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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
COMMERCIAL INTERTECH CORP.
(NAME OF SUBJECT COMPANY)
OPUS ACQUISITION CORPORATION,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
(BIDDERS)
COMMON SHARES, PAR VALUE $1.00 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
201709102
(CUSIP NUMBER OF CLASS OF SECURITIES)
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B. BERNARD BURNS, JR.
OPUS ACQUISITION CORPORATION
UNITED DOMINION INDUSTRIES LIMITED
2300 ONE FIRST UNION CENTER
301 SOUTH COLLEGE STREET
CHARLOTTE, NC 28202-6039
TELEPHONE: (704) 347-6800
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
Copy to:
PAMELA S. SEYMON, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NY 10019
TELEPHONE: (212) 403-1000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$469,729,638 $93,946
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* For purposes of calculation of the filing fee only. Assumes the purchase,
at a purchase price of $27 per Common Share, of 17,397,394 Common Shares of
the Subject Company, representing all of such Common Shares outstanding on
a fully diluted basis (assuming the conversion of each of the 1,039,657
shares of the Subject Company's ESOP Convertible Preferred Stock Series B
into 1.235 Common Shares, and the exercise of 617,051 options to acquire
Common Shares and excluding 1,000 Common Shares owned by the Bidders). The
above calculation is based on the most recent publicly available data for
the Subject Company.
** The amount of the filing fee, calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50th
of 1% of the transaction value.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(A)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
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This Schedule 14D-1 Tender Offer Statement (this "Statement") relates to
the offer by Opus Acquisition Corporation, a Delaware corporation (the
"Purchaser") and an indirect wholly owned subsidiary of United Dominion
Industries Limited, a Canadian corporation ("Parent"), to purchase all
outstanding common shares, par value $1.00 per share (the "Common Shares"), and,
unless and until the Purchaser declares the Rights Condition (as defined in the
Offer to Purchase) has been satisfied, the associated preferred share purchase
rights (the "Rights") issued pursuant to the Rights Agreement (as defined in the
Offer to Purchase), of Commercial Intertech Corp., an Ohio corporation (the
"Subject Company"), at a price of $27 per Common Share (and associated Right),
net to the seller in cash, without interest thereon (the "Offer Price"), upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated July 12, 1996 (the "Offer to Purchase") and in the related Letter of
Transmittal (the "Letter of Transmittal") (which, as amended from time to time,
together constitute the "Offer"). Copies of the Offer to Purchase and the Letter
of Transmittal are annexed hereto as Exhibits (a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the Subject Company is Commercial Intertech Corp., an Ohio
corporation, with its principal executive offices at 1775 Logan Avenue,
Youngstown, Ohio 44501.
(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a-d, g) This Statement is being filed on behalf of Parent and the
Purchaser for purposes of the Schedule 14D-1. The information set forth in the
Introduction, Section 9 and Schedule I of the Offer to Purchase is incorporated
herein by reference.
(e-f) During the last five years, neither Parent nor the Purchaser, nor, to
the best knowledge of Parent and the Purchaser, any of the persons listed in
Schedule I of the Offer to Purchase, has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree, or final order enjoining future violation of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a-b) The information set forth in the Introduction, Sections 8, 9 and 11
and Schedule I of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a-c) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a) The information set forth in the Introduction and Sections 11 and 12 of
the Offer to Purchase is incorporated herein by reference.
(b-g) The information set forth in Sections 7, 12 and 13 of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction, Section 11 and Schedules
I and II of the Offer to Purchase is incorporated herein by reference.
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(b) The information set forth in the Introduction, Sections 9 and 11 and
Schedule II of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Sections 9 and 11 of the
Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Sections 11 and 16 of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a shareholder of the Company whether to sell, tender or hold
Common Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b-c, e) The information set forth in Section 15 of the Offer to Purchase
is incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise incorporated herein by reference, and
in the Preliminary Solicitation Statement and the Preliminary Proxy Statement
attached hereto as exhibits (a)(10) and (a)(11), respectively, is incorporated
herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated July 12, 1996.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement, dated July 12, 1996.
(a)(8) Press Release, dated July 11, 1996.
(a)(9) Press Release, dated July 12, 1996.
(a)(10) Preliminary Solicitation Statement of United Dominion Industries
Limited and Opus Acquisition Corporation to call a Special Meeting of
Shareholders of Commercial Intertech Corp., together with the form of
Appointment of Designated Agents relating thereto (incorporated by reference to
the Schedule 14A filed with the Securities and Exchange Commission on July 12,
1996).
(a)(11) Preliminary Proxy Statement of United Dominion Industries Limited
and Opus Acquisition Corporation relating to a Special Meeting of Shareholders
of Commercial Intertech Corp. pursuant to Section 1701.831 of the Ohio Revised
Code (incorporated by reference to the Schedule 14A filed with the Securities
and Exchange Commission on July 12, 1996).
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(b)(1) Credit Agreement, dated June 20, 1996, among Parent and the other
banks and financial institutions listed therein (incorporated by reference to
Exhibit 10.2(a) of Parent's Current Report on Form 8-K, filed with the
Securities and Exchange Commission on July 12, 1996).
(b)(2) Commitment Letter dated July 11, 1996 between the Royal Bank of
Canada and Parent.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
(g) Complaint in United Dominion Industries Limited et. al. v. Commercial
Intertech Corp. et. al., filed in the United States District Court for the
Southern District of Ohio, Eastern Division on July 11, 1996.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: July 12, 1996 OPUS ACQUISITION CORPORATION
By: /s/ B. BERNARD BURNS, JR.
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Name: B. Bernard Burns, Jr.
Title: Vice President
and Secretary
UNITED DOMINION INDUSTRIES LIMITED
By: /s/ B. BERNARD BURNS, JR.
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Name: B. Bernard Burns, Jr.
Title: Senior Vice President,
General Counsel and Secretary
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EXHIBIT INDEX
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EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
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(a)(1) Offer to Purchase, dated July 12, 1996. ...................................
(a)(2) Letter of Transmittal. ....................................................
(a)(3) Notice of Guaranteed Delivery. ............................................
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees. .................................................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees. .............................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9. ......................................................
(a)(7) Summary Advertisement, dated July 12, 1996. ...............................
(a)(8) Press Release, dated July 11, 1996. .......................................
(a)(9) Press Release, dated July 12, 1996. .......................................
(a)(10) Preliminary Solicitation Statement of United Dominion Industries Limited
and Opus Acquisition Corporation to call a Special Meeting of Shareholders
of Commercial Intertech Corp., together with the form of Appointment of
Designated Agents relating thereto (incorporated by reference to the
Schedule 14A filed with the Securities and Exchange Commission on July 12,
1996). ....................................................................
(a)(11) Preliminary Proxy Statement of United Dominion Industries Limited and Opus
Acquisition Corporation relating to a Special Meeting of Shareholders of
Commercial Intertech Corp. pursuant to Section 1701.831 of the Ohio Revised
Code (incorporated by reference to the Schedule 14A filed with the
Securities and Exchange Commission on July 12, 1996). .....................
(b)(1) Credit Agreement, dated June 20, 1996, among Parent and the other banks and
financial institutions listed therein (incorporated by reference to Exhibit
10.2(a) of Parent's Current Report on Form 8-K, filed with the Securities
and Exchange Commission on July 12, 1996). ................................
(b)(2) Commitment Letter dated July 11, 1996 between the Royal Bank of Canada and
Parent. ...................................................................
(g) Complaint in United Dominion Industries Limited et. al. v. Commercial
Intertech Corp. et. al., filed in the United States District Court for the
Southern District of Ohio, Eastern Division on July 11, 1996. .............
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OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
(including the associated preferred share purchase rights)
OF
COMMERCIAL INTERTECH CORP.
AT
$27 NET PER SHARE
BY
OPUS ACQUISITION CORPORATION
an indirect wholly owned subsidiary of
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 8, 1996, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED, AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, A
NUMBER OF COMMON SHARES, PAR VALUE $1.00 PER SHARE ("COMMON SHARES"), OF
COMMERCIAL INTERTECH CORP. (THE "COMPANY"), WHICH, WHEN ADDED TO THE COMMON
SHARES BENEFICIALLY OWNED BY OPUS ACQUISITION CORPORATION (THE "PURCHASER") AND
ITS AFFILIATES, CONSTITUTES AT LEAST TWO-THIRDS OF THE TOTAL VOTING POWER OF ALL
SHARES OF CAPITAL STOCK OF THE COMPANY OUTSTANDING ON A FULLY DILUTED BASIS ON
THE DATE OF PURCHASE, (2) THE RIGHTS (AS DEFINED HEREIN) HAVING BEEN REDEEMED BY
THE BOARD OF DIRECTORS OF THE COMPANY OR THE PURCHASER BEING SATISFIED, IN ITS
SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER (AS DEFINED HEREIN), (3) THE
SUPERMAJORITY VOTE REQUIREMENT (AS DEFINED HEREIN) HAVING BEEN ELIMINATED FROM
THE AMENDED ARTICLES OF INCORPORATION OF THE COMPANY OR THE PURCHASER BEING
OTHERWISE SATISFIED, IN ITS SOLE DISCRETION, THAT THE SUPERMAJORITY VOTE
REQUIREMENT IS NOT APPLICABLE TO THE PROPOSED MERGER, (4) THE ACQUISITION OF
COMMON SHARES PURSUANT TO THE OFFER BEING AUTHORIZED BY THE SHAREHOLDERS OF THE
COMPANY PURSUANT TO THE OHIO CONTROL SHARE ACQUISITION LAW (AS DEFINED HEREIN)
OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE OHIO CONTROL
SHARE ACQUISITION LAW IS INVALID OR INAPPLICABLE TO SUCH ACQUISITION AND (5) THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RESTRICTIONS
CONTAINED IN THE OHIO BUSINESS COMBINATION LAW (AS DEFINED HEREIN) WILL NOT
APPLY TO THE ACQUISITION OF COMMON SHARES PURSUANT TO THE OFFER OR TO THE
PROPOSED MERGER. SEE THE INTRODUCTION AND SECTIONS 14 AND 15. THE OFFER IS NOT
CONDITIONED ON THE RECEIPT OF FINANCING.
------------------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Common Shares (and the associated Rights) should either (i) complete and sign
the Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal, have such shareholder's signature
thereon guaranteed as and if required by Instruction 1 to the Letter of
Transmittal, mail or deliver the Letter of Transmittal (or such facsimile) and
any other required documents to the Depositary (as defined herein) and either
deliver the certificates for such Common Shares (and, if separate, the
certificates representing the associated Rights) to the Depositary along with
the Letter of Transmittal (or facsimile) or deliver such Common Shares (and
Rights) pursuant to the procedure for book-entry transfer set forth in Section 2
or (ii) request such shareholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such shareholder. A
shareholder having Common Shares (and Rights) registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if such
shareholder desires to tender such Common Shares (and Rights).
Unless and until the Purchaser declares that the Rights Condition (as
defined herein) is satisfied, holders of Common Shares will be required to
tender one Right for each Common Share tendered in order to effect a valid
tender of such Common Share. If the Distribution Date (as defined herein) does
not occur prior to the Expiration Date (as defined herein), a tender of Common
Shares will also constitute a tender of the associated Rights. If the
Distribution Date occurs prior to the Expiration Date, the procedures set forth
in Section 2 with respect to the separate delivery of certificates evidencing
the Rights must be followed to effect a valid tender.
If a shareholder desires to tender Common Shares (and Rights) and such
shareholder's certificates for Common Shares (and, if separate, certificates for
Rights) are not immediately available or the procedure for book-entry transfer
cannot be completed on a timely basis, or time will not permit all required
documents to reach the Depositary prior to the Expiration Date, such
shareholder's tender may be effected by following the procedure for guaranteed
delivery set forth in Section 2.
Questions and requests for assistance may be directed to Schroder Wertheim &
Co. Incorporated, the Dealer Manager, or to MacKenzie Partners, Inc., the
Information Agent, at their respective addresses and telephone numbers set forth
on the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other
related materials may be obtained from the Information Agent or from brokers,
dealers, commercial banks and trust companies.
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The Dealer Manager for the Offer is:
SCHRODER WERTHEIM & CO.
--------------------------------------------------
INCORPORATED
July 12, 1996
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TABLE OF CONTENTS
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Introduction.......................................................... 3
Section 1. Terms of the Offer.................................................... 8
Section 2. Procedures for Tendering Common Shares................................ 10
Section 3. Withdrawal Rights..................................................... 14
Section 4. Acceptance for Payment and Payment.................................... 15
Section 5. Certain Federal Income Tax Consequences............................... 16
Section 6. Price Range of the Common Shares; Dividends on the Common Shares...... 17
Section 7. Effect of the Offer on the Market for the Shares; Exchange Act
Registration; Margin Regulations...................................... 17
Section 8. Certain Information Concerning the Company............................ 19
Section 9 Certain Information Concerning Parent and the Purchaser............... 25
Section 10. Source and Amount of Funds............................................ 26
Section 11. Background of the Offer............................................... 27
Section 12. Purpose of the Offer; Plans for the Company........................... 30
Section 13. Dividends and Distributions........................................... 33
Section 14. Certain Conditions of the Offer....................................... 34
Section 15. Certain Legal Matters................................................. 38
Section 16. Fees and Expenses..................................................... 44
Section 17. Miscellaneous......................................................... 45
Schedule I -- Directors and Executive Officers of Parent and the Purchaser.......... S-1
Schedule II -- Parent Purchases of Shares............................................ S-5
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To the Holders of Shares of
COMMERCIAL INTERTECH CORP.:
INTRODUCTION
Opus Acquisition Corporation, a Delaware corporation (the "Purchaser") and
an indirect wholly owned subsidiary of United Dominion Industries Limited, a
Canadian corporation ("Parent"), hereby offers to purchase all outstanding
common shares, par value $1.00 per share (the "Common Shares"), together with
(unless and until the Purchaser declares that the Rights Condition (as defined
below) is satisfied) any associated preferred share purchase rights (the
"Rights") issued pursuant to the Rights Agreement (the "Rights Agreement")
between the Company and the Mahoning National Bank of Youngstown, as rights
agent (the "Rights Agent"), including Common Shares issuable upon conversion of
the outstanding ESOP Convertible Preferred Shares Series B, without par value
(the "Preferred Shares" and, together with the Common Shares, the "Shares"), of
Commercial Intertech Corp., an Ohio corporation (the "Company"), at a price of
$27 per Common Share (and associated Right), net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). Unless the context otherwise requires, all references to Common Shares
shall include the Rights and all references to the Rights shall include all
benefits that may inure to holders of the Rights pursuant to the Rights
Agreement.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Common Shares pursuant to
the Offer. The Purchaser will pay all charges and expenses of Schroder Wertheim
& Co. Incorporated ("Schroder Wertheim"), as Dealer Manager (in such capacity,
the "Dealer Manager"), IBJ Schroder Bank & Trust Company, as Depositary (the
"Depositary"), and MacKenzie Partners, Inc., as Information Agent (the
"Information Agent"), incurred in connection with the Offer. See Section 16.
PARTICIPANTS IN THE COMPANY'S EMPLOYEE STOCK OWNERSHIP PLAN AND RETIREMENT
STOCK OWNERSHIP AND SAVINGS PLAN (THE "ESOPS") DESIRING TO TENDER COMMON SHARES
ISSUABLE UPON CONVERSION OF PREFERRED SHARES HELD ON THEIR BEHALF SHOULD SO
INSTRUCT THE ESOP TRUSTEE BY COMPLETING THE FORM WHICH WILL BE PROVIDED TO
PARTICIPANTS FOR THAT PURPOSE. ESOP PARTICIPANTS CANNOT TENDER SHARES ALLOCATED
TO THEIR ESOP ACCOUNTS BY EXECUTING THE LETTER OF TRANSMITTAL.
The purpose of the Offer and the Proposed Merger (as defined below) is to
enable the Purchaser to acquire control of, and the entire equity interest in,
the Company. The Offer, as the first step in the acquisition of the Company, is
intended to facilitate the acquisition of all outstanding Shares. Parent intends
to continue to seek to negotiate with the Company with respect to the
acquisition of the Company by Parent. Parent currently intends, as soon as
practicable following the consummation of the Offer, to seek to have the Company
consummate a merger or similar business combination with the Purchaser (the
"Proposed Merger"), pursuant to which each then outstanding Share other than
Common Shares owned by the Purchaser or Parent, Shares held in the treasury of
the Company and Common Shares owned by shareholders who perfect their
dissenters' rights under the Ohio Revised Code (the "ORC"), would be converted
into the right to receive an amount in cash equal (i) in the case of the Common
Shares, to the price per Common Share paid pursuant to the Offer and (ii) in the
case of the Preferred Shares, to such price per Common Share multiplied by 1.235
(the conversion ratio for the Preferred Shares), and the Company would become an
indirect wholly owned subsidiary of Parent. See Sections 11 and 12.
Parent intends to continue to seek to negotiate with the Company with
respect to the acquisition of the Company. If such negotiations result in a
definitive merger agreement between the Company and Parent, certain material
terms of the Offer may change and Parent would not proceed with any solicitation
with regard to the Special Meeting referred to below. Accordingly, such
negotiations could result in, among other things, termination or amendment of
the Offer and/or submission of a different acquisition proposal to the Company's
shareholders for their approval.
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In order to increase the likelihood that the conditions to the Offer will
be satisfied and that the Company and the Purchaser will enter into the Proposed
Merger, Parent and the Purchaser have taken steps to commence a solicitation of
appointments of designated agents ("agent designations") to call a special
meeting of the Company's shareholders (the "Special Meeting") at which, among
other things, Parent and the Purchaser will propose that the holders of Shares
(i) adopt a resolution calling upon the persons currently constituting the
Company's board of directors (the "Company's Board") to redeem the Rights prior
to their removal as directors, (ii) remove all of the incumbent directors of the
Company, (iii) amend the Code of Regulations of the Company (the "Regulations")
to reduce the authorized number of directors of the Company from twelve to three
and to provide that the Company's Board shall not be classified and that the
directors shall serve as a single class, (iv) elect three nominees of the
Purchaser as directors of the Company to fill the vacancies created thereby
(such new board of directors being referred to herein as the "New Board"), (v)
amend the Company's Amended Articles of Incorporation (the "Articles") to repeal
Article SIXTH thereof (the "Supermajority Vote Requirement") (upon the unanimous
recommendation of the New Board) and (vi) if the Control Share Condition (as
defined herein) shall not theretofore have been satisfied, amend the Regulations
to provide that Section 1701.831 of the ORC (the "Ohio Control Share Acquisition
Law") shall not apply to acquisitions of Shares. The nominees of the Purchaser
will, if elected at the Special Meeting, and subject to their fiduciary duties,
be committed to take such actions as may be required to facilitate prompt
consummation of the Offer and the Proposed Merger.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR AGENT
DESIGNATIONS FOR ANY MEETING OF THE COMPANY'S SHAREHOLDERS. ANY SUCH
SOLICITATION WILL BE MADE ONLY PURSUANT TO PROXY MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
(THE "EXCHANGE ACT"), AND THE RULES AND REGULATIONS THEREUNDER.
CERTAIN CONDITIONS TO THE OFFER
The Offer is subject to the fulfillment of a number of conditions
including, without limitation, the following:
MINIMUM CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THERE
BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO EXPIRATION OF THE
OFFER A NUMBER OF COMMON SHARES (THE "MINIMUM NUMBER OF SHARES") WHICH, WHEN
ADDED TO THE COMMON SHARES BENEFICIALLY OWNED BY THE PURCHASER AND ITS
AFFILIATES, CONSTITUTES AT LEAST TWO-THIRDS OF THE TOTAL VOTING POWER OF ALL
SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION"). For purposes of the Offer, "on a fully diluted basis"
means, as of any date, the number of Shares outstanding, together with Shares
that the Company is then required to issue pursuant to obligations outstanding
at that date under employee stock option or other benefit plans or otherwise
(assuming all such options are then exercisable).
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1996 (the "Company 10-Q"), there were 15,497,367 Common Shares
outstanding as of June 1, 1996 and 1,039,657 Preferred Shares outstanding as of
April 30, 1996. According to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995 (the "Company 10-K"), on October 31, 1995,
there were 1,413,600 Common Shares reserved for issuance under the Company's
employee stock option and award plans (with 617,051 options outstanding
thereunder) and 1,301,082 Common Shares reserved for conversion of the Preferred
Shares. The Preferred Shares vote together with the Common Shares as a single
class. The Company 10-K states that each Preferred Share is convertible into
1.235 Common Shares (for a total of 1,283,976 Common Shares issuable upon
conversion of all Preferred Shares) and is entitled to one and one-half votes.
The Articles, however, provide that each Preferred Share is entitled to one
vote. See Section 15.
Based on the foregoing, assuming exercise of all options and assuming that
no additional Shares or options were issued or granted since the respective
dates for which information has been provided, there would be 17,398,394 Common
Shares outstanding on a fully diluted basis entitled to 17,673,904 votes
(assuming each Preferred Share is entitled to one and one-half votes). See
Section 15. Parent owns 1,000 Common
4
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Shares beneficially, 500 of which are held of record by Parent and 500 of which
are held of record by the Purchaser. Thus, based on the foregoing assumptions,
11,781,603 Common Shares would be the Minimum Number of Shares. However, the
actual Minimum Number of Shares will depend upon the facts as they exist on the
date of purchase.
RIGHTS CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THE RIGHTS
HAVING BEEN REDEEMED BY THE COMPANY'S BOARD OR THE PURCHASER BEING SATISFIED, IN
ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER (THE "RIGHTS CONDITION").
According to the Company 10-K and the Company's Registration Statement on
Form 8-A dated November 30, 1989 (the "Company 8-A"), in November 1989 the
Company adopted the Rights Agreement and declared a dividend of one Right for
each outstanding Common Share. The Company 10-K states that each Right entitles
the registered holder thereof to purchase one one-hundredth of a Series A
Participating Preferred Share at a purchase price of $75, and that the Rights
will become operative in the event that certain change in control events occur.
The Rights are described in the Company 8-A, and such description of the Rights
is summarized in Section 8.
According to the Company 8-A, the Rights Agreement provides that, until the
close of business on the Distribution Date (as defined in Section 8), the Rights
will be evidenced by the certificates for Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares will also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented by such certificates. The Rights Agreement further provides that, as
soon as practicable following the Distribution Date, separate certificates
representing the Rights are to be mailed by the Company or the Rights Agent to
holders of record of Common Shares as of the close of business on the
Distribution Date.
Based on publicly available information, the Purchaser believes that, as of
the date hereof, the Rights are not exercisable, certificates for Rights have
not been issued and the Rights are evidenced by the certificates for Common
Shares. The Purchaser believes that, as a result of the Purchaser's commencement
of the Offer on the date hereof, the Distribution Date may occur as early as
July 26, 1996, unless prior to such date the Company's Board defers the
Distribution Date, redeems the Rights or amends the Rights Agreement to make the
Rights inapplicable to the Offer and the Proposed Merger.
Unless the Rights Condition is satisfied, shareholders will be required to
tender one Right for each Common Share tendered in order to effect a valid
tender of Common Shares in accordance with the procedures set forth in Section
2. Unless the Distribution Date occurs prior to the Expiration Date, a tender of
Common Shares will also constitute a tender of the associated Rights.
According to the Company 8-A, the Rights Agreement provides that, at any
time prior to the close of business on the earlier of (a) the date that an
Acquiring Person (as defined in Section 8) becomes such and (b) the Expiration
Date (as defined in Section 8), the Company's Board may redeem (except as
provided in the Rights Agreement) the Rights in whole, but not in part, at a
price of $.01 per Right.
According to the Company 8-A, the Rights Agreement provides that, in the
event that a majority of the Company's Board is comprised of (i) persons elected
at a meeting of shareholders or by shareholder action by written consent who
were not nominated by the Company's Board in office immediately prior to such
meeting or action by written consent and/or (ii) successors of such persons
elected to the Company's Board for the purpose of either facilitating a
transaction with an Interested Person (as defined in Section 8) or circumventing
directly or indirectly the provisions of the Rights Agreement, then for a period
of 180 days following the effectiveness of such action (a) the Rights may not be
redeemed if such redemption is reasonably likely to have the purpose of
facilitating a transaction with an Interested Person or if during such 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, (b) 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
and (c) the Company may not exclude from the definition of an Acquiring Person
any Interested Person who acquires 20% or more
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of the outstanding Common Shares or deem any offer by an Interested Person to be
a Permitted Offer (as defined in Section 8) (the "180-Day Restrictions").
Accordingly, under the Rights Agreement, the Purchaser may be unable or
unwilling to purchase Common Shares in the Offer, and Parent and the Purchaser
may be unable or unwilling to consummate the Proposed Merger, for a period of
180 days following the election of nominees of the Purchaser to the Company's
Board at the Special Meeting unless the persons currently constituting the
Company's Board redeem the Rights (or take other action under the Rights
Agreement to make the Rights inapplicable to the Offer and the Proposed Merger).
Under the Rights Agreement, this 180-day waiting period would take effect even
if the current Board of Directors of the Company was removed, and the New Board
consisting of the Purchaser's designees was elected at the Special Meeting and
the New Board thereafter voted to redeem the Rights.
Parent and the Purchaser believe that under the circumstances of the Offer,
and under applicable law, the Company's Board has a fiduciary obligation to
redeem the Rights (or take other action under the Rights Agreement to make the
Rights and the 180-Day Restrictions inapplicable to the Offer and the Proposed
Merger), and Parent and the Purchaser are hereby requesting that the Company's
Board do so. Parent and the Purchaser intend to propose that the holders of
Shares adopt a resolution at the Special Meeting calling on the persons
currently constituting the Company's Board to redeem the Rights prior to their
removal as directors (for which removal Parent and the Purchaser also intend to
propose a resolution for shareholder approval subsequently at the Special
Meeting). However, there can be no assurance that the Company's Board will
redeem the Rights (or amend the Rights Agreement). See Section 15.
Redemption of the Rights (or an amendment of the Rights Agreement which the
Purchaser is satisfied, in its sole discretion, makes the Rights inapplicable to
the Offer and the Proposed Merger) would satisfy the Rights Condition.
CONTROL SHARE CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THE
ACQUISITION OF COMMON SHARES PURSUANT TO THE OFFER BY THE PURCHASER BEING
AUTHORIZED BY THE SHAREHOLDERS OF THE COMPANY PURSUANT TO THE OHIO CONTROL SHARE
ACQUISITION LAW AT A SPECIAL MEETING OF SHAREHOLDERS OF THE COMPANY (THE "OHIO
CONTROL SHARE ACQUISITION MEETING") DULY AND VALIDLY CALLED AND HELD IN
ACCORDANCE WITH THE OHIO CONTROL SHARE ACQUISITION LAW, OR THE PURCHASER BEING
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
OFFER (THE "CONTROL SHARE CONDITION").
Under the Ohio Control Share Acquisition Law, unless a corporation's
articles of incorporation or regulations otherwise provide, any "control share
acquisition" of an "issuing public corporation" (such as the Company) may be
made only with the prior authorization of its shareholders in accordance with
the Ohio Control Share Acquisition Law. Neither the Articles nor the Regulations
currently contains a provision by which the Company "opts out" of the Ohio
Control Share Acquisition Law. However, Parent and the Purchaser intend to
solicit from the Company's shareholders sufficient agent designations for the
call of a Special Meeting at which, among other things, Parent and the Purchaser
may propose that, if the Control Share Condition shall not have theretofore been
satisfied, the Regulations be amended to provide that the Ohio Control Share
Acquisition Law does not apply to "control share acquisitions" of Common Shares.
Unless and until such time as the Articles or the Regulations are amended
to include such an "opt out" provision, the Ohio Control Share Acquisition Law
requires shareholder approval of any proposed "control share acquisition" of the
Company. A "control share acquisition" is the acquisition, directly or
indirectly, by any person of control in respect of shares that entitles such
person to exercise or direct the exercise of 20% or more of the voting power in
the election of directors. A control share acquisition must be approved in
advance (i) by the holders of at least a majority of the voting power of the
corporation in the election of directors represented at an Ohio Control Share
Acquisition Meeting at which a quorum is present and (ii) by the holders of a
majority of such voting power excluding the voting power of shares owned by the
acquiring shareholder and certain other "Interested Shares" (as defined in
Section 15). The Ohio Control Share Acquisition Law provides that a quorum shall
be deemed to be present at the Ohio Control Share Acquisition Meeting if at
least a majority of the voting power of the Shares, and a majority of the voting
power of the
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Shares excluding the voting power of "Interested Shares," are represented at
such meeting in person or by proxy.
Under the Ohio Control Share Acquisition Law, the Company must call the
Ohio Control Share Acquisition Meeting to consider the authorization of an
acquisition of Common Shares covered by the Ohio Control Share Acquisition Law
no later than 10 days, and it must be held no later than 50 days, following its
receipt of an "acquiring person statement" from the acquiring person. However,
the acquiring person may request, at the time of delivery of the acquiring
person statement, that the Ohio Control Share Acquisition Meeting not be held
sooner than 30 days after receipt by the Company of such statement.
Without waiving their right to challenge the validity of all or any part of
the Ohio Control Share Acquisition Law or to seek an amendment to the
Regulations opting out of the Ohio Control Share Acquisition Law, and reserving
their right to take actions inconsistent with the applicability of the Ohio
Control Share Acquisition Law, Parent and the Purchaser delivered to the Company
on July 12, 1996 an acquiring person statement relating to the Offer. Parent and
the Purchaser have requested that the Ohio Control Share Acquisition Meeting not
be held for at least 30 days after the receipt of the acquiring person statement
by the Company. Accordingly, the Ohio Control Share Acquisition Meeting must be
held no earlier than August 11, 1996 and no later than August 31, 1996. See
Section 15 for a more detailed description of the Ohio Control Share Acquisition
Law and a description of certain litigation brought by Parent and the Purchaser
relating to the Ohio Control Share Acquisition Law.
Although Parent and the Purchaser have taken the foregoing actions pursuant
to the Ohio Control Share Acquisition Law with respect to the matters to be
considered at the Ohio Control Share Acquisition Meeting and have described
their purposes and plans with respect thereto in this Offer to Purchase, in
order to comply with the requirements of the Exchange Act, Parent and the
Purchaser are not, as of the date hereof, soliciting proxies with respect to the
proposed approval of the acquisition of Common Shares pursuant to the Offer at
the Ohio Control Share Acquisition Meeting. Parent and the Purchaser presently
intend, however, to solicit proxies from the shareholders of the Company with
respect to the Ohio Control Share Acquisition Meeting (unless the Purchaser is
satisfied that the provisions of the Ohio Control Share Acquisition Law are
invalid or are not applicable to the acquisition of Common Shares pursuant to
the Offer).
BUSINESS COMBINATION CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED
UPON THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE
RESTRICTIONS CONTAINED IN CHAPTER 1704 OF THE ORC (THE "OHIO BUSINESS
COMBINATION LAW") WILL NOT APPLY TO THE ACQUISITION OF COMMON SHARES PURSUANT TO
THE OFFER OR TO THE PROPOSED MERGER (THE "BUSINESS COMBINATION CONDITION").
The Ohio Business Combination Law prohibits certain business 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. See Section 15.
Parent and the Purchaser are hereby requesting that the Company's Board
take appropriate action so that the Ohio Business Combination Law is not
applicable to the acquisition of Common Shares pursuant to the Offer or the
Proposed Merger. There can be no assurance that the Company's Board will do so.
In the event that the Company's Board fails to do so prior to the intended date
of the consummation of the Offer, the Purchaser expects its nominees to the
Company's Board, if elected at the Special Meeting, and subject to their
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<PAGE> 8
fiduciary duties, to take such appropriate action as shall result in the
satisfaction of the Business Combination Condition.
ARTICLES AMENDMENT CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED
UPON THE AMENDMENT OF THE ARTICLES TO REPEAL ARTICLE SIXTH (THE SUPERMAJORITY
VOTE REQUIREMENT) OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT
THE PROVISIONS OF THE SUPERMAJORITY VOTE REQUIREMENT WILL NOT APPLY TO THE
PROPOSED MERGER (THE "ARTICLES AMENDMENT CONDITION").
The Supermajority Vote Requirement requires that certain business
combinations, such as the Proposed Merger, between the Company and any person
that, directly or indirectly, is the beneficial owner of 30% or more of the
outstanding voting power of the Company be approved by 95% of the outstanding
Shares unless certain "fair price" and other provisions are satisfied. The
Supermajority Vote Requirement may be amended only by the affirmative vote of
95% of the outstanding Shares, or by the affirmative vote of two-thirds of the
outstanding Shares upon the unanimous recommendation of the "continuing
directors" of the Company (who were (i) elected as directors by the Company's
public shareholders prior to the time the other party to the transaction
acquired in excess of 10% of the stock of the Company entitled to vote in the
election of directors or (ii) recommended to succeed any "continuing directors"
by a majority of "continuing directors"). See Section 15.
Parent and the Purchaser are hereby requesting that the Company's Board
take appropriate action to unanimously recommend to the Company's shareholders
the repeal of the Supermajority Vote Requirement so that the Supermajority Vote
Requirement is not applicable to the Proposed Merger. There can be no assurance
that the Company's Board will do so. In the event that the Company's Board fails
to do so prior to the intended date of the consummation of the Offer, the
Purchaser expects its nominees to the Company's Board, if all such nominees are
elected at the Special Meeting, and subject to their fiduciary duties, to take
such appropriate action as shall result in the satisfaction of the Articles
Amendment Condition.
Certain other conditions to the Offer are described in Section 14. The
Purchaser expressly reserves the right, in its sole discretion, to waive any one
or more of the conditions to the Offer. See Sections 14 and 15.
The Offer is not conditioned on the receipt of financing.
In the event the Offer is not consummated, Parent and the Purchaser intend
to explore all options which may be available to them at such time, which may
include, without limitation, the acquisition of Common Shares through open
market purchases, privately negotiated transactions, another tender offer or
exchange offer or otherwise upon such terms and at such prices as they shall
determine, which may be more or less than the price to be paid pursuant to the
Offer. Parent and the Purchaser also reserve the right to dispose of Common
Shares.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
SECTION 1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Common Shares
validly tendered prior to the Expiration Date and not withdrawn in accordance
with the procedures set forth in Section 3 on or prior to the Expiration Date.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Thursday, August 8, 1996, unless and until the Purchaser, in its sole
discretion, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by the Purchaser, will expire. In light
of the time periods required for the fulfillment of certain conditions of the
Offer, Parent and the Purchaser expect that the Offer may be extended from time
to time as described below. However, there can be no assurance that the
Purchaser will exercise its right to extend the Offer.
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<PAGE> 9
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF THE
MINIMUM CONDITION, THE RIGHTS CONDITION, THE CONTROL SHARE CONDITION, THE
BUSINESS COMBINATION CONDITION, THE ARTICLES AMENDMENT CONDITION, THE EXPIRATION
OR TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR
ACT") AND THE SATISFACTION OF THE OTHER CONDITIONS SET FORTH IN SECTION 14. THE
OFFER IS NOT CONDITIONED ON THE RECEIPT OF FINANCING.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), the Purchaser reserves the right, in its
sole discretion, at any time and from time to time, and regardless of whether or
not any of the events set forth in Section 14 hereof shall have occurred or
shall have been determined by the Purchaser to have occurred, to (a) extend the
period of time during which the Offer is open, and thereby delay acceptance for
payment of and the payment for any Common Shares, by giving oral or written
notice of such extension and delay to the Depositary and (b) waive any condition
or amend the Offer in any other respect by giving oral or written notice of such
waiver or amendment to the Depositary. During any such extension, all Common
Shares previously tendered and not properly withdrawn will remain subject to the
Offer, subject to the right of a tendering shareholder to withdraw such
shareholder's Common Shares. See Section 3. UNDER NO CIRCUMSTANCES WILL INTEREST
BE PAID ON THE PURCHASE PRICE FOR TENDERED COMMON SHARES AND RIGHTS, WHETHER OR
NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If by the Expiration Date any or all of the conditions to the Offer have
not been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated), subject to the applicable rules and regulations of the Commission,
to (a) terminate the Offer and not accept for payment or pay for any Common
Shares and return all tendered Common Shares to tendering shareholders, (b)
waive all the unsatisfied conditions and accept for payment and pay for all
Common Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn, (c) extend the Offer and, subject to the right of shareholders to
withdraw Common Shares until the Expiration Date, retain the Common Shares that
have been tendered during the period or periods for which the Offer is extended
or (d) amend the Offer.
The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights pursuant to Section 14. There can be no
assurance that the Purchaser will exercise its right to extend the Offer. Any
extension, amendment or termination will be followed as promptly as practicable
by public announcement. In the case of an extension, Rule 14e-l(d) under the
Exchange Act requires that the announcement be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date, or the first opening of the New York Stock Exchange (the
"NYSE") on the next business day after the previously scheduled Expiration Date,
in accordance with the public announcement requirements of Rule 14d-4(c) under
the Exchange Act. Subject to applicable law (including Rules 14d-4(c) and
14d-6(d) under the Exchange Act, which require that any material change in the
information published, sent or given to shareholders in connection with the
Offer be promptly disseminated to shareholders in a manner reasonably designed
to inform shareholders of such change), and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Exchange Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance for
payment of Common Shares) for Common Shares or it is unable to pay for Common
Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer, the Depositary may retain tendered Common
Shares on behalf of the Purchaser, and such Common Shares may not be withdrawn
except to the extent tendering shareholders are entitled to withdrawal rights as
described in Section 3. However, the ability of the Purchaser to delay the
payment for Common Shares that the Purchaser has accepted for payment is limited
by Rule 14e-1(c) under
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<PAGE> 10
the Exchange Act, which requires that a bidder pay the consideration offered or
return the securities tendered by or on behalf of holders of securities promptly
after the termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In the
Commission's view, an offer should generally remain open for a minimum of five
business days from the date a material change is first published, sent or given
to shareholders. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought, a minimum period
of 10 business days is generally required to allow for adequate dissemination to
shareholders and investor response. Accordingly, if prior to the Expiration
Date, the Purchaser decreases the number of Common Shares being sought, or
increases or decreases the consideration offered pursuant to the Offer, and if
the Offer is scheduled to expire at any time earlier than the period ending on
the tenth business day from the date that notice of such increase or decrease is
first published, sent or given to holders of Shares, the Offer will be extended
at least until the expiration of such 10 business day period.
Requests are being made to the Company pursuant to Rule 14d-5 of the
Exchange Act and Section 1701.37 of the ORC for the use of the Company's
shareholder lists and security position listings for the purpose of, among other
things, disseminating the Offer to holders of Shares and communicating with
shareholders regarding agent designations and proxy solicitations in connection
with the Special Meeting. This Offer to Purchase, the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares, and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists, or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares, by the Purchaser following receipt
of such lists or listings from the Company, or by the Company if it so elects.
SECTION 2. PROCEDURES FOR TENDERING COMMON SHARES
Valid Tender. For a shareholder validly to tender Common Shares and Rights
pursuant to the Offer, either (a) a properly completed and duly executed Letter
of Transmittal, together with any required signature guarantees, or, in the case
of a book-entry transfer, an Agent's Message (as defined herein), and any other
required documents, must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date and either certificates for tendered Common Shares and Rights must be
received by the Depositary at one of such addresses or such Common Shares and
Rights must be delivered pursuant to the procedures for book-entry transfer set
forth below (and a Book-Entry Confirmation (as defined below) received by the
Depositary), in each case prior to the Expiration Date, or (b) the tendering
shareholder must comply with the guaranteed delivery procedures set forth below.
Unless the Rights Condition is satisfied, shareholders will be required to
tender one Right for each Common Share tendered in order to effect a valid
tender of Common Shares. Accordingly, shareholders who sell their Rights
separately from their Common Shares and do not otherwise acquire Rights may not
be able to satisfy the requirements of the Offer for a valid tender of Common
Shares. Unless the Distribution Date occurs, a tender of Common Shares will also
constitute a tender of the associated Rights.
If the Distribution Date occurs and certificates representing Rights
("Rights Certificates") are distributed by the Company or the Rights Agent to
holders of Common Shares prior to the time a holder's Common Shares are tendered
pursuant to the Offer, in order for Rights (and the corresponding Common Shares)
to be validly tendered, Rights Certificates representing a number of Rights
equal to the number of Common Shares tendered must be delivered to the
Depositary or, if available, a Book-Entry Confirmation received by the
Depositary with respect thereto. If the Distribution Date occurs and Rights
Certificates are not distributed prior to the time Common Shares are tendered
pursuant to the Offer, Rights may be tendered prior to a
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shareholder receiving Rights Certificates by use of the guaranteed delivery
procedure described below. In any case, a tender of Common Shares constitutes an
agreement by the tendering shareholder to deliver Rights Certificates
representing a number of Rights equal to the number of Common Shares tendered
pursuant to the Offer to the Depositary within three business days after the
date Rights Certificates are distributed. The Purchaser reserves the right to
require that the Depositary receive Rights Certificates, or a Book-Entry
Confirmation, if available, with respect to such Rights, prior to accepting the
related Common Shares for payment pursuant to the Offer if the Distribution Date
occurs prior to the Expiration Date.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Common Shares at The Depository Trust Company, the
Midwest Securities Trust Company and the Philadelphia Depository Trust Company
(the "Book-Entry Transfer Facilities") for purposes of the Offer within two
business days after the date of this Offer to Purchase. Any financial
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry delivery of Common Shares by causing a Book-Entry
Transfer Facility to transfer such Common Shares into the Depositary's account
in accordance with such Book-Entry Transfer Facility's procedures for such
transfer. However, although delivery of Common Shares may be effected through
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
(as defined below), and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering shareholder must comply with the guaranteed delivery procedures
described below.
If the Distribution Date occurs, the Depositary will also make a request to
establish an account with respect to the Rights at each of the Book-Entry
Transfer Facilities, but no assurance can be given that book-entry delivery of
Rights will be available. If book-entry delivery of Rights is available, the
foregoing book-entry transfer procedures will also apply to Rights. If
book-entry delivery of Rights is not available and the Distribution Date occurs,
a tendering shareholder will be required to tender Rights by means of physical
delivery (including with respect to the guaranteed delivery procedures set forth
below) to the Depositary of Rights Certificates (in which event references in
this Offer to Purchase to Book-Entry Confirmations with respect to Rights will
be inapplicable).
The confirmation of a book-entry transfer of Common Shares or Rights into
the Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Common Shares that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF COMMON SHARES, RIGHTS, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER.
COMMON SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
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Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Common Shares) of Common Shares
and Rights tendered therewith and such registered holder has not completed
either the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on the Letter of Transmittal or (b) if such
Common Shares and Rights are tendered for the account of a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (an "Eligible Institution"). In all other
cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Common Shares or Rights are registered in the name of a
person other than the signer of the Letter of Transmittal, or if payment is to
be made or certificates for Common Shares or Rights not tendered or not accepted
for payment are to be returned to a person other than the registered holder of
the certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders appear on the certificates, with the
signatures on the certificates or stock powers guaranteed as described above.
See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Common Shares and
Rights pursuant to the Offer and such shareholder's certificates for Common
Shares or Rights are not immediately available (including because Rights
Certificates have not yet been distributed by the Rights Agent) or the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such shareholder's tender may be effected if all the following conditions
are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, on or prior to the Expiration Date;
and
(iii) the certificates, representing all tendered Common Shares and/or
Rights, in proper form for transfer (or a Book-Entry Confirmation with
respect to all such Common Shares and/or Rights), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents are received
by the Depositary within (a) in the case of Common Shares, three trading
days after the date of execution of such Notice of Guaranteed Delivery or
(b) in the case of Rights, a period ending on the later of (1) three
trading days after the date of execution of such Notice of Guaranteed
Delivery or (2) three business days (as defined above) after the date
Rights Certificates are distributed to shareholders by the Rights Agent. A
"trading day" is any day on which the NYSE is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution and a
representation that the shareholder owns the Common Shares and, if applicable,
Rights tendered within the meaning of, and that the tender of the Common Shares
and, if applicable, Rights effected thereby complies with, Rule 14e-4 under the
Exchange Act, each in the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Common Shares
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Common Shares and, if the Distribution Date
occurs, Rights Certificates for (or a timely Book-Entry Confirmation, if
available, with respect to) the associated Rights, (b) a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and
12
<PAGE> 13
(c) any other documents required by the Letter of Transmittal. Accordingly,
tendering shareholders may be paid at different times depending upon when
certificates for Common Shares (or Rights) or Book-Entry Confirmations with
respect to Common Shares (or Rights, if available) are actually received by the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
OF THE COMMON SHARES AND RIGHTS TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If the Rights Condition is satisfied, the guaranteed delivery procedures
with respect to Rights Certificates and the requirement for the tender of Rights
will no longer apply.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of the Purchaser
and each of them as such shareholder's attorneys-in-fact and proxies in the
manner set forth in the Letter of Transmittal, each with full power of
substitution, to the full extent of such shareholder's rights with respect to
the Common Shares and Rights tendered by such shareholder and accepted for
payment by the Purchaser and with respect to any and all other Common Shares,
Rights or other securities or rights issued or issuable in respect of such
Common Shares and Rights on or after July 11, 1996 (the "Applicable Date"). All
such powers of attorney and proxies will be irrevocable and considered coupled
with an interest in the tendered Common Shares and Rights. Such appointment will
be effective when, and only to the extent that, the Purchaser accepts such
Common Shares and Rights for payment pursuant to the Offer. Upon such acceptance
for payment, all prior powers of attorney, proxies and consents given by such
shareholder with respect to such Common Shares, Rights and other securities or
rights will, without further action, be revoked and no subsequent powers of
attorney, proxies, consents or revocations may be given (and, if given, will not
be deemed effective). The designees of the Purchaser will thereby be empowered
to exercise all voting and other rights with respect to such Common Shares,
Rights and other securities or rights in respect of any annual, special,
adjourned or postponed meeting of the Company's shareholders, actions by written
consent in lieu of any such meeting or otherwise, as they in their sole
discretion deem proper. The Purchaser reserves the right to require that, in
order for Common Shares and Rights to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Common Shares and Rights,
the Purchaser must be able to exercise full voting, consent and other rights
with respect to such Common Shares, Rights and other securities or rights,
including voting at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Common Shares or Rights will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined by
it not to be in proper form or the acceptance for payment of or payment for
which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser
also reserves the absolute right to waive any condition of the Offer or any
defect or irregularity in the tender of any Common Shares or Rights of any
particular shareholder whether or not similar defects or irregularities are
waived in the case of other shareholders. No tender of Common Shares or Rights
will be deemed to have been validly made until all defects or irregularities
relating thereto have been cured or waived. None of the Purchaser, Parent, any
of their affiliates or assigns, the Depositary, the Information Agent, the
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in tenders or incur any liability for failure
to give any such notification. The Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding on all parties.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Common Shares in the Offer must, unless an exemption applies, provide the
Depositary with such shareholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such shareholder is not subject to backup
withholding. If a shareholder does not provide such shareholder's correct TIN or
fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a penalty on such shareholder and the payment of
cash to such shareholder pursuant to the Offer
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<PAGE> 14
may be subject to backup withholding of 31% of the amount of such payment. All
shareholders surrendering Common Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to the Purchaser and the Depositary). Certain
shareholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. Noncorporate
foreign shareholders should complete and sign the main signature form and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 10 to the
Letter of Transmittal.
Other Requirements. The Purchaser's acceptance for payment of Common
Shares and, if applicable, Rights tendered pursuant to any of the procedures
described above will constitute a binding agreement between the tendering
shareholder and the Purchaser upon the terms and subject to the conditions of
the Offer, including the tendering shareholder's representation and warranty
that the shareholder is the holder of the Common Shares (and, if applicable, the
Rights) within the meaning of, and that the tender of the Common Shares and
Rights complies with, Rule 14e-4 under the Exchange Act.
SECTION 3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Common Shares
and Rights pursuant to the Offer are irrevocable. Common Shares and Rights
tendered pursuant to the Offer may be withdrawn pursuant to the procedures set
forth below at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after September 9, 1996. If the Purchaser extends the
Offer, is delayed in its acceptance for payment of Common Shares and Rights or
is unable to purchase Common Shares and Rights validly tendered pursuant to the
Offer for any reason, then without prejudice to the Purchaser's rights under the
Offer, the Depositary may nevertheless, on behalf of the Purchaser, retain
tendered Common Shares and Rights and such Common Shares and Rights may not be
withdrawn except to the extent that tendering shareholders are entitled to
withdrawal rights as described in this Section 3. Any such delay will be
accompanied by an extension of the Offer to the extent required by law. Common
Shares or Rights may not be withdrawn unless the associated Rights or Common
Shares, as the case may be, are also withdrawn. A withdrawal of Common Shares or
Rights will also constitute a withdrawal of the associated Rights or Common
Shares, as the case may be.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Common Shares and Rights
to be withdrawn, the number of Common Shares and Rights to be withdrawn and the
name of the registered holder of the Common Shares and Rights to be withdrawn,
if different from the name of the person who tendered the Common Shares and
Rights. If certificates for Common Shares or Rights have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Common Shares or Rights have been
tendered by an Eligible Institution, the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Common Shares or Rights have
been delivered pursuant to the procedure for book-entry transfer as set forth in
Section 2, any notice of withdrawal must also specify the name and number of the
account at the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Common Shares or Rights and otherwise comply with such Book-Entry
Transfer Facility's procedures.
Withdrawals of tenders of Common Shares or Rights may not be rescinded, and
any Common Shares or Rights properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Common Shares and
Rights may be retendered by again following one of the procedures described in
Section 2 at any time on or prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, Parent, any of their affiliates or assigns, the Depositary,
the Information Agent, the
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<PAGE> 15
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
SECTION 4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Common
Shares validly tendered on or prior to the Expiration Date and not properly
withdrawn in accordance with Section 3 promptly after the Expiration Date. All
questions as to the satisfaction of such terms and conditions will be determined
by the Purchaser, in its sole discretion, whose determination will be final and
binding on all parties. See Sections 1 and 14. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of or payment
for Common Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. See Section 15. Any such delays
will be effected in compliance with Rule 14e-l(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer).
Parent expects to file on July 12, 1996 a Notification and Report Form with
respect to the Offer under the HSR Act. The waiting period under the HSR Act
with respect to the Offer will expire at 11:59 p.m., New York City time, on the
fifteenth calendar day after the date of such filing, unless early termination
of the waiting period is granted. However, the Antitrust Division of the
Department of Justice (the "Antitrust Division") or the Federal Trade Commission
(the "FTC") may extend the waiting period by requesting additional information
or documentary material from Parent. If such a request is made, such waiting
period will expire at 11:59 p.m., New York City time, on the 10th day after
substantial compliance by Parent with such request. Thereafter, the waiting
period may only be extended by court order or with the consent of Parent. See
Section 15 hereof for additional information concerning the HSR Act and the
applicability of the antitrust laws to the Offer.
In all cases, payment for Common Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (a)
certificates for (or a timely Book-Entry Confirmation with respect to) such
Common Shares, and, if the Distribution Date occurs, Rights Certificates for (or
a timely Book-Entry Confirmation, if available, with respect to) the associated
Rights, (b) a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal. The consideration per Common Share paid to any
shareholder pursuant to the Offer will be the highest consideration paid to any
other shareholder of the same class pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Common Shares validly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Common Shares pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Common Shares accepted for payment pursuant
to the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for validly tendering shareholders for the
purpose of receiving payment from the Purchaser and transmitting payment to
tendering shareholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE COMMON SHARES AND RIGHTS TO BE PAID BY THE PURCHASER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making payments
to tendering shareholders, the Purchaser's obligation to make such payment shall
be satisfied and tendering shareholders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance for
payment of Common Shares pursuant to the Offer. The Purchaser will pay any stock
transfer taxes with respect to the transfer and sale to it or its order pursuant
to the Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, as well as any charges and expenses of the Depositary and the
Information Agent.
If the Purchaser is delayed in its acceptance for payment of or payment for
Common Shares or is unable to accept for payment or pay for Common Shares
pursuant to the Offer for any reason, then, without prejudice
15
<PAGE> 16
to the Purchaser's rights under the Offer (but subject to compliance with Rule
14e-1(c) under the Exchange Act), the Depositary may, nevertheless, on behalf of
the Purchaser, retain tendered Common Shares, and such Common Shares may not be
withdrawn except to the extent tendering shareholders are entitled to exercise,
and duly exercise, withdrawal rights as described in Section 3.
If any tendered Common Shares are not purchased pursuant to the Offer for
any reason, certificates for any such unpurchased Common Shares (and the
associated Rights) will be returned, without expense to the tendering
shareholder (or, in the case of Common Shares or Rights delivered by book-entry
transfer of such Common Shares or Rights into the Depositary's account at a
Book-Entry Transfer Facility pursuant to the procedure set forth in Section 2,
such Common Shares or Rights will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility), as promptly as practicable after the
expiration, termination or withdrawal of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Common Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering shareholders to receive payment for Common Shares validly
tendered and accepted for payment pursuant to the Offer.
SECTION 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Proposed Merger will be a
taxable transaction for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for federal income tax purposes, a tendering shareholder will recognize gain or
loss equal to the difference between the amount of cash received by the
shareholder pursuant to the Offer or the Proposed Merger and the aggregate tax
basis in the Common Shares (together with the Rights) tendered by the
shareholder and purchased pursuant to the Offer or converted in the Proposed
Merger, as the case may be. Gain or loss will be calculated separately for each
block (i.e., Common Shares acquired at the same time in a single transaction) of
Common Shares and Rights tendered and purchased pursuant to the Offer or
converted in the Proposed Merger, as the case may be.
If Common Shares (and associated Rights) are held by a shareholder as
capital assets, gain or loss recognized by the shareholder will be capital gain
or loss, which will be long-term capital gain or loss if the shareholder's
holding period for the Common Shares (and associated Rights) exceeds one year.
Under present law, long-term capital gains recognized by an individual
shareholder will generally be taxed at a maximum federal marginal tax rate of
28%, and long-term capital gains recognized by a corporate shareholder will be
taxed at a maximum federal marginal tax rate of 35%.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Common Shares may be subject to 31% backup withholding unless the
shareholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN, or unless an exemption applies. A
shareholder that does not furnish its TIN may be subject to a penalty imposed by
the IRS. See Section 2 ("Procedures For Tendering Common Shares--Backup
Withholding").
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the shareholder upon filing an appropriate income tax return.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY
NOT BE APPLICABLE WITH RESPECT TO COMMON SHARES (AND ASSOCIATED RIGHTS) RECEIVED
PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION
OR WITH RESPECT TO HOLDERS OF COMMON
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<PAGE> 17
SHARES (AND ASSOCIATED RIGHTS) WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER
THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF
COMMON SHARES (AND ASSOCIATED RIGHTS) IN LIGHT OF INDIVIDUAL CIRCUMSTANCES.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE PROPOSED
MERGER.
SECTION 6. PRICE RANGE OF COMMON SHARES; DIVIDENDS ON THE COMMON SHARES
The Common Shares currently are listed and traded on the NYSE under the
symbol TEC. The following table sets forth the high and low sales prices per
Common Share together with the per Common Share dividends paid by the Company
for the periods indicated as reported in publicly available sources. All amounts
have been restated for the effects of a three-for-two stock split effective
September 1, 1994.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
----- ----- ---------
<S> <C> <C> <C>
Fiscal Year Ended October 31, 1994:
First quarter................................................ $14 $ 12 $.113
Second quarter............................................... 16 12 2/3 .114
Third quarter................................................ 195/6 145/6 .125
Fourth quarter............................................... 205/12 17 3/8 .125
Fiscal Year Ended October 31, 1995:
First quarter................................................ 19 5/8 15 3/4 .125
Second quarter............................................... 22 3/8 18 3/4 .125
Third quarter................................................ 22 3/4 15 7/8 .125
Fourth quarter............................................... 20 3/4 16 7/8 .135
Fiscal Year Ending October 31, 1996:
First quarter................................................ 19 1/8 16 5/8 .135
Second quarter............................................... 19 3/4 18 1/4 .135
Third quarter (through July 11).............................. 28 7/8 18
</TABLE>
On June 27, 1996, the trading day on which Parent announced after the close
of NYSE trading its proposal to acquire the Company for $27 per Common Share in
cash, the last reported sales price of the Common Shares on the NYSE was
$19 1/8. On July 10, 1996, the last full trading day before Parent's
announcement that it intended to commence the Offer, the closing sales price for
the Common Shares on the NYSE was $27 3/8 per share. SHAREHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE COMMON SHARES.
According to the Company 10-K, by their terms, each Preferred Share pays
dividends of $1.97625 per year and is convertible into 1.235 Common Shares. No
price quotations are available for the Preferred Shares.
Upon the occurrence of the Distribution Date, the Rights are to detach, and
may trade separately, from the Common Shares. See Section 8. If the Distribution
Date occurs and the Rights begin to trade separately from the Common Shares,
shareholders should also obtain current market quotations for the Rights.
SECTION 7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Common Shares pursuant to the Offer
will reduce the number of holders of Common Shares and the number of Common
Shares that might otherwise trade publicly and could adversely affect the
liquidity and market value of the remaining Common Shares held by the public.
17
<PAGE> 18
Stock Exchange Listing. Depending on the number of Common Shares purchased
in the Offer, the Common Shares may no longer meet the requirements of the NYSE
for continued listing. According to the NYSE's published guidelines, the NYSE
would consider delisting the Common Shares if, among other things, (i) the
number of record holders of at least 100 shares should fall below 1,200, (ii)
the number of publicly held Common Shares (exclusive of holdings of officers,
directors, members of their immediate families and other concentrated holdings
of 10% or more ("NYSE Excluded Holdings")) should fall below 600,000 or (iii)
the aggregate market value of publicly held Common Shares (exclusive of NYSE
Excluded Holdings) should fall below $5,000,000. According to the Company 10-K,
as of October 31, 1995, there were 3,785 holders of record of Common Shares.
If the NYSE were to delist the Common Shares, it is possible that the
Common Shares would trade on another securities exchange or in the
over-the-counter market and that price quotations for the Common Shares would be
reported by such exchange on the NASDAQ stock market or other sources. The
extent of the public market for the Common Shares and availability of such
quotations would depend, however, upon such factors as the number of holders,
the aggregate market value of the publicly held Common Shares at such time, the
interest in maintaining a market in the Common Shares on the part of securities
firms, the possible termination of registration of the Common Shares under the
Exchange Act and other factors. The Purchaser cannot predict whether the
reduction in the number of Common Shares that might otherwise trade publicly
would have an adverse or beneficial effect on the market price for or
marketability of the Common Shares or whether it would cause future market
prices to be greater or less than the price per share to be paid pursuant to the
Offer.
The Preferred Shares are not listed on any exchange or on the NASDAQ stock
market. According to the Company's Proxy Statement relating to its 1996 Annual
Meeting of Shareholders, all of the Preferred Shares are held by Mellon Bank,
N.A., as trustee under the Company's leveraged ESOPs.
Exchange Act Registration. The Common Shares are currently registered
under the Exchange Act. Registration of the Common Shares under the Exchange Act
may be terminated upon application of the Company to the Commission if the
Common Shares are neither listed on a national securities exchange or quoted on
NASDAQ nor held by 300 or more holders of record. Termination of registration of
the Common Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its shareholders and to
the Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
shareholders' meetings and the related requirement of furnishing an annual
report to shareholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, as amended, may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Common Shares under the Exchange Act as soon after the
completion of the Offer as the requirements for such termination are met.
Based on publicly available information, the Rights are registered under
the Exchange Act. If the Distribution Date occurs and the Rights separate from
the Common Shares, the foregoing discussion with respect to the effect of the
Offer on any such Exchange Act registration would apply to the Rights in a
similar manner.
If registration of the Common Shares is not terminated prior to the
Proposed Merger, then the Common Shares will be delisted from all stock
exchanges and the registration of the Common Shares and the Rights under the
Exchange Act will be terminated following the consummation of the Proposed
Merger.
The Preferred Shares are not registered under the Exchange Act.
Margin Regulations. The Common Shares are currently "margin securities"
under the regulations of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Common Shares.
Depending
18
<PAGE> 19
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Common Shares would no
longer constitute "margin securities" for the purposes of the margin regulations
of the Federal Reserve Board and therefore could no longer be used as collateral
for loans made by brokers for the purpose of buying, carrying or trading in
securities.
The Preferred Shares are not "margin securities."
SECTION 8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is an Ohio corporation with its principal offices at 1775 Logan
Avenue, Youngstown, Ohio 44501. According to the Company 10-K, the Company is
engaged in the design, manufacture and sale of products in three business
groups: hydraulic systems, building systems and metal products, and fluid
purification.
According to the Company 10-K: the Company's hydraulic systems consist
primarily of gear pumps and motors, control valves and telescopic cylinders for
use generally on heavy-duty mobile equipment such as dump trucks, cranes, refuse
vehicles, front-end loaders, backhoes and mining machines; the Company's
building systems and metal products operations consist of two units--metal
stampings and Astron (custom-engineered metal buildings); and the Company's
fluid purification group operates worldwide with two major divisions, process
and consumer, with the process division manufacturing a broad range of
filtration products for general and fine filtration applications and the
consumer division principally involved in manufacturing products that purify
water for drinking.
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<PAGE> 20
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company 10-K and the Company 10-Q and the Company's Quarterly
Report on Form 10-Q for the quarter ended April 30, 1995. More comprehensive
financial information is included in the Company 10-K, such Company 10-Qs and
other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety by reference to such information. The
Company 10-K, the Company 10-Qs and such other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth below
under "Available Information."
COMMERCIAL INTERTECH CORP.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
APRIL 30, OCTOBER 31,
------------------- ------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales................................... $305,283 $289,272 $621,836 $516,931 $448,577
Income from Continuing Operations........... 12,896 13,427 30,383 19,619 14,015
Net Income.................................. 12,896 13,427 30,383 25,081 14,015
Earnings per Common Share
Primary:
Income from continuing operations...... $ 0.76 $ 0.80 $ 1.82 $ 1.14 $ 0.79
Net income............................. 0.76 0.80 1.82 1.50 0.79
Fully diluted:
Income from continuing operations...... 0.72 0.75 1.72 1.09 0.76
Net income............................. 0.72 0.75 1.72 1.41 0.76
BALANCE SHEET DATA (AT END OF PERIOD):
Total Assets.............................. $432,188 $443,493 $459,856 $422,978 $347,335
Working Capital........................... 87,917 101,418 95,846 100,400 60,766
Long-Term Debt............................ 63,299 75,938 73,929 77,020 78,059
Total Shareholders' Equity................ 186,610 171,196 183,132 153,760 122,937
</TABLE>
The Rights. Set forth below is a summary description of the publicly
available information concerning the Rights.
According to the Form 8-A, on November 29, 1989, the Company's Board
adopted the Rights Agreement and declared a dividend distribution of one Right
for each outstanding Common Share to shareholders of record at the close of
business on December 13, 1989 (the "Record Date"). Except as set forth below,
each Right, when exercisable, entitles the registered holder to purchase from
the Company one one-hundredth of a share (a "Unit") of the Company's Series A
Participating Preferred Shares, no par value (the "Series A Preferred Stock"),
at a price, subject to adjustment, of $75 per Unit (the "Purchase Price"). On
the effective date of the Rights Agreement, the holder of each outstanding
Common Share received one Right. As long as the Rights are attached to the
Common Shares, the Company will issue one Right for each Common Share issued
between the Record Date and the Distribution Date so that all such Common Shares
will have attached Rights.
The Rights are attached to all certificates representing Common Shares
("Share Certificates") outstanding and no separate Rights certificates will be
distributed prior to the Distribution Date. The Rights will separate from the
Common Shares and a "Distribution Date" for the Rights will occur upon the
earlier to occur of (i) a public announcement that, without the prior approval
of the Company (which approval is prohibited under certain circumstances as
described below), a person or group of affiliated or associated
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<PAGE> 21
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of securities having 20% or more of the voting power of all
outstanding voting securities of the Company (the date of such public
announcement being referred to as the "Stock Acquisition Date") or (ii) 10
business days (unless such date is extended by the Company's Board) 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.
Until the Distribution Date, the Rights will be evidenced by such Share
Certificates and the Rights will be transferred with and only with Share
Certificates. New Share Certificates issued upon transfer or new issuance of
Common Shares after the Record Date until the Distribution Date (or earlier
redemption or expiration of the Rights) are required to 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 Share Certificate will also constitute the transfer of the Rights associated
with the Common Shares represented by such Share Certificate.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on the earliest 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 (as defined below), and is offering in the merger the same form
of consideration, and not less than the price per Common Share, paid pursuant to
the Permitted Offer or (iii) redemption by the Company as described below.
As soon as practicable following the Distribution Date, separate Rights
Certificates will be mailed to holders of record of the Common Shares as of the
close of business on the Distribution Date. As of and after the Distribution
Date, such separate Rights Certificates alone will evidence the Rights.
The Purchase Price payable, and the number of Units, Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Series A Preferred Stock,
(ii) upon the grant to holders of the Series A Preferred Stock of certain rights
or warrants to subscribe for Series A Preferred Stock, certain convertible
securities or securities having rights, privileges and preferences the same as,
or more favorable than, the Series A Preferred Stock at less than the current
market price of the Series A Preferred Stock or (iii) upon the distribution to
holders of the Series A Preferred Stock of evidences of indebtedness, cash
(excluding regular quarterly cash dividends out of earnings or retained
earnings), assets (other than a dividend payable in Series A Preferred Stock) or
of subscription rights or warrants (other than those referred to above).
In the event that, after a Stock Acquisition Date, the Company is involved
in a merger or other business combination transaction in which the Common Stock
is exchanged or changed (other than a merger with a person or group who acquired
Common Stock pursuant to a Permitted Offer and is offering in the merger not
less than the price paid pursuant to the Permitted Offer and the same form of
consideration paid in the Permitted Offer), or 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) shall
thereafter have the right to receive, upon the exercise thereof at the Purchase
Price, that number of shares of common stock of the acquiring company (or, in
the event there is more than one acquiring company, the acquiring company
receiving the greatest portion of the assets or earning power transferred) which
at the time of such transaction would have a market value of two times the
Purchase Price (such right being called the "Merger Right"). "Permitted Offer"
means a tender offer or exchange offer for all outstanding Common Shares at a
price and on terms determined, prior to the purchase of Common Shares under such
tender offer or exchange offer, by at least a majority of the members of the
Company's Board 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 which directors may consider under Ohio law, including, without
limitation, the constituencies described in sec. 1701.59(E) of the Ohio Revised
Code; provided that in the event (a "Change of Board") that a majority of the
Company's Board is comprised of (i) persons elected at a meeting of shareholders
or by shareholder action by written consent who were not nominated by the
Company's Board in office immediately prior to such meeting or action by written
consent
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<PAGE> 22
and/or (ii) successors of such persons elected to the Company's Board 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, 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 Company's Board 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 a person.
In the event that an Acquiring Person becomes such, each holder of a Right
will, for a 60-day period thereafter, have the right to purchase, upon exercise
of such Right, Common Shares having a market value of two times the Purchase
Price therefor, to the extent available, and when all authorized and unreserved
Common Shares have been issued, a common stock equivalent (such as Series A
Preferred Stock or another equity security with at least the same economic value
as the Common Stock) having a market value of two times the Purchase Price, with
Common Stock to the extent available being issued first (such right being called
the "Subscription Right").
For a period of 180 days following a Change of Board, the Company may not
exclude from the definition of an Acquiring Person any Interested Person who
acquires 20% or more of the outstanding Common Stock.
The holder of a Right will continue to have the Merger Right whether or not
such holder exercises the Subscription Right. Upon the occurrence of any of the
events giving rise to the exercisability of the Merger Right or the Subscription
Right, any Rights that are or were at any time owned by an Acquiring Person
shall become void insofar as they relate to the Merger Right or the Subscription
Right.
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price, and no fractional Units will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) the Stock Acquisition Date
or (ii) the expiration of the Rights, the Company may 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 the action of the Company's
Board in the exercise of their sole discretion. Additionally, the Company may,
following the Stock Acquisition Date, redeem the then outstanding Rights in
whole, but not in part, at the Redemption Price provided that such redemption is
(a) in connection with a merger or other business combination transaction or
series of transactions involving the Company in which all holders of Common
Stock are treated alike but not involving an Acquiring Person or any person who
was an Acquiring Person or (b) following an event giving rise to, and the
expiration of the exercise period for, the Subscription Right 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, in the event of a Change of
Board, 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. Upon the effective date
of the redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
Until a Right is exercised, it will not entitle the holder thereof to any
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the
Company's Board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Company's Board 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).
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<PAGE> 23
However, for a period of 180 days following a Change of Board, 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.
The Purchaser believes that, as a result of the commencement of the Offer
on the date hereof, the Distribution Date may occur as early as July 26, 1996,
unless prior to such date the Company's Board defers the Distribution Date,
redeems the Rights or amends the Rights Agreement to make the Rights
inapplicable to the Offer and the Merger.
The foregoing summary of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement.
The Rights Agreement should be available for inspection and copies thereof
should be obtainable in the manner set forth below under "Available
Information."
PURSUANT TO THE RIGHTS CONDITION, THE OFFER IS CONDITIONED UPON THE RIGHTS
HAVING BEEN REDEEMED BY THE COMPANY'S BOARD OR THE PURCHASER BEING SATISFIED, IN
ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER.
Unless the Rights Condition is satisfied, shareholders will be required to
tender one Right for each Common Share tendered in order to effect a valid
tender of Common Shares in accordance with the procedures set forth in Section
2. Unless the Distribution Date occurs, a tender of Common Shares will also
constitute a tender of the associated Rights.
Parent and the Purchaser believe that under the circumstances of the Offer,
and under applicable law, the Company's Board has a fiduciary obligation to
redeem the Rights (or take other action under the Rights Agreement to make the
Rights and the 180-Day Restrictions inapplicable to the Offer and the Proposed
Merger), and Parent and the Purchaser are hereby requesting that the Company's
Board do so. Parent and the Purchaser intend to propose that the holders of
Shares adopt a resolution at the Special Meeting calling on the persons
currently constituting the Company's Board to redeem the Rights prior to their
removal as directors (for which removal Parent and the Purchaser also intend to
propose a resolution for shareholder approval subsequently at the Special
Meeting). However, there can be no assurance that the Company's Board will
redeem the Rights (or take such other action under the Rights Agreement).
Parent has commenced litigation against the Company and its directors
seeking, among other things, that the Rights be redeemed and that the 180-Day
Restrictions be deleted. See Section 15.
Redemption of the Rights (or amendment of the Rights Agreement that makes
the Rights inapplicable to the Offer and the Merger) would satisfy the Rights
Condition.
The ESOPs. The Preferred Shares are held of record by Mellon Bank N.A., as
trustee for the Company's ESOPs (the "Trustee"). According to the Company 10-K,
the Company established the ESOPs in 1990 and sold the Preferred Shares to the
ESOPs for approximately $25 million, which amount the ESOPs borrowed under a
loan (the "ESOP Loan"), repayment of which is guaranteed by the Company (and the
outstanding balance of which was $21.7 million at October 31, 1995). Preferred
Shares are allocated to individual participants' accounts in the ESOP as the
ESOP Loan is repaid. While the number of Preferred Shares that have been
allocated to participants' accounts under the ESOPs ("Allocated Shares") is not
publicly available, Parent and the Purchaser expect, based solely upon the
amount of the ESOP Loan outstanding on October 31, 1995, that most of the
Preferred Shares have not been allocated to any participant's account (such
unallocated Preferred Shares, the "Unallocated Shares").
According to the Company's Proxy Statement for its 1996 Annual Meeting of
Shareholders (the "Annual Meeting Proxy Statement"), the Common Shares and the
Preferred Shares vote together as a single class, with each Common Share
entitled to one vote and each Preferred Share entitled to one and one-half
votes. The Articles, however, provide that each Preferred Share is entitled to
one vote. See Section 15.
According to the Annual Meeting Proxy Statement, the trusts for the ESOPs
contain pass-through voting provisions for the participants of the ESOPs,
pursuant to which Allocated Shares are required to be voted by the Trustee as
instructed by the participant, and Unallocated Shares and Allocated Shares for
which no
23
<PAGE> 24
instruction from the participant has been received by the Trustee are to be
voted by the Trustee in the same proportion as the Allocated Shares for which
instructions were received are voted.
According to publicly filed information, the trusts for these plans also
contain tendering provisions for the participants of the ESOPs in the event of a
tender offer for Shares, pursuant to which Allocated Shares are required to be
tendered by the Trustee if so instructed by the participant along with that
tendering participant's pro rata portion of the Unallocated Shares. According to
publicly filed information, the Trustee is required to not tender Allocated
Shares for which instructions not to tender are received by the Trustee or for
which no instructions from the participant have been received by the Trustee
(along with such non-tendering and non-instructing participants' proportionate
share of the Unallocated Shares). Parent and the Purchaser believe that,
notwithstanding the express terms of the trust documents, the Trustee has a
fiduciary duty under the Employee Retirement Income Security Act of 1974
("ERISA") to exercise its discretion with respect to whether or not to tender
Shares held in the ESOPs for which no instructions are received by it (including
in respect of Unallocated Shares). Parent and the Purchaser also believe that
the indemnification provisions in favor of the Trustee contained in the ESOP
trust documents, which provide full indemnification for the Trustee only for
actions taken upon the written direction of the participants and in accordance
with the terms of the ESOP, violate ERISA. The United States Department of Labor
(the "DOL") has successfully advanced these positions in a federal district
court case, which is currently on appeal, arising out of a tender offer in which
the target company's employee stock ownership plan provided that tendering
decisions were to be passed-through to participants with respect both to
allocated and unallocated shares, and that a failure to direct by a participant
should be interpreted by the trustee as an instruction not to tender. The court
in Reich v. NationsBank of Georgia, N.A. concluded that it is not appropriate
for participants in an employee stock ownership plan to make tendering decisions
with respect to unallocated shares (due to "an inherent conflict of interest").
The court also stated that "when a trustee receives no affirmative direction
regarding allocated shares, the trustee must take exclusive responsibility for
decisions regarding these shares." (Moreover, the DOL has taken the position
that, under the fiduciary requirements of ERISA, an ESOP trustee must override
participant instructions if following them would be imprudent.) In Martin v.
NationsBank of Georgia, N.A., an earlier opinion in the same federal district
court proceeding, the court granted partial summary judgment to the DOL on its
claim that indemnification rights in favor of a trustee of an employee stock
ownership plan that differed depending on whether or not the trustee followed
participant voting and tendering instructions violated ERISA. The court stated
that the indemnification agreement, which created "a financial incentive for the
Trustee to breach its fiduciary obligations under ERISA," compromised the
trustee's independent judgment and thus violated ERISA.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's shareholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, DC 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, NY 10048
and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, IL 60661.
Copies of such information should be obtainable, by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal office
at 450 Fifth Street, N.W., Washington, DC 20549. Such material should also be
available for inspection at the offices of the NYSE, 20 Broad Street, New York,
New York 10005.
Company Information. The information concerning the Company contained in
this Offer to Purchase has been taken from or based upon publicly available
documents on file with the Commission and other publicly available information.
Although Parent and the Purchaser do not have any knowledge that any such
information is untrue, neither the Purchaser nor Parent takes any responsibility
for the accuracy or completeness of such information or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information.
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<PAGE> 25
SECTION 9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER
Parent is a corporation organized under the Canada Business Corporation Act
and is headquartered in Charlotte, North Carolina. Parent's businesses
manufacture proprietary engineered products for industrial and building
customers worldwide. Parent's Industrial Products Segment serves selected
markets with engineered equipment for heating, air drying and purification,
fluid handling, heat exchange, compaction, food processing and aerospace
applications. Parent's Building Products Segment manufactures a variety of
complementary products, ranging from steel doors to loading dock equipment to
complete pre-engineered metal buildings systems, primarily for the
nonresidential construction market.
The Purchaser is a newly incorporated Delaware corporation and an indirect
wholly owned subsidiary of Parent which to date has not conducted any business
other than in connection with the Offer and the Proposed Merger. The principal
executive offices of Parent and the Purchaser are located at 2300 One First
Union Center, 301 South College Street, Charlotte, North Carolina 28202. United
Dominion Industries, Inc., a Delaware corporation and a direct wholly owned
subsidiary of Parent ("UDII"), owns all of the outstanding shares of the
Purchaser. Of the 1,000 Common Shares owned beneficially by Parent, 500 Common
Shares are held of record by Parent and 500 Common Shares are held of record by
the Purchaser.
Set forth below is a summary of certain consolidated financial information
with respect to Parent and its subsidiaries excerpted or derived from the
information contained in Parent's Annual Report on Form 10-K for the year ended
December 31, 1995 (the "Parent 10-K") and Parent's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996 (the "Parent 10-Q") and Parent's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995. More comprehensive
financial information is included in the complete financial statements of Parent
contained in the Parent 10-K and the Parent 10-Q on file with the Commission,
and such financial statements are incorporated herein by reference.
UNITED DOMINION INDUSTRIES LIMITED
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED FISCAL YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------- ---------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................................ $ 422,099 $ 386,662 $1,804,950 $1,560,966 $1,122,492
Income from continuing operations.... 10,805 9,300 77,250 56,185 36,139
Net Income........................... 10,805 12,741 78,519 62,143 39,811
Earnings per Common Share:
Income from continuing
operations...................... $0.26 $0.21 $1.88 $1.39 $0.87
Net Income......................... 0.26 0.30 1.91 1.55 0.97
BALANCE SHEET DATA (AT END OF
PERIOD):
Total Assets......................... $1,481,780 $1,370,899 $1,485,372 $1,359,356 $1,307,459
Working Capital...................... 312,645 310,138 263,613 263,807 261,694
Long-Term Debt....................... 310,700 319,441 389,290 309,768 433,135
Total Shareholders' Equity........... 743,010 599,399 617,855 576,008 464,633
</TABLE>
Available Information. Parent is subject to the informational requirements
of the Exchange Act and, in accordance therewith, files reports relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Parent's directors and officers, their remuneration, stock
options and other matters, the principal holders of Parent's securities and any
material interest of such persons in transactions with Parent is required to be
disclosed in proxy statements distributed to Parent's shareholders and filed
with the Commission. Such reports, proxy statements and other information should
be available for inspection at
25
<PAGE> 26
the Commission and copies thereof should be obtainable from the Commission and
the NYSE in the same manner as is set forth with respect to the Company in
Section 8.
SECTION 10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
Common Shares pursuant to the Offer and to pay fees and expenses related to the
Offer and the Proposed Merger is estimated to be approximately $470 million (net
of approximately $10 million in proceeds from the exercise of options). The
Purchaser plans to obtain all funds needed for the Offer and the Proposed Merger
through a capital contribution from Parent.
Parent plans to obtain funds for such capital contribution from
approximately $50 million of available cash on hand, borrowing approximately
$250 million under its existing Credit Agreement, originally entered into on
August 2, 1994 and amended and restated on June 20, 1996 (the "Existing Credit
Facility"), among Parent and the banks listed therein and below (the
"Participant Banks") and borrowing the remainder under new credit arrangements
described below.
The Credit Facility provides for revolving credit of up to $300 million for
general corporate purposes through June 20, 2001. At present, there is
outstanding indebtedness of DM63 million (or approximately $41 million) under
the Existing Credit Facility. Committed loans under the Existing Credit Facility
bear interest at one of the following rates, as selected by Parent on the date
of borrowing: (i) the Base Rate (as defined in the Existing Credit Facility),
(ii) Adjusted CD Rate (as defined in the Existing Credit Facility) or (iii) the
Eurodollar Rate (as defined in the Existing Credit Facility) plus, in the case
of (ii) and (iii), a margin (ranging from 0.2000% to 0.3250%) based, in most
cases, on the leverage ratio of Parent or credit rating (as reported by Moody's
Investors Service, Inc.) of Parent's Senior Unsecured Debt (as defined in the
Existing Credit Facility) at the end of the fiscal quarter most recently then
ended. As of the date of this Offer to Purchase, the applicable margin is .25%.
The effective U.S. dollar interest rate as of the date of this Offer to Purchase
is approximately 5.75%. As of the date of this Offer to Purchase, assuming that
the Company borrows $450 million pursuant to its credit facilities to finance
the Offer, the applicable margin would be 0.45% and the effective interest rate
would be approximately 6.1%. In addition, the Existing Credit Facility permits
the Parent to solicit competitive bid loan requests for loans with a maturity
not exceeding 180 days from the Participant Banks. However, the amount of
indebtedness outstanding at any one time pursuant to the Existing Credit
Facility, including competitive bid loans, may not exceed $300 million.
The Existing Credit Facility contains covenants relating to, among other
things, the debt levels and interest coverage and restrictions on the payment of
dividends and the creation or incurrence of liens. The Participant Banks for the
Existing Credit Facility are the Royal Bank of Canada; ABN-AMRO Bank N.V.,
Atlanta Agency; Bank of Montreal; CIBC Inc.; Commerzbank AG, Atlanta Agency;
Bank of American National Trust and Savings Association; First Union National
Bank of North Carolina; Morgan Guaranty Trust Company of New York; NationsBank,
N.A.; Toronto Dominion (New York), Inc.; and Westdeutsche Landesbank
Girozentrale, New York Branch.
The foregoing summary of the Existing Credit Facility is qualified in its
entirety by reference to Exhibit 10.2(a) to Parent's Current Report on Form 8-K
filed on July 12, 1996, which is incorporated herein by reference.
Pursuant to a commitment letter from the Royal Bank of Canada ("RBC") dated
July 11, 1996 (the "Commitment Letter"), RBC has agreed to underwrite and
arrange a $300 million revolving credit facility for a period of 180 days (the
"Bridge Facility") which would be available to Parent to partially finance, and
is conditioned upon, Parent's acquisition of a controlling interest in the
Company. Within 180 days, the Bridge Facility may be converted into a five year
revolving facility (the "New Facility") with terms and conditions substantially
the same as those in the Existing Credit Facility (except that the New Facility
will not provide, among other things, for Deutschemark borrowings or a bid
option facility) and in the Commitment Letter.
The Commitment Letter provides that borrowings under the Bridge Facility
will bear interest at one of the following rates, as selected by Parent on the
date of borrowing: (i) the Base Rate (as defined in the
26
<PAGE> 27
Commitment Letter) or (ii) the Eurodollar Rate (as defined in the Commitment
Letter) plus, in either case, a facility fee ranging from 0.10% to 0.15%, a
utilization fee ranging from 0.05% to 0.125% and a margin (ranging from 0.2000%
to 0.3250%) based on the leverage ratio of Parent or on Parent's credit rating.
As of the date of this Offer to Purchase, assuming that the Company borrows $450
million pursuant to its credit facilities to finance the Offer, the applicable
margin would be 0.45% and the effective interest rate would be approximately
6.1%. The Commitment Letter provides for various fees, including a cancellation
fee, a success fee, an arrangement fee, an agency fee, a facility fee and a
utilization fee. In the event of a material adverse change in the financial
markets or the financial condition of Parent, RBC's obligation to underwrite the
New Facility would be subject to its ability, in its sole discretion, to reprice
and restructure the New Facility in accordance with the then market conditions.
The Participant Banks are also expected to participate in the New Facility,
along with certain new lenders to be selected.
The foregoing summary of the Commitment Letter is qualified in its entirety
by reference to Exhibit (b)(2) to the Schedule 14D-1 to which this Offer to
Purchase is attached as an exhibit (the "Schedule 14D-1"), is incorporated
herein by reference.
Although no definitive plan or arrangement for repayment of borrowings
under the Existing Credit Facility and the New Facility has been made, Parent
anticipates such borrowings will be repaid with internally generated funds
(including, if the Proposed Merger is accomplished, those of the Company) and
from other sources which may include the proceeds of future bank refinancings or
the public or private sale of debt or equity securities. No decision has been
made concerning the method Parent will use to repay the borrowings under the
Existing Credit Facility and the New Facility. Such decision will be made based
on Parent's review from time to time of the advisability of particular actions,
as well as prevailing interest rates, financial and other economic conditions
and such other factors as Parent may deem appropriate.
SECTION 11. BACKGROUND OF THE OFFER
Parent continuously seeks to strengthen its business segments by adding new
products, including through acquisitions, particularly of manufacturing
businesses producing proprietary engineered products. The Parent's planning and
development department has for several years included the Company among a number
of companies that it follows as potential combination prospects. Also, beginning
in late 1995, Parent, based on public information and with the assistance of
Schroder Wertheim, began analyzing the potential attractiveness of a possible
acquisition of the Company. Based on this analysis, senior management of Parent
determined to contact the Company to assess its receptiveness to a potential
combination of the Company and Parent.
On May 10, 1996, Mr. William R. Holland, Chairman and Chief Executive
Officer of Parent, met with Mr. Paul J. Powers, Chairman, President and Chief
Executive Officer of the Company, at Mr. Holland's request. At that meeting, Mr.
Holland discussed the benefits of a combination of Parent and the Company and
proposed a transaction in which Parent would acquire all of the Shares at a
price of $24.00 per Common Share. Mr. Powers responded that he was not
interested in considering a transaction between the Company and Parent.
Thereafter, on or about June 17, 1996, a representative of Schroder
Wertheim received a telephone call from a representative of the Company stating
that the Company was considering an initial public offering of 20% of the Common
stock of Cuno Incorporated, a wholly-owned subsidiary of the Company ("Cuno").
The Company representative asked if Schroder Wertheim was interested in learning
further about Cuno and potentially participating as a co-manager in such an
offering. The representative of Schroder Wertheim replied that Schroder Wertheim
had no such interest.
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On June 27, Mr. Holland sent the following letter to Mr. Powers:
Mr. Paul J. Powers
Chairman, President and
Chief Executive Officer
Commercial Intertech Corporation
1775 Logan Avenue
Youngstown, OH 44505
Dear Paul:
I enjoyed our meeting on May 10 and appreciated your time and
hospitality. I have been pondering the situation since then and would
certainly like to see our discussions proceed further. I was disappointed
that you did not share my desire to move forward. I am convinced that the
combination of our two companies would make an extremely strong industrial
enterprise.
Accordingly, United Dominion Industries is offering to acquire
Commercial Intertech pursuant to a negotiated merger transaction in which
your shareholders would receive $27.00 per share in cash for all common
shares of Commercial Intertech, or approximately $500 million in total
consideration, including assumption of debt. This price represents
approximately a 40% premium to Commercial Intertech's current share price.
Given United Dominion's strong financial condition, the proposed
transaction would not be subject to a financing condition and we do not
anticipate any anti-trust problems.
We believe that this is a full and fair price that presents an
attractive opportunity for the shareholders of Commercial Intertech. We
obviously would honor outstanding commitments to your employees and would
be pleased to discuss in depth how our companies could best be combined.
As you know, United Dominion does about $2 billion in sales--all in
manufacturing--and earned $77.3 million in 1995. We have a balance sheet
that is about 25% leveraged and have significant financial resources
available to us. We have enjoyed an excellent record of growth the last
five years and have returned, over that time, about a 24% compounded annual
return to our shareholders.
Some of the features of the combined company would be:
- Astron and Varco-Pruden would create one of the largest and strongest
metal building companies in the world, with sales of approximately $450
million, capturing the benefits of geographical reach and substantial
synergies;
- Cuno and Flair would, in our judgment, likewise create significant
synergies. This combination would create an operation doing approximately
$450 million in sales, making it one of the largest filtration businesses
in the world; and
- Our compaction operations (Bomag and Hypac) use approximately $50 million
a year in hydraulics. I would expect that these units would become a
significant customer of your hydraulics operation.
In short, Paul, we believe that the combination of United Dominion and
Commercial Intertech (with sales exceeding $2.5 billion) would produce a
strong company with a bright future.
As our preference is to consummate a negotiated transaction, we would
be pleased to advance our discussions at the earliest practicable time
after you have had an opportunity to discuss this offer with your
directors.
We are experienced in acquiring manufacturing companies and, with our
advisors, we can bring the transaction to a speedy conclusion.
Sincerely,
W.R. Holland
WRH/es
cc: Board of Directors
Commercial Intertech
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Also on June 27, 1996, Parent issued a press release announcing its
delivery of the above letter and setting forth the full text thereof. Shortly
before the issuance of Parent's announcement on June 27, 1996, Mr. Holland
telephoned Mr. Powers to apprise him of the announcement. However, Mr. Powers
was unavailable and did not return the telephone call.
On June 30, 1996, the Company issued the following press release:
FOR IMMEDIATE RELEASE
COMMERCIAL INTERTECH RESPONDS TO
UNITED DOMINION UNSOLICITED TAKEOVER BID
Youngstown, Ohio: June 30, 1996--Commercial Intertech Corp. (NYSE:
TEC) said today that the proposal received on June 27, 1996 from
Canadian-based United Dominion Industries, Ltd. to acquire the Company was
unsolicited, that it represents a unilateral effort by United Dominion and,
contrary to the suggestion in United Dominion's letter, did not arise out
of any negotiations between the companies.
The Board of Directors of Commercial Intertech, at an initial meeting
on June 29, 1996, reaffirmed the Company's long-standing objective of
creating shareholder value as an independent public company and noted that
the Company achieved record financial performance in fiscal 1995. The Board
also indicated that it will review the United Dominion proposal in
consultation with its legal and investment advisers.
As part of its ongoing strategic plans to enhance shareholder value,
the Company is preparing a public offering of up to 20% of the stock of
Cuno Incorporated, its wholly-owned filtration subsidiary. In that
connection, Mr. Paul J. Powers, Chairman of Commercial Intertech Corp.,
noted that Schroder Wertheim, United Dominion's financial adviser, had been
aware of the confidentially-proposed Cuno stock offering, having been
offered the opportunity of participating as co-manager within the last two
weeks.
Also, as part of its strategic plan, on June 28, Commercial Intertech
acquired Component Engineering Company, a manufacturer of cartridge-type
hydraulic valves based in Chanhassen, Minnesota.
Commercial Intertech is a multi-national manufacturer of Hydraulic
Systems, Building Systems and Metal Products, and Fluid Purification.
Employing more than 4,000 men and women around the world, the Company has
35 manufacturing facilities in 10 countries.
On July 3, 1996, Parent acquired 1,000 Common Shares at a price of $27.00
per share in cash on the open market on the NYSE (500 of which were later
contributed to the Purchaser).
On July 10, 1996, at the suggestion of a financial advisor to the Company,
Mr. Holland placed a call to Mr. Powers, which call Mr. Powers returned later
that day. During the call, Mr. Holland indicated to Mr. Powers that he hoped the
call could be productive and that the two could get together once again to
discuss a possible transaction. Mr. Powers replied that the Company would have
no response to Parent's proposal until the Company's Board met and, therefore,
there was no reason to have a meeting. He did not indicate when the meeting of
the Company's Board would be held.
On July 11, 1996, the Board of Directors of Parent approved the
commencement of the Offer and Parent announced that it would be commencing the
Offer. In addition, Parent also said that it intends to acquire in the Proposed
Merger any Common Shares not purchased in the Offer. A copy of the press release
issued by Parent is attached as Exhibit (a)(8) to the Schedule 14D-1 and is
incorporated herein by reference.
On July 12, 1996, the Purchaser commenced the Offer by publication of a
summary advertisement pursuant to Exchange Act Rule 14d-2(a)(2). Also on that
date, Parent delivered an "acquiring person statement" to the Company and
requested the Company's shareholder list and security position listings and
other information pursuant to the federal securities laws and the ORC. A copy of
the press release issued by Parent announcing the commencement of the Offer is
attached as Exhibit (a)(9) to the Schedule 14D-1 and is incorporated herein by
reference.
On July 12, 1996, after the announcement by Parent and the Purchaser of the
commencement of the Offer, the Company issued a press release in which it
stated, among other things, that the Company's Board
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had determined to recommend that shareholders reject as inadequate the Offer,
and had "reaffirmed the Company's strategic plan which now includes an
accelerated initiative to spin off to shareholders 100% of its wholly owned Cuno
Incorporated filtration subsidiary". In addition, the press release stated that
the Company's Board had approved a program to repurchase up to 2.5 million of
its 15.5 million Common Shares currently outstanding.
Contacts, etc. with the Company. Except as set forth in this Offer to
Purchase (including the Schedules attached hereto), none of the Purchaser,
Parent or, to the best knowledge of the Purchaser and Parent, any of the persons
listed in Schedule I hereto (other than Mr. Holland who owns 1,000 Common Shares
which he acquired in 1994), or any associate or majority-owned subsidiary of
such persons, beneficially owns any equity security of the Company, and none of
the Purchaser, Parent, or to the best knowledge of the Purchaser and Parent, any
of the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as set forth in this Offer to Purchase, none of the Purchaser,
Parent, or, to the best knowledge of the Purchaser and Parent, any of the
persons listed in Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, none of
the Purchaser, Parent or, to the best knowledge of the Purchaser and Parent, any
of the persons listed in Schedule I hereto has had any transactions with the
Company, or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, as of the date hereof, there
have been no contacts, negotiations or transactions between the Purchaser or
Parent, any of their respective subsidiaries, or, to the best knowledge of the
Purchaser and Parent, any of the persons listed in Schedule I hereto, on the one
hand, and the Company or its executive officers, directors or affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors, or a sale or other
transfer of a material amount of assets that would require reporting under the
rules of the Commission.
SECTION 12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Proposed Merger is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
The Offer, as the first step in the acquisition of the Company, is intended to
facilitate the acquisition of all the Shares. Parent currently intends to
propose and seek to consummate, as soon as practicable following the
consummation of the Offer, the Proposed Merger. The purpose of the Proposed
Merger is to acquire all Shares not purchased pursuant to the Offer or
otherwise. Pursuant to the Proposed Merger, each then outstanding Share (other
than Common Shares owned by the Purchaser or Parent, Shares held in the
Company's treasury and Common Shares owned by shareholders who perfect their
dissenters' rights under the ORC) would be converted into the right to receive
an amount in cash equal (i) in the case of the Common Shares, to the price per
Common Share paid by the Purchaser pursuant to the Offer and (ii) in the case of
the Preferred Shares, to such price per Common Share multiplied by 1.235 (the
conversion ratio for the Preferred Shares). Although it is the Purchaser's
current intention to propose and seek to enter into a definitive merger
agreement with the Company with respect to the Proposed Merger and to consummate
the Proposed Merger as promptly as practicable, there can be no assurance that
the Proposed Merger will be consummated or, if consummated, of the timing or
terms thereof. Consummation of the Proposed Merger will require the adoption of
a resolution by the Company's Board approving the Proposed Merger and the
affirmative vote of the holders of two-thirds of the voting power of the Shares.
Alternatively, if the Purchaser purchases 90% or more of each class of the
outstanding Shares of the Company, the Proposed Merger could be consummated
without the approval of the Company's shareholders through a Short-Form Merger
(described below under "The Proposed Merger"). However, there can be no
assurance that the Proposed Merger will be able to be effected through a
Short-Form Merger.
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Parent intends to continue to seek to negotiate with the Company with
respect to the acquisition of the Company. If such negotiations result in a
definitive merger agreement between the Company and Parent, certain material
terms of the Offer may change and Parent would not proceed with any solicitation
with regard to the Special Meeting referred to below. Accordingly, such
negotiations could result in, among other things, termination or amendment of
the Offer and/or submission of a different acquisition proposal to the Company's
shareholders for their approval.
In order to increase the likelihood that the conditions to the Offer will
be satisfied and that the Company and the Purchaser enter into the Proposed
Merger, Parent and the Purchaser have taken steps to commence a solicitation of
agent designations to call the Special Meeting at which, among other things,
Parent and the Purchaser will propose that the holders of Shares (i) adopt a
resolution calling upon the persons currently constituting the Company's Board
to redeem the Rights prior to their removal as directors, (ii) remove all of the
incumbent directors of the Company, (iii) amend the Regulations to reduce the
number of members on the Company's Board from twelve to three and to provide
that the Company's Board shall not be classified and that the directors shall
serve as a single class, (iv) elect three nominees of the Purchaser as directors
of the Company to fill the vacancies created thereby with the New Board, (v)
amend the Articles to repeal the Supermajority Vote Requirement (upon the
unanimous recommendation of the New Board) and (vi) if necessary, amend the
Regulations to provide that the Ohio Control Share Acquisition Laws shall not
apply to acquisitions of Shares. The nominees of the Purchaser will, if elected
at the Special Meeting, and subject to their fiduciary duties, be committed to
take such actions as may be required to facilitate prompt consummation of the
Offer and the Proposed Merger.
In addition, the Purchaser presently intends to solicit proxies from the
shareholders of the Company with respect to the Ohio Control Share Acquisition
Meeting (unless the Purchaser is satisfied that the provisions of the Ohio
Control Share Acquisition Law are invalid or are not applicable to the
acquisition of Common Shares pursuant to the Offer).
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR AGENT
DESIGNATIONS FOR ANY MEETING OF THE COMPANY'S SHAREHOLDERS. ANY SUCH
SOLICITATION WILL BE MADE ONLY PURSUANT TO PROXY OR OTHER MATERIALS COMPLYING
WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT AND THE RULES AND
REGULATIONS THEREUNDER.
Plans for the Company. In connection with the Offer, Parent and the
Purchaser have reviewed, and will continue to review, on the basis of publicly
available information, various possible business strategies that they might
consider in the event that the Purchaser acquires control of the Company,
whether pursuant to this Offer, the Proposed Merger or otherwise. If and to the
extent that the Purchaser acquires control of the Company or otherwise obtains
access to the books and records of the Company, Parent and the Purchaser intend
to conduct a detailed review of the Company and its assets, corporate structure,
dividend policy, capitalization, operations, properties, policies, management
and personnel and consider and determine what, if any, changes would be
desirable in light of the circumstances which then exist. Such strategies could
include, among other things, changes in the Company's business, corporate
structure, Articles, Regulations, capitalization, management or dividend policy.
Parent currently believes that significant economic and operational
synergies might be achieved by the common ownership of complementary businesses
of Parent and the Company. In particular, Parent believes that a combination of
its Varco-Pruden division and the Company's Astron division could create a
strong competitor in the pre-engineered metal building industry with
significantly enhanced geographical reach and a potential for substantial cost
savings, and that a combination of Parent's Flair division and the Company's
Cuno subsidiary could generate substantial synergies and create an operation
offering a broad range of air, gas and fluid filtration equipment. Parent and
the Purchaser have no specific plans or proposals for structuring any such
combination but expect that, if and when the Purchaser acquires control of the
Company, they will consider such plans in the light of all circumstances
existing at that time.
Except as described in this Offer to Purchase, Parent and the Purchaser
have no present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, consolidation, reorganization,
liquidation or sale or transfer of a material amount of assets, involving the
Company or any of
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its subsidiaries, or any material changes in the Company's present
capitalization, dividend policy, employee benefit plans, corporate structure or
business or any material changes or reductions in the composition of its
management or personnel. Except as so described, Parent and the Purchaser have
no present plans or proposals to establish, terminate, convert or amend employee
benefit plans, close any plant or facility of the Company or any of its
subsidiaries or affiliates, change or reduce the workforce of the Company or any
of its subsidiaries or affiliates or make any other major changes in its
business or policies of employment.
The Proposed Merger. In general, under the ORC and the Company's Articles,
the Proposed Merger requires the approval of the Company's Board and the
approval by the affirmative vote of the holders of at least two-thirds of the
voting power of Company shareholders, as well as compliance with the laws of the
State of Delaware applicable to the Proposed Merger.
Accordingly, if the Purchaser acquires Common Shares entitling it to
exercise at least two-thirds of the voting power of the outstanding Shares
pursuant to the Offer, the Purchaser would have the voting power to approve the
Proposed Merger without the vote of any other shareholders of the Company and
could effect the Proposed Merger by so voting and by action of the Boards of
Directors of the Purchaser and the Company (subject to the requirements of the
Supermajority Vote Requirement and the Ohio Business Combination Law). The
Minimum Tender Condition requires that there shall have been validly tendered
and not properly withdrawn prior to the Expiration Date that number of Common
Shares which, together with the Common Shares beneficially owned by Purchaser
and its affiliates, constitutes at least two-thirds of the total voting power of
all Shares outstanding on a fully diluted basis on the date of purchase. Upon
consummation of the Offer, assuming the Minimum Tender Condition, the Rights
Condition, and the other conditions to the Offer set forth in Section 14 are
satisfied or waived, the Purchaser and Parent will own sufficient Common Shares
to approve the Proposed Merger without the vote of any other shareholder.
Further, the ORC provides that if a parent corporation owns 90% or more of
each class of outstanding shares of an Ohio subsidiary, the Ohio subsidiary may
be the surviving corporation of a merger with its parent corporation upon
approval of the implementing agreement of merger by the Ohio subsidiary's board
of directors, without action or vote by its shareholders (a "Short-Form
Merger"). Accordingly, if the Purchaser owns 90% or more of each class of the
outstanding Shares after consummation of the Offer, a Short-Form Merger could be
effected by action of the Board of Directors of the Purchaser and the Company's
Board without the approval of the Company's shareholders (subject to the
requirements of the Ohio Business Combination Law). However, there can be no
assurance that the Proposed Merger will be able to be effected through a
Short-Form Merger.
Neither Parent nor the Purchaser can give any assurance as to whether, as a
result of information hereafter obtained by either Parent or the Purchaser,
changes in general economic or market conditions or in the business of the
Company, or other presently unforeseen factors, the Proposed Merger will be
submitted to the Company's shareholders or whether the Proposed Merger will be
delayed or abandoned. Whether or not the Proposed Merger is consummated, Parent
and the Purchaser reserve the right to acquire additional Common Shares
following the expiration or consummation of the Offer through private purchases,
market transactions, tender or exchange offers or otherwise on terms and at
prices that may be more or less favorable than those of the Offer or, subject to
any applicable legal restrictions, to dispose of any or all Common Shares
acquired by Parent and the Purchaser.
Dissenters' Rights. Each shareholder of record (as of the date fixed for
determining shareholders entitled to notice of the meeting of shareholders of
the Company at which the Proposed Merger is to be submitted or, if the Proposed
Merger is not subject to a vote of shareholders, the date on which an agreement
of merger with respect to the Proposed Merger is adopted by the Company's Board)
will have the right to receive fair cash value for such shareholder's Shares if
such shareholder properly exercises such shareholder's dissenters' rights and
the Proposed Merger is consummated. If the statutory procedures for exercising
or perfecting dissenters' rights are complied with in accordance with the ORC,
then a judicial determination will be made as to the fair cash value required to
be paid to the objecting shareholders for their Shares. Any such judicial
determination of fair cash value would be based on the amount that a willing
seller, under no compulsion to sell, would be willing to accept, and a willing
buyer, under no compulsion to purchase, would be willing to pay (excluding any
appreciation or depreciation in the market value resulting from the Proposed
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Merger), and the value so determined could be more or less than the price per
share to be paid in the Offer or the Proposed Merger.
From the time written demand for payment of the fair cash value is given
until either the termination of the rights and obligations arising from such
demand or the purchase of the Shares related thereto by the Company, all rights
accruing to the dissenting shareholder, including voting and dividend or
distribution rights, will be suspended. If any dividend or distribution is paid
on Shares during the suspension, an amount equal to the dividend or distribution
which would have been payable on the Shares, but for such suspension, shall be
paid to the holder of record of the Shares as a credit against the fair cash
value of the Shares. If the right to receive the fair cash value is terminated
otherwise than by the purchase of the Shares by the Company, all rights will be
restored to the objecting shareholder and any distribution that would have been
made to the holder of record of the Shares, but for the suspension, will be made
at the time of such termination.
The foregoing summary of the rights of dissenting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise their dissenters' rights. The preservation and
exercise of dissenters' rights are conditioned on strict adherence to the
applicable provisions of the ORC.
"Going Private" Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Proposed Merger.
However, Rule 13e-3 would be inapplicable if (i) the Common Shares are
deregistered under the Exchange Act prior to the Proposed Merger or other
business combination or (ii) the Proposed Merger or other business combination
is consummated within one year after the purchase of the Common Shares pursuant
to the Offer and the amount paid per Common Share in the Proposed Merger or
other business combination is at least equal to the amount paid per Common Share
in the Offer. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning the fairness of the proposed
transaction and the consideration offered to minority shareholders in such
transaction be filed with the Commission and disclosed to shareholders prior to
the consummation of the transaction.
SECTION 13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the Applicable Date (July 11, 1996), the Company should (a)
split, combine or otherwise change the Shares or its capitalization, (b) acquire
or otherwise cause a reduction in the number of outstanding Shares or other
securities or (c) issue or sell additional Shares (other than the issuance of
Shares under options outstanding prior to the Applicable Date, in accordance
with the terms of such options as publicly disclosed prior to the Applicable
Date), shares of any other class of capital stock, other voting securities or
any securities convertible into, or rights, warrants or options, conditional or
otherwise, to acquire, any of the foregoing, then, subject to the provisions of
Section 14, the Purchaser, in its sole discretion, may make such adjustments as
it deems appropriate in the Offer Price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
If, on or after the Applicable Date, the Company should declare or pay any
cash dividend on the Shares (other than regular quarterly cash dividends in an
amount not to exceed $.135 per Common Share and regular annual cash dividends of
$1.97625 per Preferred Share) or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to shareholders of record on a date prior to
the transfer of the Common Shares purchased pursuant to the Offer to the
Purchaser or its nominee or transferee on the Company's stock transfer records,
then, subject to the provisions of Section 14, (i) the Offer Price may, in the
sole discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (ii) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering shareholders will (a)
be received and held by the tendering shareholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering shareholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (b) at the direction of
the Purchaser, be exercised for the benefit of the Purchaser, in which case the
proceeds of such exercise will promptly be remitted to the Purchaser. Pending
such remittance and subject to applicable law, the Purchaser will be
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entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
SECTION 14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term or provision of the Offer, the Purchaser
will not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-l(c) under the Exchange
Act (relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer), to pay for
any Common Shares or Rights not theretofore accepted for payment or paid for
(and the Purchaser may postpone the acceptance for payment or, subject to the
restriction set forth above, payment for any tendered Common Shares or Rights
pursuant to the Offer, and may amend or terminate the Offer (whether or not any
Common Shares or Rights have theretofore been accepted for payment or paid
for)), unless (1) the Minimum Condition shall have been satisfied, (2) the
Rights Condition shall have been satisfied, (3) the Control Share Condition
shall have been satisfied, (4) the Business Combination Condition shall have
been satisfied, (5) the Articles Amendment Condition shall have been satisfied
and (6) any waiting period under the HSR Act applicable to the purchase of
Common Shares pursuant to the Offer shall have expired or been terminated.
Furthermore, notwithstanding any other term or provision of the Offer, the
Purchaser will not be required to accept for payment or, subject as aforesaid,
to pay for any Common Shares or Rights not theretofore accepted for payment or
paid for, and may terminate or amend the Offer if, at any time on or after the
Applicable Date (July 11, 1996), and before the acceptance of such Common Shares
or Rights for payment or, subject to any applicable rules and regulations of the
Commission, the payment therefor, any of the following events or facts shall
have occurred (or if such events or facts shall have occurred prior to the
Applicable Date but shall not have been publicly disclosed until after such
date):
(a) there shall be threatened, instituted or pending any action,
proceeding, application, claim or counterclaim by any government or
governmental, regulatory or administrative authority or agency, domestic,
foreign or supranational (each, a "Governmental Entity"), or by any other
person, domestic or foreign, before any court or Governmental Entity,
(i)(A) challenging or seeking to, or which is reasonably likely to, make
illegal, delay or otherwise directly or indirectly restrain or prohibit, or
seeking to, or which is reasonably likely to, impose voting, procedural,
price or other requirements, in addition to those required by federal
securities laws and the ORC (each as in effect on the date of this Offer to
Purchase), in connection with, the making of the Offer, the acceptance for
payment of, or payment for, some of or all the Common Shares by the
Purchaser, Parent or any other affiliate of Parent or the consummation by
the Purchaser, Parent or any other affiliate of Parent of a merger or other
similar business combination with the Company, (B) seeking to obtain, or
which is reasonably likely to result in, material damages or (C) otherwise
directly or indirectly relating to the transactions contemplated by the
Offer, the Proposed Merger or any other similar business combination, (ii)
seeking to, or which is reasonably likely to, restrain, prohibit or limit
the ownership or operation by the Purchaser, Parent or any other affiliate
of Parent of all or any portion of the business or assets of the Company
and its subsidiaries or of the Purchaser, Parent or any other affiliate of
Parent or to compel the Purchaser, Parent or any other affiliate of Parent
to dispose of or hold separate all or any portion of the business or assets
of the Company or any of its subsidiaries or of the Purchaser, Parent or
any other affiliate of Parent or seeking to impose, or which is reasonably
likely to result in, any limitation on the ability of the Purchaser, Parent
or any other affiliate of Parent to conduct such business or own such
assets, (iii) seeking to, or which is reasonably likely to, impose
limitations on the ability of the Purchaser, Parent or any other affiliate
of Parent effectively to acquire or hold or exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Common Shares acquired or owned by the Purchaser, Parent or any other
affiliate of Parent on all matters properly presented to the Company's
shareholders or the right to vote any shares of capital stock of any
subsidiary directly or indirectly owned by the Company, (iv) seeking to, or
which is reasonably likely to, require divestiture by the Purchaser, Parent
or any other affiliate of Parent of any Common Shares, (v) seeking, or
which is reasonably likely to result in, any material diminution in the
benefits expected to be derived by the Purchaser, Parent or any other
affiliate of Parent as a result of the transactions contemplated by the
Offer, the Proposed Merger or any other similar business
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combination with the Company, (vi) otherwise directly or indirectly
relating to the Offer or which otherwise, in the sole judgment of the
Purchaser, might materially adversely affect the Company or any of its
subsidiaries or the Purchaser, Parent or any other affiliate of Parent or
the value of the Common Shares or (vii) in the sole judgment of the
Purchaser, adversely affecting the business, properties, assets,
liabilities, capitalization, shareholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of the Company or any of its subsidiaries;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
the Purchaser, Parent or any other affiliate of Parent or the Company or
any of its subsidiaries or (ii) the Offer, the Proposed Merger or other
similar business combination by the Purchaser, Parent or any other
affiliate of Parent with the Company, by any government, legislative body
or court, domestic, foreign or supranational, or Governmental Entity, other
than the routine application of the waiting period provisions of the HSR
Act to the Offer, that, in the sole judgment of the Purchaser, might,
directly or indirectly, result in any of the consequences referred to in
clauses (i) through (vii) of paragraph (a) above;
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, shareholders' equity,
condition (financial or otherwise), operations, licenses or franchises,
results of operations or prospects of the Company or any of its
subsidiaries or affiliates or in the general economic or financial market
conditions in the United States or abroad that, in the sole judgment of the
Purchaser, is or may be materially adverse to the Company or any of its
subsidiaries, or the Purchaser shall have become aware of any facts that,
in the sole judgment of the Purchaser, have or may have material adverse
significance with respect to either the value of the Company or any of its
subsidiaries or the value of the Common Shares to the Purchaser, Parent or
any other affiliate of Parent;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States or
abroad, including without limitation a decline of at least 15% in either
the Dow Jones Average of Industrial Stocks or the Standard and Poor's 500
Index from that existing at the close of business on the Applicable Date,
or in the market price of the Common Shares, (iii) any change in the
general political, market, economic or financial conditions in the United
States or abroad that could, in the sole judgment of the Purchaser, have a
material adverse effect upon the business, properties, assets, liabilities,
capitalization, shareholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries or the trading in, or value of, the
Common Shares, (iv) any material change in United States currency exchange
rates or any other currency exchange rates or a suspension of, or
limitation on, the markets therefor, (v) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (vi) any limitation (whether or not mandatory) by any government,
domestic, foreign or supranational, or Governmental Entity on, or other
event that, in the sole judgment of the Purchaser, might adversely affect,
the extension of credit by banks or other lending institutions, (vii) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (viii) in the case of any of the foregoing situations described in
clauses (i) through (vii) of this paragraph (d) existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(e) the Company or any of its subsidiaries shall have, directly or
indirectly, (i) split, combined or otherwise changed, or authorized or
proposed a split, combination or other change of, the Common Shares or its
capitalization, (ii) acquired or otherwise caused a reduction in the number
of, or authorized or proposed the acquisition or other reduction in the
number of, outstanding Common Shares or other securities, other than a
redemption of the Rights in accordance with the terms of the Rights
Agreement as publicly disclosed to be in effect on the Applicable Date,
(iii) issued, distributed or sold, or authorized, proposed or announced the
issuance, distribution or sale of, additional Shares (other than the
issuance of
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Common Shares under options outstanding prior to the Applicable Date in
accordance with the terms of such options as publicly disclosed prior to
the Applicable Date), shares of any other class of capital stock, other
voting securities or any securities convertible into or exchangeable for,
or rights, warrants or options, conditional or otherwise, to acquire, any
of the foregoing, (iv) declared or paid, or proposed to declare or pay, any
dividend (other than regular quarterly cash dividends not to exceed $.135
per Common Share and regular annual cash dividends of $1.97625 per
Preferred Share, in each case, having customary and usual record and
payment dates) or other distribution, whether payable in cash, securities
or other property, on or with respect to any shares of capital stock of the
Company (other than a distribution of the Rights Certificates or a
redemption of the Rights in accordance with the Rights Agreement as
publicly disclosed to be in effect on the Applicable Date), (v) altered or
proposed to alter any material term of any outstanding security (including
the Rights) other than to amend the Rights Agreement to make the Rights
inapplicable to the Offer and the Proposed Merger, (vi) issued, distributed
or sold, or authorized or proposed the issuance, distribution or sale of
any debt securities or any securities convertible into or exchangeable for
debt securities or any rights, warrants or options entitling the holder
thereof to purchase or otherwise acquire any debt securities or incurred,
or authorized or proposed the incurrence of, any debt other than in the
ordinary course of business or any debt containing burdensome covenants,
(vii) authorized, recommended, proposed, entered into or announced its
intention to enter into an agreement with respect to, or to cause, any
merger (other than the Proposed Merger), consolidation, liquidation,
dissolution, business combination, acquisition of assets or securities,
disposition of assets or securities, release or relinquishment of any
material contractual or other right of the Company or any of its
subsidiaries or any comparable event not in the ordinary course of
business, (viii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into, any
agreement or arrangement with any person or group that in the sole judgment
of the Purchaser could adversely affect either the value of the Company or
any of its subsidiaries or the value of the Common Shares to the Purchaser,
Parent or any other affiliate of Parent, (ix) entered into any employment,
severance or similar agreement, arrangement or plan with or for the benefit
of any of its employees other than in the ordinary course of business in
accordance with past practice or entered into or amended any agreements,
arrangements or plans so as to provide for increased or accelerated
benefits to the employees as a result of or in connection with the
transactions contemplated by the Offer, the Proposed Merger or any other
business combination, (x) except as may be required by law, taken any
action to terminate or amend any employee benefit plan (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended) of the Company or any of its subsidiaries, or the Purchaser shall
have become aware of any such action that was not disclosed in publicly
available filings prior to the Applicable Date, (xi) amended, or authorized
or proposed any amendment to, the Articles or Regulations (other than any
amendment which provides that the Rights are inapplicable to the Offer and
the Merger or an amendment to make the Ohio Control Share Acquisition Law
inapplicable), or the Purchaser shall become aware that the Company or any
of its subsidiaries shall have proposed or adopted any such amendment that
was not disclosed in publicly available filings prior to the Applicable
Date or (xii) otherwise acted out of the ordinary course of business,
consistent with past practice;
(f) a tender or exchange offer for any Common Shares shall have been
made or publicly proposed to be made by any other person (including the
Company or any of its subsidiaries or affiliates), or it shall have been
publicly disclosed or the Purchaser shall have otherwise learned that (i)
any person, entity (including the Company or any of its subsidiaries) or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Common Shares) or any of its subsidiaries, through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted
any right, option or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 5% of any class or series of capital
stock of the Company (including the Common Shares) or any of its
subsidiaries, other than acquisitions of Common Shares for bona fide
arbitrage purposes only and other than as disclosed in a Schedule 13D or
13G on file with the Commission prior to the Applicable Date, (ii) any such
person, entity or group that prior to the Applicable Date, had filed such a
Schedule with the Commission, shall have acquired or proposed to acquire
(other than acquisitions of Common Shares for
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bona fide arbitrage purposes only), through the acquisition of stock, the
formation of a group or otherwise, beneficial ownership of additional
shares of any class or series of capital stock of the Company (including
the Common Shares) or any of its subsidiaries constituting 2% or more of
any such class or series, or shall have been granted any right, option or
warrant, conditional or otherwise, to acquire beneficial ownership of
additional shares of any class or series of capital stock of the Company
(including the Common Shares) or any of its subsidiaries constituting 2% or
more of any such class or series, (iii) any person or group shall have
entered into a definitive agreement or an agreement in principle or made or
announced a proposal with respect to a tender offer or exchange offer or a
merger, consolidation or other business combination with or involving the
Company or any of its subsidiaries or (iv) any person shall have filed a
Notification and Report Form under the HSR Act (or amended a prior filing
to increase the applicable filing threshold set forth therein) or made a
public announcement reflecting an intent to acquire the Company or any
assets or subsidiaries of the Company;
(g) the Purchaser shall become aware (i) that any contractual right of
the Company or any of its subsidiaries shall be impaired or otherwise
adversely affected or that any amount of indebtedness of the Company or any
of its subsidiaries shall become accelerated or otherwise become due or
become subject to acceleration prior to its stated due date, in any case
with or without notice or the lapse of time or both, as a result of or in
connection with the transactions contemplated by the Offer or the Proposed
Merger or any other business combination involving the Company, which, in
the aggregate, would be material, (ii) of any covenant, term or condition
in any of the Company's or any of its subsidiaries' instruments or
agreements that has or may have, in the aggregate, a material adverse
effect on (x) the business, properties, assets, liabilities,
capitalization, shareholders' equity, condition (financial or otherwise),
operations, management, key personnel, licenses, franchises, results of
operations or prospects of the Company or any of its subsidiaries
(including, but not limited to, any event of default that may result from
the consummation of the Offer, the acquisition of control of the Company or
any of its subsidiaries or the Proposed Merger or any other business
combination involving the Company) or (y) the value of the Common Shares to
Parent, the Purchaser or any of their respective affiliates or (z) the
consummation by Parent, the Purchaser or any of their respective affiliates
of the Offer and the Proposed Merger or any other business combination
involving the Company or (iii) that any report, document or instrument of
the Company or any of its subsidiaries filed with the Commission contained,
when filed, an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading or that the Company or any of its subsidiaries
shall have failed to file any such report, document or instrument;
(h) any approval, permit, authorization, favorable review or consent
of any Governmental Entity (including those described or referred to in
Section 15) shall not have been obtained on terms satisfactory to Purchaser
in its sole discretion; or
(i) the Purchaser shall have reached an agreement or understanding
with the Company providing for termination of the Offer, or the Purchaser,
Parent or any other affiliate of Parent shall have entered into a
definitive agreement or announced an agreement in principle with the
Company providing for a merger or other business combination with the
Company or the purchase of stock or assets of the Company;
which, in the sole judgment of the Purchaser in any such case, and regardless of
the circumstances (including any action or inaction by the Purchaser, Parent or
any other affiliate of Parent) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by the Purchaser in whole or
in part at any time and from time to time in its sole discretion. The failure by
the Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances will not be deemed a waiver with respect to
any
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other facts and circumstances and each such right will be deemed an ongoing
right that may be asserted at any time and from time to time. Any determination
by the Purchaser concerning the events described in this Section 14 will be
final and binding upon all parties including tendering shareholders.
SECTION 15. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based on a review of
publicly available information filed by the Company with the Commission, neither
the Purchaser nor Parent is aware of (i) any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Common
Shares by the Purchaser pursuant to the Offer or the Proposed Merger or (ii) any
approval or other action, by any governmental, administrative or regulatory
agency or authority, domestic, foreign or supranational, that would be required
for the acquisition or ownership of Common Shares by the Purchaser as
contemplated herein. Should any such approval or other action be required, the
Purchaser currently contemplates that such approval or action would be sought.
While the Purchaser does not currently intend to delay the acceptance for
payment of Common Shares tendered pursuant to the Offer pending the outcome of
any such matter, there can be no assurance that any such approval or action, if
needed, would be obtained or would be obtained without substantial conditions or
that adverse consequences might not result to the business of the Company, the
Purchaser or Parent or that certain parts of the businesses of the Company, the
Purchaser or Parent might not have to be disposed of in the event that such
approvals were not obtained or any other actions were not taken. The Purchaser's
obligation under the Offer to accept for payment and pay for Common Shares is
subject to certain conditions. See Section 14.
Antitrust. Under the HSR Act, and the rules and regulations that have been
promulgated thereunder by the FTC, certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division and the FTC and certain waiting period requirements have been
satisfied. Parent expects to file a Notification and Report Form with respect to
the Offer and the Proposed Merger on July 12, 1996.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Common Shares pursuant to the Offer may not be consummated until the
expiration of a 15-calendar day waiting period following the filing by Parent.
Accordingly, the waiting period with respect to the Offer will expire at 11:59
p.m., New York City time, on July 27, 1996 unless Parent receives a request for
additional information or documentary material, or the Antitrust Division and
the FTC terminate the waiting period prior thereto. If, within such 15-day
period, either the Antitrust Division or the FTC requests additional information
or material from Parent concerning the Offer, the waiting period will be
extended and would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. The
Purchaser will not accept for payment Common Shares tendered pursuant to the
Offer unless and until the waiting period requirements imposed by the HSR Act
with respect to the Offer have been satisfied. See Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Common
Shares pursuant to the Offer and the Proposed Merger. At any time before or
after the Purchaser's acquisition of Common Shares, the Antitrust Division or
the FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Common Shares pursuant to the Offer or otherwise or seeking divestiture of
Common Shares acquired by the Purchaser or divestiture of substantial assets of
Parent or its subsidiaries. Private parties and state attorneys general may also
bring action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which Parent and the Company are engaged, Parent and the Purchaser believe that
the acquisition of Common Shares by the Purchaser will not violate the antitrust
laws. Nevertheless, there can be no assurance that a challenge to the Offer or
other acquisition of Common Shares by the Purchaser on antitrust grounds will
not be made or, if such a challenge is made, of the result. See Section 14 for
certain conditions to the Offer, including conditions with respect to litigation
and certain governmental actions.
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Foreign Approvals. According to publicly available information, the
Company also owns property and conducts business in a number of other countries
and jurisdictions. In connection with the acquisition of the Common Shares
pursuant to the Offer, the laws of certain of those foreign countries and
jurisdictions may require the filing of information with, or the obtaining of
the approval of, governmental authorities in such countries and jurisdictions.
The governments in such countries and jurisdictions might attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Common Shares pursuant
to the Offer or the Proposed Merger. There can be no assurance that the
Purchaser will be able to cause the Company or its subsidiaries to satisfy or
comply with such laws or that compliance or noncompliance will not have adverse
consequences for the Company or any subsidiary after purchase of the Common
Shares pursuant to the Offer or the Proposed Merger.
Connecticut Environmental Transfer Law. The Connecticut Transfer Act,
Conn. Gen. Stat. Sec. 22a-134 et seq. (the "CTA"), requires that prior to the
transfer of ownership of an establishment subject to the CTA, the transferor
must submit a "Negative Declaration" to the transferee stating (i) that there
has been no spillage or discharge of hazardous waste on the property or that any
such spillage or discharge has been cleaned up according to the procedures and
requirements of the state Department of Environmental Protection (the "DEP") and
(ii) that any hazardous waste remaining on-site is being managed in accordance
with all applicable regulations. If the transferor cannot submit a "Negative
Declaration," one of the parties to the transfer must certify to the
Commissioner of the DEP that such party will contain or otherwise mitigate the
effects of any spillage or discharge in accordance with the procedures and
timetable approved by the Commissioner pursuant to an order or consent decree.
Based on publicly available information, the Purchaser understands that the
Company operates certain facilities in Connecticut. The Purchaser will seek to
determine whether any of the Company's properties are establishments subject to
the CTA and, if so, the Purchaser will comply, or seek to cause the Company to
comply, with the CTA as promptly as practicable following consummation of the
Offer. See Section 14.
Supermajority Vote Requirement. The Supermajority Vote Requirement
contained in Article SIXTH of the Company's Articles requires that certain
business combinations, such as the Proposed Merger, between the Company and any
person that, directly or indirectly, is the beneficial owner of 30% or more of
the outstanding voting power of the Company as of the record date for the
determination of the shareholders entitled to notice thereof and to vote thereon
or consent thereto (an "Interested Entity") be approved by 95% of the aggregate
voting power of the outstanding Shares, unless certain provisions are complied
with which generally require, among other things, (i) that the shareholders
receive at least the same amount of cash or fair market value of other
consideration as such Interested Entity paid for any of its Shares and that such
consideration be at least equal to the Company's earnings per Common Share for
the four full consecutive fiscal quarters immediately preceding the record date
for the solicitation of votes on such proposed business combination multiplied
by the price/earnings multiple of such Interested Entity; (ii) that the cash, or
fair market value of other consideration, to be received per Common Share in
such proposed business combination bears the same or a greater percentage
relationship to the market price of the Common Shares immediately prior to the
announcement of such proposed business combination as the highest price per
Common Share paid by such Interested Entity for any of the Common Shares already
owned by it bears to the market price of the Common Shares immediately prior to
the commencement of acquisition of the Common Shares by such Interested Entity;
(iii) that the Company's Board contain a certain number of directors elected by
the shareholders prior to the time such Interested Entity acquired in excess of
10% of the Company's voting stock or directors recommended to succeed such a
director by a majority of such directors ("Continuing Directors"); (iv) that
such Interested Entity not acquire any additional Shares except pursuant to the
transaction resulting in such person becoming such an Interested Entity; (v)
that such Interested Entity not receive any loans or guarantees from the Company
or make major changes in the Company's business or equity capital structure
prior to the consummation of the such business combination; and (v) that a proxy
statement containing any recommendation(s) of any or all of the Continuing
Directors as to the advisability (or inadvisability) of the proposed business
combination and, if deemed advisable by a majority of the Continuing Directors,
an opinion of a reputable investment banking firm as to the fairness (or not) of
the terms of such business combination from the point of view of the remaining
public shareholders be mailed to the shareholders soliciting their approval of
the proposed business combination.
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The Supermajority Vote Requirement may be amended only by (i) the vote or
consent of 95% of the shareholders of the Company or (ii) the vote or consent of
two-thirds of the shareholders of the Company upon the unanimous recommendation
of the Continuing Directors of the Company.
THE OFFER IS CONDITIONED UPON THE SATISFACTION OF THE ARTICLES AMENDMENT
CONDITION. THE PURCHASER CURRENTLY CONTEMPLATES THAT COMMON SHARES WILL NOT BE
ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER UNTIL THE SUPERMAJORITY VOTING
REQUIREMENT IS REPEALED, OR THE PURCHASER, IN ITS SOLE DISCRETION, IS SATISFIED
THAT THE PROVISIONS OF THE SUPERMAJORITY VOTING REQUIREMENT WILL NOT APPLY TO
THE PROPOSED MERGER.
Ohio Business Combination Law. The Ohio Business Combination Law provides
that an issuing public corporation shall not engage in certain business
combinations (including mergers) with an "Interested Shareholder" (generally, a
person entitled to control 10% or more of the outstanding voting shares of the
issuing public corporation in the election of directors) for a period of three
years following the date such person became an Interested Shareholder (the
"three year period"). This restriction does not apply if prior to the date such
person became an Interested Shareholder, the board of directors of the issuing
public corporation approved either the business combination or the transaction
which resulted in the Interested Shareholder becoming an Interested Shareholder.
The Ohio Business Combination Law further provides that after the expiration of
the three year period, an issuing public corporation may not engage in a
business combination (including a merger) unless either: (i) the business
combination is approved by both (x) the holders of at least a majority of all
shares and (y) the holders of at least a majority of the disinterested shares of
such issuing public corporation or (ii) the consideration used in such business
combination, both in price and form, meets certain tests to insure that such
consideration is at least equal to each of (x) the amount paid, or to be
received, by the Interested Shareholder, (y) the fair market value on the date a
person becomes an Interested Shareholder and (z) the fair market value on the
announcement date of the business combination.
Parent and the Purchaser are requesting that the Company's Board take
appropriate action so that the Ohio Business Combination Law is not applicable
to the acquisition of Common Shares pursuant to the Offer or to the Proposed
Merger. In order to increase the likelihood that the Company's Board will take
such action, Parent and the Purchaser have taken steps to commence a
solicitation of agent designations for the calling of the Special Meeting at
which, among other things, Parent and the Purchaser will propose that the
holders of Shares remove all of the incumbent directors of the Company,
eliminate the classified board provisions from the Regulations, reduce the size
of the Company's Board and elect the nominees of the Purchaser as the Company's
only directors. The nominees of the Purchaser will, if elected at the Special
Meeting, and subject to their fiduciary duties, be committed to ensuring that
the Ohio Business Combination Law is not applicable to the acquisition of Common
Shares pursuant to the Offer or to the Proposed Merger.
THE OFFER IS CONDITIONED UPON THE SATISFACTION OF THE BUSINESS COMBINATION
CONDITION. THE PURCHASER CURRENTLY CONTEMPLATES THAT COMMON SHARES WILL NOT BE
ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER UNTIL THE BOARD OF DIRECTORS OF THE
COMPANY HAS TAKEN APPROPRIATE ACTION SO THAT THE RESTRICTIONS CONTAINED IN THE
OHIO BUSINESS COMBINATION LAW ARE NOT APPLICABLE TO THE ACQUISITION OF COMMON
SHARES PURSUANT TO THE OFFER OR TO THE PROPOSED MERGER, UNLESS THE PURCHASER, IN
ITS SOLE DISCRETION, IS SATISFIED THAT AFTER CONSUMMATION OF THE OFFER THE
RESTRICTIONS CONTAINED IN THE OHIO BUSINESS COMBINATION LAW WILL NOT APPLY TO
THE PROPOSED MERGER.
The Ohio Control Share Acquisition Law. The Ohio Control Share Acquisition
Law provides that unless the articles of incorporation or the regulations of an
issuing public corporation provide otherwise, any control share acquisition of
such corporation shall be made only with the prior authorization of the
shareholders. An "issuing public corporation" is a corporation organized for
profit under the laws of Ohio, with 50 or more shareholders, that has its
principal place of business, principal executive offices or substantial assets
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in Ohio, and as to which there is no close corporation agreement in existence.
The Company is an issuing public corporation, as so defined.
A "control share acquisition" means the acquisition, directly or
indirectly, by any person of shares of an issuing public corporation that, when
added to all other shares of the issuing public corporation in respect of which
such person may exercise or direct the exercise of voting power, would entitle
such person, immediately after such acquisition, directly or indirectly, alone
or with others, to control any of the following ranges of the voting power of
such issuing public corporation in the election of directors: (a) one-fifth or
more but less than one-third of such voting power; (b) one-third or more but
less than a majority of such voting power; or (c) a majority or more of such
voting power. An acquisition of shares of an issuing public corporation,
however, does not constitute a control share acquisition if, among other things,
the acquisition is consummated pursuant to a merger, consolidation or other
transaction effected in compliance with Sections 1701.78, 1701.781 or 1701.83 of
the ORC if the issuing public corporation is the surviving or new corporation in
the merger or consolidation or is the acquiring corporation in the combination
or majority share acquisition.
Any person who proposes to make a control share acquisition must deliver an
"acquiring person statement" to the issuing public corporation, which statement
shall include: (a) the identity of the acquiring person, (b) a statement that
the acquiring person statement is being delivered pursuant to the Ohio Control
Share Acquisition Law, (c) the number of shares of the issuing public
corporation owned, directly or indirectly, by such acquiring person, (d) the
range of voting power in the election of directors under which the proposed
acquisition would, if consummated, fall (i.e., in excess of 20%, 33 1/3% or
50%), (e) a description of the terms of the proposed acquisition and (f)
representations of the acquiring person that the acquisition will not be
contrary to law and that such acquiring person has the financial capacity to
make the proposed acquisition (including the facts upon which such
representations are based).
Within 10 days of receipt of a qualifying acquiring person statement, the
directors of the issuing public corporation must call a special shareholders
meeting to vote on the proposed acquisition. Unless the acquiring person
otherwise agrees, the meeting must be held within 50 days of receipt of such
statement. However, the acquiring person may, and Parent and the Purchaser did,
request, at the time of delivery of the acquiring person statement, that the
meeting not be held sooner than 30 days after the receipt of such statement. The
special meeting cannot be held later than certain other special meetings of
shareholders called by the corporation in compliance with the ORC after receipt
of a qualifying acquiring person statement.
The issuing public corporation is required to send a notice of the special
meeting as promptly as reasonably practicable to all shareholders of record as
of the record date set for such meeting, together with a copy of the acquiring
person statement and a statement of the issuing public corporation, authorized
by its directors, of its position or recommendation, or that it is taking no
position, with respect to the proposed control share acquisition.
The Ohio Control Share Acquisition Law provides that an acquiring person
may make a proposed control share acquisition only if (a) at a meeting at which
a quorum is present, a majority of the voting power entitled to vote in the
election of directors represented (in person or by proxy) at such meeting and a
majority of such voting power excluding "Interested Shares," authorize the
control share acquisition and (b) such acquisition is consummated, in accordance
with the terms so authorized, within 360 days following such authorization.
"Interested Shares" means shares as to which any of the following may exercise
or direct the exercise of voting power in the election of directors: (i) an
acquiring person, (ii) an officer elected or appointed by the directors of the
issuing public corporation or (iii) any employee of the issuing public
corporation who is also a director of such corporation. "Interested Shares" also
means shares of the issuing public corporation acquired, directly or indirectly,
by any person or group for valuable consideration during the period beginning
with the date of the first public disclosure of a proposed control share
acquisition of the issuing public corporation or any proposed merger,
consolidation or other transaction which would result in a change in control of
the corporation or all or substantially all of its assets, and ending on the
date of any special meeting of the corporation's shareholders held thereafter
pursuant to the Ohio Control Share Acquisition Law for the purpose of voting on
a control share acquisition proposed by an acquiring person, if either of the
following apply: (i) the aggregate consideration paid or otherwise given by the
person who acquired the shares, and any
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other persons acting in concert with it, for all shares exceeds $250,000 or (ii)
the number of shares acquired by the person who acquired the shares, and any
other persons acting in concert with it, exceeds 1/2 of 1% of the outstanding
shares of the corporation entitled to vote in the election of directors (the
Interested Shares described in this sentence are referred to herein as
"Disqualified Shares"). See "Litigation" below.
Dissenters' rights are not available to shareholders of an issuing public
corporation in connection with the authorization of a control share acquisition.
Without waiving their right to challenge the validity of all or any part of
the Ohio Control Share Acquisition Law or to seek an amendment to the Company's
Regulations opting out of the Ohio Control Share Acquisition Law, and reserving
their right to take actions inconsistent with the applicability of the Ohio
Control Share Acquisition Law, Parent and the Purchaser delivered to the Company
on July 12, 1996 an acquiring person statement relating to the Offer. Pursuant
to the Ohio Control Share Acquisition Law, Parent and the Purchaser have
requested that the Ohio Control Share Acquisition Meeting not be held for at
least 30 days after receipt of the acquiring person statement. Accordingly, the
Ohio Control Share Acquisition Meeting must be held no earlier than August 11,
1996 and no later than August 31, 1996.
THE OFFER IS CONDITIONED UPON THE SATISFACTION OF THE CONTROL SHARE
CONDITION. THE PURCHASER CURRENTLY CONTEMPLATES THAT COMMON SHARES WILL NOT BE
ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER UNTIL THE ACQUISITION BY THE
PURCHASER OF COMMON SHARES PURSUANT TO THE OFFER IS AUTHORIZED BY THE
SHAREHOLDERS OF THE COMPANY AT THE OHIO CONTROL SHARE ACQUISITION MEETING,
UNLESS THE PURCHASER, IN ITS SOLE DISCRETION, IS SATISFIED THAT THE PROVISIONS
OF THE OHIO CONTROL SHARE ACQUISITION LAW ARE INVALID OR INAPPLICABLE TO SUCH
ACQUISITION. SEE SECTION 14.
Ohio Take-Over Act. Sections 1707.041, 1707.042, 1707.23 and 1707.26 of
the ORC (collectively, the "Ohio Take-Over Act") regulate tender offers. The
Ohio Take-Over Act applies to the purchase of or offer to purchase any equity
security of a subject company from a resident of Ohio if, after the purchase,
the offeror would directly or indirectly be the beneficial owner of more than
10% of any class of issued and outstanding equity securities of such company (a
"control bid"). A subject company includes an issuer, such as the Company, that
either has its principal place of business or principal executive offices
located in Ohio or owns or controls assets located in Ohio that have a fair
market value of at least one million dollars, and that has more than one
thousand beneficial or record equity security holders who reside in Ohio. A
subject company, however, need not be incorporated in Ohio. Notwithstanding the
definition of subject company contained in the Ohio Take-Over Act, the Ohio
Division of Securities (the "Ohio Division"), by rule or an adjudicatory
proceeding, may make a determination that an issuer does not constitute a
subject company if appropriate review of control bids involving the issuer is to
be made by any regulatory authority of another jurisdiction. The Ohio Division
has not adopted any rules under this provision.
The Ohio Take-Over Act prohibits an offeror from making a control bid for
securities of a subject company pursuant to a tender offer until the offeror has
filed specified information with the Ohio Division. In addition, the offeror is
required to deliver a copy of such information to the subject company not later
than the offeror's filing with the Ohio Division and to send or deliver such
information and the material terms of the proposed offer to all offerees in Ohio
as soon as practicable after the offeror's filing with the Ohio Division.
Within three calendar days of such filing, the Ohio Division may by order
summarily suspend the continuation of the control bid if it determines that the
offeror has not provided all of the specified information or that the control
bid materials provided to offerees do not provide full disclosure of all
material information concerning the control bid. If the Ohio Division summarily
suspends a control bid, it must schedule and hold a hearing within 10 calendar
days of the date on which the suspension is imposed and must make its
determination within three calendar days after the hearing has been completed
but no later than 16 calendar days after the date on which the suspension is
imposed. The Ohio Division may maintain its suspension of the continuation of
the control bid if, based upon the hearing, it determines that all of the
information required to be provided by the Ohio Take-Over Act has not been
provided by the offeror, that the control bid materials provided to offerees do
not provide full disclosure of all material information concerning the control
bid, or
42
<PAGE> 43
that the control bid is in material violation of any provision of the Ohio
securities laws. If, after the hearing, the Ohio Division maintains the
suspension, the offeror has the right to correct the disclosure and other
deficiencies identified by the Ohio Division and to reinstitute the control bid
by filing new or amended information pursuant to the Ohio Take-Over Act.
Litigation.
On July 11, 1996, Parent and the Purchaser commenced an action in the
United States District Court for the Southern District of Ohio, Eastern Division
(the "Ohio Federal District Court") against the Company, the directors of the
Company, the Acting Commissioner of Securities of the Ohio Division of
Securities, the Director of Commerce of the Ohio Department of Commerce and the
State of Ohio, seeking among other things, that the Court declare
unconstitutional and enjoin application of the Ohio Take-Over Act and certain
provisions of the Ohio Control Share Acquisition Law that impair the voting
rights of the Disqualified Shares. In March, 1995, in Luxottica Group S.p.A. v.
The United States Shoe Corporation, the Ohio Federal District Court issued an
order enjoining application of such provisions of the Ohio Control Share
Acquisition Law to the tender offer involved in that case. Without prejudice to
its position that the Ohio Take-Over Act is unconstitutional, on July 12, 1996,
Parent and the Purchaser submitted Form 041 under the Ohio Take-Over Act,
including a copy of the Schedule 14D-1 relating to the Offer, to the Ohio
Division. If injunctive relief is not obtained against the enforcement of the
Ohio Take-Over Act, then the Purchaser may not be obligated to accept for
payment or pay for Common Shares tendered pursuant to the Offer or may, among
other things, terminate the Offer or amend the terms and conditions of the
Offer. See Section 14.
The complaint also alleges that the 180-Day Restrictions are in violation
of the ORC and invalid, and further that refusal by the directors of the Company
to redeem the Rights constitutes a breach of the directors' fiduciary duties.
The Complaint seeks, among other things, that the Court enjoin the Company and
its directors from taking any steps to enforce or amend the Rights, and require
that the Rights be redeemed and that the 180-Day Restrictions be deleted.
The complaint further alleges that the Preferred Shares held of record by
the Trustee for the Company's ESOPs are not entitled to one and one-half votes
per share under Ohio law and the Company's Articles and Regulations, but rather
that each Preferred Share is entitled to one vote. The complaint seeks, among
other things, a declaratory judgment that the Preferred Shares are entitled to
only one vote per share and an injunction against the recognition of any altered
or increased voting rights for the Preferred Shares.
In addition, the ESOP Trusts contain pass-through voting and tendering
provisions described in Section 8. Parent and the Purchaser believe that,
notwithstanding the express terms of the trust documents, the Trustee has a
fiduciary duty under ERISA to exercise its discretion with respect to voting and
tendering Shares held in the ESOPs which are allocated to a participant's
account but for which no instructions are received by it and for all Shares held
in the ESOPs which are not allocated to a participant's account. See Section 8.
Other State Laws. A number of other states have adopted laws and
regulations applicable to attempts to acquire securities of corporations which
are incorporated, or have substantial assets, shareholders, principal executive
offices or principal places of business, or whose business operations otherwise
have substantial economic effects, in such states. In 1982, in Edgar v. MITE
Corp., the Supreme Court of the United States invalidated on constitutional
grounds the Illinois Business Takeover Statute, which, as a matter of state
securities law, made takeovers of corporations meeting certain requirements more
difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the Indiana Control Share Acquisition Act was
constitutional. Such Act, by its terms, is applicable only to corporations that
have a substantial number of shareholders in Indiana and are incorporated there.
Subsequently, a number of Federal courts ruled that various state takeover
statutes were unconstitutional insofar as they apply to corporations
incorporated outside the state of enactment.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer and has not complied with any such laws. Should
any person seek
43
<PAGE> 44
to apply any state takeover law, the Purchaser will take such action as then
appears desirable, which may include challenging the validity or applicability
of any such statute in appropriate court proceedings. In the event it is
asserted that one or more state takeover laws is applicable to the Offer and the
Proposed Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer and the Proposed Merger, the
Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined, the
Purchaser might be unable to accept for payment any Common Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer. In
such case, the Purchaser may not be obligated to accept for payment any Common
Shares tendered. See Section 14.
SECTION 16. FEES AND EXPENSES
Schroder Wertheim is acting as Dealer Manager in connection with the Offer
and serving as financial advisor to Parent in connection with its proposed
acquisition of the Company. As compensation for such services, Parent has agreed
to pay or cause to be paid to Schroder Wertheim a fee of $500,000 upon
commencement of the Offer. Parent has agreed to pay or cause to be paid to
Schroder Wertheim an additional fee of $3,500,000 contingent upon consummation
of a Transaction. "Transaction" has been defined as an acquisition by Parent of
the Company by way of (i) merger, (ii) purchase of all or a portion of the
assets or stock of the Company, (iii) obtaining 50% or more voting control of
the common stock of the Company or effective control of the Board of Directors
of the Company through a proxy or similar solicitation, or (iv) otherwise.
Parent has also agreed that, in the event a Transaction is not consummated,
Parent will pay to Schroder Wertheim 10% of any profits Parent receives upon its
disposition of, or otherwise received in respect of, securities of the Company
acquired by it, or 10% of any break-up fee Parent receives from the Company (in
each case, less any fees paid to Schroder Wertheim at the commencement of the
Offer). In addition, Parent has agreed to reimburse Schroder Wertheim for
certain reasonable out-of-pocket expenses incurred in connection with the Offer
and the Proposed Merger or otherwise arising out of Schroder Wertheim's
engagement, and has also agreed to indemnify Schroder Wertheim (and certain
affiliated persons) against certain liabilities and expenses, including, without
limitation, certain liabilities under the federal securities laws.
Schroder Wertheim may from time to time in the future render various
investment banking services to Parent and its affiliates, for which it is
expected it would be paid customary fees. In the ordinary course of business,
Schroder Wertheim and its affiliates may actively trade the securities of Parent
and the Company for their own account and for the account of customers and
accordingly may, at any time, hold long or short positions in such securities.
MacKenzie Partners, Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee shareholders to forward material
relating to the Offer to beneficial owners of Shares. The Purchaser will pay the
Information Agent reasonable and customary compensation for all such services in
addition to reimbursing the Information Agent for reasonable out-of-pocket
expenses in connection therewith. The Purchaser has agreed to indemnify the
Information Agent against certain liabilities and expenses in connection with
the Offer, including, without limitation, certain liabilities under the federal
securities laws.
IBJ Schroder Bank & Trust Company has been retained as the Depositary. The
Purchaser will pay the Depositary reasonable and customary compensation for its
services in connection with the Offer, will reimburse the Depositary for its
reasonable out-of-pocket expenses in connection therewith and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including, without limitation, certain liabilities under the federal securities
laws.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by Parent or the
44
<PAGE> 45
Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials to their customers.
SECTION 17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Common Shares in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. Neither the Purchaser
nor Parent is aware of any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any jurisdiction and extend the Offer
to holders of Common Shares in such jurisdiction. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of the Purchaser by
the Dealer Manager or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission a Tender Offer
Statement on Schedule 14D-1 pursuant to Rule 14D-3 under the Exchange Act,
together with Exhibits, furnishing certain additional information with respect
to the Offer, and may file amendments thereto. Such Schedule 14D-1 and any
amendments thereto, including Exhibits, may be inspected and copies may be
obtained in the manner set forth in Section 8 (except that such material will
not be available at the regional offices of the Commission).
OPUS ACQUISITION CORPORATION
July 12, 1996
45
<PAGE> 46
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND THE PURCHASER
PARENT
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 Parent. Except for Messrs. Crossgrove, Grant,
MacKay, McDonald, Scott, Stinson, Allan Taylor and George Taylor, who are
citizens of Canada, each of the Parent's directors and executive officers is a
citizen of the United States. The business address of each executive officer of
Parent is 2300 One First Union Center, Charlotte, North Carolina 28202. Each
occupation set forth opposite a person's name, unless otherwise indicated,
refers to employment with Parent. Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST
FIVE YEARS,
NAME, PRINCIPAL BUSINESS AND
BUSINESS (B) OR RESIDENCE (R) ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
- ------------------------------ ------------------------------ ------------------------------
<S> <C> <C>
James E. Courtney*............ (r)1779 Venus Dr. Chairman of the Board, First
Sanibel, Florida Independence Bank of Fort
33957-3427 Myers, Jan. 1, 1996.
President, The Mariner Group,
Inc., a real estate management
and development company, 12800
University Drive, Suite 350,
Fort Myers, Florida 33907,
from 1992 to 1995.
Peter A. Crossgrove*.......... (b)141 Adelaide Street West President and CEO, Southern
Suite 1703 Africa Minerals Corporation, a
Toronto, Ontario M5H 3L5 diamond exploration company,
Canada 141 Adelaide Street West,
Suite 1703, Toronto, Ontario
M5H 3L5, Canada, from 1994 to
present. Chairman and Chief
Executive Officer of Brush
Creek Corporation, an
investment holding company,
250 Yonge Street, Toronto,
Ontario M5B 1C8, Canada, from
1993 to present. Acting CEO,
Placer Dome Inc., an
international mining company,
Suite 3500, IBM Tower,
Toronto-Dominion Ctr.,
Toronto, Ontario M5K 1N3,
Canada, from 1992 to 1993.
President and Chief Executive
Officer of Itco Properties
Ltd., a wholly owned
subsidiary of Starlaw Holdings
Limited, a company that
develops, purchases and holds
real estate in Canada and the
U.S., from 1982 to 1992.
</TABLE>
S-1
<PAGE> 47
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST
FIVE YEARS,
NAME, PRINCIPAL BUSINESS AND
BUSINESS (B) OR RESIDENCE (R) ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
- ------------------------------ ------------------------------ ------------------------------
<S> <C> <C>
R. Stuart Dickson*............ (b)2000 Two First Union Center Chairman of the Executive
Charlotte, NC 28282 Committee, Ruddick
Corporation, an industrial
thread, regional supermarket
and venture capital company,
2000 Two First Union Center,
Charlotte, NC 28282, from 1994
to present. Chairman, Ruddick
Corporation, from 1968 to
1994.
James A. Grant*............... (b)Suite 3900 Partner of Stikeman, Elliott,
1155 Rene Levesque Blvd. W. a law firm, Commerce Court
Montreal, Quebec H3B 3V2 West, Suite 5300, Toronto,
Canada Ontario M5L IB9, Canada, from
1970 to present. Chairman of
Executive Committee of
Stikeman, Elliott since 1988.
William R. Holland*........... Chairman since 1987 and Chief
Executive Officer since 1986.
Russell C. King, Jr.*......... (r)2376E Dunwoody Crossing Retired since May 30, 1994.
Atlanta, GA 30338 President and Chief Operating
Officer, Sonoco Products
Company, an international
manufacturer of packaging
products, 1 North Second
Street, P.O. Box 160,
Hartsville, SC 29551, from
1990 to 1994.
H. John McDonald*............. (b)Suite 2800, 2 Bloor St. Chairman, Black & McDonald
East Limited, an international
Toronto, Ontario M4W 1A8 mechanical and electrical
Canada contracting company, Suite
2800, 2 Bloor St. East,
Toronto, Ontario M4W 1A8,
Canada, since 1984.
Dalton D. Ruffin*............. (r)2841 Galsworthy Dr. Retired since January 1, 1989.
Winston-Salem, NC 27106
I. Barry Scott*............... (r)96 Churchill Road Baie Retired since February 28,
d'Urfe, Quebec H9X 2Y3 1995. Chairman and Chief
Canada Executive Officer of CP Rail
System, a transportation
division of Canadian Pacific
Limited, 910 Peel Street, Room
215, P.O. Box 6042, Station
Centre-ville, Montreal, Quebec
H3C 3E4, Canada, from 1985 to
1995.
William W. Stinson*........... (b)Suite 800, Place du Canada Retired since May 1, 1996.
P.O. Box 6042, Chairman of Canadian Pacific
Station Centre-ville Limited, a transportation,
Montreal, Quebec H3C 3E4 energy, real estate and hotel
Canada company, Suite 800, Place du
Canada,
P.O. Box 6042, Station
Centre-ville, Montreal, Quebec
H3C 3E4, Canada from 1989 to
1996. Chief Executive Officer
of Canadian Pacific Limited
from 1985 to 1996.
</TABLE>
S-2
<PAGE> 48
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST
FIVE YEARS,
NAME, PRINCIPAL BUSINESS AND
BUSINESS (B) OR RESIDENCE (R) ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
- ------------------------------ ------------------------------ ------------------------------
<S> <C> <C>
Allan R. Taylor, O.C.*........ (r)The Chedington Manor Retired since January 31,
1 Chedington Place, Suite 2A 1995. Chairman, Royal Bank of
North York, Ontario M4N 3R4 Canada, a financial
Canada institution, Royal Bank Plaza,
Toronto, Ontario M5J 2J5,
Canada, from 1986 to 1995.
George S. Taylor*............. (b)120 Adelaide St. W Retired since December 31,
Suite 1850 1995. President and Chief
Toronto, Ontario M5J 2T3 Executive Officer, John Labatt
Canada Limited, a brewing company,
Labatt House BCE Place, P.O.
Box 811, Suite 200-181 Bay
St., Toronto, Ontario M5J 2T3,
Canada, from 1992 to 1995.
Executive Vice President, John
Labatt Limited, from 1985 to
1992.
Jan K. Ver Hagen*............. President and Chief Operating
Officer since 1994. Vice
Chairman, Emerson Electric
Co., a manufacturer of a broad
range of electrical and
electronic products, 8000 W.
Florissant Ave., St. Louis,
Missouri 63136, from 1988 to
1994.
Robert E. Drury............... Executive Vice President and
Chief Administrative Officer
since 1995. Chief Financial
Officer from 1992 to 1995, and
Senior Vice President from
1993 to 1995. Vice President
from 1987 to 1993.
Richard A. Bearse............. Senior Vice President since
1996. President and Chief
Executive Officer, Flair
Corporation, a manufacturer of
air filtration and dehydration
equipment, 4647 S.W. 40th
Avenue, Ocala, Florida 34474,
from 1992 to 1995. President
and Chief Executive Officer,
Pneumatic Products
Corporation, a subsidiary of
Flair, from 1991 to 1992.
B. Bernard Burns, Jr.......... General Counsel and Secretary
since 1992, and Senior Vice
President since 1993. Vice
President from 1989 to 1993.
Glenn A. Eisenberg............ Senior Vice President and
Chief Financial Officer since
1995. Vice President of
Planning and Development from
1992 to 1995. Director of
Corporate Finance and Investor
Relations since 1991. Manager
of Treasury Analysis and
Services from 1990 to 1991.
John G. MacKay................ Senior Vice President since
1995. Various positions with
Parent since 1990, including
President-- Industrial
Products segment.
</TABLE>
S-3
<PAGE> 49
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST
FIVE YEARS,
NAME, PRINCIPAL BUSINESS AND
BUSINESS (B) OR RESIDENCE (R) ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
- ------------------------------ ------------------------------ ------------------------------
<S> <C> <C>
Irvin B. Prude................ Senior Vice President since
1995. Various positions since
1968, including
President--Building Products
segment.
J. Milton Childress II........ Vice President since 1996.
Assistant Vice President from
1995 to 1996. Director of
corporate development from
1992 to 1995. Ernst & Young
prior to 1992.
William Dries................. Vice President and Controller
since 1990.
June P. Hassett............... Vice President since 1996.
Assistant Vice President from
1995 to 1996. Director of
taxes from 1991 to 1995.
Richard L. Magee.............. Vice President since 1996.
Assistant Vice President from
1995 to 1996. Associate
General Counsel since 1993,
and Assistant General Counsel
from 1989 to 1993.
Robert L. Shaffer............. Vice President of Corporate
Communications since 1990.
Thomas J. Snyder.............. Vice President and Treasurer
since 1993, and Treasurer
since 1991. Various positions
with Parent since 1977.
Timothy J. Verhagen........... Vice President since 1993.
Vice President and Associate
General Counsel, The Marley
Company, a manufacturer of
engineered equipment for
heating, fluid handling and
heat exchange applications,
1900 Shawnee Mission Parkway,
Mission, Kansas 66205, from
1985 to 1993.
</TABLE>
THE PURCHASER
The name and position with the Purchaser of each director and executive
officer of the Purchaser are set forth below. The business address, present
principal occupation or employment, five-year employment history and citizenship
of each person is set forth above. Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
NAME POSITION WITH THE PURCHASER
- ------------------------------ -------------------------------------
<S> <C>
B. Bernard Burns, Jr.*........ Vice President and Secretary
Robert E. Drury*.............. President
Glenn A. Eisenberg*........... Vice President and Treasurer
Richard L. Magee.............. Assistant Secretary
</TABLE>
S-4
<PAGE> 50
SCHEDULE II
PARENT PURCHASES OF SHARES
(ALL PURCHASES WERE MADE FOR CASH ON THE OPEN MARKET
ON THE NEW YORK STOCK EXCHANGE)
<TABLE>
<CAPTION>
DATE NUMBER OF SHARES PRICE PER SHARE
------------------------------------ ---------------- ---------------
<S> <C> <C>
July 3, 1996........................ 1,000 $27
</TABLE>
S-5
<PAGE> 51
The Letter of Transmittal, certificates for Common Shares and, if
applicable, Rights and any other required documents should be sent or delivered
by each shareholder of the Company or such shareholder's broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Attn.: Reorganization Operations New York, New York 10004
New York, New York 10274-0084 Department Attn.: Securities Processing
Attn.: Reorganization Operations Window, Subcellar One
Department
</TABLE>
Confirm Facsimile by telephone:
(212) 858-2103
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses or telephone numbers set
forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and all other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or Call Toll Free (800) 322-2885
The Dealer Manager for the Offer is:
SCHRODER WERTHEIM & CO.
--------------------------------------------------
INCORPORATED
Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
(212) 492-6000 (Call Collect)
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER COMMON SHARES
(including the associated preferred share purchase rights)
OF
COMMERCIAL INTERTECH CORP.
Pursuant to the Offer to Purchase dated July 12, 1996
BY
OPUS ACQUISITION CORPORATION
an indirect wholly owned subsidiary of
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 8, 1996, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or
P.O. Box 84 (212) 858-2611 Overnight Delivery:
Bowling Green Station Attn: Reorganization One State Street
New York, New York 10274-0084 Operations Department New York, New York 10004
Attn: Reorganization Attn: Securities Processing
Operations Department Window,
Subcellar One
</TABLE>
Confirm Facsimile by Telephone:
(212) 858-2103
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
PARTICIPANTS IN THE COMPANY'S EMPLOYEE STOCK OWNERSHIP PLAN AND RETIREMENT
STOCK OWNERSHIP AND SAVINGS PLAN (THE "ESOPS") DESIRING TO TENDER COMMON SHARES
(AS DEFINED HEREIN) ISSUABLE UPON CONVERSION OF ESOP CONVERTIBLE PREFERRED
SHARES SERIES B HELD ON THEIR BEHALF SHOULD SO INSTRUCT THE TRUSTEE FOR THE
ESOPS BY COMPLETING THE FORM WHICH WILL BE PROVIDED TO PARTICIPANTS FOR THAT
PURPOSE. ESOP PARTICIPANTS CANNOT TENDER SHARES ALLOCATED TO THEIR ESOP ACCOUNTS
BY EXECUTING THIS LETTER OF TRANSMITTAL.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Common Shares and/ or Rights (as such terms are defined
below) are to be forwarded herewith or, unless an Agent's Message (as defined
below) is utilized, if delivery of Common Shares and/or Rights is to be made by
book-entry transfer (in the case of Rights, if available) to an account
maintained by the Depositary at The Depository Trust Company ("DTC"), the
Midwest Securities Trust Company ("MSTC") or the Philadelphia Depository Trust
Company ("PDTC") (each a "Book-Entry Transfer Facility" and collectively, the
"Book-Entry Transfer Facilities") pursuant to the book-entry transfer procedure
described in Section 2 of the Offer to Purchase (as defined below).
<PAGE> 2
Unless and until the Purchaser declares that the Rights Condition (as
defined in the Offer to Purchase) is satisfied, holders of Common Shares will be
required to tender one associated Right for each Common Share tendered in order
to effect a valid tender of such Common Share. If the Distribution Date (as
defined in the Offer to Purchase) does not occur prior to the Expiration Date
(as defined in the Offer to Purchase), a tender of Common Shares will also
constitute a tender of the associated Rights. If the Distribution Date occurs
and certificates representing Rights are distributed to holders of Common
Shares, such holders of Common Shares will be required to tender certificates
for a number of Rights equal to the number of Common Shares being tendered in
order to effect a valid tender of such Common Shares. Shareholders who deliver
Common Shares and/or Rights by book-entry transfer are referred to herein as
"Book-Entry Shareholders" and other shareholders are referred to herein as
"Certificate Shareholders".
Shareholders whose certificates for Common Shares and/or Rights are not
immediately available or who cannot deliver either the certificates for, or a
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to,
their Common Shares and/or Rights and all other documents required hereby to the
Depositary on or prior to the Expiration Date must tender their Common Shares
and/or Rights in accordance with the guaranteed delivery procedures set forth in
Section 2 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
------------------------
/ / CHECK HERE IF TENDERED COMMON SHARES AND/OR RIGHTS (IF AVAILABLE WITH
RESPECT THERETO) ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING. (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER COMMON SHARES AND/OR RIGHTS (IF AVAILABLE WITH RESPECT THERETO)
BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
----------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
Midwest Philadelphia
Depository Securities Depository
Trust Company Trust Company Trust Company
------------- ------------- --------------
(CHECK ONE) / / / / / /
Account Number
--------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------
/ / CHECK HERE IF TENDERED COMMON SHARES AND/OR RIGHTS ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH
NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s)
---------------------------------------------
Window Ticket No. (if any)
--------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------
Name of Institution which Guaranteed Delivery
-------------------------------
<PAGE> 3
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMON SHARES TENDERED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) COMMON SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF COMMON SHARES NUMBER OF
CERTIFICATE EVIDENCED BY COMMON SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total
Common Shares
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Common Shares
being delivered to the Depositary are being tendered hereby. See
Instruction 4.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF RIGHTS TENDERED(1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) RIGHTS TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST, IF NECESSARY)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF RIGHTS NUMBER
CERTIFICATE REPRESENTED BY OF RIGHTS
NUMBER(S)(2)(3) CERTIFICATE(S)(3) TENDERED(4)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Rights
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed if the Distribution Date has not occurred.
(2) If the tendered Rights are represented by separate certificates, complete
using the certificate numbers of such certificates for Rights. If the
tendered Rights are not represented by separate certificates, or if such
certificates have not been distributed, complete using the certificate
numbers of the Common Shares with respect to which the Rights were issued.
Shareholders tendering Rights that are not represented by separate
certificates should retain a copy of this description in order to
accurately complete the Notice of Guaranteed Delivery if the Distribution
Date occurs.
(3) Need not be completed by Book-Entry Shareholders who are delivering Rights
by book-entry transfer (if available).
(4) Unless otherwise indicated, it will be assumed that all Rights being
delivered to the Depositary are being tendered. See Instruction 4.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Common Shares and/or Rights tendered hereby. The certificates and number of
Common Shares and/or Rights that the undersigned wishes to tender should be
indicated in the appropriate boxes.
<PAGE> 4
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Opus Acquisition Corporation, a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of United
Dominion Industries Limited, a Canadian corporation ("Parent"), the above-
described common shares, par value $1.00 per share (the "Common Shares") of
Commercial Intertech Corp., an Ohio corporation (the "Company"), together with
(unless and until the Purchaser declares that the Rights Condition (as defined
in the Offer to Purchase) is satisfied) an equal number of the associated
preferred share purchase rights (the "Rights") issued pursuant to the Rights
Agreement (the "Rights Agreement") dated as of November 29, 1989 between the
Company and The Mahoning National Bank of Youngstown, as rights agent (the
"Rights Agent"), pursuant to Purchaser's offer to purchase all outstanding
Common Shares, at a price of $27.00 per Common Share (and associated Right), net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated July 12, 1996 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, as each may be amended or supplemented from time
to time, together constitute the "Offer"). The undersigned understands that
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or any
portion of the Common Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Common Shares
and Rights tendered herewith, in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, Purchaser all right,
title and interest in and to all the Common Shares and Rights that are being
tendered hereby and all dividends (other than regular quarterly cash dividends,
not in excess of $0.135 per Common Share, having a customary and usual record
and payment date prior to the Purchaser purchasing and becoming a record holder
of such Common Shares), distributions (including, without limitation,
distributions of additional Common Shares) and rights declared, paid or
distributed in respect of such Common Shares on or after July 11, 1996 (other
than the $0.01 redemption price per Right if the Rights are redeemed in
accordance with the Rights Agreement as publicly disclosed to be in effect on
July 11, 1996) (collectively, "Distributions"), and irrevocably appoints IBJ
Schroder Bank & Trust Company (the "Depositary") the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Common Shares and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full extent
of the undersigned's rights with respect to such Common Shares and Rights (and
Distributions) to (i) deliver certificates evidencing such Common Shares and
Rights and all Distributions, or transfer ownership of such Common Shares and
Rights and all Distributions on the account books maintained by a Book-Entry
Transfer Facility, together, in either case, with all accompanying evidences of
transfer and authenticity, to, or upon the order of, Purchaser, (ii) present
such Common Shares and Rights and all Distributions for transfer on the books of
the Company and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Common Shares and Rights and all Distributions, all
in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints William R. Holland, B. Bernard Burns, Jr., and Richard L. Magee of the
Purchaser as the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to the full extent of the undersigned's rights with
respect to the Common Shares and Rights tendered hereby and accepted for payment
by the Purchaser (and any and all Distributions). All such powers of attorney
and proxies shall be considered irrevocable and coupled with an interest in the
tendered Common Shares and Rights (and Distributions). This appointment will be
effective if, when, and only to the extent that, the Purchaser accepts such
Common Shares and Rights for payment pursuant to the Offer. Upon such acceptance
for payment, all prior powers of attorney, proxies and consents given by the
undersigned with respect to such Common Shares and Rights (and such other Common
Shares and securities) will, without further action, be revoked, and no
subsequent powers of attorney, proxies, consents or revocations may be given or
executed by the undersigned (and, if given or executed, will not be deemed to be
effective) with respect thereto. The designees of the Purchaser named above
will, with respect to the Common Shares and Rights and other securities for
which the appointment is effective, be empowered to exercise all voting and
other rights of the undersigned as they in their sole discretion may deem proper
at any annual or special meeting of the shareholders of the Company or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise, and the Purchaser reserves the right to require that, in
order for Common Shares and Rights or other securities to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such Common
Shares and Rights, the Purchaser must be able to exercise full voting, consent
or other rights with respect to such Common Shares and Rights and all
Distributions, including voting at any meeting of shareholders of the Company.
<PAGE> 5
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Common Shares
and Rights tendered hereby and all Distributions, and that when such Common
Shares and Rights are accepted for payment by Purchaser, Purchaser will acquire
good, marketable and unencumbered title thereto and to all Distributions, free
and clear of all liens, restrictions, charges and encumbrances, and that none of
such Common Shares and Rights and Distributions will be subject to any adverse
claim. The undersigned, upon request, shall execute and deliver all additional
documents deemed by the Depositary or Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Common Shares and Rights
tendered hereby and all Distributions. In addition, the undersigned shall remit
and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Common Shares and Rights tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of each such Distribution and may
withhold the entire purchase price of the Common Shares tendered hereby or
deduct from such purchase price, the amount or value of such Distribution as
determined by Purchaser in its sole discretion.
If the Distribution Date does not occur prior to the Expiration Date, a
tender of Common Shares will also constitute a tender of the associated Rights.
If the Purchaser declares that the Rights Condition has been satisfied, the
Purchaser will not require delivery of Rights.
The undersigned understands that, unless and until the Purchaser declares
that the Rights Condition is satisfied, holders of Common Shares will be
required to tender one associated Right for each Common Share tendered in order
to effect a valid tender of such Common Share in accordance with the procedures
set forth in Section 2 of the Offer to Purchase. If the Distribution Date occurs
and certificates representing the Rights ("Rights Certificates") are distributed
by the Company or the Rights Agent to holders of Common Shares prior to the time
Common Shares are tendered herewith, in order for Rights (and the corresponding
Common Shares) to be validly tendered, Rights Certificates representing a number
of Rights equal to the number of Common Shares being tendered herewith must be
delivered to the Depositary or, if available, a Book-Entry Confirmation must be
received by the Depositary with respect thereto. If the Distribution Date occurs
and Rights Certificates are not distributed prior to the time Common Shares are
tendered herewith, Rights may be tendered prior to a shareholder receiving
Rights Certificates by use of the guaranteed delivery procedure described in
Section 2 of the Offer to Purchase. In any case, a tender of Common Shares
constitutes an agreement by the tendering shareholder to deliver Rights
Certificates representing a number of Rights equal to the number of Common
Shares tendered pursuant to the Offer to the Depositary within three business
days after the date Rights Certificates are distributed. The Purchaser reserves
the right to require that the Depositary receive Rights Certificates, or a
Book-Entry Confirmation, if available, with respect to such Rights, prior to
accepting the related Common Shares for payment pursuant to the Offer if the
Distribution Date occurs prior to the Expiration Date.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Common Shares and Rights
pursuant to any one of the procedures described in Section 2 of the Offer to
Purchase and in the instructions hereto will constitute the undersigned's
acceptance of the terms and conditions of the Offer. Purchaser's acceptance of
such Common Shares (and Rights) for payment will constitute a binding agreement
between the undersigned and Purchaser upon the terms and subject to the
conditions of the Offer, including, without limitation, the undersigned's
representation and warranty that the undersigned owns the Common Shares (and
Rights) being tendered. The undersigned recognizes that under certain
circumstances set forth in the Offer to Purchase, Purchaser may not be required
to accept for payment any of the Common Shares and Rights tendered hereby.
Without limiting the foregoing, if the price to be paid in the Offer is amended
in accordance with the Offer, the price to be paid to the undersigned will be
the amended price notwithstanding the fact that a different price is stated in
this Letter of Transmittal.
<PAGE> 6
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Common
Shares and Rights purchased, and return all certificates evidencing Common
Shares and Rights not purchased or not tendered, in the name(s) of the
registered holder(s) appearing above under "Description of Common Shares
Tendered" and "Description of Rights Tendered," respectively. Similarly, unless
otherwise indicated in the box entitled "Special Delivery Instructions," please
mail the check for the purchase price of all Common Shares and Rights purchased
and all certificates evidencing Common Shares or Rights not tendered or not
purchased (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing above under "Description of Common Shares
Tendered" and "Description of Rights Tendered," respectively. In the event that
the boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase price
of all Common Shares purchased and return all certificates evidencing Common
Shares or Rights not purchased or not tendered (and any accompanying documents,
as appropriate) in the name(s) of, and mail such check and certificates (and any
accompanying documents, as appropriate) to, the person(s) so indicated. Please
credit any Common Shares and Rights tendered herewith by book-entry transfer
that are not purchased by crediting the account at the Book-Entry Transfer
Facility (as defined herein) designated above. The undersigned recognizes that
Purchaser has no obligation, pursuant to the Special Payment Instructions, to
transfer any Common Shares or Rights from the name of the registered holder(s)
thereof if Purchaser does not purchase any of the Common Shares or Rights,
respectively, tendered hereby.
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING COMMON SHARES THAT YOU
OWN HAVE BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Common Shares represented by the lost or destroyed certificates:
<PAGE> 7
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Common
Shares and/or Rights purchased or certificates evidencing Common Shares
and/or Rights not tendered or not purchased are to be issued in the name
of someone other than the undersigned.
Issue / / Check / / Certificate(s) to:
Name:
----------------------------------------------------
(PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Common
Shares and/or Rights purchased or certificates evidencing Common Shares
and/or Rights not tendered or not purchased are to be mailed to someone
other than the undersigned, or to the undersigned at an address other than
that shown under "Description of Common Shares Tendered" or "Description
of Rights Tendered."
Mail / / Check / / Certificate(s) to:
Name:
----------------------------------------------------
(PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER
------------------------------------------------------------
<PAGE> 8
IMPORTANT
SHAREHOLDERS SIGN HERE:
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated:
- --------------------------- , 1996
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for the Common Shares or Rights on a security position listing or
by a person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please provide the
following information. See Instruction 5.)
Name(s):
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
-----------------------------------------------------------------
Address:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
---------------------------------------------------
Taxpayer Identification or Social Security No.:
----------------------------------------------
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
Authorized Signature:
----------------------------------------------------------------
Name: --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Title:
---------------------------------------------------------------------------
Name of Firm:
---------------------------------------------------------------------
Address:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
---------------------------------------------------------
Dated:
- --------------------------- , 1996
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Common Shares and Rights (which term, for purposes
of this document, shall include any participant in a Book-Entry Transfer
Facility whose name appears on a security position listing as the owner of
Common Shares and Rights) tendered hereby and such holder(s) has (have)
completed neither the box entitled "Special Payment Instructions" nor the box
entitled "Special Delivery Instructions" on the reverse hereof or (ii) such
Common Shares and Rights are tendered for the account of an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter
of Transmittal is to be completed by the holder of the Common Shares and/or
Rights either if certificates are to be forwarded herewith or, unless an Agent's
Message (as defined below) is utilized, if Common Shares and/or Rights are to be
delivered by book-entry transfer pursuant to the procedure set forth in Section
2 of the Offer to Purchase. Certificates evidencing all physically tendered
Common Shares and Rights, or a confirmation of a book-entry transfer into an
account maintained by the Depositary at a Book-Entry Transfer Facility of all
Common Shares and Rights delivered by book-entry transfer as well as a properly
completed and duly executed Letter of Transmittal, together with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth herein prior to the
Expiration Date (as defined in the Offer to Purchase). If certificates for
tendered Common Shares and Rights are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal must
accompany each such delivery.
UNLESS AND UNTIL THE PURCHASER DECLARES THAT THE RIGHTS CONDITION IS
SATISFIED, HOLDERS OF COMMON SHARES WILL BE REQUIRED TO TENDER ONE ASSOCIATED
RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE.
IF THE DISTRIBUTION DATE DOES NOT OCCUR PRIOR TO THE EXPIRATION DATE, A TENDER
OF COMMON SHARES WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. The
Rights are currently represented by the certificates for the Common Shares with
respect to which the Rights were issued. The Rights Agreement provides that
until the close of business on the Distribution Date, the Rights will be
evidenced by the certificates for the Common Shares and may be transferred with
and only with the Common Shares. The Rights Agreement further provides that, as
soon as practicable following the Distribution Date, separate Rights
Certificates are to be mailed by the Company or the Rights Agent to holders of
record of Common Shares as of the close of business on the Distribution Date. If
the Distribution Date occurs and separate Rights Certificates are distributed
prior to the time Common Shares are tendered herewith, in order for Rights (and
the corresponding Common Shares) to be validly tendered, Rights Certificates
representing a number of Rights equal to the number of Common Shares being
tendered herewith must be delivered to the Depositary or, if available, a
Book-Entry Confirmation must be received by the Depositary with respect thereto.
If the Distribution Date occurs and separate Rights Certificates are not
distributed prior to the time Common Shares are tendered herewith, Rights may be
tendered prior to a shareholder receiving separate Rights Certificates by use of
the guaranteed delivery procedures described below. In any case, a tender of
Common Shares constitutes an agreement by the tendering shareholder to deliver
Rights Certificates representing a number of Rights equal to the number of
Common Shares tendered pursuant to the Offer to the Depositary within three
business days after the date Rights Certificates are distributed. The Purchaser
reserves the right to require that the Depositary receive Rights Certificates or
a Book-Entry Confirmation, if available, with respect to such Rights, prior to
accepting the related Common Shares for payment pursuant to the Offer if the
Distribution Date occurs prior to the Expiration Date.
<PAGE> 10
Shareholders whose certificates for tendered Common Shares and/or Rights
are not immediately available (including because Rights Certificates have not
yet been distributed by the Company or the Rights Agent), who cannot deliver
their certificates for tendered Common Shares and/or Rights and all other
required documents to the Depositary prior to the Expiration Date or who cannot
complete the procedure for delivery by book-entry transfer on a timely basis may
tender such Common Shares and Rights pursuant to the guaranteed delivery
procedure described in Section 2 of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, must be received by the
Depositary prior to the Expiration Date; and (iii) the certificates evidencing
all physically delivered Common Shares and/or Rights in proper form for transfer
by delivery, or a confirmation of a book-entry transfer into an account
maintained by the Depositary at a Book-Entry Transfer Facility of all Common
Shares and/or Rights delivered by book-entry transfer, in each case together
with a Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other documents required by
this Letter of Transmittal, must be received by the Depositary within (a) in the
case of Common Shares, three trading days after the date of execution of such
Notice of Guaranteed Delivery, or (b) in the case of Rights, a period ending on
the later of (1) three trading days after the date of execution of such Notice
of Guaranteed Delivery or (2) three business days (as defined in Section 1 of
Offer to Purchase) after the date Rights Certificates are distributed to
shareholders by the Company or the Rights Agent, all as provided in Section 2 of
the Offer to Purchase. A "trading day" is any day on which the New York Stock
Exchange is open for business. The Notice of Guaranteed Delivery may be
delivered by hand to the Depositary or transmitted by telegram, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution and a representation that the shareholder owns the Common
Shares and, if applicable, Rights tendered within the meaning of, and that the
tender of the Common Shares and, if applicable, Rights effected thereby complies
with, Rule 14e-4 under the Securities Exchange Act of 1934, as amended, each in
the form set forth in such Notice of Guaranteed Delivery. Shareholders may not
extend the foregoing time period for delivery of Rights to the Depositary by
providing a second Notice of Guaranteed Delivery with respect to such Rights.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Common Shares that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Common Shares and
the Rights tendered hereby whether or not such Rights are delivered
simultaneously with such Common Shares.
THE METHOD OF DELIVERY OF COMMON SHARES, RIGHTS, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER.
COMMON SHARES AND RIGHTS WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Common Shares or Rights will be purchased. By execution of this
Letter of Transmittal (or a facsimile hereof), all tendering shareholders waive
any right to receive any notice of the acceptance of their Common Shares or
Rights for payment.
3. Inadequate Space. If the space provided herein under "Description of
Common Shares Tendered" or "Description of Rights Tendered" is inadequate, the
certificate numbers and/or the number of Common Shares or Rights should be
listed on a separate schedule and attached hereto.
4. Partial Tenders (Not Applicable to Shareholders who Tender by Book-Entry
Transfer). If fewer than all the Common Shares or Rights evidenced by any
certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Common Shares or Rights which are to be tendered in the box
entitled "Number of Common Shares Tendered" or "Number of Rights Tendered," as
appropriate. In any such case, new certificate(s) evidencing the remainder of
the Common Shares or Rights that were evidenced by the certificate(s) delivered
to the Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
of the Offer. All Common Shares and Rights evidenced by certificates delivered
to the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Common
Shares and/or Rights tendered hereby, the signature(s) must correspond with the
name(s) as written on the face of the certificate(s) evidencing such Common
Shares and/or Rights without alteration, enlargement or any other change
whatsoever.
If any of the Common Shares or Rights tendered hereby are owned of record
by two or more persons, all such persons must sign this Letter of Transmittal.
<PAGE> 11
If any of the Common Shares or Rights tendered hereby are registered in the
names of different holders, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
such Common Shares or Rights.
If this Letter of Transmittal is signed by the registered holder(s) of the
Common Shares and Rights tendered hereby, no endorsements of certificates or
separate stock powers are required, unless payment is to be made to, or
certificates evidencing Common Shares or Rights not tendered or not purchased
are to be issued in the name of, a person other than the registered holder(s),
in which case, the certificate(s) evidencing the Common Shares and/or Rights
tendered hereby must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear(s)
on such certificate(s). Signatures on such certificate(s) and stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Common Shares and/or Rights tendered hereby, the
certificate(s) evidencing the Common Shares and/or Rights tendered hereby must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on such
certificate(s). Signatures on such certificate(s) and stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
Purchaser of such person's authority so to act must be submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Common Shares or Rights to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificate(s) evidencing Common Shares or Rights not tendered or not purchased
are to be issued in the name of, a person other than the registered holder(s),
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer to
such other person will be deducted from the purchase price unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption therefrom,
is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY
FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES EVIDENCING THE COMMON
SHARES AND/OR RIGHTS TENDERED HEREBY.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of, or certificate(s) evidencing Common Shares or Rights not
tendered or not purchased are to be returned to, a person other than the
person(s) signing this Letter of Transmittal or if such check or any such
certificate is to be sent to someone other than the person(s) signing this
Letter of Transmittal or to the person(s) signing this Letter of Transmittal but
at an address other than that shown in the box entitled "Description of Common
Shares Tendered" or "Description of Rights Tendered" herein, the appropriate
boxes on this Letter of Transmittal must be completed.
8. Waiver of Conditions. The conditions to the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. Questions and Requests for Assistance or Additional Copies. Questions
and requests for assistance may be directed to the Dealer Manager or the
Information Agent at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
10. Substitute Form W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of federal income tax. If
a tendering shareholder has been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding, such shareholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
shareholder has since been notified by the Internal Revenue Service that such
shareholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering shareholder to
31% federal income tax withholding on the payment of the purchase price of all
Common Shares purchased from such shareholder. If the tendering shareholder has
not been issued a TIN and has applied for one or intends to apply for one in the
near future, such shareholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such shareholder until a TIN is provided to
the Depositary.
<PAGE> 12
11. Lost, Destroyed or Stolen Certificates. If any certificate
representing Common Shares or Rights has been lost, destroyed or stolen, the
shareholder should promptly notify the Depositary by checking the box
immediately preceding the special payment/special delivery instructions and
indicating the number of Common Shares or Rights lost. The shareholder will then
be instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE OF THE OFFER AND EITHER CERTIFICATES FOR
TENDERED COMMON SHARES AND RIGHTS MUST BE RECEIVED BY THE DEPOSITARY OR COMMON
SHARES AND RIGHTS MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY
TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING
SHAREHOLDER MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Common
Shares are accepted for payment is required by law to provide the Depositary (as
payer) with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Common
Shares purchased pursuant to the Offer may be subject to backup withholding of
31%.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
pursuant to the Offer, the shareholder is required to notify the Depositary of
such shareholder's correct TIN by completing the form below certifying (a) that
the TIN provided on Substitute Form W-9 is correct (or that such shareholder is
awaiting a TIN), and (b) that (i) such shareholder has not been notified by the
Internal Revenue Service that such shareholder is subject to backup withholding
as a result of a failure to report all interest or dividends or (ii) the
Internal Revenue Service has notified such shareholder that such shareholder is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Common
Shares tendered hereby. If the Common Shares are in more than one name or are
not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report. If the tendering shareholder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, the shareholder should write "Applied For" in the
space provided for the TIN in Part I, and sign and date the Substitute Form W-9.
If "Applied For" is written in Part I and the Depositary is not provided with a
TIN within 60 days, the Depositary will withhold 31% of all payments of the
purchase price to such shareholder until a TIN is provided to the Depositary.
<PAGE> 13
ALL TENDERING SHAREHOLDERS MUST COMPLETE THE FOLLOWING:
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY, AS AGENT
- ----------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- Taxpayer Identification ------------------------------
FORM W-9 Number -- For all accounts, enter taxpayer Social Security Number(s)
DEPARTMENT OF THE TREASURY identification number in the box at right. OR
INTERNAL REVENUE SERVICE (For most individuals, this is your social ------------------------------
security number. If you do not have a Employer Identification Number
number, see Obtaining a Number in the (If awaiting TIN write
enclosed guidelines.) Certify by signing and "Applied For")
dating below. Note: If the account is in
more than one name, see the chart in the
enclosed Guidelines to determine which
number to give the payer.
----------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II -- For Payees Exempt From Backup Withholding, see the enclosed
IDENTIFICATION NUMBER Guidelines and complete as instructed therein.
("TIN") CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
PART III -- Awaiting TIN [ ]
PART IV -- Exempt TIN [ ]
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding
because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out item
(2). (Also see instructions in the enclosed Guidelines.)
- -------------------------------------------------------------------------------------------------------
Signature Date __________1996
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
III OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, 31% of all reportable payments made to me will be withheld, but
will be refunded if I provide a certified taxpayer identification number
within 60 days.
<TABLE>
<S> <C>
- ------------------------------------------------- -------------------------------------------------
Signature Date
- -------------------------------------------------
Name (Please Print)
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 14
The Letter of Transmittal, certificates for Common Shares and, if
applicable, Rights and any other required documents should be sent or delivered
by each shareholder of the Company or such shareholder's broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below:
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Delivery:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Attn: Reorganization Operations New York, New York 10004
New York, New York 10274-0084 Department Attn: Securities Processing Window,
Attn: Reorganization Subcellar One
Operations Department
</TABLE>
Confirm Facsimile by Telephone:
(212) 858-2103
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers
listed below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and all other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or Call Toll Free (800) 322-2885
The Dealer Manager for the Offer is:
SCHRODER WERTHEIM & CO.
--------------------------------------------------
INCORPORATED
Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
(212) 492-6000 (call collect)
July 12, 1996
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF COMMON SHARES
(including the associated preferred share purchase rights)
of
COMMERCIAL INTERTECH CORP.
TO
OPUS ACQUISITION CORPORATION
an indirect wholly owned subsidiary of
UNITED DOMINION INDUSTRIES LIMITED
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if (i) certificates
evidencing common shares, par value $1.00 per share (the "Common Shares") of
Commercial Intertech Corp., an Ohio corporation (the "Company") and/or
certificates for the associated preferred share purchase rights (the "Rights")
issued pursuant to the Rights Agreement (the "Rights Agreement") between the
Company and The Mahoning National Bank of Youngstown, as rights agent (the
"Rights Agent"), if the Rights shall have been separated from the Common Shares,
are not immediately available (including because the certificates for Rights
have not yet been distributed by the Company or the Rights Agent), (ii) time
will not permit all required documents to reach IBJ Schroder Bank & Trust
Company, as Depositary (the "Depositary"), prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase (as defined below)) or (iii) the
procedure for book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution (as defined in the Offer to Purchase) and a
representation that the shareholder owns the Common Shares and, if applicable,
Rights tendered within the meaning of, and that the tender of the Common Shares
and, if applicable, Rights effected thereby complies with, Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, each in the form set forth in such
Notice of Guaranteed Delivery. See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Delivery:
P.O. Box 84 (212) 858-2611 Operations Department
Bowling Green Station Attn: Reorganization One State Street
New York, New York 10274-0084 Operations Department New York, New York 10004
Attn: Reorganization Attn: Securities Processing Window,
Operations Department Subcellar One
</TABLE>
Confirm Facsimile by Telephone:
(212) 858-2103
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Opus Acquisition Corporation, a Delaware
corporation (the "Purchaser") and an indirect wholly owned subsidiary of United
Dominion Industries Limited, a Canadian corporation ("Parent"), upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated July 12,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), receipt of each of
which is hereby acknowledged, the number of Common Shares and Rights specified
below pursuant to the guaranteed delivery procedures described in Section 2 of
the Offer to Purchase.
Number of Common Shares:
- --------------------------------------------------------------------------------
Number of Rights:
- --------------------------------------------------------------------------------
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Check ONE box if Common Shares or Rights will be tendered by book-entry
transfer:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number:
- --------------------------------------------------------------------------------
Name(s) of Record Holder(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT
Address(es):
----------------------------------------------------------------------
ZIP CODE
Daytime Area Code and Telephone No.:
---------------------------------------------------------------------
Signature(s):
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: , 1996
---------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a commercial bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
hereby (a) represents that the above named person(s) "own(s)" the Common Shares
and/or Rights tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that
the tender of Common Shares effected hereby complies with Rule 14e-4, (c)
guarantees delivery to the Depositary, at one of its addresses set forth above,
of certificates evidencing the Common Shares tendered hereby in proper form for
transfer, or confirmation of book-entry transfer of such Common Shares into the
account maintained by the Depositary at The Depository Trust Company, the
Midwest Securities Trust Company or the Philadelphia Depository Trust Company,
in each case with delivery of a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) with any required signature guarantees, or
an Agent's Message (as defined in Section 2 of the Offer to Purchase), and any
other documents required by the Letter of Transmittal, within three New York
Stock Exchange, Inc. trading days after the date of execution of this Notice of
Guaranteed Delivery, and (d) guarantees, if applicable, to deliver certificates
representing the Rights in proper form for transfer, or to deliver such Rights
pursuant to the procedure for book-entry transfer into the Depositary's account
at a Book-Entry Transfer Facility together with, if Rights are forwarded
separately, the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed with any required signature guarantees or an Agent's
Message in the case of book-entry delivery, and any other required documents,
all within a period ending on the later of (i) three New York Stock Exchange
trading days after the date hereof or (ii) three business days (as defined in
Section 1 of the Offer to Purchase) after the date certificates for Rights are
distributed to shareholders by the Company or the Rights Agent.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and the
certificates for Common Shares and/or Rights to the Depositary within the time
period shown herein. Failure to do so could result in financial loss to such
Eligible Institution. All terms used herein have the meanings set forth in the
Offer to Purchase.
(PLEASE PRINT)
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(Zip Code)
AUTHORIZED SIGNATURE:
- -------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Daytime Area Code and Tel. No.:
- -----------------------------------------------------------------------------
Dated: , 1996
------------------- ----
NOTE: DO NOT SEND CERTIFICATES FOR COMMON SHARES AND/OR RIGHTS WITH THIS
NOTICE OF GUARANTEED DELIVERY. COMMON SHARE CERTIFICATES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
SCHRODER WERTHEIM & CO.
--------------------------------------------------
INCORPORATED
Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
(212) 492-6000 (CALL COLLECT)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
(including the associated preferred share purchase rights)
OF
COMMERCIAL INTERTECH CORP.
AT
$27 NET PER COMMON SHARE
BY
OPUS ACQUISITION CORPORATION
an indirect wholly owned subsidiary of
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 8, 1996, UNLESS THE OFFER IS EXTENDED.
July 12, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Opus Acquisition Corporation, a Delaware
corporation (the "Purchaser") and an indirect wholly owned subsidiary of United
Dominion Industries Limited, a Canadian corporation ("Parent"), to act as Dealer
Manager in connection with the Purchaser's offer to purchase all outstanding
common shares, par value $1.00 per share (the "Common Shares") of Commercial
Intertech Corp., an Ohio corporation (the "Company"), together with the
associated preferred share purchase rights (the "Rights") issued pursuant to the
Rights Agreement between the Company and The Mahoning National Bank of
Youngstown, as rights agent, at a price of $27.00 per Common Share (and
associated Right), net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated July 12, 1996 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer") enclosed herewith.
Unless and until the Purchaser declares that the Rights Condition (as
defined in the Offer to Purchase) has been satisfied, holders of Common Shares
will be required to tender one Right for each Common Share tendered in order to
effect a valid tender of such Common Share. If the Distribution Date (as defined
in the Offer to Purchase) does not occur prior to the Expiration Date (as
defined in the Offer to Purchase), a tender of Common Shares will also
constitute a tender of the associated Rights. If the Distribution Date occurs
prior to the Expiration Date, the procedures set forth in Section 2 of the Offer
to Purchase with respect to the separate delivery of certificates evidencing the
Rights must be followed to effect a valid tender.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF COMMON SHARES WHICH, WHEN ADDED TO THE COMMON SHARES BENEFICIALLY
OWNED BY PURCHASER AND ITS AFFILIATES, CONSTITUTES AT LEAST TWO-THIRDS OF THE
TOTAL VOTING POWER OF ALL SHARES OF CAPITAL STOCK OF THE COMPANY OUTSTANDING ON
A FULLY DILUTED BASIS ON THE DATE OF
<PAGE> 2
PURCHASE; (2) THE RIGHTS HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE
COMPANY OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE
RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE
PROPOSED MERGER (AS DEFINED IN THE OFFER TO PURCHASE); (3) THE SUPERMAJORITY
VOTE REQUIREMENT (AS DEFINED IN THE OFFER TO PURCHASE) HAVING BEEN ELIMINATED
FROM THE AMENDED ARTICLES OF INCORPORATION OF THE COMPANY OR THE PURCHASER BEING
OTHERWISE SATISFIED, IN ITS SOLE DISCRETION, THAT THE SUPERMAJORITY VOTE
REQUIREMENT IS NOT APPLICABLE TO THE PROPOSED MERGER; (4) THE ACQUISITION OF
COMMON SHARES PURSUANT TO THE OFFER BEING AUTHORIZED BY THE SHAREHOLDERS OF THE
COMPANY PURSUANT TO THE OHIO CONTROL SHARE ACQUISITION LAW (AS DEFINED IN THE
OFFER TO PURCHASE) OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION,
THAT THE OHIO CONTROL SHARE ACQUISITION LAW IS INVALID OR INAPPLICABLE TO SUCH
ACQUISITION AND (5) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT
THE RESTRICTIONS CONTAINED IN THE OHIO BUSINESS COMBINATION LAW (AS DEFINED IN
THE OFFER TO PURCHASE) WILL NOT APPLY TO THE ACQUISITION OF COMMON SHARES
PURSUANT TO THE OFFER OR TO THE PROPOSED MERGER. SEE THE INTRODUCTION AND
SECTIONS 14 AND 15 OF THE OFFER TO PURCHASE. THE OFFER IS NOT CONDITIONED ON THE
RECEIPT OF FINANCING.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Common Shares and/or Rights your name or in the name
of your nominee.
For your information and for forwarding to your clients for whom you hold
Common Shares and/or Rights registered in your name or in the name of your
nominee, or who hold Common Shares and/or Rights registered in their own names,
we are enclosing the following documents:
1. The Offer to Purchase, dated July 12, 1996;
2. The Letter of Transmittal to be used by holders of Common Shares in
accepting the Offer and tendering Common Shares (and associated Rights) for your
use and for the information of your clients (facsimile copies of the Letter of
Transmittal may be used to tender Common Shares and associated Rights);
3. The Notice of Guaranteed Delivery to be used to accept the Offer if the
certificates evidencing such Common Shares and/or Rights are not immediately
available or time will not permit all required documents to reach the IBJ
Schroder Bank and Trust Company (the "Depositary") prior to the Expiration Date
or the procedure for book-entry transfer cannot be completed on a timely basis;
4. A letter which may be sent to your clients for whose accounts you hold
Common Shares and/or Rights registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
5. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9; and
6. A return envelope addressed to the Depositary.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person (other than the Dealer Manager, the Information Agent and
the Depositary as described in Section 16 of the Offer to Purchase) in
connection with the solicitation of tenders of Common Shares (and associated
Rights) pursuant to the Offer. The Purchaser will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding the enclosed materials to your clients.
The Purchaser will pay any stock transfer taxes incident to the transfer to
it of validly tendered Common Shares and Rights, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 8, 1996, UNLESS THE OFFER IS
EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Depositary, and certificates evidencing the tendered Common Shares and/or Rights
should be delivered or such Common Shares and/or Rights should be tendered by
book-entry transfer, all in accordance with the Instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
2
<PAGE> 3
If holders of Common Shares and Rights wish to tender Common Shares and
Rights, but it is impracticable for them to forward their certificates or other
required documents to the Depositary prior to the
Expiration Date or to comply with the procedures for book-entry transfer on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures specified under Section 2 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
Schroder Wertheim & Co. Incorporated, the Dealer Manager, or MacKenzie Partners,
Inc., the Information Agent, at their respective addresses and telephone numbers
set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from the
Information Agent, at the address and telephone number set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
Schroder Wertheim & Co. Incorporated
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY
OTHER PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE DEALER
MANAGER, THE DEPOSITARY, OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN
THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
(including associated preferred share purchase rights)
OF
COMMERCIAL INTERTECH CORP.
AT
$27 NET PER SHARE
BY
OPUS ACQUISITION CORPORATION
an indirect wholly owned subsidiary of
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME ON THURSDAY, AUGUST 8, 1996, UNLESS THE OFFER IS EXTENDED
July 12, 1996
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated July 12,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the offer by Opus Acquisition Corporation, a Delaware corporation (the
"Purchaser") and an indirect wholly owned subsidiary of United Dominion
Industries Limited, a Canadian corporation ("Parent"), to purchase all
outstanding common shares, par value $1.00 per share (the "Common Shares"), of
Commercial Intertech Corp., an Ohio corporation (the "Company"), together with
the associated preferred share purchase rights (the "Rights") issued pursuant to
the Rights Agreement between the Company and The Mahoning National Bank of
Youngstown, as rights agent, at a price of $27.00 per Common Share (and
associated Right), net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase and in the related Letter of Transmittal enclosed herewith.
Unless and until the Purchaser declares that the Rights Condition (as
defined in the Offer to Purchase) has been satisfied, holders of Common Shares
will be required to tender one associated Right for each Common Share tendered
in order to effect a valid tender of such Common Share. If the Distribution Date
(as defined in the Offer to Purchase) does not occur prior to the Expiration
Date (as defined in the Offer to Purchase), a tender of Common Shares will also
constitute a tender of the associated Rights. If the Distribution Date occurs
prior to the Expiration Date, the procedures set forth in Section 2 of the Offer
to Purchase with respect to the separate delivery of certificates evidencing the
Rights must be followed to effect a valid tender.
Shareholders whose certificates evidencing Common Shares or Rights are not
immediately available (including, if the Distribution Date has occurred, because
certificates evidencing the Rights have not yet been distributed) or who cannot
deliver such certificates and all other documents required by the Letter of
Transmittal to the Depositary (as defined in the Offer to Purchase) prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer to an account maintained by the Depositary at a Book-Entry Transfer
Facility (as defined in the Offer to Purchase) on a timely basis and who wish to
tender their Common Shares and Rights must do so pursuant to the guaranteed
delivery procedure described in
<PAGE> 2
Section 2 of the Offer to Purchase. See Instruction 2 of the Letter of
Transmittal. Delivery of documents to a Book-Entry Transfer Facility in
accordance with the Book-Entry Transfer Facility's procedures does not
constitute delivery to the Depositary.
THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF COMMON SHARES
AND RIGHTS HELD BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE
THE HOLDER OF RECORD OF COMMON SHARES AND RIGHTS HELD BY US FOR YOUR ACCOUNT. A
TENDER OF SUCH COMMON SHARES AND RIGHTS CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER COMMON
SHARES AND RIGHTS HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Common Shares and Rights held by us for your account,
upon the terms and subject to the conditions set forth in the Offer to Purchase.
Your attention is invited to the following:
1. The tender price is $27.00 per Common Share (and associated Right), net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions of the Offer.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Thursday, August 8, 1996, unless the Offer is extended.
3. The Offer is being made for all outstanding Common Shares and Rights.
4. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not properly withdrawn prior to the expiration of the Offer
a number of Common Shares which, when added to the Common Shares beneficially
owned by Purchaser and its affiliates constitutes at least two-thirds of the
total voting power of all shares of capital stock of the Company outstanding on
a fully diluted basis on the date of purchase; (2) the Rights having been
redeemed by the Board of Directors of the Company or the Purchaser being
satisfied, in its sole discretion, that the Rights have been invalidated or are
otherwise inapplicable to the Offer and the Proposed Merger (as defined in the
Offer to Purchase); (3) the Supermajority Vote Requirement (as defined in the
Offer to Purchase) having been eliminated from the Amended Articles of
Incorporation of the Company or the Purchaser being otherwise satisfied, in its
sole discretion, that the Supermajority Vote Requirement is not applicable to
the Proposed Merger; (4) the acquisition of Common Shares pursuant to the Offer
being authorized by the shareholders of the Company pursuant to the Ohio Control
Share Acquisition Law (as defined in the Offer to Purchase) or the Purchaser
being satisfied, in its sole discretion, that the Ohio Control Share Acquisition
Law is invalid or inapplicable to such acquisition; and (5) the Purchaser being
satisfied, in its sole discretion, that the restrictions contained in the Ohio
Business Combination Law (as defined in the Offer to Purchase) will not apply to
the acquisition of common shares pursuant to the Offer or to the Proposed
Merger. See Introduction and Sections 14 and 15, of the Offer to Purchase.
5. The Offer is not conditioned on the receipt of financing.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Common Shares and Rights by
the Purchaser pursuant to the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Common Shares in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue sky or other laws of such jurisdiction. Neither the
Purchaser nor Parent is aware of any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. In those jurisdictions where the securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of the Purchaser by Schroder Wertheim & Co. Incorporated or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
2
<PAGE> 3
If you wish to have us tender any or all of your Common Shares and Rights,
please so instruct us by completing, executing and returning to us the
instruction form contained in this letter. An envelope in which to return your
instructions to us is enclosed. If you authorize the tender of your Common
Shares and Rights, all such Common Shares and Rights will be tendered unless
otherwise specified on the instruction form contained in this letter. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
3
<PAGE> 4
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING COMMON SHARES
(including the associated preferred share purchase rights)
of
Commercial Intertech Corp.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated July 12, 1996, and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), in
connection with the Offer by Opus Acquisition Corporation, a Delaware
corporation (the "Purchaser") and an indirect wholly owned subsidiary of United
Dominion Industries Limited, a Canadian corporation ("Parent"), to purchase all
outstanding common shares, par value $1.00 per share (the "Common Shares"), of
Commercial Intertech Corp., an Ohio corporation, together with the associated
preferred share purchase rights (the "Rights"), at a price equal to $27.00 per
Common Share (and associated Right), net to the seller in cash, without interest
thereon.
This will instruct you to tender to the Purchaser the number of Common
Shares and Rights indicated below (or, if no number is indicated below, all
Common Shares and Rights) held by you for the account of the undersigned, upon
the terms and subject to the conditions set forth in the Offer to Purchase and
in the related Letter of Transmittal.
<TABLE>
<S> <C>
Number of Common Shares to be Tendered:* SIGN HERE
Common Shares ---------------------------------------------
- -----------------------------
---------------------------------------------
Number of Rights to be Tendered:* Signature(s)
Rights ---------------------------------------------
- -----------------------------------
---------------------------------------------
Account Number: Please type or print name(s)
--------------------------
Dated: , 1996 ---------------------------------------------
-----------------------------
---------------------------------------------
Please type or print address(es)
---------------------------------------------
Daytime Area Code and Telephone Number(s)
---------------------------------------------
---------------------------------------------
Taxpayer Identification or
Social Security Number(s)
</TABLE>
- ---------------
* Unless and until the Purchaser declares that the Rights Condition (as defined
in the Offer to Purchase) is satisfied, holders of Common Shares will be
required to tender one Right for each Common Share tendered to effect a valid
tender of such Common Share. If the Distribution Date (as defined in the Offer
to Purchase) does not occur prior to the Expiration Date (as defined in the
Offer to Purchase), a tender of Common Shares will also constitute a tender of
the associated Rights. Unless otherwise indicated, it will be assumed that all
of your Common Shares and Rights held by us for your account are to be
tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: TAXPAYER
IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The Legal entity
pension trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 20% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated July
12, 1996 and the related Letter of Transmittal. The Offer is not being made
to (nor will tenders be accepted from or on behalf of) holders of Shares
in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. However, the Purchaser (as defined
below) may, in its discretion, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the
Offer to holders of Shares in such jurisdiction. In those
jurisdictions where securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the Purchaser by
Schroder Wertheim & Co. Incorporated or one or more
registered brokers or dealers that are licensed under the
laws of such jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
COMMERCIAL INTERTECH CORP.
AT
$27 NET PER SHARE
BY
OPUS ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
Opus Acquisition Corporation, a Delaware corporation (the "Purchaser") and
an indirect wholly owned subsidiary of United Dominion Industries Limited, a
Canadian corporation ("Parent"), is offering to purchase all outstanding Common
Shares, par value $1 per share (the "Shares"), including Shares issuable upon
conversion of the outstanding ESOP Convertible Preferred Shares Series B,
without par value ("Preferred Shares"), of Commercial Intertech Corp., an Ohio
corporation (the "Company"), together with the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement dated as
of November 29, 1989, between the Company and The Mahoning National Bank of
Youngstown, as rights agent, at a price of $27 per Share (and associated Right),
net to the seller in cash, without interest thereon (the "Offer Price"), upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
July 12, 1996 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). Unless the context otherwise requires, all references herein to Shares
shall include the Rights.
UNLESS THE RIGHTS ARE REDEEMED OR THE PURCHASER IS SATISFIED, IN ITS SOLE
DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE
TO THE OFFER AND THE PROPOSED MERGER (AS DEFINED BELOW), SHAREHOLDERS ARE
REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID
TENDER OF SHARES IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 2 OF THE
OFFER TO PURCHASE. UNLESS THE DISTRIBUTION DATE (AS DEFINED IN THE OFFER TO
PURCHASE) OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF THE
ASSOCIATED RIGHTS.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, AUGUST 8, 1996, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
<PAGE> 2
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of Shares which, when added to the Shares beneficially owned by the
Purchaser and its affiliates, constitutes at least two-thirds of the total
voting power of all shares of capital stock of the Company outstanding on a
fully diluted basis on the date of purchase, (2) the Rights having been redeemed
by the Board of Directors of the Company or the Purchaser being satisfied, in
its sole discretion, that the Rights have been invalidated or are otherwise
inapplicable to the Offer and the Proposed Merger, (3) the supermajority vote
requirement set forth in Article SIXTH of the Amended Articles of Incorporation
of the Company (the "Articles") having been eliminated from the Articles or the
Purchaser otherwise being satisfied, in its sole discretion, that such
supermajority vote requirement will not be applicable to the Proposed Merger,
(4) the acquisition of Shares pursuant to the Offer being authorized by the
shareholders of the Company pursuant to Section 1701.831 of the Ohio Revised
Code (the "Ohio Control Share Acquisition Law"), or the Purchaser being
satisfied, in its sole discretion, that the Ohio Control Share Acquisition Law
is invalid or inapplicable to such acquisition of Shares and (5) the Purchaser
being satisfied, in its sole discretion, that the restrictions contained in
Chapter 1704 of the Ohio Revised Code (the "Ohio Business Combination Law")
will not be applicable to the acquisition of Shares pursuant to the Offer or to
the Proposed Merger. See the Introduction and Sections 14 and 15 of the Offer to
Purchase. The Offer is not conditioned on the receipt of financing.
The purpose of the Offer and the Proposed Merger is to acquire control of,
and the entire equity interest in, the Company. Parent currently intends, as
soon as practicable following the consummation of the Offer, to seek to have the
Company consummate a merger or similar business combination with the Purchaser
(the "Proposed Merger") pursuant to which each then outstanding Share (other
than Shares owned by the Purchaser or Parent, Shares held in the treasury of the
Company and Shares owned by shareholders who perfect dissenters' rights under
the Ohio Revised Code) would be converted into the right to receive an amount in
cash equal, in the case of the Shares, to the price per Share paid pursuant to
the Offer and, in the case of the Preferred Shares, to such price per Preferred
Share multiplied by 1.235.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment pursuant to
the Offer. In all cases, upon the terms and subject to the conditions of the
Offer, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from the
Purchaser and transmitting payment to validly tendering shareholders. Under no
circumstances will interest on the purchase price for Shares be paid by the
Purchaser by reason of any delay in making such payment. In all cases, payment
for Shares purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of (a) certificates for such Shares ("Certificates")
or a book-entry confirmation of the book-entry transfer of such Shares into the
Depositary's account at The Depositary Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depositary Trust Company (each a "Book-Entry
Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities"),
pursuant to the procedures set forth in the Offer to Purchase and the Letter of
Transmittal, and, if the Distribution Date has occurred, separate Certificates
for the associated Rights (or confirmation of a book-entry transfer of such
Rights, if available with respect to the Rights), (b) the Letter of Transmittal
(or facsimile thereof) properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer, and (c) any other documents
required by the Letter of Transmittal.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 midnight, New York City
time, on Thursday, August 8, 1996 (or, if the Purchaser shall have extended the
period of time for which the Offer is open, the latest time and date at which
the Offer, as so extended by the Purchaser, shall expire) and, unless
theretofore accepted for payment by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after September 9, 1996. For a withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of withdrawal
must be timely received by the Depositary at its address set forth on the back
cover of the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be
2
<PAGE> 3
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If Certificates evidencing
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such Certificates, the serial
numbers shown on such Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase), unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 2 of the Offer to Purchase, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Purchaser, in its sole discretion, whose determination will be final and
binding.
Subject to the rules and regulations of the Securities and Exchange
Commission, the Purchaser expressly reserves the right, in its sole discretion,
at any time or from time to time and regardless of whether any of the events set
forth in Section 14 of the Offer to Purchase shall have been determined by the
Purchaser to have occurred, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of and payment for any
Shares by giving oral or written notice of such extension to the Depositary and
(ii) to waive any condition or amend the Offer in any respect by giving oral or
written notice of such amendment to the Depositary. Any extension, amendment or
termination will be followed as promptly as practicable by public announcement
thereof, such announcement in the case of an extension to be issued not later
than 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date (as defined in the Offer to Purchase).
During any such extension, all Shares previously tendered and not properly
withdrawn will remain subject to the Offer, subject to the right of a tendering
shareholder to withdraw such shareholder's Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
Requests are being made to the Company for the use of the Company's
shareholder list and security position listings for the purpose of disseminating
the Offer to holders of Shares and Rights and communicating with shareholders in
connection with the Offer. The Offer to Purchase and the related Letter of
Transmittal and, if required, other relevant materials will be mailed to record
holders of Shares and Rights whose names appear on the Company's shareholder
list and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares and Rights by the Purchaser following receipt of
such lists or listings from the Company, or by the Company if it so elects.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers as
set forth below. The Purchaser will not pay any fees or commissions to any
broker or dealer or to any other person (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Additional copies of the Offer to Purchase, the Letter of Transmittal and all
other tender offer materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks and trust companies, and will be furnished
promptly at the Purchaser's expense.
3
<PAGE> 4
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
SCHRODER WERTHEIM & CO. INCORPORATED
Equitable Center
787 Seventh Avenue
New York, New York 10019
(212) 492-6000 (call collect)
July 12, 1996
4
<PAGE> 1
[LOGO]
UNITED DOMINION
NEWS
CONTACTS:
Media -- Robert L. Shaffer FOR IMMEDIATE RELEASE
(704) 347-6975 o.
(704) 366-2780 b.
Analysts -- Stanley J. Kay, Jr.
Of MacKenzie Partners
(212) 929-5940 o.
UNITED DOMINION ANNOUNCES $27 PER SHARE TENDER OFFER
FOR COMMERCIAL INTERTECH COMMON STOCK
CHARLOTTE, NC (July 11, 1996) -- United Dominion Industries (NYSE, TSE;
UDI), a manufacturer of diversified engineered products, today announced that
its board of directors has authorized commencement of a cash tender offer for
all the outstanding common shares, including associated preferred share
purchase rights, of Commercial Intertech Corp. (NYSE, TEC) at $27 net per
share and associated right. The offer will be subject to terms and conditions
contained in United Dominion's offer to purchase. Schroder Wertheim &
Co. Incorporated will serve as dealer manager for the offer, and MacKenzie
Partners, Inc. will serve as information agent.
William R. Holland, chairman and chief executive officer, said that the
decision by United Dominion's board to proceed with a tender offer follows
unsuccessful attempts to open dialogue with Commercial Intertech.
"Clearly, our preference would be to negotiate the terms of a mutually
acceptable acquisition with Commercial Intertech's management and board," Mr.
Holland said. "We regret that we have not yet received a formal response to our
June 27 offer to acquire the company. To clarify our intentions and to
demonstrate the seriousness of our offer, we are now taking that offer directly
to Commercial Intertech's shareholders," he said.
. . . more
<PAGE> 2
- 2 -
Mr. Holland said that United Dominion's board endorsed the take-over
bid at a special meeting here today. Including the assumption of Commercial
Intertech's debt, the value of the acquisition is approximately $500 million.
The $27 per share offer, detailed in a June 27 open letter to Commercial
Intertech's chairman and chief executive officer, is 41 percent higher than
TEC's closing stock price that day.
"We believe the combination of Commercial Intertech and United Dominion
will create a strong manufacturing enterprise with $2.5 billion in revenues
derived from market-leading industrial and building products sold worldwide,"
Mr. Holland said.
# # #
<PAGE> 1
UNITED DOMINION NEWS
CONTACTS: FOR IMMEDIATE RELEASE
Media -- Robert L. Shaffer
(704) 347-6875 o.
(704) 366-2780 h.
Analysts -- Stanley J. Kay, Jr.,
of MacKenzie Partners
(212) 929-5940 o.
UNITED DOMINION COMMENCES OFFER FOR COMMERCIAL INTERTECH
COMMON STOCK, LAUNCHES OTHER ACTIONS TO COMPLETE TRANSACTION
CHARLOTTE, NC (July 12, 1996) -- United Dominion Industries (NYSE, TSE:
UDI), a manufacturer of diversified engineered products, announced that a
wholly-owned subsidiary is commencing a cash tender offer today for all
outstanding common shares, including associated preferred share purchase rights,
of Commercial Intertech Corp. (NYSE: TEC). Subject to the terms and conditions
set forth in its Offer to Purchase, United Dominion is offering to purchase
Commercial Intertech Common Shares, including TEC Common Shares issuable upon
conversion of TEC's outstanding Series B ESOP convertible preferred shares, at a
cash price of $27 per common share and associated right. The offer and
withdrawal rights will expire on Thursday, August 8, 1996 at midnight (EDT),
unless extended.
The offer is subject to certain conditions, including that (1) common
shares representing at least two-thirds of the total voting power of all
outstanding voting shares of TEC, on a fully diluted basis, be validly tendered,
(2) the TEC board of directors takes action to eliminate certain impediments to
the acquisition by United Dominion of TEC common shares and (3) United Dominion
is satisfied that certain provisions of Ohio law are either inapplicable to
United Dominion's acquisition of TEC or have been met. The offer is not subject
to financing.
Following consummation of the offer, United Dominion intends to seek to
have Commercial Intertech merge with a United Dominion subsidiary in which
Commercial Intertech common shares not purchased in the offer will be converted
into cash at the same price paid in the offer.
In order to increase the likelihood that the conditions to the offer will
be satisfied, United Dominion has taken preliminary steps to commence a
solicitation of appointments of designated agents to call a special meeting of
Commercial Intertech shareholders at which, among other things, United Dominion
will propose the removal of the incumbent Commercial Intertech board of
directors and the election of United Dominion nominees as replacements. United
Dominion is also delivering an Acquiring Person Statement to Commercial
Intertech under the Ohio Control Share Acquisition Law in connection with which
Commercial Intertech will be required, within 10 days, to call a special meeting
of Commercial Intertech shareholders to be held within 30 to 50 days for
purposes of voting on United Dominion's control acquisition under Ohio law. The
offer does not constitute a solicitation of proxies or agent designations for
any meeting of Commercial Intertech shareholders.
United Dominion also announced that on July 11, it filed a complaint in the
Ohio Federal District Court against Commercial Intertech, its directors and the
Ohio Securities Commissioner seeking, among other things, that the Ohio Court
declare unconstitutional certain provisions of Ohio law as they relate to the
proposed United Dominion acquisition of Commercial Intertech. The complaint also
alleges breach of fiduciary duty by the Commercial Intertech board of directors
by their failure to redeem the preferred share purchase rights and seeks a court
order requiring the redemption of the rights.
# # #
<PAGE> 1
- --------------------------------------------------------------------------------
P.D. STEFFEN
Senior Manager
Corporate Banking
U.S.A. Headquarters
Financial Square
New York, New York 10005-3531
(212)428-5494
July 11, 1996
Mr. Glenn A. Eisenberg
Senior Vice President and Chief Financial Officer
United Dominion Industries
2300 One First Union Center
301 South College Street
Charlotte, NC 28202-6039
Dear Glenn:
We enjoyed meeting with you, Bob and Tom on Friday, July 5th to review the
proposed acquisition of Commercial Intertech Corporation. Following our
discussions, we are pleased to submit Royal Bank's firm offer to arrange a
US$300 million revolving credit facility which would be available to UDI for a
period of 180 days. It is our understanding that this facility will be used to
demonstrate UDI's ability to finance a controlling interest in the shares of
Commercial Intertech and, if you are successful, the facility would then convert
to a 5 year revolving facility.
The Royal Bank of Canada has fully underwritten the $300MM revolver subject
only to satisfactory documentation which we expect would essentially mirror the
terms and conditions attached as well as those contained in your June 20, 1996
revolving credit facility (there will be some notable differences for instance
the lack of Deutschemark borrowings, a bid option facility or a sublimit for
letters of credit). Pricing on the 180 day portion of the facility would stay at
the existing levels detailed in the aforementioned loan agreement and, while we
would expect that pricing on the five year portion would also be the same, we
would like to reserve the right to reprice the latter facility should market
conditions change during the 6 month "bridge" period.
As was briefly discussed with you, we believe that the new facility can be
syndicated to your existing bank group plus a select group of new lenders if
necessary to hedge the possibility that either some lenders are unable to commit
either or a higher level or due to potential conflicts. In any event, we feel
comfortable that the facility would likely be oversubscribed.
The fees that we propose to charge UDI in connection with both the 180 day
facility plus the 5 year revolver are contained in the attached offer to finance
and, if you are in agreement with the terms and conditions contained therein,
please sign and return one copy and retain the second copy for your records.
Thank you for your continued confidence in RBC; let me know should you have
any questions or concerns.
Sincerely,
/s/ Peter D. Steffen
<PAGE> 2
United Dominion Industries Confidential
- --------------------------------------------------------------------------------
SUMMARY OF TERMS & CONDITIONS
FOR
UNITED DOMINION INDUSTRIES
BORROWER: United Dominion Industries Limited a Canadian
corporation and/or United Dominion Industries,
Inc., a Delaware corporation.
GUARANTOR-OBLIGOR: The obligations of each of the two Borrowers are
guaranteed by the other.
FACILITY: US$300 Million 180-day Revolving Credit Facility
(the "Bridge Facility"), converting to a 5 year
Revolving Credit Facility (the "Five Year
Facility"), subject to satisfactory completion of
Conditions Precedent.
PURPOSE: To finance, in part, the acquisition of Commercial
Intertech, and for subsequent liquidity purposes
pursuant to that transaction.
AGENT: Royal Bank of Canada.
BANKS: Syndicate of banks acceptable to the Borrower and
the Agent.
CURRENCY AVAILABILITY: U.S. Dollars.
BORROWING OPTIONS: At the Borrowers' option:
(i) Eurodollar Loans for 1, 2, 3, 6, 9 or 12
months, and
(ii) Base Rate Loans (higher of Prime or Fed
Funds plus 0.50%).
Each Bank will participate according to its
pro-rata share of allocated commitments.
CANCELLATION FEE: $25,000, payable within six months of signing the
Summary of Terms and Conditions dated July 11,
1996, if Conditions Precedent have not been met.
SUCCESS FEE: $75,000, payable on the signing of the New Credit
Agreement.
ARRANGEMENT FEE: $25,000 payable on the signing of the New Credit
Agreement.
AGENCY FEE: $2,500 per bank per annum, with a minimum of
$25,000 per annum.
APPLICABLE MARGIN: Upon satisfactory completion of Conditions
Precedent and subsequent conversion to the Five
Year Facility, an Applicable Margin over LIBOR
will apply. Please refer to Exhibit I.
FACILITY FEE: Upon satisfactory completion of Conditions
Precedent and subsequent conversion to the Five
Year Facility, a Facility Fee will be payable
quarterly in arrears in accordance with Exhibit
I.
- --------------------------------------------------------------------------------
Royal Bank of Canada 1 July 11, 1996
<PAGE> 3
United Dominion Industries Confidential
- --------------------------------------------------------------------------------
UTILIZATION FEE: Upon satisfactory completion of Conditions
Precedent and subsequent conversion to the Five
Year Facility, a Utilization Fee will be payable
quarterly in arrears on daily average
outstandings, during the preceding three month
period, if the average outstandings are greater
than 50% of the Commitments, in accordance with
Exhibit I.
INTEREST PAYMENT DATE: Eurodollar Loans: interest is payable at the end of
each Interest Period and, if any Interest Period
is longer than three months, every three months
(360 day basis).
Base Rate Loans: interest is payable at the last
day of each calendar month (365/366 day basis).
OTHER TERMS & CONDITIONS: Documentation for the Bridge Facility will consist
of the Summary of Terms and Conditions dated July
11, 1996, based upon the Credit Agreement and
Guaranty dated as of June 20, 1996 (the "Existing
Credit Agreement").
All Articles of the Existing Credit Agreement are
incorporated herein by reference, including but
not limited to, Articles VII, VIII, and IX,
Affirmative and Negative Covenants, and Events of
Default, except for any Section referring to
Deutschemarks, Competitive Bid Options, and
Letter of Credit.
Upon conversion to the Five Year Facility, a new
credit agreement (the "New Credit Agreement")
will document the terms and conditions of the
Five Year Facility.
CONDITIONS PREDECENT: The obligation of RBC to make available the Bridge
Facility and the Five Year Facility is subject to
the satisfactory completion of the following:
1. The Borrower has obtained a controlling
interest of 51% (a "Controlling Interest") of
the shares of Commercial Intertech.
The following are conditions to each borrowing
(including the initial borrowing):
1. No event of default or condition with which,
the giving of notice or the passage of time (or
both) would constitute an event of default
shall have occurred and be continuing;
2. Representations and warranties, as stated in
Article V of the Existing Credit Agreement and
incorporated herein by reference, are true and
correct in all material respects as of the date
of such borrowing.
FINANCIAL COVENANTS: The Bridge Facility and the Five Year Facility will
include, inter alia, the following Covenants:
(i) Fixed Charge Coverage Ratio shall not be less
than 2.5:1 at any time.
(ii) Consolidated Funded Debt shall not exceed 55%
of Consolidated Total Capitalization.
- --------------------------------------------------------------------------------
Royal Bank of Canada 2 July 11, 1996
<PAGE> 4
United Dominion Industries Confidential
- --------------------------------------------------------------------------------
ASSIGNMENTS/PARTICIPATIONS: With consent of the Borrowers (which shall not be
unreasonably withheld), Banks are permitted to
sell assignments of participations. Assignments
shall be in minimum amounts of $10 million;
however, if the seller is not reducing
commitments to zero, said commitment may not be
reduced below $10 million. Consent is not
required for assignments to Federal Reserve
Banks.
EXPENSES: Borrower agrees to pay all reasonable out-of-pocket
expenses of the Agent, including fees and
disbursements of legal counsel related to this
transaction.
REQUIRED BANKS: Any amendments or waivers of the Bridge Facility
will require the sole consent of RBC. The New
Credit Agreement will define Required Banks as
67% of total Commitments.
GOVERNING LAW: State of New York.
AGENT'S COUNSEL: Simpson Thacher & Bartlett
CLEAR MARKET: This offer is subject to there being no other
transactions of a similar nature for the
Borrowers being syndicated among two or more
banks until signing.
CHANGE IN CIRCUMSTANCES: In the instance of a material adverse change in the
financial markets or the financial condition of
the Borrowers, the conversion to a five year
facility is subject to RBC's ability, in its sole
discretion, to reprice and restructure the
Facility in accordance with the then market
conditions.
ACCEPTANCE: This offer will remain open for acceptance until
the close of business on July 12, 1996, at which
time it will be deemed to have expired unless
theretofore accepted or extended by RBC at its
sole discretion.
- --------------------------------------------------------------------------------
Royal Bank of Canada 3 July 11, 1996
<PAGE> 5
United Dominion Industries Confidential
- --------------------------------------------------------------------------------
WE ACCEPT THE SUMMARY OF TERMS AND CONDITIONS DATED JULY 11, 1996.
UNITED DOMINION INDUSTRIES, INC.
By: /s/ GLENN A. EISENBERG
- --------------------------------------
Title: SVP & CFO
- --------------------------------------
Date: July 11, 1996
- --------------------------------------
By: /s/ T.J. SNYDER
- --------------------------------------
Title: VP & Treas.
- --------------------------------------
Date: July 11, 1996
- --------------------------------------
UNITED DOMINION INDUSTRIES, LTD.
By: /s/ GLENN A. EISENBERG
- --------------------------------------
Title: SVP & CFO
- --------------------------------------
Date: July 11, 1996
- --------------------------------------
By: /s/ T.J. SNYDER
- --------------------------------------
Title: VP & Treas.
- --------------------------------------
Date: July 11, 1996
- --------------------------------------
ROYAL BANK OF CANADA
By: /s/ PETER D. STEFFEN
- --------------------------------------
Title: Senior Manager
- --------------------------------------
Date: July 11, 1996
- --------------------------------------
- --------------------------------------------------------------------------------
Royal Bank of Canada 4 July 11, 1996
<PAGE> 6
United Dominion Industries Confidential
- --------------------------------------------------------------------------------
EXHIBIT I
UNITED DOMINION INDUSTRIES
PRICING GRID FOR 5 YEAR REVOLVING CREDIT FACILITY
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
LEVEL I LEVEL II LEVEL III
(all amounts in Basis
Points) (current level)
- -------------------------------------------------------------------------------------
Consolidated Funded Debt 40% or 40% & 50% 50% or
to Capitalization Ratio A- or A3 or BBB or Baa2 BBB- or Baa3
- -------------------------------------------------------------------------------------
Facility Fee 10.00 12.50 15.00
- -------------------------------------------------------------------------------------
LIBOR Margin 20.00 25.00 32.50
- -------------------------------------------------------------------------------------
Undrawn Cost
(Facility Fee only): 10.00 12.50 15.00
- -------------------------------------------------------------------------------------
Equivalent Drawn Cost
( 50% utilization) 30.00 37.50 47.50
- -------------------------------------------------------------------------------------
Utilization Fee
( 50% usage) 5.00 7.50 12.50
- -------------------------------------------------------------------------------------
Equivalent Total Drawn
Cost ( 50% utilization) 35.00 45.00 60.00
- -------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Royal Bank of Canada 5 July 11, 1996
<PAGE> 1
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
UNITED DOMINION INDUSTRIES :
LIMITED :
2300 One First Union Center :
301 South College Street :
Charlotte, NC 28202 :
:
and :
:
OPUS ACQUISITION CORPORATION :
2300 One First Union Center :
301 South College Street :
Charlotte, NC 28202, :
:
Plaintiffs, :
:
v. : Civil Action No.
:
COMMERCIAL INTERTECH CORP. :
1775 Logan Avenue :
Youngstown, OH 44501 :
:
and :
:
WILLIAM J. BRESNAHAN :
8890 Youngstown Conneau :
Kinsman, OH 44428 :
:
and :
:
CHARLES B. CUSHWA III :
61 Norwick Drive :
Youngstown, OH 44505 :
:
and :
:
WILLIAM W. CUSHWA :
2271 5th Avenue :
Youngstown, OH 44504 :
:
and :
<PAGE> 2
:
JOHN M. GALVIN :
6997 Edgerton Road :
Cleveland, OH 44133 :
:
and :
:
RICHARD J. HILL :
8440 N. Lima Road :
Youngstown, OH 44514 :
:
and :
:
NEIL D. HUMPHREY :
c/o Commercial Intertech Corp. :
1775 Logan Avenue :
Youngstown, OH 44501 :
:
and :
:
WILLIAM E. KASSLING :
c/o Commercial Intertech Corp. :
1775 Logan Avenue :
Youngstown, OH 44501 :
:
and :
:
GERALD C. MCDONOUGH :
135 Aspenwood Drive :
Chagrin Falls, OH 44022 :
:
and :
:
C. EDWARD MIDGLEY :
16777 Captiva Drive :
Sanibel, FL 33957 :
:
and :
:
PAUL J. POWERS :
c/o Commercial Intertech Corp. :
1775 Logan Avenue :
Youngstown, OH 44501 :
:
and :
:
2
<PAGE> 3
GEORGE M. SMART :
3014 Stickney Avenue :
Toledo, OH 43608 :
:
and :
:
DON E. TUCKER :
c/o Commercial Intertech Corp. :
1775 Logan Avenue :
Youngstown, OH 44501 :
:
and :
:
THOMAS GEYER, :
Acting Commissioner of Securities :
Ohio Division of Securities :
77 South High Street :
Columbus, Ohio 43266-0548, :
:
and :
:
DONNA OWENS, :
Director of Commerce :
Department of Commerce :
of the State of Ohio :
77 South High Street :
Columbus, Ohio 43266-0548, :
:
and :
:
STATE OF OHIO, :
c/o Betty D. Montgomery :
Attorney General of Ohio :
State Office Tower :
30 East Broad Street :
Columbus, Ohio 43215, :
:
Defendants. :
3
<PAGE> 4
VERIFIED COMPLAINT FOR TEMPORARY RESTRAINING
ORDER AND FOR PRELIMINARY AND PERMANENT
INJUNCTIVE RELIEF AND DECLARATORY JUDGMENT
Plaintiffs, by their undersigned attorneys, as and for their Complaint
herein, aver upon knowledge as to themselves and upon information and belief as
to all other matters as follows:
NATURE OF THIS ACTION
1. Plaintiffs seek (a) temporary, preliminary and permanent injunctive
relief, pursuant to Rule 65, Fed. R. Civ. P., against the enforcement of the
Ohio Take-Over Act, Ohio R.C. Section Section 1707.041, 1707.042, 1707.23 and
1707.26 (the "Take-Over Act"), which purports to regulate nationwide tender
offers governed by federal law; (b) preliminary and permanent injunctive relief
prohibiting application of certain provisions of the Ohio Control Share
Acquisition Act, R.C. Section Section 1701.01(CC)(2) and 1701.831(E)(1), to
impair the voting rights of holders of certain of Commercial Intertech Corp.
("CIC") Common Shares; (c) preliminary and permanent injunctive relief
prohibiting CIC and its directors from taking any steps to enforce or amend the
CIC Shareholder Rights Plan, commonly referred to as the "Poison Pill Plan,"
except to redeem the rights issued thereunder (the "Rights") or to delete the
provisions in the Poison Pill Plan that purport to prohibit directors elected by
the shareholders of CIC (without the approval of the current CIC directors) from
redeeming the Rights for a period of 180 days, as hereinbelow further alleged,
and directing CIC and its directors to redeem all Rights issued pursuant to
CIC's Poison Pill Plan; and (d) preliminary and permanent injunctive relief
prohibiting CIC and its directors from treating CIC's Preferred Shares as having
one and one-half shares.
2. Plaintiffs also seek a declaratory judgment, pursuant to 28 U.S.C.
Section 2201 and Fed. R. Civ. P. 57, declaring that (a) the Take-Over Act is
unconstitutional to the extent it is sought to be
4
<PAGE> 5
applied to the proposed acquisition by Plaintiffs of all of the outstanding
Common Shares of CIC; (b) the Control Share Acquisition Act is unconstitutional
to the extent it is sought to be applied to impair the voting rights of holders
of CIC's Common Shares described in R.C. Section 1701.01(CC)(2); (c) CIC's
Poison Pill Plan and the Rights issued thereunder are invalid, unlawful, null
and void; and (d) CIC's Preferred Shares have one vote and any attempt to
increase the voting power is invalid.
PARTIES
3. Plaintiff United Dominion Industries Limited ("United
Dominion") is a corporation organized under the laws of Canada with its
principal place of business in Charlotte, North Carolina. United Dominion and
Opus Acquisition Corporation, a Delaware corporation with its principal place of
business in Charlotte, North Carolina and an indirect wholly-owned subsidiary of
United Dominion (hereinafter collectively referred to as "Plaintiffs"), are
announcing and commencing a nationwide cash tender offer for all of the
outstanding Common Shares of CIC.
4. Defendant CIC is an Ohio corporation with its principal
executive offices in Youngstown, Ohio.
5. Defendants Bresnahan, C. Cushwa, W. Cushwa, Galvin, Hill,
Humphrey, Kassling, McDonough, Midgley, Powers, Smart and Tucker are directors
of CIC (the "Directors"), and each is a citizen of a state other than Delaware
or North Carolina.
6. Defendant Thomas Geyer (the "Commissioner") is a citizen and
resident of Ohio and is the Acting Commissioner of the Division of Securities,
Department of Commerce of the State of Ohio (the "Division"). Pursuant to R.C.
Section 1707.46, the Division is charged with the enforcement of all laws and
rules enacted to regulate the sale of securities. In the enforcement of
5
<PAGE> 6
those laws, the Commissioner is empowered, inter alia, to conduct hearings and
investigations (R.C. Section Section 1707.041, 1707.23), issue cease and desist
orders (R.C. Section 1707.23) and seek court-ordered injunctive relief (R.C.
Section Section 1707.23, 1707.26). Further, the Commissioner is empowered,
pursuant to R.C. Section 1707.23(E) and (H), to enforce certain criminal
provisions and may refer certain enforcement matters to the Attorney General and
the Prosecuting Attorney.
7. Defendant Donna Owens is a citizen and resident of Ohio and is
the Director of Commerce, Ohio Department of Commerce. The Department of
Commerce has authority to enforce provisions of the Take-Over Act.
8. The State of Ohio is being made a defendant herein by and
through Betty D. Montgomery, the Attorney General of Ohio.
JURISDICTION AND VENUE
9. This action arises under (a) Sections 14(a), 14(d), 14(e) and
28 of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C.
Section Section 78(a), 78n(d), 78n(e) and 78bb, and the rules and regulations
promulgated thereunder by the Securities and Exchange Commission (the "SEC"), 17
C.F.R. Section Section 240.14d-1 et seq.; and (b) the Commerce Clause, Article
I, Section 8, Clause 3, and the Supremacy Clause, Article VI, Clause 2 of the
United States Constitution and 42 U.S.C. Section 1983.
10. This Court has subject matter jurisdiction over this action
pursuant to (a) Section 27 of the Exchange Act, 15 U.S.C. Section 78aa; (b) 28
U.S.C. Section 1331(a) (federal question); (c) 28 U.S.C. Section 1332 (diversity
of citizenship); (d) 28 U.S.C. Section 1337(a) (commerce and antitrust
regulation); (e) 28 U.S.C. Section 1343(a) (deprivation of constitutional
rights); and (f) 28 U.S.C. Section 1367 (supplemental
6
<PAGE> 7
jurisdiction). Plaintiffs and defendants are of diverse citizenship, and the
amount in controversy, exclusive of interest and costs, exceeds $50,000.
Further, this Court has supplemental jurisdiction over the state law claims.
11. Venue is proper in this District pursuant to 28 U.S.C. Section
1391(b) and (c) because all defendants reside in or are subject to personal
jurisdiction in this District and the claims asserted herein arise from events
and/or omissions in this District; and pursuant to Section 27 of the Exchange
Act, 15 U.S.C. Section 78aa, because acts or transactions constituting
violations of the Exchange Act have occurred or are threatened to occur in this
District, and the defendants are in, inhabit or transact business in this
District. Venue in this division is proper pursuant to S.D. Ohio L.R. 3.3(c)
because defendants Geyer and Owens reside, and the cause of action arose, in
this division.
THE TENDER OFFER
12. In a meeting on May 10, 1996 and in a letter dated June 27,
1996, United Dominion advised CIC of its interest in acquiring CIC. In the June
27 letter, United Dominion proposed to acquire CIC by means of an all-cash
merger (not subject to financing) involving payment to CIC's shareholders of a
very substantial premium above the then current market value of CIC's Common
Shares, and stated its desire to engage in negotiations to effectuate such a
transaction.
13. In response to the June 27 letter, CIC's Board of Directors
issued a statement to the effect that, while it would review the United Dominion
proposal in consultation with legal and investment advisors, it reaffirmed CIC's
"long-standing objective of creating shareholder value as an independent public
company."
7
<PAGE> 8
14. In light of CIC's lack of substantive response to United
Dominion's friendly overtures, United Dominion decided to make an offer directly
to CIC's shareholders.
15. Accordingly, Plaintiffs announced on July 11, 1996, that they
would commence a cash tender offer (the "Tender Offer") for all of the
outstanding shares of CIC's common stock (including common stock issuable upon
conversion of CIC's ESOP Convertible Preferred Stock Series B) at a price of $27
per Common Share.
16. The Tender Offer is a substantial transaction in interstate
commerce, totaling more than $469,756,000. It is being made to all of CIC's
common shareholders, who are widely dispersed throughout the United States, with
the majority located outside Ohio. The Tender Offer is fair, reasonable and
adequate, and is not coercive. The Tender Offer is for all shares. The Tender
Offer has no financing condition. The Tender Offer price represents a premium of
approximately 40% over the market price of CIC shares prior to public
announcement of United Dominion's interest in acquiring CIC. If the Tender Offer
is successful, Plaintiffs intend, as soon as practicable, to consummate a merger
and to acquire at the same price all remaining Common Shares not tendered in the
Tender Offer.
17. The Tender Offer complies in all respects with the detailed
substantive and disclosure requirements of federal law, which comprehensively
regulate nationwide tender offers, including, among other things, the Exchange
Act and certain amendments thereto (the "Williams Act"), and rules and
regulations promulgated by the Securities and Exchange Commission ("SEC")
pursuant to Congressional authorization. Plaintiffs are filing a Schedule 14D-1
with the SEC with respect to the Tender Offer which contains, among other
exhibits, an Offer to Purchase setting forth the material terms of the Tender
Offer. Plaintiffs are also filing a Form 041 together with the
8
<PAGE> 9
aforesaid Schedule 14D-1, the Offer to Purchase and all other exhibits thereto,
with the Division, without prejudice to Plaintiffs' position that the Take-Over
Act is unconstitutional or inapplicable to the Tender Offer. In addition,
Plaintiffs are delivering an Acquiring Person Statement to CIC, without
prejudice to Plaintiffs' position that the Control Share Acquisition Act is
unconstitutional to the extent it is applied to impair certain voting rights.
18. Further, in order that the shareholders of CIC may have an
opportunity to receive the benefits of the Tender Offer and not be subject to
the defenses erected and being maintained by the incumbent Directors, Plaintiffs
are taking steps available under Ohio law and CIC's Code of Regulations to
solicit appointments of designated agents to call a special meeting of CIC
shareholders. At such meeting, Plaintiffs will offer the CIC shareholders an
opportunity, among other things, to adopt a resolution calling on the current
Directors to redeem the CIC Poison Pill Plan, to remove the incumbent Directors
in favor of Plaintiffs' nominees, to amend CIC's Code of Regulations if
necessary to provide that the Control Share Acquisition Law does not apply to
CIC, and otherwise to remove the defensive barriers to Plaintiffs' Tender Offer.
Plaintiffs' efforts to call such a special meeting will comply in all respects
with Ohio law and applicable federal law, and, together with the relief
requested herein that is necessary to enable the CIC shareholders' corporate
franchise to be exercised without unlawful and inequitable impairment, will
enable the shareholders to decide for themselves whether they wish to accept
Plaintiffs' Tender Offer.
FEDERAL REGULATION OF THE TENDER OFFER
19. In 1968, Congress enacted the Williams Act amendments to the
Exchange Act and thereby established a uniform national system, administered by
the SEC, for regulation of
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interstate tender offers. The provisions of the Williams Act, and the rules
promulgated thereunder by the SEC, represent a comprehensive federal scheme
which regulates nationwide tender offers.
20. In enacting the Williams Act, Congress recognized that tender
offers serve legitimate and beneficial economic functions by, among other
things, providing investors with an opportunity to sell their shares at an
advantageous premium over the prevailing market prices and providing
shareholders with all information material to their respective decisions whether
or not to tender their shares.
21. The Williams Act reflects the intent of Congress that
interstate tender offers for shares of public corporations should succeed or
fail solely at the hands of the free and informed investment judgment of the
individual shareholders of such corporations. The Williams Act is designed
neither to deter nor to encourage tender offers, but rather to establish
evenhanded regulation, favoring neither the tender offeror nor incumbent
management of the corporation whose securities are being sought. The goals of
the Williams Act are shareholder protection and strict neutrality in the contest
for corporate control between management of the target company and the tender
offeror.
22. The Williams Act protects investors by requiring that tender
offerors provide shareholders with certain information which Congress has
determined to be material to an informed investment judgment as to whether an
individual shareholder should hold, sell or trade his securities and by
requiring that tender offerors observe specified timetable requirements in
connection with all tender offers for securities registered under the Exchange
Act.
23. Pursuant to its authority under Section 23(a)(1) and other
provisions of the Exchange Act, the SEC has promulgated rules and regulations in
furtherance of the comprehensive
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Congressional scheme set forth in the Williams Act and in other provisions of
the Exchange Act. Federal law establishes a specific regulatory scheme and
timetable which apply to the Tender Offer. The Williams Act does not contain any
provisions that would substantially delay or restrict a tender offer, or permit
administrative review respecting the fairness of its substantive terms or the
effectiveness of tender offer disclosures.
THE OHIO TAKE-OVER ACT
24. The Take-Over Act, R.C. Section 1701.041, was originally
enacted in 1969 and amended in 1990. It purports to regulate interstate tender
offers.
25. Under the Take-Over Act, a "control bid" is defined to include
an offer to acquire equity securities of a corporation incorporated inside or
outside Ohio with its principal place of business or principal executive office
in Ohio or with substantial assets within Ohio if there are a certain specified
number of Ohio shareholders. R.C. Section Section 1707.01(V)(1); 1707.01(Z)(1).
26. While the Take-Over Act requires disclosure which is, in part,
duplicative of that required under federal law, the information filed with the
Division and to be delivered to the subject company and Ohio offerees must also
include information which need not be disclosed in a Schedule 14D-1 filed with
the SEC pursuant to the Williams Act, such as:
(a) information regarding plans or proposals of the offeror to make
changes in employee plans or workforce or to close plants or facilities.
Section1707.041(A)(2)(d).
(b) complete information on the organization and operations of offeror,
including
(i) a description of the offeror's outstanding capital stock and
long-term debt,
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(ii) financial statements of the offeror for the current period and
three most recent annual accounting periods,
(iii) a description of the location and general character of
offeror's principal physical properties,
(iv) a description of pending legal proceedings other than routine
litigation,
(v) a description of the business done and projected by the offeror
and the general development of offeror's business over the past three
years, and
(vi) the amount of any material interest, direct or indirect, of
any of offeror's officers or directors in any material transaction
during the past three years, or any proposed transactions, to which the
offeror was or is to be a party. Section 1707.041(A)(2)(g).
(c) "[s]uch other and further documents, exhibits, data, and
information as may be required by regulations of the division of
securities, or as may be necessary to make fair, full and effective
disclosure to offerees of all information material to a decision to accept
or reject the offer." Section 1707.041(A)(2)(h).
27. The Take-Over Act impermissibly imposes burdens upon offerors,
such as the Plaintiffs, in conflict with the Williams Act, 15 U.S.C. Section
78n(d), (e) (to which the Tender Offer is subject), and the regulations
promulgated thereunder, to the extent that the Take-Over Act requires that
offerors provide to the company being acquired, the Division and Ohio offerees,
materials which include, among other things, information with respect to the
financial condition and history of the offerors; plans relating to employees;
and a general open-ended requirement for additional information, beyond the
requirements of the Williams Act. R.C. Section 1707.041(A)(2).
28. The Take-Over Act allows the Division, by rule or in an
adjudicatory proceeding, to determine that an issuer is not a "subject company"
if "appropriate review" of the control bid will be made by a regulatory
authority of another jurisdiction. R.C. Section 1707.01(Z)(2).
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29. The Division may "summarily suspend the continuation of the
control bid." Further, the Division may effectively block the Tender Offer from
going forward if, after a hearing, it determines that "all of the information
required to be provided . . . has not been provided by the offeror, that the
control bid materials provided to offerees do not provide full disclosure to
offerees of all material information concerning the control bid, or that the
control bid is in material violation of any provision of this chapter . . ."
R.C. Section 1707.041(A)(4).
30. The contemplated "suspension" of Plaintiffs' control bid, both
summarily and after hearing, would have the practical effect of impeding, and
possibly halting, the Tender Offer throughout the nation. Reinstitution of the
offer can be accomplished only by filing "new or amended information" to correct
"disclosure and other deficiencies." R.C. Section 1707.041(A)(4).
31. These provisions are in direct contravention of the Williams
Act, which does not contemplate any substantive administrative review of the
"effectiveness" of tender offer disclosures or of "other deficiencies". These
provisions also conflict with the explicit timetable of the Williams Act.
THE CONTROL SHARE ACQUISITION ACT
32. R.C. Section 1701.831 regulates the making of "control share
acquisitions" as defined in R.C. Section 1701.01(Z)(1). The Tender Offer to
acquire all of the Common Shares of CIC for cash proposes a control share
acquisition. Within ten days of receipt of an Acquiring Person Statement
delivered to CIC pursuant to R.C. Section 1701.831(B), defendant Directors of
CIC must call a special meeting (the "831 Special Meeting") of shareholders to
vote on the proposed control share acquisition.
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33. Under R.C. Section 1701.831, the Tender Offer can only be
consummated if CIC shareholders approve the proposed control share acquisition
by the affirmative vote of a majority of the voting power of CIC in the election
of directors represented at the 831 Special Meeting in person or by proxy and a
majority of the portion of such voting power excluding the voting power of
"interested shares" [as defined in R.C. Section 1701.01(CC)]. A quorum must be
present at the 831 Special Meeting and will be deemed present if a majority of
the voting power of CIC in the election of directors and a majority of such
voting power excluding "interested shares" are represented at the meeting in
person or by proxy.
34. According to R.C. Section 1701.832, the procedures in Section
1701.831 are to provide ". . . evenhanded protection of offerors and
shareholders from fraudulent and manipulative transactions arising in connection
with control acquisitions." "Evenhanded protection" requires that the
shareholder vote in Section 1701.831 must treat offerors and incumbent
management evenhandedly and must be bona fide and achievable. If the vote cannot
be calculated, or cannot be calculated in a timely manner, the voting
requirements are a blatant sham designed to enable entrenched management to
avoid a shareholder referendum on the Tender Offer and kill fair, all-cash,
non-manipulative tender offers or stymie them indefinitely.
35. R.C. Section 1701.01(CC)(2), a 1990 amendment, presents
insurmountable barriers to any and all control share acquisitions of the shares
of widely held public companies, such as CIC, by creating a class of "interested
shares" which, as a practical matter, is impossible to determine.
36. R. C. Section 1701.01(CC)(2) provides:
"Interested shares" also means any shares of an issuing public
corporation acquired, directly or indirectly, by any person from the holder
or holders thereof for a valuable consideration during the period beginning
with the date of the first public disclosure of a proposed control share
acquisition of the issuing public corporation or any proposed merger,
consolidation, or other transaction which
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would result in a change in control of the corporation or all or
substantially all of its assets, and ending on the date of any special
meeting of the corporation's shareholders held thereafter pursuant to
section 1701.831 [1701.83.1] of the Revised Code, for the purpose of voting
on a control share acquisition proposed by any acquiring person if either
of the following apply:
(a) The aggregate consideration paid or given by the person who
acquired the shares, and any other persons acting in concert with him, for
all such shares exceeds two hundred fifty thousand dollars;
(b) The number of shares acquired by the person who acquired the
shares, and any other persons acting in concert with him, exceeds one-half
of one per cent of the outstanding shares of the corporation entitled to
vote in the election of directors. (Emphasis added).
37. Whether any shares of CIC are "interested shares" under R.C.
Section 1701.01(CC)(2) cannot be determined from the shareholder records of CIC
required to be maintained under R.C. Section 1701.37 because such records
disclose the names and addresses of record holders only, who may or may not also
be the beneficial owners of such shares. Even as to those record holders who are
also beneficial owners, the records do not contain the information necessary to
determine whether the shares are "interested shares" under
R.C.Section 1701.01(CC)(2).
38. It is estimated that at least 50% of CIC's outstanding Common
Shares are held by clearing agencies and by brokers and banks as record holders
for the beneficial owners using "street" or nominee names. Such brokers, banks
and clearing agencies hold shares for many beneficial owners, including
arbitrageurs. Arbitrageurs buy and sell significant amounts of shares of widely
held public companies, like CIC, after tender offer announcements. They
frequently do not consent to disclosure of their names, addresses and holdings.
Neither CIC nor Plaintiffs can compel the record shareholders to disclose the
name, address or holdings of the numerous non-consenting beneficial owners of
shares, the prices paid by them for shares, when such shares were purchased or
whether they are "acting in concert" with any other person, and yet this
unavailable
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information must be obtained in order to identify the class of "interested
shares" created by R.C. Section 1701.01(CC)(2). Thus, this provision presents
insurmountable difficulties in tallying "interested shares" and, accordingly,
shares that are not "interested." Moreover, it is a practical impossibility to
determine whether there is a quorum or to determine the vote on the proposed
control share acquisition, which makes it impossible to comply with the
statutory requirement of obtaining approval of the Tender Offer by separate
majorities of the holders of "interested shares" and the other shares of CIC.
39. Section 14 of the Exchange Act and the regulations promulgated
thereunder (the "Proxy Rules") regulate the solicitation of proxies and related
matters with respect to public companies such as CIC.
40. Rules 14b-1(b)(3) and 14b-2(b)(4) of the Proxy Rules require
clearing agencies, securities brokers and banks holding record ownership of
stock for beneficial owners to provide a public company such as CIC, upon
request of the company, with the names, addresses and securities positions,
compiled as of a date no earlier than five business days after such request is
received, of its customers who are beneficial owners of the company's securities
and "who have not objected to disclosure of such 'information'." Thus, the Proxy
Rules recognize the right of a beneficial owner to keep his identity
confidential. In addition, the Proxy Rules create no right or ability to compel
disclosure by a beneficial owner of the price paid by him for securities, the
time of the purchases, the identity of sellers or whether he is acting in
concert with any other person, all of which must be obtained to determine
whether shares of CIC are "interested shares" under R.C. Section 1701.01(CC)(2).
Therefore, Section 1701.01(CC)(2) conflicts with and is preempted by the Proxy
Rules.
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41. While some of this information could be obtained from reports
required to be filed by 5% shareholders under Section 13 of the Exchange Act,
Section 1701.01(CC)(2) applies to a person holding as few as $250,000 worth of
the outstanding CIC shares, so that Section 13 filings would provide incomplete
and non-dispositive information in determining which CIC shares are "interested
shares." Thus, Section 1701.01(CC)(2) is also in conflict with the disclosure
scheme of Section 13 of the Exchange Act.
42. The Williams Act, and the regulations thereunder, establish
procedural rules to govern tender offers. CIC and Plaintiffs are subject to the
Williams Act. The Williams Act strikes a careful balance between the interests
of offerors and target companies, and any state statute that upsets this balance
is preempted.
43. R.C. Section 1701.831(E)(1), by virtue of R.C. Section
1701.01(CC)(2), operates to favor entrenched management against offerors to the
detriment of shareholders by excluding, from one of the votes required under
Section 1701.831, certain shares of CIC trading after the Tender Offer
announcement. It does not protect independent shareholders against the
contending parties and does not ensure collective deliberation about the merits
of tender offers; rather, it deprives holders of independently-owned shares of
CIC of their rightful voice in corporate affairs. R.C. Section 1701.01(CC)(2)
excludes certain shares owned independently of CIC's management and Plaintiffs
from a crucial vote and makes it impossible to determine whether a requisite
shareholder vote has been obtained. Thus, it impedes the operation of the
special shareholder's meeting intended to give to the offeror the opportunity to
present its offer to the shareholders and to shareholders the opportunity to
decide for themselves whether a change in control should occur. Therefore, R.C.
Section 1701.01(CC)(2) frustrates the purposes of the Williams Act. R.C. Section
1701.01(CC)(2) also does
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not treat shares which trade after the first announcement of a tender offer
equally, thereby discriminating against Plaintiffs' Tender Offer in favor of any
later competing offer made by CIC's management or a "white knight" friendly to
management. Shares purchased after the announcement of Plaintiffs' Tender Offer
are "interested shares" as to such Tender Offer but would not be "interested
shares" as to any other offer if such shares are purchased prior to the
announcement of the second offer. The "evenhanded" approach mandated by R.C.
Section 1701.832 and the Williams Act is frustrated by a scheme which favors
entrenched management to the detriment of CIC's shareholders.
44. The Ohio General Assembly demonstrated awareness that the
amendment of R.C. Section 1701.01, adding division (CC)(2), was constitutionally
dubious by specifically adding a severability clause solely for that division,
to apply "if any part of this division is held to be illegal or invalid in
application . . .." R.C. Section 1701.01(CC)(3).
THE POISON PILL PLAN, INCLUDING THE
UNIQUE "DEAD HAND PROVISION"
45. CIC's Poison Pill Plan (denominated the "Shareholder Rights
Plan") was initially adopted by CIC's Board of Directors on November 29, 1989,
without shareholder approval. On that date, CIC implemented the Poison Pill Plan
by distributing a dividend of one preferred share purchase right (i.e., a Right)
for each outstanding Common Share of CIC held of record by shareholders at the
close of business on December 13, 1989.
46. CIC's Poison Pill Plan is designed to impose substantial
economic penalties on any entity, like United Dominion, which attempts to
acquire CIC in a transaction desired by the shareholders of CIC but not approved
by CIC's incumbent Board of Directors. Thus, the Poison
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Pill Plan affords CIC's Board the power effectively to prevent shareholders from
receiving the benefits of Plaintiffs' Tender Offer regardless of its merit or
the desires of shareholders to sell their shares pursuant thereto.
47. CIC's Poison Pill Plan, however, empowers CIC's incumbent
Directors to redeem the Rights and remove the threat of overwhelming dilution
that they carry. CIC's incumbent Board may at its discretion redeem the Rights
at the nominal price of One Cent ($.01) per Right at any time prior to the time
a person together with its affiliates and associates, becomes the beneficial
owner of 20 percent or more of the voting power of CIC's outstanding voting
securities (an "Acquiring Person").
48. In the Offer to Purchase, Plaintiffs request that CIC's Board
of Directors redeem the Rights. Plaintiffs believe that CIC's Board will refuse
to redeem the Rights.
49. CIC uses and maintains the Rights solely to employ the
discriminatory "flip-over" and "flip-in" features of the Rights which are
designed to deter tender offerors, like Plaintiffs, whose offers have not been
approved by CIC's incumbent Board of Directors. According to CIC's Poison Pill
Plan, unless CIC's incumbent Board of Directors approves of the transaction --
without regard for the wishes of CIC's shareholders -- the Rights become
exercisable in the event that any person acquires 20 percent or more of the
voting power of CIC's outstanding voting securities, entitling the holder of
each Right (other than those owned by the Acquiring Person, which become void)
to purchase Common Shares of CIC having a market value of two times the $75
"Purchase Price" of the Right -- thereby exacting prohibitive dilution on the
position of the Acquiring Person (such right being referred to as a "flip-in"
right). Similarly, according to the Poison Pill Plan, in the event that, after a
person acquires 20 percent or more of CIC's voting
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power, CIC is involved in a merger or other business combination transaction,
each holder of a Right (other than the Acquiring Person) will have the right to
receive, upon exercise of the Right at the Purchase Price, that number of shares
of common stock of the acquiring company which has a market value of two times
the Purchase Price (such right being referred to as a "flip-over" right) --
thereby also exacting prohibitive dilution on the position of the Acquiring
Person, all without regard to the wishes of the shareholders of CIC.
50. The Poison Pill Plan thus has anti-takeover effects in that
the Rights will cause substantial dilution to the ownership rights of any person
who attempts to acquire CIC on terms not approved by CIC's Board of Directors.
This dilution would impose substantial economic penalties on Plaintiffs or any
other person who attempts to take control of CIC in a transaction not approved
by CIC's incumbent Board of Directors.
51. In the face of Plaintiffs' all cash, all shares, premium,
noncoercive Tender Offer, CIC's Board of Directors likely will continue to
refuse to redeem the Rights despite Plaintiffs' demand that they do so. CIC's
Board of Directors is employing the Poison Pill Plan to obstruct Plaintiffs'
valuable offer, to deny to CIC's shareholders any meaningful opportunity to
decide for themselves whether to tender their shares, and to entrench the
incumbent Board.
52. The purported purpose of the Poison Pill Plan was to protect
the interests of CIC's shareholders. Plaintiffs' all cash, all shares premium
Tender Offer provides for fair and equal treatment of all CIC shareholders and
is not coercive. Consequently, CIC's Poison Pill has no valid application to
Plaintiffs' Tender Offer.
53. CIC's Board of Directors has a fiduciary duty to redeem the
Rights to allow Plaintiffs' Tender Offer to proceed. Unless the Poison Pill is
redeemed, CIC's shareholders may
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be denied the opportunity to exercise their right to decide for themselves
whether to accept the benefits of Plaintiffs' Tender Offer.
54. The Directors of CIC should promptly determine that the cash
Tender Offer for all outstanding Common Shares commenced by Plaintiffs is in the
best interest of the corporation and its shareholders, so that the Poison Pill
Plan does not apply to that Tender Offer. The failure to approve the Tender
Offer and render the Poison Pill Plan inapplicable would constitute a breach of
fiduciary duty, and may deny CIC's shareholders the opportunity to exercise
their right to decide for themselves whether to accept the benefits of
Plaintiffs' Tender Offer.
55. While CIC's Poison Pill Plan empowers CIC's incumbent
Directors to redeem the Rights and thereby remove them as a barrier to
Plaintiffs' Tender Offer, the Poison Pill Plan contains an unusual provision
that purports to prohibit a newly-elected CIC board of directors effectively
from redeeming the Rights, or otherwise permitting an acquisition of CIC to go
forward, for a period of 180 days (the "Dead Hand Provision"). By virtue of such
Dead Hand Provision, the incumbent Directors of CIC are purporting to penalize
shareholders of CIC should the shareholders, as is their right, determine to
oust the Directors in favor of Plaintiffs' nominees committed to support
Plaintiffs' highly advantageous tender offer and remove the defensive obstacles
erected by CIC's incumbent Directors. Were the CIC shareholders to choose to
remove the incumbent Directors in favor of Plaintiffs' nominees, the Dead Hand
Provision -- unless it is first removed by the incumbent Directors, as they may
do under the Poison Pill Plan prior to their removal from office -- would
dictate that the shareholders could not receive the premium tender offer for 180
days, thus subjecting the shareholders to the "Dead Hand" of the removed
Directors.
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56. Specifically, CIC's Poison Pill Plan provides that, while the current
CIC Board of Directors may designate a tender offer for all shares to be a
"Permitted Offer" not subject to the Plan, no offer -- regardless of its merits,
its price, or its terms -- may be deemed a Permitted Offer for a period of 180
days following the election to the majority of the Board of Directors of CIC of
persons not nominated by the incumbent Directors. Similarly, the Poison Pill
Plan provides that, while the CIC Board of Directors may redeem the Rights for
the nominal price of $.01 per Right in order to permit a desirable transaction
to go forward, the Rights cannot be redeemed -- regardless of the desirability
of a transaction or the wishes of the shareholders -- for a period of 180 days
following the election of directors of which a majority are persons who were not
nominated by the incumbent Directors.
57. By such arrogant provisions, which purport to render directors not
chosen by the incumbent Directors themselves to be powerless to redeem or
otherwise remove the Rights as an obstacle to a transaction, the incumbent
Directors have sought to set themselves up as a continuously self-sustaining
body immune to the wishes of the shareholders, on pain that the shareholders are
compelled to suffer a 180-day (six-month) delay in the receipt of payment for
their shares in a tender offer should they deign to remove the Directors in
favor of other persons of their choosing, such as Plaintiffs' nominees. By such
provisions, the incumbent Directors are seeking to rule the shareholders with
their "Dead Hands" even after they are removed from office.
58. There is no legitimate purpose served by subjecting Plaintiffs' Tender
Offer, and the CIC shareholders, to the Dead Hand Provision of CIC's Poison Pill
Plan. The shareholders of CIC have the fundamental right to choose to replace
the CIC Directors. Plaintiffs have a fundamental right, under Ohio and federal
law, to solicit the CIC shareholders to replace the CIC
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Directors with Plaintiffs' nominees. The Dead Hand Provision threatens to
interfere with these rights and, in so doing, severely penalizes the CIC
shareholders who may be unable to receive the premium tender offer price for 180
days after they chose to remove the CIC Directors in favor of Plaintiffs'
nominees (without any corresponding payment of interest or other recompense for
such lengthy and unjustifiable delay). The Dead Hand Provision is invalid under
Ohio law because without amending CIC's Articles or Regulations by a vote of
shareholders, CIC Directors have unilaterally limited the voting rights of
shareholders, created different classes of CIC Directors, and improperly limited
the exercise of the fiduciary duties of certain CIC Directors, thereby
preventing them from carrying out their fiduciary duties under Ohio law.
59. The adoption of the Dead Hand Provision of CIC's Poison Pill Plan and
its continuation threaten to impede the right of CIC's shareholders freely to
decide whether to remove the CIC Directors, and to impose a severe economic
penalty on the CIC shareholders. By adopting and keeping the Dead Hand Provision
in place notwithstanding that they are free to remove it by amendment of the
Poison Pill Plan, the incumbent Directors are violating Ohio law, breaching
their fiduciary duties to the shareholders of CIC and acting to entrench
themselves in office by creating a totally artificial and unjustifiable cost to
their removal, imposed on the very shareholders to whom the Directors owe
fiduciary duties and at whose pleasure the Directors serve in our system of
corporate democracy.
VOTING RIGHTS OF PREFERRED SHARES
60. The Articles of Incorporation of CIC, as adopted by the shareholders,
do not state voting rights for the authorized common and preferred shares.
O.R.C. Section 1701.44(A) states
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"[e]xcept to the extent that the voting rights of the shares of any class are
increased, limited, or denied by the express terms of such shares . . . each
outstanding share regardless of class shall entitle the holder thereof to one
vote . . ." The express terms of the Preferred Shares were adopted by CIC's
Directors, not its shareholders. The express terms established by the Directors
establish one vote per share, as contemplated by Section 1701.44(A). Moreover,
the Articles and Regulations state that all shares, including preferred, have
one vote. CIC's Articles at Section 3(A) state: "[t]he holder of each share of
Series B Preferred Stock shall be entitled to one vote (or consent) for each
share of Series B Preferred Stock held by such holder." Article I, Section 8 of
CIC's Regulations, which were adopted by CIC's shareholders, states: "[e]ach
voting share of the corporation shall, unless otherwise provided by law or the
Articles, entitle the holder thereof . . . to one vote . . .".
61. Therefore, pursuant to Ohio law, CIC's Common Shares and Preferred
Shares each have one vote since there is no express term of the Preferred Shares
increasing the voting rights of such shares which was adopted by the
shareholders.
62. However, contrary to CIC's Articles and Regulations and O.R.C. Section
1701.44(A), CIC has claimed in certain documents that its Preferred Shares have
increased voting rights. CIC's Proxy Statement for its 1996 Annual Meeting of
Shareholders claims that each Common Share is entitled to one vote and each
Preferred Share is entitled to one and one-half votes. In Note L to the
consolidated financial statement in CIC's 1995 Annual Report, the statement is
made that "Series B shares are entitled to one and one-half votes per share. .
." CIC's 1995 Form 10-K states "[t]he Series B shares are entitled to one and
one-half votes per share."
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63. Any such unauthorized increase in the voting rights of the Preferred
Shares would be a violation of the laws of Ohio and CIC's Articles and
Regulations. The Preferred Shares cannot be entitled to one and one-half votes,
and any attempt to increase their voting power is unlawful.
CLAIMS FOR RELIEF
The Take-Over Act Violates The Commerce
Clause Of The United States Constitution
(COUNT ONE)
64. Plaintiffs repeat and reallege the averments set forth in paragraphs
1-63 of this Complaint as if fully rewritten herein.
65. The Commerce Clause of the Constitution provides that "Congress shall
have power . . . to regulate commerce . . . among the several states." U.S.
Const. Art. I, Section 8, cl. 3.
66. Shareholders of CIC reside throughout the United States and the Tender
Offer will take place in interstate commerce.
67. The Take-Over Act imposes a substantial, adverse, and direct burden on
interstate commerce because, among other things, the Take-Over Act:
(a) grants to the Division power to suspend the Tender Offer in the
State of Ohio which would effectively prevent plaintiffs from going forward
with the Tender Offer nationwide;
(b) imposes disclosure requirements which exceed those required under
federal law;
(c) deprives Plaintiffs of the federally-protected right to buy
securities from willing sellers throughout the United States free of state
law impediments;
(d) exerts a powerful constraint upon transactions in securities
between willing buyers and willing sellers throughout the United States;
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(e) impedes the infusion of millions of dollars into interstate
commerce by means of tender offers and interferes with efficient allocation
of economic resources; and
(f) creates unnecessary, duplicative and wasteful expenses for
companies engaged in interstate commerce and upon persons wishing to use
the national securities exchanges.
68. The Take-Over Act is invalid and unconstitutional because it places a
substantial burden on interstate commerce which outweighs any putative local
benefits, in violation of the Commerce Clause of the United States Constitution.
69. Plaintiffs have no adequate remedy at law.
The Take-Over Act Violates The Supremacy
Clause Of The United States Constitution
And Section 28 Of The Exchange Act
(COUNT TWO)
70. Plaintiffs repeat and reallege the averments set forth in paragraphs
1-69 of this Complaint as if fully rewritten herein.
71. The Supremacy Clause, U.S. Const. Art. VI, cl. 2, provides, in
pertinent part:
This Constitution, and the Laws of the United States which shall be
made in Pursuance thereof . . . shall be the supreme Law of the Land; and
Judges in every State shall be bound thereby, any Thing in the Constitution
or Laws of any State to the Contrary notwithstanding.
72. The Take-Over Act frustrates the objectives of, and is in direct
conflict with, the Exchange Act and the rules and regulations promulgated
thereunder in the following respects:
(a) The Take-Over Act imposes disclosure requirements in addition to
those required by federal law;
(b) the Division may prohibit a tender offer from proceeding and
thereby frustrate the federal scheme which provides for each shareholder to
decide whether to accept a tender offer;
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(c) the Take-Over Act represents an attempt to assert the legislative
power of the State of Ohio over a subject matter over which the federal
government has developed a comprehensive body of law; and
(d) the Take-Over Act creates the potential for unseemly conflict
between federal and state proceedings by permitting a state official to
halt a nationwide tender offer based upon his examination of materials
which meet applicable federal law.
73. By establishing policies, standards and procedures that conflict with
and are obstacles to the objectives of Congress expressed in the Exchange Act
and rules and regulations promulgated thereunder, the Take-Over Act is invalid
and unconstitutional as applied to the Tender Offer under the Supremacy Clause,
which accords supremacy to federal law over conflicting state law, and violates
and is preempted by Section 28(a) of the Exchange Act, 15 U.S.C. Section 78bb,
which prohibits and preempts state regulation which with the provisions of the
Exchange Act and the rules and regulations thereunder.
74. Plaintiffs have no adequate remedy at law.
The Control Share Acquisition Act,
By Virtue Of R.C. Section 1701.01(CC)(2),
Violates The Supremacy Clause Of The
United States Constitution And Section 28
Of The Exchange Act
(COUNT THREE)
75. Plaintiffs repeat and reallege the averments set forth in paragraphs
1-74 of this complaint as if fully rewritten herein.
76. The provisions of the Control Share Acquisition Act impairing the
voting rights of the holders of certain of CIC's shares frustrate the
objectives, and are in direct conflict with, the
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Exchange Act and the rules and regulations promulgated thereunder, in at least
the following respects:
(a) Effectively imposing proxy requirements inconsistent with those
imposed by federal law;
(b) Constituting an attempt to assert the legislative power of the
State of Ohio over a subject matter over which the federal government has
developed a comprehensive body of law; and
(c) Functioning as a bar to national tender offers by impeding the
ability to conduct the control share acquisition meeting so that
shareholders can decide whether a change of control should occur, by making
it impossible to identify "interested shares," and therefore making it
impossible to determine and obtain the vote required by R.C. Section
1701.831(E)(1).
77. By establishing policies, standards and procedures that conflict with
and are obstacles to the objectives of Congress expressed in the Exchange Act
and the rules and regulations promulgated thereunder, R.C. Section
1701.831(E)(1), by virtue of R.C. Section 1701.01(CC)(2), is invalid and
unconstitutional as applied to the Tender Offer under the Supremacy Clause of
the United States Constitution, Article VI, Clause 2, which accords supremacy to
federal law over conflicting state law, and violates and is preempted by Section
28(a) of the Exchange Act, 15 U.S.C. Section 78bb, which prohibits and preempts
state regulation that conflicts with the provisions of the Exchange Act and the
rules and regulations thereunder.
The Control Share Acquisition Act, By Virtue Of
Ohio Rev. Code Section 1701.01(CC)(2),
Creates An Unlawful Burden
On Interstate Commerce
(COUNT FOUR)
78. Plaintiffs repeat and reallege the averments set forth in paragraphs
1-77 of this Complaint as if fully rewritten herein.
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79. The Control Share Acquisition Act, by virtue of R.C. Section
1701.01(CC)(2), was intended to discourage trading in securities of target
companies after the announcement of a tender offer by limiting the voting rights
of certain purchasers. It was intended to disrupt the national secondary market
in securities, a market generally regulated by federal, not state law. The
provision effectively discourages the purchase of shares of widely held public
companies after announcement of a tender offer.
80. The Control Share Acquisition Act, by virtue of R.C. Section
1701.01(CC)(2), is invalid, unconstitutional, null and void because it places a
substantial burden on interstate commerce that outweighs any putative local
benefits, in violation of the Commerce Clause, Art. I, Section 8, cl. 3 of the
United States Constitution.
81. Plaintiffs have no adequate remedy at law.
The Dead Hand Provision Of The Poison Pill
Violates Ohio Law
(COUNT FIVE)
82. Plaintiffs repeat and reallege the averments set forth in paragraphs
1-81 of this Complaint as if fully rewritten herein.
83. The Dead Hand Provision of CIC's Poison Pill Plan limits, in violation
of Ohio law, the right of CIC's shareholders to remove CIC's Directors and
replace them with Directors empowered to manage the affairs of CIC in accordance
with their fiduciary duties as required by O.R.C. Section 1701.59(A).
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84. By granting certain powers to CIC's incumbent Directors but denying
such powers to replacement Directors, the Dead Hand Provision defines and limits
the power of certain Directors and establishes different classes of CIC
Directors in violation of Ohio law.
85. The Dead Hand Provision limits the exercise of the fiduciary duties of
certain CIC Directors and prevents them from carrying out their fiduciary duties
in violation of Ohio law.
86. Plaintiffs have no adequate remedy at law.
The Directors' Adoption and Failure To Redeem
The Poison Pill And To Remove The
Dead Hand Provision Violates
Their Fiduciary Duties
(COUNT SIX)
87. Plaintiffs repeat and reallege the averments set forth in paragraphs
1-86 of this Complaint as if fully rewritten herein.
88. The Tender Offer offers a substantial premium to CIC's stockholders for
their stock, and contains no threat or coercion of any kind to CIC or to CIC's
stockholders. The Tender Offer treats all CIC stockholders equally and allows
them to decide for themselves whether to accept the benefits of the premium
offer.
89. The purported purpose of the Poison Pill Plan is to protect CIC's
stockholders. The all-cash, all-shares premium Tender Offer does not imperil the
interests of CIC's stockholders in any way. Thus, the Poison Pill Plan cannot
legitimately be used to block the Tender Offer, and the CIC Directors' failure
to redeem the Poison Pill Rights constitutes a violation of the directors'
fiduciary duties under Ohio law.
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90. The Dead Hand Provision violates Ohio law and its adoption by CIC
Directors constitutes a violation of the directors' fiduciary duties under Ohio
law, and the failure of the directors to amend the Poison Pill Plan to eliminate
this unlawful provision also constitutes a violation of their fiduciary duties.
91. Further, the Dead Hand Provision serves no purpose other than to delay
unnecessarily the receipt by CIC's stockholders of the cash to be paid in the
Tender Offer for CIC shares. If it is not removed by the current CIC Directors,
the Dead Hand Provision would result in a six-month delay in the payment of
CIC's stockholders for their shares -- even if those stockholders were to
overwhelmingly express their approval of the Tender Offer by voting to remove
those Directors who oppose the Tender Offer. In addition, by creating such a
delay, the Dead Hand Provision would impose a significant financial penalty upon
the CIC stockholders should they decide to remove the CIC Directors, and thus
infringes upon the stockholders' fundamental right of corporate suffrage.
Accordingly, the Dead Hand Provision serves no legitimate purpose, and the
failure of the directors to amend the Poison Pill Plan to eliminate it also
constitutes a violation of their fiduciary duties.
92. Plaintiffs have no adequate remedy at law.
CIC's Attempt To Alter The Voting Power
Of The Preferred Shares Violates Ohio Law And
Its Articles And Regulations
(COUNT SEVEN)
93. Plaintiffs repeat and reallege the averments set forth in paragraphs
1-92 of this Complaint as if fully rewritten herein.
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94. The Articles, Regulations, express share terms and Ohio law establish
that the Preferred Shares held by the Employee Stock Ownership Plan and
Retirement Stock Ownership and Savings Plan ("ESOPs") are entitled to only one
vote each.
95. Plaintiffs and CIC's other common shareholders are injured by the
dilution of their voting power, by the improper and invalid attempt to increase
the voting rights of the Preferred Shares. The Preferred Shares, which are held
in CIC's ESOPs, would presumably be voted, in significant part, to block
Plaintiffs' Tender Offer and to further entrench current management. Therefore,
the attempt to increase the voting power of the Preferred Shares is an invalid,
unlawful and unauthorized defensive tactic, which could deprive common
shareholders of their right to consider Plaintiffs' Tender Offer.
96. Plaintiffs and the other CIC shareholders have no adequate remedy at
law.
IRREPARABLE INJURY
97. Unless temporary, preliminary and permanent injunctive relief is
granted, plaintiffs and CIC's shareholders will be irreparably harmed in at
least the following respects:
(a) Plaintiffs face the difficulty of proceeding nationwide, if there
is a "summary suspension" in Ohio, and the inability to consummate the
Tender Offer if the Division denies permission to proceed with the Tender
Offer because it will be effectively unable to purchase nationwide;
(b) the confusion, delay, or litigation resulting from any attempt to
enforce the Take-Over Act will adversely affect Plaintiffs' ability to
purchase shares pursuant to the Tender Offer nationwide, and could be used
by CIC's management to frustrate the Tender Offer and deprive CIC
shareholders of the opportunity to choose whether or not to tender their
shares;
(c) CIC's shareholders may be discouraged from accepting the Tender
Offer because of uncertainty surrounding the Take-Over Act;
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(d) CIC's shareholders will be further subjected to corporate
governance inconsistent with their own best interests and CIC may be unable
to comply with the illegal vote required by the Control Share Acquisition
Act; and
(e) CIC's shareholders may be deprived of an opportunity to receive
the benefits of Plaintiffs' all cash premium offer.
98. Unless temporary, preliminary and permanent injunctive relief is
granted, CIC shareholders who reside throughout the United States, including
those residing in Ohio, may be deprived of their right freely to consider and
avail themselves of the Tender Offer and to sell their shares to Plaintiffs at
the substantial premium over market prices offered pursuant to the Tender Offer.
WHEREFORE, plaintiffs pray that this Court:
(i) declare and adjudge that the Take-Over Act is unconstitutional as
applied to the Tender Offer;
(ii) temporarily, preliminary and permanently enjoin defendants, their
respective assigns and successors, their directors, officers, agents, employees,
attorneys, servants and shareholders and all persons in active concert or
participation with them, from taking any actions to enforce or apply the
Take-Over Act to the Tender Offer;
(iii) declare and adjudge that R.C. Section 1701.831(E)(1), by virtue of
R.C. Section 1701.01(CC)(2), is unconstitutional as applied to the Tender Offer;
(iv) preliminarily and permanently enjoin defendants from classifying or
treating any CIC shares as "interested shares" pursuant to R.C. Section
1701.01(CC)(2) for purposes of conducting the vote on the proposed control share
acquisition under R.C. Section 1701.831(E)(1);
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(v) preliminarily and permanently enjoin CIC and its Board of Directors
from taking any steps to enforce or amend the Poison Pill (except to redeem the
Rights, designate the Tender Offer as a Permitted Offer or eliminate the Dead
Hand Provision);
(vi) preliminarily and permanently order CIC and its Board of Directors
to redeem the Rights;
(vii) preliminarily and permanently order CIC and its Board of Directors
to amend the Poison Pill Plan to remove the Dead Hand Provision;
(viii) declare and adjudge that the Poison Pill may not properly be
enforced to bar the Tender Offer;
(ix) declare and adjudge that the Dead Hand Provision of the Poison Pill
Plan is invalid and unenforceable;
(x) declare and adjudge any attempt to increase the voting power of
Preferred Shares invalid;
(xi) preliminarily and permanently enjoin CIC and its Directors from
treating Preferred Shares as having one and one-half votes, or altering or
increasing their voting power;
(xii) award plaintiffs their costs and disbursements in this action,
including reasonable attorney's fees; and
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(xiii) grant such other and further relief as the Court may deem just and
proper.
/s/ Thomas B. Ridgley
--------------------------------
Thomas B. Ridgley (0000910)
Trial Attorney
VORYS, SATER, SEYMOUR AND PEASE
52 East Gay Street
P.O. Box 1008
Columbus, Ohio 43216-1008
(614) 464-6229
Attorneys for Plaintiffs
OF COUNSEL:
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd Street
New York, New York 10019
(212) 403-1000
VORYS, SATER, SEYMOUR AND PEASE
Laura G. Kuykendall (0012591)
Robert N. Webner (0029984)
52 East Gay Street
P.O. Box 1008
Columbus, Ohio 43216-1008
(614) 464-6400
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VERIFICATION
B. Bernard Burns, Jr., a Senior Vice President of United Dominion
Industries Limited and an officer of Opus Acquisition Corporation, hereby
declares, under penalty of perjury, that he has read the foregoing Complaint and
that the allegations contained therein are true to the best of his knowledge,
information and belief.
/s/ B. Bernard Burns, Jr.
-------------------------------
Subscribed and sworn to before me this 11th day of July, 1996.
/s/ Vera Johnson
-------------------------------
Notary Public
MY COMMISSION EXPIRES 02-27-2001
