 3,000
1/2/96 (1,737)
1/2/96 3,750
1/2/96 (2,465)
1/2/96 1,125
1/2/96 (817)
4/30/96 31.13 (1)
</TABLE>
<TABLE>
<S> <C> <C>
JOHN M. GALVIN
3/11/96 1,000
4/30/96 25.80 (1)
5/28/96 1,000
</TABLE>
<TABLE>
<S> <C> <C>
JOHN GILCHRIST
1/27/95 (494)
12/13/94 1,702
12/15/94 24.51
9/15/94 23.50
</TABLE>
<TABLE>
<CAPTION>
Transaction Amount of
Date Shares
----------- ---------
<S> <C> <C>
3/15/95 24.30
8/30/94 1,000
8/30/94 (545)
8/30/94 (159)
8/30/94 1,592
8/30/94 (985)
8/30/94 (212)
6/30/94 .47 (2)
7/27/94 25,000
7/31/94 16.49
6/15/95 27.81
9/15/95 27.41
1/30/96 (247)
3/15/96 81.51
3/5/96 5,112
3/5/96 (751)
3/4/96 (4,200)
3/5/96 (161)
4/25/96 (.37)
1/27/95 (494)
12/15/95 31.18
12/13/95 11,858
12/13/95 (5,390)
12/13/95 633
STEVEN HEWITT
7/31/94 3.34 (1)
10/31/94 4.76 (1)
1/27/95 (618)
1/31/95 4.74 (1)
12/13/94 851
1/27/95 (618)
1/31/95 4.74 (1)
4/30/95 4.58 (1)
7/31/95 4.23 (1)
11/30/95 4.91 (1)
12/13/95 1,500
12/13/95 (510)
12/13/95 644
1/30/96 (371)
1/31/96 5.71 (1)
4/30/96 5.33 (1)
RICHARD HILL
12/15/94 53.93
9/15/94 51.73
6/20/94 200 (4)
3/15/95 44.63
9/26/94 (300) (4)
6/15/95 51.08
9/15/95 50.35
12/15/95 57.26
3/15/96 58.50
6/14/96 52.57
NEIL HUMPHREY
12/15/94 20.33
9/15/94 19.50
3/15/95 16.83
6/15/95 19.26
9/15/95 18.98
12/15/95 21.59
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Transaction Amount of
Date Shares
----------- ---------
NEIL HUMPHREY (CONTINUED)
<S> <C> <C>
12/18/95 1,000
3/7/96 750
3/15/96 29.34
6/14/96 26.36
MARK G. KACHUR
6/27/96 (487)
WILLIAM KASSLING
3/27/96 5,000
GILBERT MANCHESTER
6/30/94 8.95 (2)
7/31/94 16.18 (1)
1/27/95 (618)
12/31/94 10.13 (2)
1/31/95 22.94 (1)
9/15/94 1.76 (3)
9/15/94 .19 (3)
12/15/94 1.83 (3)
12/15/94 .19 (3)
12/13/94 2,043
12/22/94 (83)
3/15/95 1.52 (3)
3/15/95 .16 (3)
9/30/94 13.78 (2)
10/31/94 23.05 (1)
4/1/96-4/30/96 .30 (2)
6/14/96 1.79 (3)
6/14/96 .19 (3)
3/31/95 9.06 (2)
4/30/95 22.20 (1)
6/15/95 1.74 (3)
6/15/95 .18 (3)
6/30/95 10.01 (2)
7/31/95 20.50 (1)
9/15/95 1.71 (3)
9/15/95 .18 (3)
10/31/95 10.14 (2)
11/30/95 23.80 (1)
12/15/95 1.95 (3)
12/15/95 .21 (3)
12/13/95 2,250
12/13/95 (841)
12/13/95 1,611
3/15/96 1.99 (3)
3/15/96 .21 (3)
3/4/96 3,000
3/4/96 (1,944)
1/1/96-3/31/96 2.38 (2)
1/30/96 (371)
1/31/96 27.67 (1)
12/31/95 11.41 (2)
12/15/95 1.95 (3)
12/15/95 .21 (3)
12/13/95 2,250
12/13/95 (841)
12/13/95 1,611
C. EDWARD MIDGLEY
8/1/95 10,000
</TABLE>
<TABLE>
<CAPTION>
Transaction Amount of
Date Shares
----------- ---------
PAUL POWERS
<S> <C> <C>
7/31/94
4/1/94-6/30/94 35.97 (2)
1/27/95 (4,771)
1/31/95 10.38 (1)
12/31/94 40.65 (2)
11/30/94 23.40 (2)
12/13/94 6,809
12/19/94 15,000
12/19/94 (2,138)
12/19/94 (12,862)
1/31/95 22.31 (2)
10/31/94 10.44 (1)
8/1/94-9/30/94 47.55 (2)
7/27/94 25,000
7/31/94 16.49
11/30/95 29.58 (2)
12/13/95 42,210
12/13/95 (25,896)
12/13/95 7,087
1/30/96 (5,032)
1/31/96 12.52 (1)
12/31/95 74.51 (2)
4/30/96 11.68 (1)
1/1/96-3/31/96 156.10 (2)
4/1/96-4/30/96 40.19 (2)
5/28/96 15,000
5/28/96 (7,151)
4/30/95 10.05 (1)
2/1/95-3/31/95 64.56 (2)
7/31/95 9.28 (1)
4/1/95-6/30/95 143.80 (2)
11/30/95 10.77 (1)
7/1/95-10/31/95 179.55 (2)
</TABLE>
GEORGE SMART
<TABLE>
<S> <C> <C>
3/22/95 1,000
12/20/95 1,000
DON TUCKER
1/27/95 (1,654)
1/31/95 60.14 (1)
12/31/94 30.37 (2)
7/31/94 42.43 (1)
4/1/94-6/30/94 21.02 (2)
2/21/95 10,500
2/21/95 (7,597)
2/21/95 (915)
10/31/94 60.45 (1)
9/30/94 30.25 (2)
4/30/95 58.21 (1)
3/31/95 27.16 (2)
7/31/95 53.75 (1)
6/30/95 29.99 (2)
11/30/95 62.41 (1)
10/31/95 30.39 (2)
12/20/95 (175)
1/30/96 (2,643)
1/31/96 72.55 (1)
1/30/96 (2,127)
</TABLE>
<TABLE>
<CAPTION>
Transaction Amount of
Date Shares
----------- ---------
<S> <C> <C>
1/31/96 72.55 (1)
2/21/96 637
12/31/95 34.22 (2)
4/30/96 67.64 (1)
1/1/96-3/31/96 7.12 (2)
HUBERT VAN MERLEN
8/1/95 6,205
103.31 (1)
08/31/96 19.76 (5)
10/31/95 .81 (1)
12/13/95 1,082
1/30/96 (309)
1/31/96 .92 (1)
2/12/96 (125) (1)
2/12/96 125
BRUCE WHEATLEY
12/31/94 26.17 (2)
12/13/94 3,404
10/1/94-
11/30/94 32.77 (2)
4/1/94-6/30/94 23.01 (2)
1/31/95 22.31 (2)
7/1/94-9/30/94 53.81 (2)
4/1/95-6/30/95 129.49 (2)
9/30/95 52.75 (2)
10/31/95 43.42 (2)
11/30/95 29.58 (2)
12/13/95 10,050
12/13/95 (4,769)
12/13/95 1,933
12/31/95 58.19 (2)
1/1/96-3/31/96 152.71 (2)
7/1/95-8/31/95 68.87 (2)
9/8/95 7,500
9/8/95 (1,083)
9/7/95 (4,400)
9/7/95 (1,600)
9/8/95 (317)
9/8/95 (100)
</TABLE>
- --------
(1) ESOP Transaction--"Transaction Date" represents the end of a certain
period over which time the trustee bought or sold shares for the
participant's account.
(2) 401(k) Transaction--"Transaction Date" represents the end of a certain
period over which time the trustee bought or sold shares for the
participant's account.
(3) Transaction made by "associate" (as defined in the Securities Exchange
Act) of the participant or participant otherwise disclaims beneficial
ownership.
(4) Transaction made by general partnership; amount of shares was calculated
based on the proportional interest of the beneficial owner in the
partnership.
(5) Non-Qualified Stock Plan.
44
<PAGE>
PROXY
COMMERCIAL INTERTECH CORP.
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1996
THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS OF COMMERCIAL INTERTECH CORP.
The undersigned hereby appoints Paul J. Powers, Bruce C. Wheatley and
Hubert Jacobs van Merlen, each of them, with full power of substitution, the
proxies of the undersigned to vote all of the outstanding Common Shares, par
value $1.00 per share ("Common Shares"), of Commercial Intertech Corp. (the
"Company") that the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Company to be held on , 1996 (the "Special
Meeting"), or at any adjournment or postponement of the Special Meeting, on the
following matters which are described in the Proxy Statement (the "Proxy
Statement"; all capitalized terms used herein without definition having the
meaning set forth therein) of the Board of Directors of the Company, dated
August [ ], 1996, as follows:
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED "AGAINST" PROPOSALS 1-7 AND "FOR" PROPOSALS 8-9.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMEND THAT YOU VOTE "AGAINST" ITEMS 1
- - 7.
FIRST PROPOSAL: RESOLUTION CALLING FOR [ ] TO PRESIDE AT THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SECOND PROPOSAL: RESOLUTION CALLING FOR REDEMPTION OF THE RIGHTS.
/ / FOR / / AGAINST / / ABSTAIN
THIRD PROPOSAL: RESOLUTION CALLING FOR REMOVAL OF ALL CURRENT DIRECTORS AND
REDUCTION OF THE SIZE OF THE COMPANY'S BOARD.
/ / FOR / / AGAINST / / ABSTAIN
FOURTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY CODE OF
REGULATIONS TO OPT OUT OF THE OHIO CONTROL SHARE ACQUISITION STATUTE.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
FIFTH PROPOSAL: RESOLUTION CALLING FOR THE RECESS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SIXTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY ARTICLES OF
INCORPORATION TO REPEAL ARTICLE SIXTH THEREOF.
/ / FOR / / AGAINST / / ABSTAIN
SEVENTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY UNITED
DOMINION/OAC'S PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE "FOR" ITEMS 8-9
EIGHTH PROPOSAL: ELECTION OF DIRECTORS
If the election of directors is not by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted as follows all
on the proposal to elect , , and (the
"Board of Directors' Nominees" as directors of the Company:
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
If the election of directors is by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted on the
proposal to elect the Board of Directors' Nominees as directors of the Company
as follows, in accordance with the optimal manner in which as many Board of
Directors' Nominees as possible be elected:
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
NINTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY THE
<PAGE>
BOARD OF DIRECTORS' PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE PROVIDED
[Proxy Continued On Reverse]
The proxies of the undersigned named above are authorized to vote, in their
discretion, upon such other matters as may properly come before the Special
Meeting and any adjournment or postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER MARKED HEREIN
BY THE UNDERSIGNED. IF NO MARKING IS MADE AS TO ANY PROPOSAL OR ALL PROPOSALS,
THIS PROXY WILL BE VOTED "AGAINST" PROPOSALS 1 - 7 DESCRIBED ABOVE AND "FOR"
PROPOSALS 8 - 9 DESCRIBED ABOVE. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF
THE PROXY STATEMENT OF THE BOARD OF DIRECTORS OF THE COMPANY DATED AUGUST ,
1996, SOLICITING PROXIES FOR THE SPECIAL MEETING.
All previous proxies given by the undersigned to vote at the Special
Meeting or at any adjournment or postponement thereof are hereby revoked.
Please sign exactly as name
appears on this Proxy:
____________________________
(Signature)
____________________________
(Signature, if jointly held)
Title:
____________________________
Dated:
____________________________,
1996
When shares are held by joint tenants,
both should sign. When signing as an
attorney, executor, administrator,
trustee or guardian, give full title
as such. If a corporation, sign in
full corporate name by President or
<PAGE>
other authorized officer. If a
partnership, sign in partnership name
by authorized person.
PLEASE COMPLETE, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY TO COMMERCIAL
INTERTECH CORP., C/O MORROW & COMPANY, 909 THIRD AVENUE, 20TH FLOOR, NEW YORK,
NEW YORK 10022 IN THE ENCLOSED ENVELOPE.
PARTICIPANTS IN THE ESOPS AND THE PLANS CAN VOTE SHARES HELD IN THE ESOPS
OR PLANS ON THEIR BEHALF ONLY BY INSTRUCTING THE ESOP TRUSTEE OR PLAN TRUSTEE,
AS APPLICABLE, ON THE FORM THAT SHOULD BE PROVIDED, BY THE ESOP TRUSTEE OR PLAN
TRUSTEE, AS APPLICABLE, TO PARTICIPANTS FOR THAT PURPOSE.
<PAGE>
[FORM OF TRUSTEE INSTRUCTION CARD FOR COMMON SHARES IN PLANS --
NON-QUALIFIED STOCK PURCHASE PLAN]
[FRONT]
CONFIDENTIAL VOTING INSTRUCTIONS
TO: NATIONAL CITY BANK, N.E.
AS TRUSTEE ON BEHALF OF THE
NON-QUALIFIED STOCK PURCHASE PLAN
OF COMMERCIAL INTERTECH CORP.
("TRUSTEE")
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IN OPPOSITION TO THE PROPOSALS MADE BY UNITED DOMINION INDUSTRIES LIMITED AND
OPUS ACQUISITION CORPORATION AND IN FAVOR OF THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES
The undersigned hereby directs the Trustee to vote all Common Shares of
Commercial Intertech Corp. allocated to the undersigned's account under the plan
on the record date for the Special Meeting of Shareholders of Commercial
Intertech Corp., to be held at the [ ], Youngstown, Ohio on [ ],
[ ], 1996 at [ ] a.m., or at any adjournments or
postponements thereof, upon the matter as set forth in the Notice of Special
Meeting and Proxy Statement ("Proxy Statement"), receipt of which is hereby
acknowledged.
The Trustee is directed to vote as specified below, or if no specification is
made, AGAINST proposals 1-7 and FOR proposals 8-9. To vote in accordance with
the Board of Directors' recommendations, just sign below without checking any
boxes. If you fail to sign and return these instructions, the Trustee will
vote, in its sole discretion, any shares held under the plan which are not
voted. The Trustee makes no recommendation as to this matter.
PLEASE SIGN, DATE AND RETURN THIS CONFIDENTIAL VOTING SHEET PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. THESE CONFIDENTIAL VOTING INSTRUCTIONS WILL BE
SEEN ONLY BY AUTHORIZED PERSONNEL APPOINTED BY THE TRUSTEE.
Dated:______________, 1996 _____________________________________
Signature of Participant
_____________________________________
Social Security Number
[REVERSE]
<PAGE>
IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "AGAINST"
PROPOSALS 1-7 AND "FOR" PROPOSALS 8-9.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMEND THAT YOU VOTE "AGAINST" ITEMS
1 - 7.
FIRST PROPOSAL: RESOLUTION CALLING FOR [ ] TO PRESIDE AT THE SPECIAL
MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SECOND PROPOSAL: RESOLUTION CALLING FOR REDEMPTION OF THE RIGHTS.
/ / FOR / / AGAINST / / ABSTAIN
THIRD PROPOSAL: RESOLUTION CALLING FOR REMOVAL OF ALL CURRENT DIRECTORS AND
REDUCTION OF THE SIZE OF THE COMPANY'S BOARD.
/ / FOR / / AGAINST / / ABSTAIN
FOURTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY CODE OF
REGULATIONS TO OPT OUT OF THE OHIO CONTROL SHARE ACQUISITION STATUTE.
/ / FOR / / AGAINST / / ABSTAIN
FIFTH PROPOSAL: RESOLUTION CALLING FOR THE RECESS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SIXTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY ARTICLES OF
INCORPORATION TO REPEAL ARTICLE SIXTH THEREOF.
/ / FOR / / AGAINST / / ABSTAIN
SEVENTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY UNITED
DOMINION/OAC'S PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE "FOR" ITEMS 8-9
EIGHTH PROPOSAL: ELECTION OF DIRECTORS
If the election of directors is not by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted as follows all
on the proposal to elect , , and (the
"Board of Directors' Nominees" as directors of the Company:
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
If the election of directors is by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted on the
proposal to elect the Board of Directors' Nominees as directors of the Company
as follows, in accordance with the optimal manner in which as many Board of
Directors' Nominees as possible be elected:
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
NINTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY THE BOARD OF
DIRECTORS' PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
[FORM OF TRUSTEE INSTRUCTION CARD FOR COMMON SHARES IN PLANS --
EMPLOYEE SAVINGS AND STOCK PURCHASE PLAN]
[FRONT]
CONFIDENTIAL VOTING INSTRUCTIONS
TO: NATIONAL CITY BANK, N.E.
AS TRUSTEE ON BEHALF OF THE
EMPLOYEE SAVINGS AND STOCK PURCHASE PLAN
OF COMMERCIAL INTERTECH CORP.
("TRUSTEE")
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IN OPPOSITION TO THE PROPOSALS MADE BY UNITED DOMINION INDUSTRIES
LIMITED AND OPUS ACQUISITION CORPORATION AND IN FAVOR OF THE
ELECTION OF THE BOARD OF DIRECTORS' NOMINEES
The undersigned hereby directs the Trustee to vote all Common Shares of
Commercial Intertech Corp. allocated to the undersigned's account under the plan
on the record date for the Special Meeting of Shareholders of Commercial
Intertech Corp., to be held at the [ ], Youngstown, Ohio on [
], [ ], 1996 at [ ] a.m., or at any adjournments or
postponements thereof, upon the matter as set forth in the Notice of Special
Meeting and Proxy Statement ("Proxy Statement"), receipt of which is hereby
acknowledged.
The Trustee is directed to vote as specified below, or if no specification is
made, AGAINST proposals 1-7 and FOR proposals 8-9. To vote in accordance with
the Board of Directors' recommendations, just sign below without checking any
boxes. If you fail to sign and return these instructions, the Trustee will
vote, in its sole discretion, any shares held under the plan which are not
voted. The Trustee makes no recommendation as to this matter.
PLEASE SIGN, DATE AND RETURN THIS CONFIDENTIAL VOTING SHEET PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. THESE CONFIDENTIAL VOTING INSTRUCTIONS WILL BE
SEEN ONLY BY AUTHORIZED PERSONNEL APPOINTED BY THE TRUSTEE.
Dated: _____________, 1996 ________________________________
Signature of Participant
________________________________
Social Security Number
[REVERSE]
<PAGE>
IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "AGAINST"
PROPOSALS 1-7 AND "FOR" PROPOSALS 8-9.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMEND THAT YOU VOTE "AGAINST" ITEMS
1 - 7.
FIRST PROPOSAL: RESOLUTION CALLING FOR [ ] TO PRESIDE AT THE SPECIAL
MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SECOND PROPOSAL: RESOLUTION CALLING FOR REDEMPTION OF THE RIGHTS.
/ / FOR / / AGAINST / / ABSTAIN
THIRD PROPOSAL: RESOLUTION CALLING FOR REMOVAL OF ALL CURRENT DIRECTORS AND
REDUCTION OF THE SIZE OF THE COMPANY'S BOARD.
/ / FOR / / AGAINST / / ABSTAIN
FOURTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY CODE OF
REGULATIONS TO OPT OUT OF THE OHIO CONTROL SHARE ACQUISITION STATUTE.
/ / FOR / / AGAINST / / ABSTAIN
FIFTH PROPOSAL: RESOLUTION CALLING FOR THE RECESS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SIXTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY ARTICLES OF
INCORPORATION TO REPEAL ARTICLE SIXTH THEREOF.
/ / FOR / / AGAINST / / ABSTAIN
SEVENTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY UNITED
DOMINION/OAC'S PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE "FOR" ITEMS 8-9
EIGHTH PROPOSAL: ELECTION OF DIRECTORS
If the election of directors is not by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted as follows all
on the proposal to elect , , and (the
"Board of Directors' Nominees" as directors of the Company:
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
If the election of directors is by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted on the
proposal to elect the Board of Directors' Nominees as directors of the Company
as follows, in accordance with the optimal manner in which as many Board of
Directors' Nominees as possible be elected:
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
NINTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY THE BOARD OF
DIRECTORS' PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
[FORM OF TRUSTEE INSTRUCTION CARD
FOR COMMON SHARES AND PREFERRED SHARES IN ESOPS --
EMPLOYEE STOCK OWNERSHIP PLAN]
[FRONT]
CONFIDENTIAL VOTING INSTRUCTIONS TO: LASALLE NATIONAL TRUST, N.A. AS TRUSTEE ON
BEHALF OF THE COMMERCIAL INTERTECH
EMPLOYEE STOCK OWNERSHIP PLAN
("TRUSTEE")
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS IN OPPOSITION TO THE PROPOSALS
MADE BY UNITED DOMINION INDUSTRIES LIMITED AND OPUS ACQUISITION CORPORATION AND
IN FAVOR OF THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES
ESOP
The undersigned hereby directs the Trustee to vote all Common Shares or
Preferred Shares of Commercial Intertech Corp. deemed credited to the
undersigned's account under the plan on the record date for the Special Meeting
of Shareholders of Commercial Intertech Corp., to be held at the [
], Youngstown, Ohio on [ ], [ ], 1996 at [
] a.m., or at any adjournments or postponements thereof, upon the matter as set
forth in the Notice of Special Meeting and Proxy Statement ("Proxy Statement"),
receipt of which is hereby acknowledged.
The Trustee is directed to vote as specified below, or if no specification is
made, AGAINST proposals 1-7 and FOR proposals 8-9. To vote in accordance with
the Board of Directors' recommendations, just sign below without checking any
boxes. If you fail to sign and return these instructions, the Trustee will vote
all shares deemed credited to your account in the same proportion as the shares
deemed credited to the accounts of participants who have directed it. The
Trustee makes no recommendation as to this matter.
PLEASE SIGN, DATE AND RETURN THIS CONFIDENTIAL VOTING CARD PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. THESE CONFIDENTIAL VOTING INSTRUCTIONS WILL BE
SEEN ONLY BY AUTHORIZED PERSONNEL APPOINTED BY THE TRUSTEE. ADDITIONAL
INFORMATION CONCERNING THE VOTING OF SHARES HELD UNDER THE PLAN APPEARS IN THE
PROXY STATEMENT.
Dated:______________, 1996 _____________________________________
Signature of Participant
_____________________________________
Social Security Number
[REVERSE]
<PAGE>
IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "AGAINST" PROPOSALS 1-7
AND "FOR" PROPOSALS 8-9.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMEND THAT YOU VOTE "AGAINST" ITEMS
1 - 7.
FIRST PROPOSAL: RESOLUTION CALLING FOR [ ] TO PRESIDE AT THE SPECIAL
MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SECOND PROPOSAL: RESOLUTION CALLING FOR REDEMPTION OF THE RIGHTS.
/ / FOR / / AGAINST / / ABSTAIN
THIRD PROPOSAL: RESOLUTION CALLING FOR REMOVAL OF ALL CURRENT DIRECTORS AND
REDUCTION OF THE SIZE OF THE COMPANY'S BOARD.
/ / FOR / / AGAINST / / ABSTAIN
FOURTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY CODE OF
REGULATIONS TO OPT OUT OF THE OHIO CONTROL SHARE ACQUISITION STATUTE.
/ / FOR / / AGAINST / / ABSTAIN
FIFTH PROPOSAL: RESOLUTION CALLING FOR THE RECESS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SIXTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY ARTICLES OF
INCORPORATION TO REPEAL ARTICLE SIXTH THEREOF.
/ / FOR / / AGAINST / / ABSTAIN
SEVENTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY UNITED
DOMINION/OAC'S PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE "FOR" ITEMS 8-9
EIGHTH PROPOSAL: ELECTION OF DIRECTORS
If the election of directors is not by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted as follows all
on the proposal to elect , , and (the
"Board of Directors' Nominees" as directors of the Company:
<PAGE>
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
If the election of directors is by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted on the
proposal to elect the Board of Directors' Nominees as directors of the Company
as follows, in accordance with the optimal manner in which as many Board of
Directors' Nominees as possible be elected:
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
NINTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY THE BOARD OF
DIRECTORS' PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
[FORM OF TRUSTEE INSTRUCTION CARD
FOR COMMON SHARES AND PREFERRED SHARES IN ESOPS --
RETIREMENT STOCK OWNERSHIP AND SAVINGS PLAN]
[FRONT]
CONFIDENTIAL VOTING INSTRUCTIONS TO: LASALLE NATIONAL TRUST, N.A., AS
TRUSTEE ON BEHALF OF THE COMMERCIAL INTERTECH
RETIREMENT STOCK OWNERSHIP AND SAVINGS PLAN
("TRUSTEE")
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS IN OPPOSITION TO THE
PROPOSALS MADE BY UNITED DOMINION INDUSTRIES LIMITED AND OPUS
ACQUISITION CORPORATION AND IN FAVOR OF THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES
401(K)
The undersigned hereby directs the Trustee to vote all Common Shares or
Preferred Shares of Commercial Intertech Corp. deemed credited to the
undersigned's account under the plan on the record date for the Special Meeting
of Shareholders of Commercial Intertech Corp., to be held at the [ ],
Youngstown, Ohio on [ ], [ ], 1996 at [ ] a.m.,
or at any adjournments or postponements thereof, upon the matter as set forth in
the Notice of Special Meeting and Proxy Statement ("Proxy Statement"), receipt
of which is hereby acknowledged.
The Trustee is directed to vote as specified below, or if no specification is
made, AGAINST proposals 1-7 and FOR proposals 8-9. To vote in accordance with
the Board of Directors' recommendations, just sign below without checking any
boxes. If you fail to sign and return these instructions, the Trustee will vote
all shares deemed credited to your account in the same proportion as the shares
deemed credited to the accounts of participants who have directed it. The
Trustee makes no recommendation as to this matter.
PLEASE SIGN, DATE AND RETURN THIS CONFIDENTIAL VOTING CARD PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. THESE CONFIDENTIAL VOTING INSTRUCTIONS WILL BE
SEEN ONLY BY AUTHORIZED PERSONNEL APPOINTED BY THE TRUSTEE. ADDITIONAL
INFORMATION CONCERNING THE VOTING OF SHARES HELD UNDER THE PLAN APPEARS IN THE
PROXY STATEMENT.
Dated:______________, 1996 _____________________________________
Signature of Participant
_____________________________________
Social Security Number
[REVERSE]
IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "AGAINST" PROPOSALS 1-7
AND "FOR" PROPOSALS 8-9.
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMEND THAT YOU VOTE "AGAINST" ITEMS
1 - 7.
FIRST PROPOSAL: RESOLUTION CALLING FOR [ ] TO PRESIDE AT THE SPECIAL
MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SECOND PROPOSAL: RESOLUTION CALLING FOR REDEMPTION OF THE RIGHTS.
/ / FOR / / AGAINST / / ABSTAIN
THIRD PROPOSAL: RESOLUTION CALLING FOR REMOVAL OF ALL CURRENT DIRECTORS AND
REDUCTION OF THE SIZE OF THE COMPANY'S BOARD.
/ / FOR / / AGAINST / / ABSTAIN
FOURTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY CODE OF
REGULATIONS TO OPT OUT OF THE OHIO CONTROL SHARE ACQUISITION STATUTE.
/ / FOR / / AGAINST / / ABSTAIN
FIFTH PROPOSAL: RESOLUTION CALLING FOR THE RECESS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
SIXTH PROPOSAL: RESOLUTION CALLING FOR THE AMENDMENT OF THE COMPANY ARTICLES OF
INCORPORATION TO REPEAL ARTICLE SIXTH THEREOF.
/ / FOR / / AGAINST / / ABSTAIN
SEVENTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY UNITED
DOMINION/OAC'S PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE "FOR" ITEMS 8-9
EIGHTH PROPOSAL: ELECTION OF DIRECTORS
If the election of directors is not by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted as follows all
on the proposal to elect , , and (the
"Board of Directors' Nominees" as directors of the Company:
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
<PAGE>
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
If the election of directors is by cumulative voting, then the undersigned
directs that all of the Common Shares of the undersigned be voted on the
proposal to elect the Board of Directors' Nominees as directors of the Company
as follows, in accordance with the optimal manner in which as many Board of
Directors' Nominees as possible be elected:
/ / FOR all Board of Directors' Nominees
/ / WITHHOLD AUTHORITY for all Board of Directors' Nominees
INSTRUCTION: To withhold authority to vote for the election of one or
more of the Board of Directors' Nominees, mark FOR above and write the
name(s) of the person(s) with respect to whom you wish to withhold
authority to vote here: ____________]
NINTH PROPOSAL: RESOLUTION CALLING FOR THE ADJOURNMENT BY THE BOARD OF
DIRECTORS' PROXY AGENTS OF THE SPECIAL MEETING.
/ / FOR // AGAINST // ABSTAIN
