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REVOCATION STATEMENT
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box: [X]
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY
(AS PERMITTED BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
COMMERCIAL INTERTECH CORP.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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/(R)/[LOGO] Commercial Intertech
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August 3, 1996
Dear Fellow Shareholder:
United Dominion Industries Limited ("United Dominion") and Opus Acquisition
Corporation ("OAC") are attempting to call a special meeting of the
shareholders of Commercial Intertech in order to seek to implement their $30
per share tender offer to take over Commercial Intertech (the "Offer").
The Commercial Intertech Board of Directors has unanimously concluded that
the Offer is inadequate and not in the best interests of the Company, its
shareholders, employees, and other constituencies, and does not adequately
reflect the long-term value or prospects of the Company.
Your Board is proceeding with its strategic plan to enhance value for all
shareholders through the growth of its core businesses, including the tax-free
spin-off to shareholders of our CUNO fluid filtration and purification
subsidiary. The CUNO spin-off dividend was declared on July 29, 1996 and is
payable to holders of record of Common Shares on August 9, 1996. The Board of
Directors believes that the Company's strategic plan provides greater value to
shareholders than United Dominion and OAC's inadequate Offer. We continue to
be optimistic about the prospects of the Company and CUNO.
United Dominion and OAC are soliciting "agent designations" from you so they
can call a special meeting in an attempt to facilitate their inadequate Offer
and to deprive you, our shareholders, of the long term value of your
investment in the Company and CUNO. THE BOARD OF DIRECTORS URGES YOU NOT TO
EXECUTE OR DELIVER UNITED DOMINION'S AND OAC'S WHITE AGENT DESIGNATION CARD.
IF YOU HAVE RETURNED UNITED DOMINION'S WHITE AGENT DESIGNATION CARD, WE URGE
YOU TO EXECUTE AND DELIVER COMMERCIAL INTERTECH'S LIGHT-GREEN REVOCATION CARD
TODAY.
This matter is of critical importance to the future of the Company and your
investment. If United Dominion and OAC succeed in obtaining the consents of
holders of 40 percent of the Commercial Intertech shares, they will be able to
hold this meeting, the avowed purpose of which is to fire the entire
Commercial Intertech Board of Directors and replace them with hand-picked
nominees of their own.
The enclosed Revocation Solicitation Statement contains information as to
reasons why you should, and how to, revoke any previously signed and returned
United Dominion's WHITE agent designation card. If you own Common Shares or
Preferred Shares through the Commercial Intertech Employee Stock Ownership
Plan or certain other benefit plans (as discussed in the enclosed Revocation
Solicitation Statement), please be sure to sign and return the enclosed card
providing the instructions to the trustee of the applicable plan so that your
Common Shares and Preferred Shares will be voted in accordance with your
instructions.
Thank you for your continued support.
Sincerely,
/s/ Paul J. Powers
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Paul J. Powers
Chairman of the Board, President and
Chief Executive Officer
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/(R)/[LOGO] Commercial Intertech
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REVOCATION SOLICITATION STATEMENT BY BOARD OF DIRECTORSIN OPPOSITION TO THE
SOLICITATION MADE BY OPUS ACQUISITION CORPORATION AND UNITED DOMINION
INDUSTRIES LIMITED TO CALLA SPECIAL MEETING OF SHAREHOLDERS
This Revocation Solicitation Statement (this "Revocation Statement") and the
accompanying LIGHT-GREEN revocation card are being furnished to holders of
outstanding common shares, $1.00 par value (the "Common Shares"), and 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"), in connection with the
solicitation by the Board of Directors of the Company (the "Board of
Directors"), in opposition to the solicitation by United Dominion Industries
Limited, a Canadian corporation ("United Dominion"), and Opus Acquisition
Corporation, a Delaware corporation and an indirect wholly owned subsidiary of
United Dominion ("OAC"), of Appointments of Designated Agents ("Agent
Designations") to call a special meeting of the shareholders of the Company
(the "Special Meeting"). By executing an Agent Designation, a shareholder will
designate specified persons as his or her agents (each a "Designated Agent")
with authority to take all actions, other than voting the Shares at the
Special Meeting, permitted to be taken by Company shareholders under the ORC
(as defined below) in order to call and convene the Special Meeting.
According to a Solicitation Statement filed with the Securities and Exchange
Commission (the "SEC") by United Dominion and OAC on July 24, 1996 (the
"Solicitation Statement"), the purpose of the Special Meeting would be to
consider and vote on the following proposals made by United Dominion and OAC
(each of which is opposed by the Board of Directors and management of the
Company): (i) a proposal to call on the Company's incumbent directors to
redeem the preferred share purchase rights (the "Rights") associated with the
Company's common shares, $1.00 par value (the "Common Shares"), pursuant to
the Shareholder's Rights Agreement, dated as of November 29, 1989, between the
Company and The Mahoning National Bank of Youngstown, as rights agent (the
"Rights Agreement"), (ii) a proposal to remove all incumbent directors of the
Company, (iii) a proposal to amend the Company's Code of Regulations (the
"Regulations") to reduce the size of the Board of Directors from twelve
members to three members and to provide that the directors shall serve as a
single class having the same term of office and shall not be divided into
three classes having staggered terms, (iv) a proposal to elect three new
directors nominated by United Dominion and OAC to fill the vacancies resulting
from such removal and reduction of the size of the Board of Directors, (v) a
proposal to amend the Company's Amended Articles of Incorporation (the
"Articles") to repeal Article SIXTH thereof and (vi) a proposal to amend the
Regulations to provide that the Ohio Control Share Acquisition Law (as defined
below) shall not apply to "control share acquisitions" of Shares, if the
acquisition of Common Shares constituting a majority of the voting power of
the outstanding Shares (as defined below) by the Company has not yet been
authorized by the Company's shareholders pursuant to Section 1701.831 (the
"Ohio Control Share Acquisition Law") of the Ohio Revised Code ("ORC") or OAC
is not otherwise satisfied, in its sole discretion, that the Ohio Control
Share Acquisition Law is invalid or inapplicable to the acquisition of Common
Shares pursuant to the Revised Offer (described below). Under the ORC and the
Regulations, shareholders holding 40% or more of the outstanding Shares (the
"Requisite Holders") are entitled to call a special meeting of the Company's
shareholders.
This Revocation Statement and the enclosed LIGHT-GREEN REVOCATION CARD are
first being mailed to shareholders on or about August 3, 1996. THE BOARD OF
DIRECTORS UNANIMOUSLY OPPOSES THE SOLICITATION BY UNITED DOMINION AND OAC. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU NOT SIGN ANY WHITE AGENT
DESIGNATION SENT TO YOU BY UNITED DOMINION AND OAC. WHETHER OR NOT YOU HAVE
PREVIOUSLY EXECUTED A WHITE AGENT DESIGNATION, THE BOARD OF DIRECTORS URGES
YOU TO SIGN, DATE AND DELIVER THE ENCLOSED LIGHT-GREEN REVOCATION CARD AS
PROMPTLY AS POSSIBLE, BY FAX OR BY
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MAIL (USING THE ENCLOSED ENVELOPE), TO MORROW & CO., INC., 909 THIRD AVENUE,
20TH FLOOR, NEW YORK, NEW YORK, 10022, FAX: (212) 754-8362.
According to the Solicitation Statement, United Dominion and OAC commenced
on July 25, 1996 the solicitation of Agent Designations and intend to seek to
call the Special Meeting as soon as possible after the date on which United
Dominion and OAC have received Agent Designations from holders of 40% of the
Shares (excluding Agent Designations from holders of Shares who are not
holders on the date United Dominion and OAC deliver a written request to the
Company to call the Special Meeting). The Company is soliciting revocations of
any Agent Designations which United Dominion and OAC may solicit. As of the
date of this Revocation Statement, there are 13,671,332 Common Shares and
1,039,657 Preferred Shares outstanding. Accordingly, United Dominion and OAC
would require Agent Designations from the holders of at least 5,883,396 Shares
(excluding the 1,000 Common Shares owned by United Dominion and OAC) in order
to call the Special Meeting.
Subject to the provisions for cumulative voting in the election of
directors, as described below, each Share is entitled to one vote on all
matters brought before the Company's shareholders for a vote.
Certain Shares are held of record by LaSalle National Trust, N.A. (which
succeeded Mellon Bank, N.A. as trustee on July 26, 1996), as trustee (the
"ESOP Trustee") for the Commercial Intertech Employee Stock Ownership Plan and
Commercial Intertech Retirement Stock Ownership and Savings Plan (the
"ESOPs"). The trusts for these plans (the "ESOP Trusts") contain pass-through
voting provisions for the participants of the ESOPs, with Shares that are
allocated to a participant's account to be voted by the ESOP Trustee as
instructed by the participant and Shares that either are not allocated to any
participant's account or are allocated but for which no instruction from the
participant has been received by the ESOP Trustee voted by the ESOP Trustee
proportionately as the allocated Shares for which instructions were received
are voted. PARTICIPANTS IN THE ESOPS CAN ONLY EXECUTE THE LIGHT-GREEN
REVOCATION CARD WITH RESPECT TO SHARES HELD IN THE ESOPS ON THEIR BEHALF BY
INSTRUCTING THE TRUSTEE ON THE FORM THAT WILL BE PROVIDED TO PARTICIPANTS FOR
THAT PURPOSE. According to their Solicitation Statement, United Dominion and
OAC believe that, notwithstanding the express terms of the trust document, the
ESOP Trustee has a fiduciary duty under the Employee Retirement Income
Security Act of 1974 ("ERISA") to exercise its discretion with respect to
voting Shares held in the ESOPs which are allocated to any participant's
account but for which no instructions are received by it and for all Shares
held in ESOPs which are not allocated to any participant's account. United
Dominion and OAC also believe, according to their Solicitation Statement, that
the indemnification provisions in favor of the ESOP Trustee contained in the
trust documents, which provide full indemnification for the ESOP Trustee only
for actions taken upon the written direction of the participants and in
accordance with the terms of the ESOP, violate ERISA. According to their
Solicitation Statement, United Dominion and OAC believe that the Department of
Labor has successfully advanced similar positions in a federal district court
case, Reich v. NationsBank of Georgia, N.A., and Martin v. NationsBank of
Georgia, N.A., an earlier opinion in the same proceeding.
In addition, Common Shares are held of record by National City Bank, N.E.,
as trustee (the "Plan Trustee") for the Company's Non-Qualified Stock Purchase
Plan and the Employee Savings and Stock Purchase Plan (the "Plans"). The
trusts for these plans (the "Plan Trusts") contain pass-through voting
provisions for the participants of the Plans, with Common Shares that are
allocated to a participant's account voted by the Plan Trustee as instructed
by the participant and Common Shares for which no instruction from the
participant has been received by the Plan Trustee voted by the Plan Trustee,
in its sole discretion. PARTICIPANTS IN THE PLANS CAN ONLY VOTE COMMON SHARES
HELD IN THE PLANS ON THEIR BEHALF BY INSTRUCTING THE PLAN TRUSTEE ON THE
TRUSTEE INSTRUCTION CARD THAT WILL BE PROVIDED TO PARTICIPANTS FOR THAT
PURPOSE.
Proxies representing Common Shares held of record will include Common Shares
allocated to participants under the Automatic Dividend Reinvestment Plan (the
"Dividend Reinvestment Plan") for shareholders of the Company. The form of
Proxy accompanying this Proxy Statement can be used to vote such Common Shares
held under the Dividend Reinvestment Plan.
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IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE, WE
URGE YOU TO CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR
HER TO EXECUTE A LIGHT-GREEN REVOCATION CARD ON YOUR BEHALF, VOTING AS
RECOMMENDED BY THE COMPANY'S BOARD OF DIRECTORS.
If you have any questions concerning Company's solicitation of Revocation
Cards, or United Dominion's and OAC's solicitation of Agent Designations,
please contact Morrow & Co., Inc. at 1-800-566-9061 (Toll-Free).
BACKGROUND AND PURPOSE OF THIS SOLICITATION
On January 23, 1996, at a meeting of the Executive Committee of the Board of
Directors, the Executive Committee discussed a number of strategic initiatives
with respect to the Company, including the possibility of spinning off the
Company's Cuno Incorporated fluid filtration and purification subsidiary
("Cuno") or its Astron metal buildings division.
On March 5, 1996, Paul J. Powers, Chairman and Chief Executive Officer of
the Company, telephoned Tom Walker of Goldman, Sachs & Co. ("Goldman Sachs")
to brief Goldman Sachs on strategic initiatives being considered by the
Company, and requested that Goldman Sachs meet with senior management of the
Company on March 22, 1996, to discuss possible actions to enhance shareholder
value.
On March 22, 1996, senior executives of the Company met with Goldman Sachs
to discuss possible actions that would enhance shareholder value. The
discussion focused upon the value of the higher growth, higher multiple
business of Cuno, the fact that the value of Cuno had not previously received
appropriate market recognition because of the Company's mix of lower multiple
industrial businesses, Cuno's difficulties in attracting and retaining
qualified personnel in light of the Company's existing compensation schemes,
and the impact on Cuno of not having an appropriate equity currency for
acquisitions of other technology companies. On April 17, 1996, representatives
of Goldman Sachs met again with senior executives of the Company. At the April
17 meeting, Goldman Sachs discussed a broad range of strategic alternatives
which could enhance shareholder value, including a 100% spin-off of certain
subsidiaries, an initial public offering of certain subsidiaries, and
divestitures.
On April 26, 1996, the Company telephoned its legal counsel, Katten Muchin &
Zavis ("Katten Muchin"), and instructed Katten Muchin to assemble a
transaction team to prepare for a proposed spin-off of Cuno.
On May 6, 1996, representatives from Goldman Sachs again met with senior
executives of the Company. This meeting focused on the alternative of a 100%
spin-off of Cuno. Goldman Sachs explained the mechanics of a spin-off and the
market perception of such a transaction. Cuno's ability to make acquisitions
using its stock after the spin-off was discussed.
On May 10, 1996, at the request of William R. Holland, the Chief Executive
Officer of United Dominion, Mr. Holland met with Paul J. Powers, the Chairman
and Chief Executive Officer of the Company, in Youngstown, Ohio. During this
meeting, Mr. Holland expressed the view that a combination of the Company with
United Dominion would be attractive and suggested a price of $27.00 per share.
Mr. Powers indicated that the Company has a policy of independence, and that
he believed the Company's prospects on a stand-alone basis were strong.
By May 16, 1996, the Company was focused upon unlocking shareholder value
through a transaction involving Cuno. Representatives from Goldman Sachs and
Katten Muchin met with Company officials on that date. At that time, Goldman
Sachs outlined a series of options with respect to Cuno, including: a 100%
spin-off; an up to 20% initial public offering to be followed by a spin-off; a
sale for cash; a sale for stock; and a leveraged buyout.
On May 21, 1996, the Finance Committee of the Board of Directors met with
Goldman Sachs and Katten Muchin to discuss strategic alternatives for Cuno.
Goldman Sachs made a presentation on three alternatives at
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that meeting: an up to 20% initial public offering and a subsequent spin-off,
a 100% spin-off and a sale. The discussions focused upon either an up to 20%
public offering to be followed by a spin-off or 100% spin-off. The committee
noted that, because of Cuno's low tax-basis, a taxable sale of Cuno would
result in the Company incurring substantial tax liabilities. In addition, the
committee believed that, because of Cuno's improvements in operating
performance and profitability in recent years, its market position in the
fluid filtration industry and its growth potential, shareholders would be
better served by retaining their interest in Cuno and participating in Cuno's
future growth, rather than undertaking an immediate sale of Cuno.
At a June 18, 1996 Board of Directors meeting, the Board of Directors
determined to pursue an up to 20% initial public offering of Cuno, to be
followed by a spin-off. The Board of Directors concluded that an up to 20%
public offering of Cuno had certain potential advantages over an immediate
100% spin-off, which included: establishing an initial trading market for Cuno
to enable the company to begin developing market recognition; permitting Cuno
to develop a following among analysts in the fluid filtration industry; and
generating immediate cash for the Company. The Board of Directors recognized,
however, that the value inherent in Cuno, the ability to attract and retain
qualified personnel and the ability to use Cuno stock as acquisition currency
could only be realized by a complete separation of Cuno and the Company in the
near future. The officers of the Company contacted Katten Muchin and Goldman
Sachs to pursue this strategy and prepare a registration statement. Meetings
were scheduled with advisers and potential underwriters.
On June 27, 1996, Mr. Holland faxed to Mr. Powers a letter, which was
released to the news media on the same day, containing an unsolicited proposal
to acquire the Company pursuant to a transaction in which the Company's
shareholders would receive $27.00 in cash for their Common Shares.
On June 28, 1996, the Company retained Goldman Sachs as its financial
advisor with respect to United Dominion's proposal.
At a meeting on June 29, 1996, the Board of Directors of the Company
discussed United Dominion's June 27 letter. On June 30, 1996, the Company
issued a press release which stated that the Board of Directors of the
Company, at its meeting on June 29, 1996, reaffirmed the Company's long-
standing objective of creating shareholder value through the Company's core
businesses and indicated that the Board of Directors would review the United
Dominion proposal in consultation with its legal and investment advisors. In
addition, the Company announced that, as part of its ongoing strategic plans,
the Company was preparing a public offering of up to 20% of the stock of Cuno.
The Company continued to prepare for the public offering of Cuno until the
first week of July 1996. At that time, however, the Board of Directors
recognized that, if the Board of Directors rejected United Dominion's
proposal, and United Dominion continued to pursue its proposal, shareholders
of the Company would not, under that proposal, be able to realize the true
value of the Company's investment in Cuno. In addition, the Board of Directors
believed, after consultation with its financial advisor, that it would not be
practicable to pursue the public offering, in view of the uncertainties
created by United Dominion's proposal, including uncertainties as to the
future ownership of Cuno and the strategic direction of Cuno's business in the
event of a change in ownership of Cuno. Accordingly, at their meetings on July
8 and July 11, 1996, the Board of Directors again focused on alternatives for
unlocking the value of Cuno, and concluded that such value could more readily
be realized through an immediate spin-off.
On July 11, 1996, United Dominion and OAC announced an unsolicited tender
offer to purchase all of the Company's outstanding Common Shares and the
associated Rights for a purchase price of $27.00 per Share, net to the seller
in cash, without interest thereon (the "Original Offer"). On the same date,
the Board of Directors unanimously determined that the Original Offer was
inadequate, and not in the best interests of the Company, its shareholders,
employees, customers, suppliers, labor organizations, the communities in which
the Company does business and its other constituencies, and did not adequately
reflect the long-term value or prospects of the Company. At that meeting, the
Board of Directors unanimously determined not to proceed with a public
offering of up to 20% of the stock of Cuno, but instead to proceed with a
spin-off of 100% of the stock of Cuno to the
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Company's shareholders (the "Spin-Off"), subject to customary conditions,
including the receipt of an opinion of counsel with respect to the tax-free
nature of the Spin-Off. The Board of Directors determined to proceed with the
Spin-Off at this time for the reasons discussed under "Recommendation by the
Company's Board of Directors," below. The Board of Directors believed that the
Spin-Off would also ensure that shareholders of the Company, rather than United
Dominion and OAC, would realize the benefits of Cuno's leading position in the
worldwide fluid filtration business and its long-term growth potential. The
Board of Directors also unanimously approved a program to repurchase up to
2,500,000 Common Shares in open market and privately negotiated transactions
(the "Repurchase Program"). On July 12, 1996, United Dominion and OAC filed
with the Company an Acquiring Person Statement under the Ohio Control Share
Acquisition Law in order to cause the Company to call a special meeting of
Company shareholders under the Ohio Share Acquisition Law (the "831 Special
Meeting").
On July 15, 1996, the purchase price of the Original Offer was increased to
$30.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in a Revised Offer to Purchase,
dated July 16, 1996 (the "Revised Offer"). The stated purpose of the Revised
Offer is to acquire control of, and the entire equity interest in, the Company.
According to a Revised Offer to Purchase, dated July 16, 1996 (the "Revised
Offer to Purchase"), United Dominion intends, following completion of the
Revised Offer, to seek to have the Company consummate a merger or similar
business combination with OAC or another subsidiary of United Dominion at the
same price per Common Share to be paid in the Revised Offer (the "Proposed
Merger"), subject to the terms and conditions described in the Revised Offer to
Purchase.
According to the Revised Offer to Purchase, the Revised Offer is conditioned
upon, among other things, the following significant matters:
(1) The Minimum Condition. There must be validly tendered and not
properly withdrawn prior to expiration of the Revised Offer a number of
Common Shares which, when added to the Common Shares beneficially owned by
OAC and its affiliates, constitutes at least two-thirds of the total voting
power of all Common Shares outstanding on a fully diluted basis on the date
of purchase.
(2) The Control Share Condition. The approval of the Control Share
Acquisition shall have been obtained from the Company's shareholders or OAC
shall be satisfied, in its sole discretion, that the Ohio Control Share
Acquisition Law is invalid or inapplicable to the acquisition of Common
Shares pursuant to the Revised Offer.
(3) The Business Combination Condition. OAC must be satisfied, in its
sole discretion, that the restrictions contained in Chapter 1704 (the "Ohio
Business Combination Law") of the ORC will not apply to the acquisition of
Common Shares pursuant to the Revised Offer or to the Proposed Merger.
The Ohio Business Combination Law prohibits certain combinations and
other transactions (each, a "Chapter 1704 Transaction"), such as the
Proposed Merger, between an issuing public corporation (such as the
Company) and any "Interested Shareholder" (defined generally as any person
that, directly or indirectly, is entitled to exercise or direct the
exercise of 10% or more of the outstanding voting power of a corporation in
the election of directors) for a period of three years after the date the
person becomes an Interested Shareholder. After such three year period, a
Chapter 1704 Transaction between an issuing public corporation and such
Interested Shareholder is prohibited unless either certain "fair price"
provisions are complied with or the Chapter 1704 Transaction is approved by
certain supermajority shareholder votes.
The Ohio Business Combination Law restrictions do not apply to a Chapter
1704 Transaction with an Interested Shareholder if either the acquisition
of the corporation's shares that would cause the Interested Shareholder to
become an Interested Shareholder, or the Chapter 1704 Transaction, is
approved by a resolution of the board of directors of the corporation
adopted prior to the date on which the Interested Shareholder became an
Interested Shareholder.
(4) The Rights Condition. The Rights shall have been redeemed by the
Company or OAC shall be satisfied, in its sole discretion, that the Rights
have been invalidated or are otherwise inapplicable to the Revised Offer
and the Proposed Merger.
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(5) The Articles Amendment Condition. Article SIXTH of the Articles
(which requires a 95% vote to approve a business combination which does not
meet certain "fair price" and procedural criteria) shall have been repealed
or otherwise amended with the effect that, or OAC shall be otherwise
satisfied, in its sole discretion, that, the provisions of such Article
will not apply to the Proposed Merger.
On July 17, 1996, the Board of Directors unanimously concluded that the
Revised Offer is inadequate, and not in the best interests of the Company, its
shareholders, employees, customers, suppliers, labor organizations, the
communities in which the Company does business and its other constituencies,
and does not adequately reflect the long-term value or prospects of the
Company. At that meeting, the Board of Directors unanimously reaffirmed the
Company's prior determination to proceed with the Spin-Off. The Board of
Directors also unanimously reaffirmed the Repurchase Program. In addition, the
Board of Directors fixed September 3, 1996 as the record date for the
solicitation of Agent Designations (on July 25, 1996, the District Court for
the Southern District of Ohio declined to issue an injunction restraining
United Dominion and OAC from seeking Agent Designations without regard to such
record date) and fixed August 7, 1996 and August 30, 1996 as the record date
and meeting date, respectively, for the 831 Special Meeting.
On July 24, 1996, United Dominion and OAC filed with the SEC preliminary
proxy materials relating to the Special Meeting. These materials indicate that,
in addition to the matters described in the Solicitation Statement, United
Dominion and OAC intend to propose a resolution calling for an unspecified
representative of United Dominion and OAC to preside at the Special Meeting and
to seek proxy authority to recess the Special Meeting.
On July 25, 1996, United Dominion and OAC commenced the solicitation of Agent
Designations. In connection with such solicitation, United Dominion and OAC are
providing the Company's shareholders with a Solicitation Statement and an Agent
Designation. A shareholder's execution of an Agent Designation designates
specific persons as agents for the shareholder with authority to take all
actions necessary to convene the Special Meeting. SIGNING AND RETURNING AN
AGENT DESIGNATION FURTHERS THE INTERESTS OF UNITED DOMINION AND OAC IN PURSUING
THE REVISED OFFER, WHICH YOUR BOARD OF DIRECTORS HAS DETERMINED IS INADEQUATE
AND NOT IN THE BEST INTERESTS OF THE COMPANY, ITS SHAREHOLDERS AND OTHER
CONSTITUENCIES. UNITED DOMINION'S AND OAC'S NOMINEES, IF ELECTED, ARE COMMITTED
TO ENSURING THAT A FUTURE BOARD OF DIRECTORS OF THE COMPANY APPROVES THEIR
OFFER, WHICH YOUR BOARD OF DIRECTORS HAS DETERMINED TO BE INADEQUATE. UNLIKE
THE COMPANY'S CURRENT BOARD OF DIRECTORS, FOLLOWING THE SPECIAL MEETING THE
BOARD OF DIRECTORS WOULD BE COMPRISED OF UNITED DOMINION'S AND OAC'S HAND-
PICKED REPRESENTATIVES. NEITHER UNITED DOMINION NOR OAC HAS ANY FIDUCIARY
OBLIGATION TO PROTECT YOUR INTERESTS; THEIR SOLE OBLIGATIONS ARE TO THEIR OWN
SHAREHOLDERS.
If a shareholder signs and returns an Agent Designation to United Dominion
and OAC, such shareholder authorizes United Dominion and OAC to call the
Special Meeting. The Agent Designations also provide that the agenda for the
Special Meeting will include: (i) a proposal to call on the Company's incumbent
directors to redeem the Rights, (ii) a proposal to remove all incumbent
directors of the Company, (iii) a proposal to amend the Regulations to reduce
the size of the Board of Directors from twelve members to three members and to
provide that the directors shall serve as a single class having the same term
of office and shall not be divided into three classes having staggered terms,
(iv) a proposal to elect three new directors nominated by United Dominion and
OAC to fill the vacancies resulting from such removal and reduction of the size
of the Board of Directors, (v) a proposal to amend the Articles to repeal
Article SIXTH thereof and (vi) a proposal to amend the Regulations to provide
that the Ohio Control Share Acquisition Law shall not apply to "control share
acquisitions" of Shares, if the acquisition of Common Shares constituting a
majority of the voting power of the outstanding Shares by OAC has not yet been
authorized by the Company's shareholders pursuant to the Ohio Control Share
Acquisition Law or OAC is not otherwise satisfied, in its sole discretion, that
the Ohio Control Share Acquisition Law is invalid or inapplicable to the
acquisition of Common Shares pursuant to the Revised Offer.
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The purpose of the above listed proposals is to facilitate the consummation
of the Revised Offer, which the current Board of Directors and management of
the Company has determined to be inadequate and not in the best interest of the
Company, its shareholders, employees, customers, suppliers, labor
organizations, the communities in which the Company does business and its other
constituencies, and does not adequately reflect the long-term value or
prospects of the Company, by eliminating provisions which are designed to
protect the Company against inadequate offers and to give your Board of
Directors flexibility to act in what it is convinced are the best interests of
the Company, its shareholders and other constituencies.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS NOT RETURN THE AGENT
DESIGNATION REQUESTED BY UNITED DOMINION AND OAC. TO STOP UNITED DOMINION AND
OAC FROM USING YOUR COMMON SHARES TO FURTHER THEIR INADEQUATE OFFER, THE BOARD
OF DIRECTORS RECOMMENDS THAT YOU (1) DISCARD ANY WHITE AGENT DESIGNATION AND
(2) IF YOU HAVE ALREADY RETURNED A WHITE AGENT DESIGNATION, SIGN, DATE AND
RETURN THE ENCLOSED GREEN REVOCATION CARD AS SOON AS POSSIBLE.
RECOMMENDATION BY THE COMPANY'S BOARD OF DIRECTORS
At a meeting of the Board of Directors held on July 11, 1996, the Board of
Directors met with its financial and legal advisers and reviewed the Original
Offer of $27.00 per Share. At that meeting, the Board of Directors unanimously
concluded that the Original Offer was inadequate and not in the best interests
of the Company, its shareholders, employees, customers, suppliers, labor
organizations, the communities in which the Company does business and its other
constituencies, and did not adequately reflect the long-term value or prospects
of the Company. In connection with its determination, the Board of Directors
considered numerous factors, including but not limited to the factors described
in clauses (i) through (ix) of the third succeeding paragraph. At that meeting,
the Board of Directors unanimously determined to proceed with the Spin-Off. The
Board also unanimously approved the Repurchase Program.
On July 15, 1996, United Dominion and OAC issued a press release announcing
the Revised Offer.
On July 17, 1996, the Board of Directors of the Company met to review the
Revised Offer with its financial and legal advisors. The Board of Directors
unanimously concluded that the Revised Offer is inadequate and not in the best
interests of the Company, its shareholders, employees, customers, suppliers,
labor organizations, the communities in which the Company does business and its
other constituencies, and does not adequately reflect the long-term value or
prospects of the Company. At that meeting, the Board of Directors unanimously
reaffirmed the Company's prior determination to proceed with the Spin-Off. The
Board of Directors also unanimously reaffirmed the Repurchase Program.
In reaching its conclusions referred to above, the Board of Directors
considered numerous factors, including but not limited to:
(i) the Board of Directors' familiarity with the business, financial
condition, prospects and current business strategy of the Company, the
nature of the businesses in which the Company operates and the Board of
Directors' belief that the Revised Offer does not reflect the long-term
values inherent in the Company;
(ii) the Company's financial performance in recent years, including its
record results for its 1995 fiscal year and three consecutive years of
improving operating results, including strong improvements in operating
performance and profitability by Cuno;
(iii) the Company's long-term strategic plan to build value for its
shareholders by growing its core businesses (the strategic plan includes,
with respect to the Company, the launch of new products, reductions in
corporate and operating unit overhead, continued improvement in the
Company's German businesses, and increased penetration by the Building
Systems division in Central and Eastern European markets and, with respect
to Cuno, the development of new products from Cuno's core technologies,
decreasing product development cycles, increased customer focus, improved
distribution, improved operating efficiencies, and growth though selective
acquisitions);
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(iv) the Company's plan to proceed with the Spin-Off, in light of the
belief of the Board of Directors and management that:
-- the Spin-Off should enhance the abilities of the managements of both
the Company and Cuno to focus more closely on the objectives of
their respective businesses, enhance the two companies' ability to
create incentives that align the interests of their management and
employees with the performance of their respective companies, and
permit Cuno to use its publicly traded stock as a currency for
expansion through acquisitions; and
-- the Spin-Off should enable shareholders of the Company to benefit in
the near term from the value of a high-growth, high-multiple
business, which has not previously received appropriate market
recognition because of the Company's mix of industrial businesses,
which typically trade at lower multiples. The Board of Directors
took into consideration that there is some risk that the tax-free
nature of the Spin-Off could be impacted, with attendant adverse tax
consequences to the Company and certain of its shareholders, in the
event of an acquisition of the Company by certain third parties
(including United Dominion) following a spin-off;
(v) the Board of Directors' belief that the Repurchase Program will
provide investors who desire to obtain liquidity for their investment in
the Company with an opportunity to sell all or a portion of their
investment in the Company; these shareholders may be more likely to support
actions that would make it more difficult for the Company to resist an
inadequate bid, which in the view of the Board of Directors would not be in
the best interests of the Company, its shareholders and its other
constituencies; accordingly, the Repurchase Program may stabilize the
Company's base of long-term shareholders and may give long-term
shareholders who desire to participate in the benefits of the Spin-Off and
the future growth of the Company and Cuno a greater opportunity to do so;
the Board of Directors also considered the fact that the Repurchase Program
is expected to be accretive to the Company's earnings per Share (assuming
the repurchase of 2,500,000 Common Shares at an average price of $29.00 per
Common Share and the incurrence by the Company of additional debt of $72.5
million bearing interest at 9% per annum, the Repurchase Program would add
an estimated $0.06 to fiscal 1996 earnings per Common Share and an
estimated $0.14 to fiscal 1997 earnings per Common Share);
(vi) the Board of Directors' belief, in light of the Company's strategic
plan and its plan to proceed with the Spin-Off, that this is not the
appropriate time to sell the Company (the Board of Directors' belief was
based upon its view that the Spin-Off would unlock the value of a high-
growth, high-multiple business which had not received appropriate market
recognition because of the Company's mix of industrial businesses, which
typically trade at lower multiples, and its view that the Company's
strategic plan, including the Spin-Off, would result in greater value to
the Company and its shareholders over the long-term);
(vii) the Board of Directors' belief, based upon its review of the
Company's strategic plan described in clause (iii) above, the benefits of
the Spin-Off described in clause (iv) above, and the benefits of the
Repurchase Program described in clause (v) above, that the interests of the
Company, its shareholders and other constituencies would best be served by
the Company continuing as an independent entity, proceeding with its plans
to effect the Spin-Off, and effecting the Repurchase Program;
(viii) the oral opinion of Goldman Sachs, the Company's financial
advisor, after reviewing with the Board of Directors many of the factors
referred to above and other financial criteria used in assessing an offer,
that the Revised Offer is inadequate; and
(ix) the disruptive effect consummation of the Revised Offer would have
on the Company's employees, suppliers, customers and the communities where
the Company operates.
On July 29, 1996, the Board of Directors declared a dividend to the holders
of Common Shares of 100% of the common stock of Cuno (the "Cuno Common Stock").
The Cuno Common Stock will be distributed on the basis of one share of Cuno
Common Stock for each outstanding Common Share, payable to holders of record of
Common Shares as of the close of business on August 9, 1996. The distribution
of the Cuno Common Stock to
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the Company's shareholders is expected to take place on the later of either
August 19, 1996 or the earliest practicable date after approval of the Cuno
Common Stock for trading on the Nasdaq National Market and the commencement of
trading. The Spin-Off is also subject to there not being in effect on the
distribution date any injunction, order or decree of any court or governmental
authority which prohibits or makes illegal the Spin-Off.
In connection with the Spin-Off, the Company received opinions from Katten
Muchin and Fried, Frank, Harris, Shriver & Jacobson to the effect that the
Spin-Off should qualify as tax-free under Section 355 of the Internal Revenue
Code of 1986 (the "Code"). Such opinions specifically assume, however, that
the Revised Offer will not be accepted by shareholders of the Company and
neither the Company nor Cuno is acquired in a transaction after the Spin-Off
which was initiated prior to the Spin-Off or that could reasonably be
anticipated to occur as of the date of the Spin-Off. If that assumption proves
inaccurate, there is a significant risk that the Spin-Off will not qualify as
a tax-free distribution under Section 355 of the Code. If the Spin-Off does
not qualify under Section 355 of the Code, then the Company will be treated as
if it sold the stock of Cuno in a taxable transaction, resulting in a
substantial tax liability to the Company. In addition, the shareholders who
receive the Cuno Common Stock in the Spin-Off will be treated as if they have
received a taxable dividend (to the extent of Cuno's accumulated and current
earnings and profits) in the amount of the full fair market value of the Cuno
Common Stock received. In addition, legislation proposed by the Clinton
Administration would render the Spin-Off taxable to the Company if within two
years following the Spin-Off there is a more than 50% change in control
transaction involving either the Company or Cuno which is related to the Spin-
Off. The explanation to the proposed legislation indicates that a hostile
acquisition commenced before the Spin-Off occurs may be related. The Clinton
Administration proposed that this legislation apply to all transactions
occurring after March 19, 1996, although Congressional leaders have indicated
that it would not be effective until after appropriate Congressional action.
Stockholders who acquire Cuno Common Stock after the Spin-Off will not have
any individual federal tax obligation with respect to this potential
liability. However, such new stockholders will be impacted by the effect, if
any, on Cuno's earnings, financial condition and results of operations from
such tax liabilities.
The certificate of incorporation and the bylaws of Cuno contain provisions
that (i) limit a stockholder's ability to act by written consent, (ii) provide
for a staggered board of directors, (iii) require an affirmative vote of 80%
of the stockholders entitled to vote to remove directors (who can only be
removed for cause), to amend certain provisions of the certificate of
incorporation or to repeal or amend the bylaws, and (iv) allow the Board of
Directors of Cuno, without obtaining stockholder approval, to issue shares of
preferred stock having rights that could adversely affect the voting power and
economic rights of holders of the Cuno Common Stock. Cuno has also adopted a
stockholder rights agreement. Also, Section 203 of the Delaware General
Corporation Law restricts certain business combinations with any "interested
stockholder" as defined by such statute. Any of the foregoing factors may
delay, defer or prevent a change in control of Cuno.
The Spin-Off could also have certain anti-takeover effects with respect to
the Revised Offer, including adversely impacting United Dominion's and OAC's
interest in an acquisition of the Company, causing United Dominion and OAC to
restructure the Revised Offer, or causing United Dominion and OAC to reduce
the price payable pursuant to the Revised Offer.
In connection with the Spin-Off, the Company has entered into a new $190
million credit facility with a group of banks led by Mellon Bank, N.A., which
will provide funds for Cuno and, among other purposes, completion of the
Repurchase Program. Also, on July 29, 1996, the Board of Directors declared a
regular quarterly cash dividend on the Common Shares of $0.135 per share,
payable September 13, 1996 to shareholders of record on August 30, 1996.
On July 30, 1996, the Company filed a Registration Statement on Form 10 (the
"Form 10") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), relating to the registration of the Cuno Common Stock under
the Exchange Act. The Form 10 has not yet been reviewed by the SEC and is
subject to changes to reflect any comments which the SEC may have and
additional information relating to the terms of the Spin-Off. The Company is
mailing to shareholders copies of the Form 10, as amended on August 2, 1996.
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<PAGE>
There may be material changes in the information contained in the Form 10 after
the date of this Revocation Statement, and the Company may, depending upon the
circumstances, be required to provide additional information to the
shareholders.
IN LIGHT OF THE BOARD OF DIRECTORS' CONCLUSIONS THAT THE REVISED OFFER IS
INADEQUATE, IS NOT IN THE BEST INTERESTS OF THE COMPANY, ITS SHAREHOLDERS AND
OTHER CONSTITUENCIES, AND DOES NOT ADEQUATELY REFLECT THE LONG-TERM VALUE OR
PROSPECTS OF THE COMPANY, THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
NOT RETURN THE AGENT DESIGNATION REQUESTED BY UNITED DOMINION AND OAC. TO STOP
UNITED DOMINION AND OAC FROM USING YOUR SHARES TO FURTHER THEIR INADEQUATE
REVISED OFFER, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU (1) DISCARD ANY WHITE
AGENT DESIGNATION AND (2) IF YOU HAVE ALREADY RETURNED A WHITE AGENT
DESIGNATION, SIGN, DATE AND RETURN THE ENCLOSED LIGHT-GREEN REVOCATION CARD AS
SOON AS POSSIBLE.
THE RETURN OF A SIGNED REVOCATION CARD OR AGENT DESIGNATION BY A SHAREHOLDER
IS INDEPENDENT OF ANY DECISION BY SUCH SHAREHOLDER WHETHER OR NOT TO TENDER
SHARES PURSUANT TO UNITED DOMINION'S INADEQUATE REVISED OFFER. THE RETURN OF A
SIGNED REVOCATION CARD OR AGENT DESIGNATION BY A SHAREHOLDER IS ALSO
INDEPENDENT OF ANY PROXY PREVIOUSLY EXECUTED BY SUCH SHAREHOLDER IN CONNECTION
WITH THE 831 SPECIAL MEETING TO BE HELD PURSUANT TO THE OHIO CONTROL SHARE
ACQUISITION LAW.
EFFECT OF EXECUTION AND DELIVERY OF AGENT DESIGNATIONS
Under the ORC and the Regulations, a special meeting of the Company's
shareholders may be called by the Requisite Holders at such time and such place
as such Requisite Holders set forth in a written request delivered to the
Chairman, President or Secretary of the Company (the "Written Request"). The
Regulations provide that, upon receipt of the Written Request by an appropriate
officer of the Company, it shall be the duty of such officer to cause notice of
the Special Meeting to be given to the Company's shareholders entitled thereto
within five business days of receipt of the Written Request; provided that if
such officer fails to cause such notice to be given within such time period,
then the Requisite Holders may give notice of the Special Meeting to the
Company's shareholders. According to the Solicitation Statement, following
receipt of Agent Designations from Requisite Holders, the Designated Agents
intend to call the Special Meeting and thereupon make delivery, to the
President or the Secretary of the Company, of the Written Request requesting
such officer forthwith to cause appropriate notice of the Special Meeting to be
given to the Company's shareholders entitled thereto. According to the
Solicitation Statement, if notice of the Special Meeting is not so given within
five business days of delivery of the Written Request, the Designated Agents
intend to cause notice thereof to be given to the Company's shareholders as
provided in the Regulations. According to the Solicitation Statement, it is the
current intention of United Dominion and OAC to designate that the Special
Meeting be held as soon as practicable following receipt of Agent Designations
from the Requisite Holders, subject to the requirements of the ORC and the
Regulations.
According to the Solicitation Statement, in the Written Request, the
Designated Agents will also request that the Board of Directors take action,
within such time as is specified in the Written Request, to fix a record date
for the determination of the shareholders who are entitled to receive notice of
or to vote at the Special Meeting (the "Special Meeting Record Date").
According to the Solicitation Statement, if the Board of Directors fails or
refuses, within such specified time, to fix the Special Meeting Record Date,
then the Designated Agents intend to fix the Special Meeting Record Date.
According to the Solicitation Statement, United Dominion and OAC commenced on
July 25, 1996 the solicitation of Agent Designations and intend to seek to call
the Special Meeting as soon as possible after the
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date on which United Dominion and OAC have received Agent Designations from
holders of 40% of the Shares (excluding Agent Designations from holders of
Shares who are not holders on the date United Dominion and OAC deliver a
written request to the Company to call the Special Meeting). The Company is
soliciting revocations of any Agent Designations which United Dominion and OAC
may solicit. As of the date of this Revocation Statement, there are 13,671,332
Common Shares and 1,039,657 Preferred Shares outstanding. Accordingly, United
Dominion and OAC are permitted under applicable law to request the calling of
a Special Meeting prior to the Record Date, United Dominion and OAC would
require Agent Designations from the holders of at least 5,883,396 Shares
(excluding the 1,000 Common Shares owned by United Dominion and OAC) in order
to call the Special Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE SOLICITATION BY UNITED
DOMINION AND OAC. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU NOT
SIGN ANY WHITE CONSENT CARD SENT TO YOU BY UNITED DOMINION AND OAC. WHETHER OR
NOT YOU HAVE PREVIOUSLY EXECUTED A WHITE AGENT DESIGNATION, THE BOARD OF
DIRECTORS URGES YOU TO SIGN, DATE AND DELIVER THE ENCLOSED LIGHT-GREEN
REVOCATION CARD AS PROMPTLY AS POSSIBLE, BY FAX OR BY MAIL (USING THE ENCLOSED
ENVELOPE), TO MORROW & CO., INC., 909 THIRD AVENUE, 20TH FLOOR, NEW YORK, NEW
YORK, 10022, FAX: (212) 754-8362.
Certain Shares are held of record by LaSalle National Trust, N.A. (which
succeeded Mellon Bank, N.A. as ESOP Trustee on July 26, 1996), as ESOP Trustee
for the ESOPs. The ESOP Trusts contain pass-through voting provisions for the
participants of the ESOPs, with Shares that are allocated to a participant's
account to be voted by the ESOP Trustee as instructed by the participant and
Shares that either are not allocated to any participant's account or are
allocated but for which no instruction from the participant has been received
by the ESOP Trustee voted by the ESOP Trustee proportionately as the allocated
Shares for which instructions were received are voted. PARTICIPANTS IN THE
ESOPS CAN ONLY EXECUTE THE LIGHT-GREEN REVOCATION CARD WITH RESPECT TO SHARES
HELD IN THE ESOPS ON THEIR BEHALF BY INSTRUCTING THE TRUSTEE ON THE FORM THAT
WILL BE PROVIDED TO PARTICIPANTS FOR THAT PURPOSE. According to their
Solicitation Statement, United Dominion and OAC believe that, notwithstanding
the express terms of the trust document, the ESOP Trustee has a fiduciary duty
under ERISA to exercise its discretion with respect to voting Shares held in
the ESOPs which are allocated to any participant's account but for which no
instructions are received by it and for all Shares held in ESOPs which are not
allocated to any participant's account. United Dominion and OAC also believe,
according to their Solicitation Statement, that the indemnification provisions
in favor of the ESOP Trustee contained in the trust documents, which provide
full indemnification for the ESOP Trustee only for actions taken upon the
written direction of the participants and in accordance with the terms of the
ESOP, violate ERISA. According to their Solicitation Statement, United
Dominion and OAC believe that the Department of Labor has successfully
advanced similar positions in a federal district court case, Reich v.
NationsBank of Georgia, N.A., and Martin v. NationsBank of Georgia, N.A., an
earlier opinion in the same proceeding.
In addition, Common Shares are held of record by National City Bank, N.E.,
as Plan Trustee for the Plans. The Plan Trusts contain pass-through voting
provisions for the participants of the Plans, with Common Shares for which no
instruction from the participant has been received by the Plan Trustee voted
by the Plan Trustee, in its sole discretion. PARTICIPANTS IN THE PLANS CAN
ONLY VOTE COMMON SHARES HELD IN THE PLANS ON THEIR BEHALF BY INSTRUCTING THE
PLAN TRUSTEE ON THE TRUSTEE INSTRUCTION CARD THAT WILL BE PROVIDED TO
PARTICIPANTS FOR THAT PURPOSE.
Prior to the Repurchase Program, the Preferred Shares represented
approximately 6.2% of the voting power of the Company's outstanding voting
securities. In addition, Common Shares held in employee benefit plans
represented approximately 4.9% of the voting power of the Company's
outstanding voting securities. Assuming the repurchase of 2,500,000 shares
pursuant to the Repurchase Program, the Preferred Shares would represent
approximately 7.3%, and such Common Shares would represent approximately 5.8%,
of the voting power of the
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Company's outstanding voting securities. If the Preferred Shares were
converted to Common Shares and assuming completion of the repurchase, a total
of approximately 1,283,470 Common Shares would be issued, representing
approximately 8.9% of the voting power of the Company's then outstanding
voting securities.
In connection with the Spin-Off, the ESOP Trustee would have to make a
determination, in its discretion, whether to continue to hold the Preferred
Shares or to convert prior to the Spin-Off record date into Common Shares and
receive Cuno Common Stock in the Spin-Off. If the ESOP Trustee were to convert
prior to the record date, based on the number of Common Shares which would be
held by the ESOPs, it could continue to hold the Cuno shares following the
Spin-Off. If the ESOP Trustee did not convert, however, under the anti-
dilution provisions of the Preferred Shares, the Preferred Shares would be
entitled to an adjustment in the conversion ratio equal to the result obtained
by multiplying the conversion price by a fraction, the numerator of which
would be the trading value of the Common Shares prior to the Spin-Off less the
fair market value of the Cuno Common Stock, and the denominator of which would
be the trading value of the Common Shares prior to the Spin-Off. According to
certain presentation materials previously filed with the SEC as part of the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), management of the Company estimates, based on 1997
estimated earnings per share, that the trading value of the Cuno Common Stock
could range from approximately $13.00 per share to approximately $14.75 per
share. Accordingly, assuming, solely for the purposes of illustration, a fair
market value for the Cuno Common Stock at the time of the Spin-Off of $14.75
per share and a trading value for the Common Shares at the time of the Spin-
Off of $30.00 per share, the Preferred Shares, giving effect to the above-
described anti-dilution adjustment, would be convertible into an aggregate of
approximately 2,524,862 Common Shares, or approximately 16.1% of the voting
power of the Company's then outstanding voting securities. The foregoing
percentage could increase or decrease significantly depending upon the
relative trading values of the Common Shares and the Cuno Common Stock at the
time of the Spin-Off, and in any event assumes, as noted above, that the ESOP
Trustee does not elect to convert the Preferred Shares prior to the Spin-Off
record date. Reference is made to the Form 10 under the heading "Projections"
and to Amendment No. 14 to the Schedule 14D-9, which contain information
concerning projected financial information with respect to the Company and
Cuno and certain underlying assumptions. Actual trading values of the Common
Shares and Cuno Common Stock at the time of the Spin-Off may be materially
different from the values used for purposes of this paragraph.
Proxies representing Common Shares held of record will include Common Shares
allocated to participants under the Dividend Reinvestment Plan for
shareholders of the Company. The form of Proxy accompanying this Proxy
Statement can be used to vote such Common Shares held under the Dividend
Reinvestment Plan.
REVOCATION
Either a WHITE Agent Designation or a LIGHT-GREEN Revocation Card may be
revoked by written notice of revocation to the Company by fax or by mail
(using the enclosed envelope), to Morrow & Co., Inc., 909 Third Avenue, 20th
Floor, New York, New York, 10022, Fax: (212) 754-8362. Such revocation may be
in any form, but must be signed and dated and must clearly express your
intention to revoke your previously executed Agent Designation or Revocation
Card. THERE WILL BE NO MEETING AT WHICH YOU CAN REVOKE AN AGENT DESIGNATION OR
A REVOCATION CARD. Your latest dated card will supersede any earlier-dated
card, except that a LIGHT-GREEN Revocation Card that would otherwise act as a
revocation will be inoperative and of no effect if delivered after the date,
if any, as of which it is determined that United Dominion and OAC have
effectively called the Special Meeting. A shareholder's revocation of a
previously executed WHITE Agent Designation will have the effect of opposing
United Dominion's and OAC's call for the Special Meeting. Any revocation of an
Agent Designation will not affect any action taken by the Designated Agents
pursuant to the Agent Designation prior to such revocation. In accordance with
the ORC, no Agent Designation is valid after the expiration of 11 months after
it is made.
If you have any questions concerning the Company's solicitation of
Revocation Cards, or United Dominion's and OAC's solicitation of Agent
Designations, please contact Morrow & Co., Inc., at 1-800- 566-9061 (Toll-
Free).
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SPECIAL MEETING PROPOSALS BY UNITED DOMINION AND OAC
According to the Solicitation Statement, if they obtain sufficient Agent
Designations to call a Special Meeting, United Dominion and OAC intend to
raise the following proposals ("Special Meeting Proposals") at such meeting:
(i) a proposal to call on the Company's incumbent directors to redeem the
Rights associated with the Common Shares pursuant to the Rights Agreement,
(ii) a proposal to remove all incumbent directors of the Company, (iii) a
proposal to amend the Regulations to reduce the size of the Board of Directors
from twelve members to three members and to provide that the directors shall
serve as a single class having the same term of office and shall not be
divided into three classes having staggered terms, (iv) a proposal to elect
three new directors nominated by United Dominion and OAC to fill the vacancies
resulting from such removal and reduction of the size of the Board of
Directors, (v) a proposal to amend the Company Articles to repeal Article
SIXTH thereof and (vi) a proposal to amend the Company Regulations to provide
that the Ohio Control Share Acquisition Law shall not apply to "control share
acquisitions" of Shares, if the acquisition of Common Shares constituting a
majority of the voting power of the outstanding Shares by Company has not yet
been authorized by the Company's shareholders pursuant to the Ohio Control
Share Acquisition Law or OAC is not otherwise satisfied, in its sole
discretion, that the Ohio Control Share Acquisition Law is invalid or
inapplicable to the acquisition of Common Shares pursuant to the Revised
Offer. On July 24, 1996, United Dominion and OAC filed with the SEC
preliminary proxy materials relating to the Special Meeting. These materials
indicate that, in addition to the matters described in the Solicitation
Statement, United Dominion and OAC intend to propose a resolution calling for
an unspecified representative of United Dominion and OAC to preside at the
Special Meeting and to seek proxy authority to recess the Special Meeting.
The purpose of seeking the adoption of the Special Meeting Proposals is to
facilitate the consummation of the Revised Offer which the current Board of
Directors and management of the Company has determined to be inadequate and
not in the best interest of the Company, its shareholders, employees,
customers, suppliers, labor organizations, the communities in which the
Company does business and its other constituencies, and does not adequately
reflect the long-term value or prospects of the Company by eliminating
provisions which are designed to protect the Company against inadequate offers
and to give your Board of Directors flexibility to act in what it is convinced
are the best interests of the Company, its Shareholders and other
constituencies. Accordingly, in the event of a Special Meeting, the Board of
Directors intend to oppose each of the Special Meeting Proposals which are
described in greater detail in the subsections below.
RESOLUTION CALLING FOR REDEMPTION OF RIGHTS
According to the Solicitation Statement, United Dominion and OAC intend to
propose at the Special Meeting a resolution calling on the Company's incumbent
directors to redeem the Rights prior to the time such directors are removed
from office. This resolution, if adopted by the shareholders of the Company,
will not be binding on the Board of Directors. In the event the Board of
Directors fails to redeem the Rights or to take other action under the Rights
Agreement to render the Rights inapplicable to the Revised Offer and the
Proposed Merger, as explained below, United Dominion and OAC may be unable or
unwilling to purchase Common Shares in the Revised Offer and/or to consummate
the Proposed Merger, or the purchase of Common Shares in the Revised Offer and
the consummation of the Proposed Merger may, due to the restrictions on
certain actions by a Board of Directors which is comprised of an Interested
Majority (as defined below) described below (the "180-Day Provisions"), be
delayed by 180 days from the time nominees of United Dominion are elected as
directors of the Company.
On November 29, 1989, the Board of Directors declared a dividend
distribution of one Right for each outstanding Common Share to shareholders of
record (the "Rights Record Date") on December 13, 1989. As a result of a 3 for
2 stock split effective as of September 1, 1994, two-thirds of one Right is
attached to each outstanding Common Share. When exercisable, each full Right
entitles the holder thereof to purchase one one-hundredth of a share of Series
A Participating Preferred Shares, no par value, at $75 per share, subject to
adjustment. The description and terms of the Rights are set forth in the
Rights Agreement.
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The Rights are currently attached to all Common Share certificates
representing Shares outstanding and no separate Rights certificates have been
distributed. On the earlier of (i) a public announcement that, without the
prior approval of the Company, a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired or obtained the right to acquire
the beneficial ownership of securities having 20% or more of the voting power
of all outstanding voting securities of the Company or (ii) 10 days (unless
such date is extended by the Board of Directors) following the commencement
of, or a public announcement of an intention to make, a tender offer or
exchange offer which would result in any person or group of related persons
becoming an Acquiring Person (the earlier of such dates, the "Distribution
Date"), the Rights become exercisable. At its July 17, 1996 meeting, the Board
of Directors of the Company resolved to delay a "Distribution Date" under the
Rights Agreement pursuant to clause (ii) of the preceding sentence until
either (i) the close of business on August 7, 1996 or (ii) such earlier date
prior to the expiration date of the Revised Offer as the Board of Directors,
or any duly authorized committee thereof, but subsequent resolution duly
approved, shall designate.
Once exercisable, the Rights will be evidenced, with respect to any of the
Common Shares certificates outstanding as of the Rights Record Date, by such
Common Share certificate together with the Summary of Rights attached as
Exhibit C to the Rights Agreement. The Rights Agreement provides that, until
the Distribution Date, the Rights will be transferred with and only with
Common Share certificates. From as soon as practicable after the Rights Record
Date and until the Distribution Date (or earlier redemption or expiration of
the Rights), new certificates for Common Shares issued after the Rights Record
Date upon transfer or new issuance of the Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Rights Record Date (with or without the Summary of Rights attached) will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
If an Acquiring Person becomes such, holders of Rights (other than the
Acquiring Person its affiliates and associates) have, for a period of 60 days,
the right to receive upon exercise that number of Common Shares having a
market value of two times the exercise price of the Right, to the extent
available, and then a Common Share equivalent having a market value of two
times the exercise price of the Right (such Rights collectively, the
"Subscription Rights"). If the Revised Offer is consummated, unless the Rights
have previously been redeemed or otherwise rendered inapplicable to the
purchase of Common Shares pursuant to the Revised Offer, the Subscription
Rights would be triggered, which could result in substantial dilution of the
interests of United Dominion and OAC. Accordingly, the Company believes that,
unless and until the Rights are redeemed or otherwise rendered inapplicable to
the Revised Offer, the Revised Offer will not be consummated. Moreover,
pursuant to the 180-Day Provisions, if nominees of United Dominion and OAC
were to constitute a majority of the Board of Directors, they would be
prohibited from redeeming the Rights for 180 days following their election.
After the public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such (the date of such announcement, the "Shares
Acquisition Date"), if (i) a merger or other business combination occurs in
which the Common Shares are exchanged or changed (other than a merger with a
person or group who acquired Common Shares pursuant to a Permitted Offer (as
defined below) and is offering in the merger not less than the price paid
pursuant to the Permitted Offer and the same form of consideration paid) or
(ii) 50% or more of the Company's assets or earning power are sold in one
transaction or a series of transactions, each holder of a Right (other than
such Acquiring Person) has the right to receive upon exercise that number of
Common Shares of the acquiring company having a market value of two times the
exercise price of the Right.
A "Permitted Offer" means a tender offer or exchange offer for all
outstanding shares of Common Shares at a price and on terms determined, prior
to the purchase of such shares under such tender offer or exchange offer, by
at least a majority of the members of the Board of Directors who are not
officers of the Company, to be both adequate and otherwise in the best
interests of the Company, its shareholders (other than the person on
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whose behalf the offer is being made) and other relevant constituencies that
the Board of Directors may consider under Ohio law, including, without
limitation, the constituencies described in Section 1701.59(E) of the ORC.
However, in the event that a majority of the Board of Directors is comprised
of (i) persons elected at a meeting of shareholders or by shareholder action
by written consent who were not nominated by the directors in office
immediately prior to such meeting or action by written consent and/or (ii)
successors of such persons elected to the Board of Directors for the purpose
of either facilitating a transaction with an Interested Person (as defined
below) or circumventing directly or indirectly the provisions of the Rights
Agreement (such majority, an "Interested Majority"), then for a period of 180
days following the effectiveness of such action no offer by an Interested
Person may be deemed a Permitted Offer. "Interested Person" with respect to a
transaction means (x) any person who (i) is or will become an Acquiring Person
if the transaction were to be consummated without regard to any required
approval of the Company and (ii) directly or indirectly proposed or nominated
a director of the Company which director (or a successor of such person
elected to the Board of Directors for the purpose of either facilitating a
transaction with such Interested Person or circumventing directly or
indirectly the provisions of the Rights Agreement) is in office at the time of
consideration of the transaction in question, or (y) an affiliate or associate
of such person. In the event that a majority of the Board of Directors is
comprised of an Interested Majority, then for 180 days following the
effectiveness of such action, the Company may not exclude from the definition
of an Acquiring Person any Interested Person who acquires 20% or more of the
Company's outstanding Common Shares.
At any time prior to the earlier of (i) a person becoming an Acquiring
Person or (ii) the expiration of the Rights, the Company may, upon action by
the Board of Directors in their sole discretion, redeem the Rights, in whole
but not in part, at a price of $.01 in cash per Right (the "Redemption
Price"), which redemption shall be effective upon action of the Board of
Directors in the exercise of their sole discretion. In addition, following the
Shares Acquisition Date, the Company may redeem the then outstanding Rights in
whole, but not in part, at the Redemption Price provided that such redemption
is (i) in connection with a merger or other business combination transaction
or series of transactions involving the Company in which all holders of Common
Shares are treated alike, but not involving an Acquiring Person or any person
who was an Acquiring Person or (ii) following an event giving rise to, and the
expiration of the exercise period for, the Subscription Rights, if and for as
long as no person beneficially owns securities representing 20% or more of the
voting power of the Company's voting securities. However, if a majority of the
Board of Directors is an Interested Majority, then (x) the Rights may not be
redeemed for 180 days after such election if such redemption is reasonably
likely to have the purpose of facilitating a transaction with an Interested
Person and (y) the Rights may not be redeemed if during the 180 day period the
Company enters into any agreement reasonably likely to facilitate a
transaction with an Interested Person and the redemption is reasonably likely
to facilitate such a transaction.
The Rights expire on the earlier of (i) November 29, 1999, (ii) consummation
of a merger transaction with a person or group who acquired Common Shares
pursuant to a Permitted Offer, and is offering in the merger the same form of
consideration and not less than the price per share paid pursuant to the
Permitted Offer or (iii) redemption by the Company.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or receive dividends.
Any of the provisions of the Rights Agreement may be amended or supplemented
by the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be amended
or supplemented by the Board of Directors in order to cure any ambiguity,
defect or inconsistency, or to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person). However, if the majority of the Board of Directors is an Interested
Majority, then for a period of 180 days following the effectiveness of such
action the Rights Agreement may not be amended or supplemented in any manner
reasonably likely to have the purpose or effect of facilitating certain
business combination transactions with an Interested Person.
In the event that United Dominion or any affiliates or associates of United
Dominion, acting as group, acquire beneficial ownership of 20% or more of the
Common Shares pursuant to the Revised Offer or otherwise, such persons will be
an Acquiring Person as defined in the Rights Agreement and a Shares
Acquisition Date will have occurred.
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United Dominion and OAC commenced litigation (the "District Court
Litigation") against the Company and its directors on July 11, 1996 in The
United States District Court for the Southern District of Ohio, Eastern
Division (the "Court"), seeking, among other things, an order requiring the
Board of Directors of the Company to redeem the Rights. See "CERTAIN LEGAL
MATTERS" below.
REMOVAL OF CURRENT DIRECTORS AND ELECTION OF NEW DIRECTORS
According to the Solicitation Statement, at the Special Meeting, United
Dominion and OAC intend to propose that all incumbent directors of the Company
be removed from office and that the size of the Board of Directors be reduced
from twelve to three members. The persons appointed by the proxies to be
solicited by United Dominion and OAC for the Special Meeting would vote the
Shares represented by such proxies in favor of United Dominion's and OAC's
proposals to remove all of the incumbent directors of the Company and, as
described below, to amend the Regulations to reduce the size of the Board of
Directors from twelve to three members (and, in connection with such reduction
in size, to provide that the directors shall serve as a single class with the
same term of office).
Removal of all incumbent directors requires the affirmative vote of a
majority of the total voting power of the outstanding Shares.
According to the Solicitation Statement, United Dominion and OAC also intend
to propose that nominees of United Dominion be elected as directors of the
Company to fill all of the vacancies created by the removal of the incumbent
directors and the reduction of the size of the Board of Directors, each to
hold office until a successor has been elected and qualified or until death,
resignation or removal. According to the Solicitation Statement, Company
shareholders will be provided with information concerning United Dominion's
nominees in a proxy statement relating to the Special Meeting which will be
forwarded to Company shareholders prior to the Special Meeting.
The laws of the State of Ohio, under which the Company is organized, provide
for cumulative voting for the election of directors if any shareholder gives
notice in writing to the President, a Vice President or the Secretary of the
Company, not less than 48 hours (unless notice of the meeting has not been
given at least 10 days before the date fixed for the meeting, in which case 24
hours) before the time fixed for holding the meeting that such shareholder
desires that the voting for the election of directors shall be cumulative,
provided that announcement of the giving of such notice is made upon the
convening of the meeting by the Chairman or the Secretary of the Company or by
or on behalf of such shareholder. Each shareholder shall then have the right
to vote his or her Shares cumulatively at the election; that is, each
shareholder shall be entitled to cast a number of votes as shall equal the
number of votes represented by such shareholder's Shares on the Special
Meeting Record Date multiplied by the number of directors to be elected. A
shareholder may cast all such cumulative votes for a single nominee or may
allocate them among as many nominees as that shareholder sees fit. According
to the Solicitation Statement, in the event the election of directors at the
Special Meeting is to be by cumulative voting, United Dominion and OAC intend
to seek to have as many of their nominees elected as possible.
AMENDMENTS OF THE REGULATIONS
According to the Solicitation Statement, United Dominion and OAC intend to
propose at the Special Meeting a resolution to amend Article II of the
Regulations by replacing Sections 1 and 2 in their entirety with the following
language:
"Section 1. Number. Until changed in accordance with the provisions of
Section 2 hereof, the Board of Directors of the corporation shall consist
of three (3) directors."
"Section 2. Election and Term. Each director shall hold office until the
next annual meeting of shareholders and until his or her successor is
elected, or until his or her earlier resignation, removal from office, or
death. The election of directors shall, if the number of persons nominated
shall be greater than the number of directorships to be filled, be by
ballot."
"The number of directors may be increased or decreased (subject to the
condition that in no event shall the number of directors be less than three
(3)), by resolution adopted by shareholders entitled to
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exercise a majority of the voting power on such proposal present in person
or by proxy at any annual meeting or at any special meeting called for that
purpose, provided that no decrease in the number of directors shall of
itself have the effect of shortening the term of any incumbent director."
"The Board of Directors may adopt such further regulations governing the
elections of directors, not inconsistent with the foregoing, as shall to
the Board of Directors seem proper and expedient."
In addition, as stated in the Solicitation Statement, United Dominion and OAC
intend, if the approval of the Control Share Acquisition has not been obtained
or OAC has not otherwise been satisfied, in its sole discretion, that the Ohio
Control Share Acquisition Law is invalid or inapplicable to the acquisition of
Common Shares pursuant to the Revised Offer by the date of the Special Meeting,
to propose at the Special Meeting a resolution to amend the Regulations by
adding the following Article XI to the Regulations:
"ARTICLE XI CONTROL SHARE ACQUISITION STATUTE NOT APPLICABLE"
"Section 1701.831 of the Ohio Revised Code does not apply to "control share
acquisitions' (as such term is defined in division (Z)(1) of Section 1701.01 of
the Ohio Revised Code) of shares of the corporation."
The Regulations require the affirmative vote of a majority of the total
voting power of the outstanding Shares to approve these amendments to the
Regulations.
AMENDMENT OF THE ARTICLES
Article SIXTH of the Articles ("Article SIXTH") provides that the affirmative
vote of holders of 95% of all shares of stock of the Company entitled to vote
in the election of directors shall be required to authorize a business
combination (as defined in the Articles) with any entity that, directly or
indirectly, beneficially owns 30% or more of the Shares as of the record date
for the meeting of shareholders at which such authorization is sought unless
the consideration to be offered to holders of the outstanding shares complies
with certain "fair price" requirements (the "Article SIXTH Requirements").
According to the Solicitation Statement, United Dominion and OAC intend to
propose that the Articles be amended to repeal Article SIXTH in its entirety.
Article SIXTH may be amended or repealed only by the affirmative vote of 95%
of all shares of stock of the Company entitled to vote in the election of
directors, or by the affirmative vote of at least two-thirds of the outstanding
Shares upon the unanimous recommendation of the Board of Directors provided
that all of the directors qualify as "continuing directors" at the time such
recommendation is made. "Continuing director" is defined to include directors
holding office prior to the time that any entity proposing a business
combination has acquired 10% or more of the outstanding stock of the Company.
Because the Special Meeting will occur prior to the time OAC purchases Common
Shares in the Revised Offer, United Dominion's nominees, if elected at the
Special Meeting, will qualify as "continuing directors" for purposes of Article
SIXTH.
United Dominion and OAC have requested that the Company's Board of Directors
unanimously recommend to the Company shareholders that Article SIXTH be
repealed or otherwise amended such that its provisions are inapplicable to the
Proposed Merger. Because the Board of Directors believes that the Revised Offer
is inadequate, the Board of Directors opposes any action by United Dominion and
OAC to repeal or amend Article SIXTH such that its provisions are inapplicable
to the Proposed Merger. According to the Solicitation Statement, if the Special
Meeting were to be called, OAC expects United Dominion's nominees, if all such
persons are elected at the Special Meeting, to take such action as shall result
in a unanimous recommendation by the Board of Directors to the Company's
shareholders that Article SIXTH be repealed. In the event such recommendation
is made, pursuant to Article SIXTH and the ORC, the affirmative vote of holders
of two-thirds of the voting power of the total number of outstanding Shares
would be sufficient to approve the proposal to repeal Article SIXTH.
ADDITIONAL PROPOSALS
According to the preliminary proxy materials relating to the Special Meeting
filed with the SEC on July 24, 1996, by United Dominion and OAC, United
Dominion and OAC also intend to present at the Special Meeting a resolution
that the Special Meeting and all adjournments thereof shall be presided over by
an individual to be designated by United Dominion and OAC.
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According to the preliminary materials, United Dominion's and OAC's proxy
agents will vote all shares represented by proxies in favor of adoption of the
foregoing resolution. According to the preliminary materials, if this
resolution is adopted by the shareholders, the designated special meeting
chairman intends to cause the order of business at the Special Meeting to be
as set forth in this Proxy Statement. In accordance with the Regulations,
adoption of this resolution requires the affirmative vote of the holders of a
majority of the voting Shares represented and entitled to vote at the Special
Meeting.
In addition, United Dominion and OAC intend to present at the Special
Meeting a resolution that the Special Meeting be recessed for one hour, or for
such other reasonable period of time as it shall take the duly appointed
inspectors of election for the Special Meeting (the "Inspectors") to determine
the results of the votes taken at the Special Meeting in accordance with their
obligations pursuant to Section 1701.50(C) of the ORC; and that the Special
Meeting be resumed as promptly as practicable after the announcement by the
Inspectors of the results of such votes.
According to United Dominion's and OAC's preliminary materials, the recess
would operate as an intermission within the Special Meeting and would not end
the Special Meeting or destroy its continuity as a single gathering and after
which the Special Meeting would be immediately resumed, all in accordance with
Robert's Rules of Order to which the Regulations refer for parliamentary
questions not otherwise provided in the Regulations. The purpose of the
proposed recess would be to give the inspectors of election for the Special
Meeting an opportunity to confirm the results of the election of the Company's
Board of Directors, so as to enable the newly elected Company's Board of
Directors to recommend unanimously the repeal of Article SIXTH of the Articles
to the Company's shareholders. According to United Dominion's and OAC's
preliminary materials, if elected, United Dominion and OAC's nominees expect
to report their unanimous recommendation to the Company's shareholders at the
resumption of the Special Meeting and prior to the vote of shareholders on the
proposal to repeal Article SIXTH described above.
According to United Dominion's and OAC's preliminary materials, they believe
that, if at the Special Meeting the designated special meeting chairman has
been elected to preside as chairman of the Special Meeting, the designated
special meeting chairman would be able to recess the Special Meeting without
the vote of the Company's shareholders. However, United Dominion and OAC
intend to present this resolution to Company shareholders for their approval
in order to eliminate any question as to the validity of such action. United
Dominion's and OAC's proxy agents intend, if required, to vote all Shares
represented by such proxies in favor of the resolution to recess the Special
Meeting. Under the Regulations, adoption of this resolution requires the
affirmative vote of a majority of the voting Shares represented and entitled
to vote at the Special Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS WITH RESPECT TO SPECIAL MEETING
PROPOSALS
The above listed proposals are designed to facilitate the consummation of
the Revised Offer, which your Board of Directors and management have
determined to be inadequate and not in the best interest of the Company, its
shareholders, employees, customers, suppliers, labor organizations, the
communities in which the Company does business and its other constituencies,
and not to adequately reflect the long-term value or prospects of the Company.
THE BOARD OF DIRECTORS WILL RECOMMEND THAT SHAREHOLDERS VOTE AGAINST EACH OF
UNITED DOMINION'S AND OAC'S PROPOSALS DESCRIBED ABOVE AND ANY OTHER PROPOSALS
BROUGHT BEFORE THE SPECIAL MEETING WHICH ARE DESIGNED TO, OR HAVE THE EFFECT
OF, FACILITATING UNITED DOMINION'S INADEQUATE REVISED OFFER.
ADJOURNMENT OF MEETING
In the event of the Special Meeting, the Board of Directors intends to
request, in the proxy solicitation relating to the Special Meeting, authority
to initiate and vote for proposals to recess or adjourn the Special Meeting
for any reason.
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CERTAIN LEGAL MATTERS
On July 11, 1996, United Dominion and OAC commenced the District Court
Litigation against the Company, the Board of Directors, the acting Commissioner
of Securities of the Ohio Division of Securities, the Ohio Director of Commerce
and the State of Ohio. Plaintiffs sought declarations that, among other things,
(i) Section 1701.01(CC)(2) of Ohio's Control Share Acquisition Law is
unconstitutional because it is claimed to conflict with the United States
Constitution, and (ii) the Rights Agreement and the Rights are invalid,
unlawful, null and void. Plaintiffs also sought, among other things, to enjoin
(i) the enforcement of Sections 1701.01(CC)(2) and 1701.831(E) of Ohio's
Control Share Acquisition Law, (ii) the Company's directors from taking any
action to enforce or amend the Rights Agreement (other than to redeem the
Rights or to amend certain provisions that limit the ability of the Company to
redeem the Rights), and (iii) the Company from commencing or prosecuting in any
court other than the court in which the action was filed, any action or
proceeding relating to the plaintiff's tender offer. Further, the plaintiffs
sought an order to compel the Company to redeem the Rights and to amend certain
provisions of the Rights Agreement that limit the ability of the Company to
redeem the Rights. On July 15, 1996, the Court scheduled a hearing for July 29,
1996 with respect to United Dominion and OAC's motion to enjoin preliminarily
the enforcement of Sections 1701.01(CC)(2) and 1701.831(E) of the Ohio Control
Share Acquisition Law and the parties are commencing discovery with respect
thereto.
On July 15, 1996, United Dominion and OAC filed an amended complaint
asserting as additional claims that the directors of the Company had violated
their fiduciary duties to the Company's shareholders by determining to
undertake the Repurchase Program, undertaking to effect the Spin-Off and
refusing to negotiate with United Dominion and OAC; that the Company's Schedule
14D-9 contained false and misleading statements in violation of the Exchange
Act; and that the Company's repurchase of shares in the Repurchase Program
violated the Exchange Act. The plaintiffs sought to enjoin preliminarily and
permanently: (1) the Board of Directors from refusing to negotiate with United
Dominion and OAC; (2) the Repurchase Program; and (3) the Company from refusing
to amend its Schedule 14D-9 with respect to the Repurchase Program and the
Spin-Off.
On July 18, 1996, the Company filed its answer to the amended complaint of
United Dominion and OAC denying all substantive allegations and raising, as
counterclaims, that there were disclosure violations in the state and federal
filing by United Dominion and OAC associated with the Revised Offer. The
Company also sought a declaratory judgment that, if United Dominion and OAC
obtain proxies representing more than 10% of the voting power of the Company's
Common Shares in the election of directors, United Dominion and OAC would be
"interested shareholders" within the meaning of the Ohio Business Combination
Law and thus be prohibited from engaging in certain transactions with the
Company, including completing their Proposed Merger, for a minimum of three
years and thereafter, unless they comply with the Ohio Business Combination
Law.
On July 19, 1996, United Dominion filed a motion in its litigation against
the Company seeking leave of the Court to file a Second Amended Complaint. On
July 22, 1996, the Company filed a brief opposing United Dominion's motion and
challenging its standing to bring additional claims contained in the proposed
Second Amended Complaint. Also, on July 23, 1996, the Company filed a motion
seeking an order enjoining the Revised Offer and United Dominion's and OAC's
associated proxy and Agent Designation solicitations because of certain false
and misleading disclosures in materials filed with the SEC. The Company seeks
an order requiring United Dominion to make curative disclosures to correct the
false and misleading disclosures and enjoining United Dominion's tender offer
and associated proxy and agent designation solicitations for a period of time
following the curative disclosures.
On July 24, 1996, United Dominion and OAC filed their reply memorandum in
support of their motion for leave to file a Second Amended Complaint. The Court
had indicated in a hearing on July 19, 1996, that the Court would endeavor to
rule on that motion by the close of business on July 25, 1996, but to date no
ruling has been issued.
On July 25, 1996, the Company filed a motion seeking a temporary restraining
order to prevent United Dominion and OAC from distributing proxy solicitation
materials seeking Agent Designations for the purpose of calling a Special
Meeting. This same issue had been raised in the Company's July 23, 1996 motion
for a preliminary injunction, but the Company determined that more expeditious
action was warranted in light of United Dominion's and OAC's indications that
they intended to begin sending the solicitations of Agent
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Designations from the Company's shareholders on July 25, 1996. At a hearing
held on July 25, 1996, the Court denied the Company's motion.
On July 31, 1996, the Court said that it would deny United Dominion's motion
for a preliminary injunction to declare unconstitutional certain provisions of
Ohio's takeover legislation. The Court stated it would enter written opinion
and order in a few days. At the 831 Special Meeting, United Dominion's
purchase of Shares must be approved by two separate votes: (1) a majority of
all Shares represented at the Special Meeting and (2) a majority of all such
Shares that are not "interested shares." The result of the denial of United
Dominion's injunction motion is that "interested shares" will include Shares
acquired after June 27, 1996 by any persons who paid over $250,000 for such
Shares.
On August 2, 1996, the Court denied United Dominion's motion for leave to
file a Second Amended Complaint. Count 11 of the proposed Second Amended
Complaint would have alleged, among other things, that the Company violated
ORC Sections 1701.831 and 1701.832 by scheduling an August 30, 1996 Special
Meeting of Shareholders, thereby depriving the Company's shareholders of a
meaningful opportunity to vote on the Revised Offer. The Court denied United
Dominion's motion, finding that United Dominion's Second Amended Complaint
failed to state a claim upon which relief may be granted. The Court ruled that
United Dominion's complaint did not allege a violation by the Company of
Section 1701.831, which does not regulate actions taken by a target
corporation in defense of a takeover bid apart from prescribing certain
ministerial duties.
SOLICITATION OF REVOCATIONS
The costs of the revocation solicitation will be borne by the Company. In
addition to solicitation by mail, directors, officers and regular employees of
the Company may solicit proxies in person, by telephone, by personal
interview, e-mail, or by telecopier, none of whom will receive additional
compensation for such solicitations. The Company will request banks, brokerage
houses and other custodians, nominees and fiduciaries to forward its
solicitation materials to the beneficial owners of the Common Shares they hold
of record and obtain authorization for, and appropriate certification in
connection with, the execution of Revocation Cards. The Company will reimburse
these record holders for customary mailing expenses incurred by them in
forwarding these materials. The Company also has retained Morrow & Co., Inc.
to assist the Company in connection with communications with shareholders and
to provide other services in connection with the solicitation of proxies or
consents and the Revised Offer. The fee of Morrow & Co., Inc. is estimated to
be $400,000 plus reasonable out-of-pocket costs and expenses.
Except as described above, neither the Company nor, to the best of the
Company's knowledge, any person acting on its behalf has retained any other
person to make solicitations or recommendations to security holders on its
behalf in connection with the transactions contemplated by the Revised Offer.
OTHER FEES
Pursuant to a letter agreement dated June 28, 1996 (the "Letter Agreement"),
the Company has retained Goldman Sachs as financial advisor with respect to
the Revised Offer and certain other possible transactions and Goldman Sachs
will act as exclusive financial advisor with respect to any proxy or consent
solicitation (including this revocation solicitation) involving United
Dominion and OAC. Pursuant to the Letter Agreement, the Company has agreed to
pay to Goldman Sachs:
(a) a fee of $250,000 payable on the date of the Letter Agreement;
(b) an additional fee of $250,000 in the event of the commencement by
United Dominion or any affiliate or other party of a tender offer, payable
upon the commencement of the tender offer;
(c) if 15% or more of the outstanding Shares of the Company are acquired
by United Dominion or any other person or group (including the Company), in
one or a series of transactions or if all or substantially all of the
assets of the Company are transferred, in one or a series of transactions,
by way of a sale, distribution or liquidation, an additional fee equal to
0.85% of the aggregate value of all such transactions (in the event at
least 50% of the outstanding Shares of the Company are acquired by United
Dominion or any other person or group, including the Company, such
aggregate value shall be determined as if such acquisition were of 100% of
the Shares of the Company);
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(d) if the Company or any other entity formed or owned in substantial
part or controlled by the Company or one or more members of senior
management of the Company or any employee benefit plan of the Company or
any of its subsidiaries effects certain recapitalization transactions not
covered by subparagraph (c), a fee (to be negotiated) equal to between
0.85% and 1.0% of the aggregate value of such transaction;
(e) in the event that the Company acquires the securities or assets of
another company or sells, distributes or liquidates all or a portion of the
assets of the Company, including any pension-related assets, or sells or
distributes securities of the Company, whether such distribution is made by
dividend or otherwise, and no fee has become payable to Goldman Sachs with
respect to such transaction pursuant to subparagraphs (c) and (d) above,
additional fees customary to such transactions based on the aggregate value
of the transaction; and
(f) subject to certain conditions, in the event no transaction of the
type described in subparagraphs (c) and (d) has been consummated by January
1, 1997, a fee of $500,000 on each such date as of which no transaction has
been consummated: January 1, 1997, April 1, 1997, July 1, 1997, October 1,
1997, January 1, 1998 and April 1, 1998 less any amounts paid under
subparagraphs (a) and (b) above.
Any fees paid pursuant to subparagraphs (a), (b) and (f) above shall be
credited against any fees payable pursuant to subparagraphs (d) and (e) above.
Pursuant to the Letter Agreement, if the Company becomes the subject of, or
is threatened with, a contested proxy or consent solicitation by United
Dominion or any other party, Goldman Sachs will act as the Company's exclusive
financial advisor with regard to such proxy or consent solicitation.
The Company has also agreed to reimburse Goldman Sachs periodically for its
reasonable out-of-pocket expenses, including the fees and disbursements of its
attorneys, plus any sales, use or similar taxes (including additions to such
taxes, if any) arising in connection with any matter referred to in the Letter
Agreement. In addition, the Company has agreed to indemnify Goldman Sachs
against certain liabilities, including liabilities under federal securities
laws.
The Company has entered into a financial advisory agreement with each of
Cleary Gull Reiland & McDevitt Inc. and Robert W. Baird & Co. Incorporated
(each, an "Advisor"). Each Advisor has agreed to provide assistance in
preparing the Form 10 and perform over-the-counter market making and research
activities for Cuno following the Spin-Off. The Company has agreed to pay each
Advisor $250,000 for such services plus reimbursement for reasonable expenses.
Each agreement contains customary indemnification provisions.
INTERESTS OF CERTAIN PERSONS
THE STOCK OPTION AND AWARD PLANS; FORM OF OPTION AGREEMENT
The Company's Stock Option and Award Plans allow for the grant of a variety
of stock incentive instruments, including nonqualified (i.e., not tax-
preferred) and incentive stock options, stock appreciation rights, restricted
stock and performance shares. For many years, the Company has granted stock
options to its key executives to create a direct link between shareholder and
executive interests. In the past the Company has also periodically granted
time-lapse restricted stock to its key executives.
The performance share program, first initiated in fiscal 1993, is a longer-
term incentive program designed to motivate key executives whose efforts
result in the achievement of sustained financial results leading to increased
shareholder value. Designed to replace substantially the restricted stock
grants previously made to key executives, the Management Evaluation and
Compensation Committee of the Board of Directors (the "Committee") believes
performance shares better align executive and shareholder financial interests.
The Committee selected 63 executives throughout the Company for participation
in the performance share program.
Depending on responsibilities within the Company, performance shares are
earned based on average corporate and/or group Return On Equity ("ROE"),
divisional operating income and, for certain executives, individual specific
objectives over a three-year performance period. In future years, the
Committee may consider
21
<PAGE>
other measures of shareholder value and performance periods, as appropriate,
in light of the Company's strategic objectives. Threshold levels of ROE and,
in certain cases, operating income must be achieved before any distributions
are made.
Historically the Company has granted stock options on an annual basis while
performance shares are granted every other year. In determining stock option
awards, the Committee considers such factors as median competitive award
levels, the size of previous stock option awards and Company and individual
performance.
The Company has modified its practice of awarding restricted stock to key
executives. Restricted stock is now used only in special circumstances, such
as to attract new key executives for employment with the Company and in other
similar non-recurring circumstances.
Pursuant to the terms of the Company's Stock Option and Award Plan of 1989,
the Stock Option and Award Plan of 1993 and the Stock Option and Award Plan of
1995 (collectively, the "Stock Option and Award Plans"), the Committee may
provide, upon a change of control (as defined in the Stock Option and Award
Plans and which would include the consummation of the Revised Offer), that (i)
any and all stock appreciation rights outstanding on the date that such change
of control is determined to have occurred and any and all stock options
awarded under the Stock Option and Award Plans not previously exercisable and
vested shall become fully exercisable and vested and (ii) restrictions
applicable to any and all restricted stock and performance share awards shall
lapse and such shares and awards shall be fully vested.
Similarly, pursuant to the terms of the Company's form of Option Agreement,
the options granted thereunder and not yet exercisable shall become
exercisable and vested upon a change of control or a potential change of
control (as both terms are defined in the Option Agreement and which would
include the consummation of the Revised Offer).
EMPLOYMENT AGREEMENTS
On July 27, 1994, the Company entered into an Employment Agreement with Paul
J. Powers. Mr. Powers' Employment Agreement expires on February 28, 2000. The
Employment Agreement provides for the payment of a base salary which can be
increased at the discretion of the Company. Mr. Powers' annual base salary for
1995 was $481,667. Additionally, Mr. Powers shall be eligible to (1) receive
cash bonuses as part of the Company's Salaried Employee Incentive Plan
("SEIP"); and (2) participate in other incentive, stock option, profit sharing
and similar plans maintained by the Company for the benefit of its executives.
In addition, the employment agreement with Mr. Powers provides that in the
event of his termination without cause (as defined in his employment
agreement), Mr. Powers shall receive a lump sum payment equal to two and one-
half times his most recent annual cash compensation. Finally, Mr. Powers will
be included in all other employee benefit plans to the extent that he is
eligible. Such plans include, but are not limited to, group life insurance
plans, hospitalization and medical plans and long-term disability plans.
On May 18, 1992, the Company entered into an Employment Agreement with Bruce
C. Wheatley and on December 3, 1993, the Company entered into an Employment
Agreement with Mark G. Kachur. Mr. Wheatley's Employment Agreement is for a
term of three years and Mr. Kachur's Employment Agreement is for a term of
three years. The Employment Agreement with Mr. Wheatley provides for a base
salary of $200,000 and Mr. Kachur's Employment Agreement provides for a base
salary of $240,000. Both employment agreements provide for participation in
the Company's SEIP as well as other Company benefit programs, including group
life insurance, hospitalization and medical plans. The Employment Agreements
also provide for the grant of stock options under certain stock option plans,
subject to vesting requirements, and also provide for participation in a
supplemental deferred compensation arrangement. In the event of a change in
control of the Company, the Employment Agreements provide for a lump sum
severance payment in the amount of two years' cash compensation as well as
continued participation in Company benefit programs for two years following
termination.
TERMINATION BENEFITS
On February 15, 1988, the Company entered into a Severance Compensation and
Consulting Agreement with Paul J. Powers. On September 28, 1989, the Company
entered into separate Severance Compensation
22
<PAGE>
Agreements with each of Gilbert M. Manchester, William W. Cushwa, Steven J.
Hewitt, Edward J. Barnard, Patrick C. Reardon, Kenneth W. Marcum and Robert A.
Calcagni. On June 25, 1992, the Company entered into a Severance Compensation
Agreement with John Gilchrist, on July 20, 1992 with Bruce C. Wheatley, on
March 25, 1995 with Mark G. Kachur and on February 29, 1996 with Hubert Jacobs
van Merlen. The Severance Compensation and Consulting Agreement and the
Severance Compensation Agreements are referred to collectively as the
"Agreements." The Agreements were the result of a determination by the Board
of Directors that it is appropriate and in the best interest of the Company
and its shareholders that, in the event of a possible change in control of the
Company, the stability and continuity of management would be maintained, free
of the distractions incident to any change in control.
For purposes of the Agreements, a "change in control" shall be deemed to
have occurred if (i) there shall be consummated (a) any consolidation or
merger of the Company in which the Company is not the continuing surviving
corporation or pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior
to the merger have substantially the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (b) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company,
or (ii) the shareholders of the Company shall approve any plan or proposal for
the liquidation or dissolution of the Company, or (iii) any person (as such
term is used in Section 13(d) and 14(d)(2) of the Exchange Act) other than the
Company or a subsidiary or any employee benefit plan sponsored by the Company
or a subsidiary, shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing in special circumstances) having
the right to vote in the election of directors, as a result of a tender or an
exchange offer, open market purchases, privately negotiated purchases or
otherwise, or (iv) at any time during a period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company shall cease for any reason to constitute at least the
majority thereof, unless the election or the nomination for election by the
Company's shareholders of each new director during such two-year period is
approved by a vote of at least two-thirds of the directors then still in
office who were directors in the beginning of such two-year period.
Benefits are payable under the Agreements only if a change in control has
occurred and within two years after such change in control the officer's
employment is terminated involuntarily without cause or voluntarily by the
officer for reasons such as demotion, reduction in base salary, relocation,
loss of benefits or other changes. The principal benefits to be provided to
Mr. Powers under his Agreement are (i) a lump sum payment equal to two times
his annual cash compensation (base salary and incentive compensation), (ii)
continued participation in the Company's employee benefit programs for three
years following termination, and (iii) a consulting fee equal to his annual
cash compensation in consideration for consulting services over a one-year
period after termination. The principal benefits to be provided to Messrs.
Manchester, Cushwa, Hewitt, Barnard, Reardon, Marcum, Jacobs van Merlen,
Calcagni, Kachur, Wheatley, and Gilchrist under the Agreements are (i) a lump
sum payment equal to two times the officer's annual cash compensation (base
salary and incentive compensation) and (ii) continued participation in the
Company's employee benefit programs for two years following termination. If
the officer's termination occurs after age 62, separation payments are reduced
by a factor based upon the number of months remaining until the officer
reaches age 65. The Agreements are not employment agreements, and do not
impair the right of the Company to terminate the employment of the executive
with or without cause prior to a change in control, or the right of the
executive to voluntarily terminate his employment. Each Agreement generally
terminates on the earlier of the date on which the officer reaches age 65 or
five years from the date of the Agreement, provided that the term of the
Agreement will be automatically extended for additional one-year periods until
the officer reaches age 65 or the Company or the officer determines not to
extend the Agreement.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of June 30, 1996 (unless a
different date is specified in the notes to the table) with respect to (a)
each current director of the Company, (b) each of the Named Executive
23
<PAGE>
Officers (as defined in Item 402(a)(3) of Regulation S-K of the Exchange Act)
and (c) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF VOTING
NAME OF BENEFICIAL OWNER OWNERSHIP SHARES**
- ------------------------ ----------------- ---------
<S> <C> <C>
William J. Bresnahan............... 300 *
Charles B. Cushwa III.............. 220,380(1)(4)(5) 1.50%
(8)(12)(16)
William W. Cushwa.................. 238,925(1)(2)(3)(4)(6)(7) 1.62%
(8)(13)(14)(16)(17)
John M. Galvin..................... 5,750(8) *
John Gilchrist..................... 32,032(8)(10)(14) *
Richard J. Hill.................... 10,397(8)(9) *
Neil D. Humphrey................... 6,635(8)(9) *
Hubert Jacobs van Merlen........... 13,103 *
Mark G. Kachur..................... 32,086(8) *
William E. Kassling................ 5,000 *
Gerald C. McDonough................ 4,500(8) *
C. Edward Midgley.................. 10,000 *
Paul J. Powers..................... 329,041(2)(8)(10)(14) 2.24%
George M. Smart.................... 2,750(8) *
Don E. Tucker...................... 136,855(1)(2)(8)(11) *
Bruce E. Wheatley.................. 34,714(8)(15) *
All Directors and Executive
Officers as a Group (19 people)... 1,198,805 8.15%
</TABLE>
- --------
* less than 1%
** Percent of All Voting Shares based on total outstanding Common Shares and
Preferred Shares as of August 2, 1996.
(1) Does not include Common Shares owned by the members of the above-
mentioned directors' families who share their homes, as follows: of Mr.
Charles Cushwa--947 shares; of Mr. William Cushwa--26,278 shares; and of
Mr. Tucker--1,146 shares. Beneficial ownership thereof is disclaimed by
the respective directors.
(2) Includes the beneficial interest in Common Shares (fractional shares not
shown) credited to the accounts of the above-mentioned beneficial owners
by the Trustee acting under the provisions of the Employee Savings and
Stock Purchase Plan of Commercial Intertech Corp., as follows: Mr.
William Cushwa--4,347 shares; Mr. Powers--1,630 shares; and Mr. Tucker--
9,446 shares.
(3) Includes Common Shares held by the directors as custodians for their
minor children as follows: minor children of Mr. William Cushwa--4,011
shares.
(4) Charles B. Cushwa III and William W. Cushwa are two of three
beneficiaries of a trust, of which they are not trustees, which consists
of 294,000 Common Shares the income from which will be paid to the
beneficiaries equally during their lives. These shares are not included
in the amounts shown in the table.
(5) Includes 44,000 Common Shares held in trust, in which the children of
Charles B. Cushwa III have a remainder interest, and of which National
City Bank, N.E. and Charles B. Cushwa III are co-trustees. Beneficial
ownership thereof is disclaimed by Mr. Charles B. Cushwa III.
24
<PAGE>
(6) Does not include 11,250 Common Shares held in trust, of which William W.
Cushwa is not a trustee, for the benefit of his child and of which
beneficial ownership is disclaimed by Mr. William W. Cushwa.
(7) Includes 44,000 Common Shares held in trust, in which the children of
William W. Cushwa have a remainder interest, and of which National City
Bank, N.E. and William W. Cushwa are co-trustees. Beneficial ownership
thereof is disclaimed by Mr. William W. Cushwa.
(8) Includes Common Shares acquirable within 60 days of June 30, 1996 upon
exercise of options issued under the Company's Stock Option and Award
Plans as follows: Mr. Charles Cushwa--2,250 shares; Mr. William Cushwa--
1,875 shares; Mr. Galvin--2,250 shares; Mr. Gilchrist--11,250 shares; Mr.
Hill--2,250 shares; Mr. Humphrey--1,500 shares; Mr. McDonough--2,250
shares; Mr. Powers--137,250 shares; Mr. Wheatley--11,250 shares; Mr.
Kachur--7,500 shares; Mr. Smart--750 shares; and Mr. Tucker--750 shares.
(9) Includes Common Shares (fractional shares not shown) credited to the
accounts of the above-mentioned beneficial owners by the administrator of
the Company's Automatic Dividend Reinvestment Plan, as follows: Mr.
Hill--3,147 shares; and Mr. Humphrey--1,485 shares.
(10) Includes in each case 317 Preferred Shares (fractional shares not shown)
and the following number of Common Shares (fractional shares not shown)
credited to the accounts of the above-mentioned beneficial owners by the
Trustee acting under the provisions of the Company's 401(k) plan: Mr.
Gilchrist--441 shares; and Mr. Powers--5,011 shares.
(11) Includes 206 Preferred Shares (fractional shares not shown) and 5,036
Common Shares (fractional shares not shown) credited by the Trustee
acting under the provisions of the Company's 401(k) plan.
(12) Includes 38,396 Common Shares held in trust, in which the children of
Charles B. Cushwa III have a remainder interest, and of which National
City Bank, N.E. and Charles B. Cushwa III are co-trustees. Beneficial
ownership thereof is disclaimed by Mr. Charles B. Cushwa III.
(13) Includes 61,000 Common Shares held in trust, in which the children of
William W. Cushwa have a remainder interest, and of which National City
Bank, N.E. and William W. Cushwa are co-trustees. Beneficial ownership
thereof is disclaimed by Mr. William W. Cushwa.
(14) Includes in each case two Common Shares (fractional shares not shown) as
a result of participation in the Commercial Intertech Employee Stock
Ownership Plan and the following number of Preferred Shares (fractional
shares not shown) as a result of participation in the Commercial
Intertech Employee Stock Ownership Plan: Mr. William Cushwa--324 shares;
Mr. Gilchrist--398 shares; and Mr. Powers--719 shares.
(15) Includes 96 Preferred Shares (fractional shares not shown) and 1,890
Common Shares (fractional shares not shown) held under the provisions of
the Company's 401(k) plan. Includes 110 Preferred Shares (fractional
shares not shown) as a result of participation in the Commercial
Intertech Employee Stock Ownership Plan.
(16) Charles B. Cushwa III and William W. Cushwa are two of three
beneficiaries of a trust, of which they are not trustees, containing
75,000 shares distribution of which is dependent upon the resolution of
certain probate estate matters. The shares are not included in the
amounts shown in the table.
(17) Includes 300 Preferred Shares (fractional shares not shown) and 903
Common Shares (fractional shares not shown) credited by the trustee
acting under the provisions of the Company's 401(K) Plan.
The information set forth above concerning the security holdings of the
beneficial owners is based on information received from the persons named.
None of such beneficial owners, directly or indirectly, owns beneficially any
equity securities of any subsidiary of the Company.
25
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The name of any person or "group" (as that term is used in the Exchange Act)
known by the Company to be the beneficial owner of more than five percent (5%)
of any class of the Company's voting securities as of June 30, 1996 is set
forth below:
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT PERCENT OF
OF BENEFICIAL OF ALL VOTING
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS** SHARES**
- -------------- ---------------------------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Common.................. National City Bank, N.E. 989,707(1) 7.24% 6.73%
P.O. Box 450
Youngstown, OH 44501
Series B Preferred...... LaSalle National Trust, N.A. 1,039,657(2) 100.00% 7.07%
P.O. Box 444
Pittsburgh, PA 15230
</TABLE>
- --------
** Percentage of All Voting Shares and Percent of Class based on total
outstanding Common Shares and Preferred Shares as of August 2, 1996.
(1) This figure includes 172,409 Common Shares held in trust by National City
Bank, N.E. (trustee) for the benefit of participants in the Employee
Savings and Stock Purchase Plan of Commercial Intertech Corp. This figure
includes 1,597 Common Shares held in trust by National City Bank (trustee)
for the benefit of participants in the Non-Qualified Stock Purchase Plan
of Commercial Intertech Corp.
National City Bank has sole voting power over 644,032 shares, shared voting
power over 170,806 shares and no voting power over 174,869 shares. National
City Bank has sole investment power over 277,613 shares and shared
investment power over 712,094 shares.
(2) This figure represents all of the outstanding Preferred Shares held of
record by LaSalle National Trust, N.A. (trustee) for the benefit of
participants in the ESOPs. The trust for these plans contains provisions
for pass-through voting rights to the employee participants in the plans.
LaSalle National Trust, N.A. has shared voting power and shared investment
power over all Preferred Shares.
SHAREHOLDER PROPOSALS
Proposals of security holders to be presented at the 1997 Annual Meeting of
shareholders of the Company must be in proper form and must be received by the
Company by October 1, 1996.
By Order of the Board of Directors,
/s/ Shirley M. Shields
Shirley M. Shields,
Secretary
Youngstown, Ohio
August 3, 1996
26
<PAGE>
INFORMATION AS TO DIRECTORS APPENDIX A
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR YEAR FIRST YEAR TERM
NAME (AGE) EMPLOYMENT ELECTED A DIRECTOR EXPIRES
- ---------- ---------------------------------------- ------------------ ---------
<S> <C> <C> <C>
William J. Bresnahan President of Hynes Industries. Mr. 1995 1997
(45)................... Bresnahan received his bachelor of
science degree in Business
Administration from Youngstown State
University and his master's degree in
Business Administration from the
University of Pittsburgh. He held sales
and marketing positions with Proctor &
Gamble and Pharmacia, Inc. before
joining Hynes Industries in 1980. He
held sales and general management
positions at Hynes Industries until he
was named President in 1989. Mr.
Bresnahan is a director of the Mahoning
National Bank, Youngstown, Ohio.
William W. Cushwa (58).. Vice President Planning and Assistant 1975 1997
Treasurer of the Company. Mr. Cushwa
received his bachelor of arts degree
from the University of Notre Dame and
his master's degree in Business
Administration from Case Western Reserve
University. Mr. Cushwa joined the
Company in 1960, was elected Assistant
Treasurer in 1969, and Director of
Corporate Planning in 1977 and was
elected to his current position in 1983.
Neil D. Humphrey (67)... President Emeritus of Youngstown State 1985 1997
University, having retired as President
in 1992 after eight years in that
position. Dr. Humphrey received his
bachelor of arts degree from Idaho State
University, his master of science degree
in Government Management from the School
of Business Administration of the
University of Denver, and his doctorate
degree in Education from Brigham Young
University. His prior experience
includes 10 years as Chancellor of the
University of Nevada System. He also
served as Budget Director for the State
of Nevada.
C. Edward Midgley (58).. Advisory Director, PaineWebber, 1995 1997
Incorporated. Mr. Midgley received his
bachelor of arts degree in Economics
from Princeton University and his
master's degree in Business
Administration from Harvard Business
School. Until 1994, he was Co-Head of
Investment Banking, Executive Managing
Director, Head of Mergers and
Acquisitions and Member of the Board of
Directors of Kidder, Peabody & Co.
Incorporated. He has served as Managing
Director, Partner and Head of Corporate
Finance/Client Coverage Group at Bankers
Trust Company; Vice Chairman, Office of
the Chief Executive at Fieldcrest
Cannon, Inc.; and Vice Chairman at
Amoskeag Company.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR YEAR FIRST YEAR TERM
NAME (AGE) EMPLOYMENT ELECTED A DIRECTOR EXPIRES
- ---------- ---------------------------------------- ------------------ ---------
<S> <C> <C> <C>
Gerald C. McDonough Retired in July 1988 as Chairman of the 1992 1998
(67)................... Board of Directors and Chief Executive
Officer of Leaseway Transportation
Corporation. Mr. McDonough received his
bachelor's degree in Business
Administration from Case Western Reserve
University. Mr. McDonough is a director
of York International, York,
Pennsylvania, Brush-Wellman Corporation,
Cleveland, Ohio, and Associated Estates
Realty Corporation, Cleveland, Ohio, and
a Trustee of the Fidelity Funds, Boston,
Massachusetts.
Paul J. Powers (60)..... Chairman, President, Chief Executive 1984 1998
Officer and Chief Operating Officer of
the Company. Mr. Powers received his
bachelor's degree in Economics from
Merrimack College and his master's
degree in Business Administration from
George Washington University. Mr. Powers
joined the Company in 1982 as Group Vice
President of Hydraulics, was elected
President and Chief Operating Officer in
1984 and was elected Chairman and Chief
Executive Officer in 1987. Mr. Powers is
a director of Ohio Edison Company,
Akron, Ohio, Twin Disc, Inc., Racine,
Wisconsin, and Global Marine, Inc.,
Houston, Texas. Mr. Powers is also
Chairman and Chief Executive Officer of
Cuno.
George M. Smart (50).... President and Chairman of the Board of 1995 1998
Directors of Phoenix Packaging
Corporation. Mr. Smart received his
bachelor of science degree from The
Defiance College and his master's degree
in Business Administration from Wharton
School, University of Pennsylvania. He
was President and CEO of Central States
Can Co. from 1978 to 1993. He has been
President and Chairman of Phoenix
Packaging Corporation since 1993.
Mr. Smart is a director of Phoenix
Packaging Corporation, North Canton,
Ohio, Belden & Blake Corporation, North
Canton, Ohio, Ohio Edison Company,
Akron, Ohio, and The Defiance College,
Defiance, Ohio.
Don E. Tucker (67)...... Retired Senior Vice President and Chief 1977 1998
Administrative Officer of the Company.
Mr. Tucker received his bachelor of arts
degree from Aurora College and his
bachelor of law degree from Yale
University. Mr. Tucker joined the
Company in 1972 as General Counsel and
Assistant Secretary, was elected Senior
Vice President and Chief Administrative
Officer in 1984 and retired in 1993. Mr.
Tucker is a director of Bank One
Youngstown N.A., Youngstown, Ohio.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR YEAR FIRST YEAR TERM
NAME (AGE) EMPLOYMENT ELECTED A DIRECTOR EXPIRES
- ---------- ---------------------------------------- ------------------ ---------
<S> <C> <C> <C>
Charles B. Cushwa, III Director of Cushwa Center for 1972 1999
(61)................... Entrepreneurship, Youngstown State
University since 1988. Mr. Cushwa
received his bachelor of arts degree in
Sociology and his master of arts degree
in Economics from the University of
Notre Dame. Mr. Cushwa joined the
Company in 1961 and held various
management positions with the Company
until retiring in 1988 as the Secretary
of the Company. Mr. Cushwa is a director
of Home Savings and Loan Company of
Youngstown, Youngstown, Ohio.
John M. Galvin (63)..... Private Investor and consultant 1993 1999
following retirement in 1992. He was
Vice Chairman and director of The Irvine
Company from 1987 to 1992. He received
his bachelor's degree in Business
Administration from Indiana University.
He has served as President of the Rust
Group of Austin, Texas; as Senior Vice
President of Aetna Life and Casualty;
and as Chief Executive Officer of
Aetna's International and Diversified
Business Division. Mr. Galvin is a
Director of Global Marine, Inc. of
Houston, Texas and Oasis Residential
Inc. of Las Vegas, Nevada.
Richard J. Hill (65).... Retired in 1990 as Certified Public 1993 1999
Accountant with Hill, Barth & King,
CPAs, a regional certified public
accounting firm operating in Ohio,
Pennsylvania and Florida. Mr. Hill
formerly was a general partner and
chairman of the Executive Committee of
Hill, Barth & King. He received his
bachelor's degree in Business
Administration from Youngstown State
University. Mr. Hill is a director of
Penelmatic, Inc., Youngstown, Ohio.
William E. Kassling Chairman, Chief Executive Officer and 1996 1999
(51)................... President of Westinghouse Air Brake
Company. Mr. Kassling received his
bachelor of science degree in Industrial
Management from Purdue University and
his master's degree in Business
Administration.
</TABLE>
A-3
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The principal Executive Officers of the Company and their recent business
experience are as follows:
<TABLE>
<CAPTION>
NAME OFFICE HELD AGE
---- ----------- ---
<S> <C> <C>
Paul J. Powers................ Chairman of the Board of Directors, 60
President and Chief Executive Officer
Hubert Jacobs van Merlen...... Senior Vice President and Chief Financial
Officer 41
Bruce C. Wheatley............. Senior Vice President--Administration 54
Mark G. Kachur................ Senior Vice President--Fluid Purification 52
Robert A. Calcagni............ Group Vice President--Building Systems and
Metal Products 55
John Gilchrist................ Group Vice President--Hydraulic Systems 50
William G. Welker............. Group Vice President 65
William W. Cushwa............. Vice President--Planning, Assistant
Treasurer & Director 58
Gilbert M. Manchester......... Vice President and General Counsel 51
Steven J. Hewitt.............. Controller 46
</TABLE>
None of the Executive Officers are related and they are elected from year to
year or until their successors are duly elected and qualified.
All of the Executive Officers have been continuously employed by the Company
for more than five years except Mr. Mark Kachur and Mr. Bruce Wheatley.
A-4
<PAGE>
COMMERCIAL INTERTECH CORP.
THIS REVOCATION CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS IN
OPPOSITION TO THE SOLICITATION OF AGENT DESIGNATIONS BY UNITED DOMINION
INDUSTRIES LIMITED AND OPUS ACQUISITION CORPORATION
The undersigned shareholder, acting with regard to all common shares, par
value $1.00 per share (the "Common Shares"), of Commercial Intertech Corp., an
Ohio corporation, owned by such shareholder, hereby REVOKES any previously
executed Agent Designation requesting the call of a special meeting of
shareholders (the "Special Meeting") described in the Solicitation Statement of
United Dominion Industries Limited and Opus Acquisition Corporation dated July
24, 1996. THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU REVOKE ANY
PREVIOUSLY EXECUTED AGENT DESIGNATION REQUESTING THE CALL OF THE SPECIAL
MEETING BY PROPERLY SIGNING, DATING AND RETURNING THIS REVOCATION CARD.
PLEASE SIGN THIS REVOCATION
CARD EXACTLY AS YOUR NAME
APPEARS HEREON. IF SIGNING AS
ATTORNEY, ADMINISTRATOR,
EXECUTOR, GUARDIAN OR TRUSTEE,
PLEASE GIVE TITLE AS SUCH. IF A
CORPORATION, THIS SIGNATURE
SHOULD BE THAT OF AN AUTHORIZED
OFFICER WHO SHOULD STATE HIS OR
HER TITLE. IF A PARTNERSHIP,
SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
Date: , 1996
___________________________________________
Signature
___________________________________________
Signature if held jointly
<PAGE>
CONFIDENTIAL INSTRUCTIONS REVOCATION
TO: NATIONAL CITY BANK, N.E.
AS TRUSTEE ON BEHALF OF THE
EMPLOYEE SAVINGS AND STOCK PURCHASE PLAN
OF COMMERCIAL INTERTECH CORP.
("TRUSTEE")
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IN OPPOSITION TO THE SOLICITATION OF AGENT DESIGNATIONS BY UNITED DOMINION
INDUSTRIES LIMITED AND OPUS ACQUISITION CORPORATION
The undersigned hereby directs the Trustee to revoke any Agent Designation
requesting the call of a special meeting of shareholders (the "Special
Meeting") described in the Solicitation Statement of United Dominion Industries
Limited and Opus Acquisition Corporation dated July 24, 1996, previously
executed by the Trustee in accordance with instructions provided by the
undersigned with respect to Common Shares of Commercial Intertech Corp.
allocated to the undersigned's account under the plan.
THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU REVOKE ANY PREVIOUSLY
EXECUTED INSTRUCTION CARD DIRECTING THE TRUSTEE TO EXECUTE AN AGENT DESIGNATION
BY PROPERLY SIGNING, DATING AND RETURNING THIS INSTRUCTION CARD. THE TRUSTEE
MAKES NO RECOMMENDATION AS TO THIS MATTER.
PLEASE SIGN, DATE AND RETURN THIS INSTRUCTION CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS INSTRUCTION CARD WILL BE SEEN ONLY BY AUTHORIZED
PERSONNEL APPOINTED BY THE TRUSTEE.
______________________________ Date: ____________
Signature of Participant
_________________________________________________
Title
_________________________________________________
Social Security Number
NOTE: Please sign your name exactly as it
appears in print. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.
<PAGE>
CONFIDENTIAL INSTRUCTIONS REVOCATION
TO: NATIONAL CITY BANK, N.E.
AS TRUSTEE ON BEHALF OF THE
NON-QUALIFIED STOCK PURCHASE PLAN
OF COMMERCIAL INTERTECH CORP.
("TRUSTEE")
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IN OPPOSITION TO THE SOLICITATION OF AGENT DESIGNATIONS BY UNITED DOMINION
INDUSTRIES LIMITED AND OPUS ACQUISITION CORPORATION
The undersigned hereby directs the Trustee to revoke any Agent Designation
requesting the call of a special meeting of shareholders (the "Special
Meeting") described in the Solicitation Statement of United Dominion Industries
Limited and Opus Acquisition Corporation dated July 24, 1996, previously
executed by the Trustee in accordance with instructions provided by the
undersigned with respect to Common Shares of Commercial Intertech Corp.
allocated to the undersigned's account under the plan.
THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU REVOKE ANY PREVIOUSLY
EXECUTED INSTRUCTION CARD DIRECTING THE TRUSTEE TO EXECUTE AN AGENT DESIGNATION
BY PROPERLY SIGNING, DATING AND RETURNING THIS INSTRUCTION CARD. THE TRUSTEE
MAKES NO RECOMMENDATION AS TO THIS MATTER.
PLEASE SIGN, DATE AND RETURN THIS INSTRUCTION CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS INSTRUCTION CARD WILL BE SEEN ONLY BY AUTHORIZED
PERSONNEL APPOINTED BY THE TRUSTEE.
______________________________ Date: ____________
Signature of Participant
_________________________________________________
Title
_________________________________________________
Social Security Number
NOTE: Please sign your name exactly as it
appears in print. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.
<PAGE>
CONFIDENTIAL INSTRUCTIONS TO: LASALLE NATIONAL TRUST, N.A. REVOCATION
AS TRUSTEE ON BEHALF OF THE COMMERCIAL INTERTECH
EMPLOYEE STOCK OWNERSHIP PLAN
("TRUSTEE")
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IN OPPOSITION TO THE SOLICITATION OF AGENT DESIGNATIONS BY UNITED DOMINION
INDUSTRIES LIMITED AND OPUS ACQUISITION CORPORATION
The undersigned hereby directs the Trustee to revoke any Agent Designation
requesting the call of a special meeting of shareholders (the "Special
Meeting") described in the Solicitation Statement of United Dominion Industries
Limited and Opus Acquisition Corporation dated July 24, 1996, previously
executed by the Trustee in accordance with instructions provided by the
undersigned with respect to Common Shares of Commercial Intertech Corp.
allocated to the undersigned's account under the plan.
THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU REVOKE ANY PREVIOUSLY
EXECUTED INSTRUCTION CARD DIRECTING THE TRUSTEE TO EXECUTE AN AGENT DESIGNATION
BY PROPERLY SIGNING, DATING AND RETURNING THIS INSTRUCTION CARD. UNALLOCATED
SHARES WILL BE HANDLED BY THE TRUSTEE IN PROPORTION TO THE NUMBER OF SHARES
ASSOCIATED WITH RETURNED AGENT DESIGNATION CARDS (WHICH HAVE NOT BEEN REVOKED)
TO UNRETURNED AGENT DESIGNATION CARDS. THE TRUSTEE MAKES NO RECOMMENDATION AS
TO THIS MATTER.
PLEASE SIGN, DATE AND RETURN THIS INSTRUCTION CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS INSTRUCTION CARD WILL BE SEEN ONLY BY AUTHORIZED
PERSONNEL APPOINTED BY THE TRUSTEE.
_______________________________ Date: ____________
Signature of Participant
__________________________________________________
Title
__________________________________________________
Social Security Number
NOTE: Please sign your name exactly as it
appears in print. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.
<PAGE>
CONFIDENTIAL INSTRUCTIONS TO: LASALLE NATIONAL TRUST, N.A. REVOCATION
AS TRUSTEE ON BEHALF OF THE COMMERCIAL INTERTECH
RETIREMENT STOCK OWNERSHIP AND SAVINGS PLAN
("TRUSTEE")
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IN OPPOSITION TO THE SOLICITATION OF AGENT DESIGNATIONS BY UNITED DOMINION
INDUSTRIES LIMITED AND OPUS ACQUISITION CORPORATION
The undersigned hereby directs the Trustee to revoke any Agent Designation
requesting the call of a special meeting of shareholders (the "Special
Meeting") described in the Solicitation Statement of United Dominion Industries
Limited and Opus Acquisition Corporation dated July 24, 1996, previously
executed by the Trustee in accordance with instructions provided by the
undersigned with respect to Common Shares of Commercial Intertech Corp.
allocated to the undersigned's account under the plan.
THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU REVOKE ANY PREVIOUSLY
EXECUTED INSTRUCTION CARD DIRECTING THE TRUSTEE TO EXECUTE AN AGENT DESIGNATION
BY PROPERLY SIGNING, DATING AND RETURNING THIS INSTRUCTION CARD. UNALLOCATED
SHARES WILL BE HANDLED BY THE TRUSTEE IN PROPORTION TO THE NUMBER OF SHARES
ASSOCIATED WITH RETURNED AGENT DESIGNATION CARDS (WHICH HAVE NOT BEEN REVOKED)
TO UNRETURNED AGENT DESIGNATION CARDS. THE TRUSTEE MAKES NO RECOMMENDATION AS
TO THIS MATTER.
PLEASE SIGN, DATE AND RETURN THIS INSTRUCTION CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS INSTRUCTION CARD WILL BE SEEN ONLY BY AUTHORIZED
PERSONNEL APPOINTED BY THE TRUSTEE.
_______________________________ Date: ____________
Signature of Participant
__________________________________________________
Title
__________________________________________________
Social Security Number
NOTE: Please sign your name exactly as it appears in
print. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such.
