- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
GLEASON CORPORATION
(Name of Subject Company (Issuer))
TORQUE ACQUISITION CO., L.L.C.
(Bidder)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
377339106
(CUSIP Number of Class of Securities)
GLEASON CORPORATION
ATTN: EDWARD J. PELTA, ESQ.
VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
1000 UNIVERSITY AVENUE
P.O. BOX 22970
ROCHESTER, NEW YORK 14692
TELEPHONE:(716) 473-1000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
COPY TO:
BLAINE V. FOGG, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 735-3000
CALCULATION OF FILING FEE:
TRANSACTION VALUATION** Amount of Filing Fee
- -----------------------------------------------------------------------------
$193,509,856 $38,702
- -----------------------------------------------------------------------------
** Estimated for purposes of calculating the amount of the filing fee
only. The amount assumes the purchase of 8,413,472 shares of common
stock, par value $1.00 per share (the "Shares"), of Gleason
Corporation, a Delaware corporation (the "Company"), at a price of
$23.00 per Share in cash. As of November 30, 1999, there were
9,589,195 Shares issued and outstanding. Certain stockholders of the
Company, owning in the aggregate (1) 1,458,983 Shares and (2) 472,322
unexercised options to acquire Shares under various employee stock
option plans of the Company as of November 30, 1999, have agreed not
to tender their Shares (which in the aggregate total 1,931,305 Shares,
including Shares underlying options) pursuant to the Offer. Based on
the foregoing, the maximum number of Shares available to be tendered
pursuant to the Offer is 8,413,472 Shares, which is equal to the
number of Shares outstanding on a fully diluted basis as of November
30, 1999 less the aggregate number of Shares and options to acquire
Shares owned by the non-tendering stockholders. The amount of the
filing fee calculated in accordance with Rule 0-11 of the Securities
Exchange Act of 1934, as amended, equals 1/50th of one percent of the
value of the transaction.
|X| Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Amount previously paid: $38,702 Filing party: Torque Acquisition Co., L.L.C.
Form or registration no.: Schedule 14D-1 Date filed: December 15, 1999
- -----------------------------------------------------------------------------
</TABLE>
(Continued on following pages)
This Amendment No. 1 to the Tender Offer Statement on
Schedule 14D-1 amends and supplements the Tender Offer Statement on
Schedule 14D-1 originally filed on December 15, 1999 (the "Schedule 14D-1")
by Torque Acquisition Co., L.L.C. ("Acquisition Company"), a Delaware
limited liability company and a wholly owned subsidiary of Vestar Capital
Partners IV, L.P., relating to the joint tender offer by Acquisition
Company and Gleason Corporation, a Delaware corporation (the "Company"), to
purchase all of the outstanding shares of common stock, par value $1.00 per
share, of the Company (the "Common Stock"), together with the associated
preferred share purchase rights (the "Rights" and, together with the Common
Stock, the "Shares"), at a purchase price of $23.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated December 15, 1999, and
the related Letter of Transmittal. Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Schedule 14D-1.
Acquisition Company hereby amends and supplements the Schedule 14D-1 as
follows:
ITEM 10. ADDITIONAL INFORMATION.
Item 10(e) is hereby amended and supplemented as follows:
On December 14, 1999, two purported class action lawsuits,
each by a stockholder of the Company against the Company, Vestar Capital
Partners and each of the Company's directors, were filed in the Court of
Chancery of the State of Delaware in and for New Castle County, under the
captions Jaroslawicz v. Gleason Corporation, et al, C.A. No. 17663NC and
Rapkin v. Nichols, et al, C.A. No. 17672NC (collectively, the
"Complaints"). The Complaints, which are substantially similar to each
other, allege, among other things, that (i) the Merger represents an
improper attempt to eliminate the public stockholders of the Company to
permit the defendants to retain for themselves the Company's valuable
business and assets, (ii) the $23.00 per share price offered for the Common
Stock pursuant to the Transactions is grossly unfair and inadequate,
provides value below the fair value of the Company and was not the result
of arm's-length negotiations, (iii) the directors of the Company breached
their fiduciary duties to the stockholders of the Company and (iv) Vestar
Capital Partners knowingly aided and abetted the breaches of such fiduciary
duties. The Complaints seek, among other things, an order (i) certifying
that the lawsuits may be maintained as class actions, (ii) preliminarily
and permanently enjoining the consummation of the Merger, (iii) rescinding
the Merger, in the event the Merger is consummated, (iv) awarding to the
members of the purported class all damages caused to them, including as a
result of any profits or special benefits obtained by the defendants and
(v) awarding the named plaintiffs their costs, including counsel and expert
fees. The Company, the defendant directors and Acquisition Company believe
the Complaints are without merit and intend to defend the lawsuits
vigorously.
Copies of the Complaints are filed herewith as Exhibits
(g)(8) and (g)(9) and are incorporated herein by reference.
Item 10(f) is hereby amended and supplemented as follows:
The definitive copy of the Offer to Purchase which was
mailed to the Company's stockholders and filed with the Securities and
Exchange Commission on December 16, 1999 as Exhibit 21 to Amendment No. 1
to the Schedule 13D originally filed on December 9, 1999 by James S.
Gleason, Janis F. Gleason, David J. Burns, John J. Perrotti, John J.
Perrotti as Custodian for Jason Perrotti under the New York Uniform Gift to
Minors Act, John J. Perrotti as Custodian for Christine J. Perrotti under
the New York Uniform Gift to Minors Act, Edward J. Pelta, John W. Pysnack,
Gary J. Kimmet, the GST Exempt Trust for the benefit of James S. Gleason,
the Non Exempt Trust for the benefit of James S. Gleason and Acquisition
Company, contained an additional Precedent M&A Transaction in the section
of the Offer to Purchase captioned "SPECIAL FACTORS-Opinion of the Special
Committee's Financial Advisor-Precedent M&A Transactions Analysis."
A copy of such Offer to Purchase is filed herewith as
Exhibit (a)(9) and is incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
Item 11 is hereby amended and supplemented by the addition
of the following exhibits thereto:
(a)(9) Offer to Purchase, dated December 15, 1999, attached
as Exhibit 21 to Amendment No. 1 to the Schedule 13D
filed on December 16, 1999 and incorporated herein by
reference (supersedes prior Exhibit (a)(1) to the
Schedule 14D-1) .
(g)(8) Class Action Complaint filed by David Jaroslawicz on
December 14, 1999, in the action entitled
Jaroslawicz v. Gleason Corporation, et al, C.A. No.
17663NC (Court of Chancery of New Castle
County, Delaware).
(g)(9) Class Action Complaint filed by Isadore Rapkin on December
14, 1999, in the action entitled Rapkin
v. Nichols, et al, C.A. No. 17672NC (Court of Chancery of
New Castle County, Delaware).
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: December 17, 1999
TORQUE ACQUISITION CO., L.L.C.
By: /s/ SANDER M. LEVY
--------------------------
Name: Sander M. Levy
Title: President
EXHIBIT INDEX
EXHIBITS
(a)(1) Offer to Purchase, dated December 15, 1999, attached as
Exhibit 21 to Amendment No. 1 to the Schedule 13D filed on
December 16, 1999 and incorporated herein by reference
(supersedes prior Exhibit (a)(1) to the Schedule 14D-1).
(g)(8) Class Action Complaint filed by David Jaroslawicz on December
14, 1999, in the action entitled Jaroslawicz v. Gleason
Corporation, et al, C.A. No. 17663NC (Court of Chancery of New
Castle County, Delaware).
(g)(9) Class Action Complaint filed by Isadore Rapkin on December 14,
1999, in the action entitled Rapkin v. Nichols, et al, C.A.
No. 17672NC (Court of Chancery of New Castle County,
Delaware).
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - - - -x
DAVID JAROSLAWICZ : Civil Action No. 17663NC
Plaintiff, : CLASS ACTION COMPLAINT
-against- :
GLEASON CORPORATION, VESTAR CAPITAL :
PARTNERS, INC., JAMES S. GLEASON, DAVID
J. BURNS, ROBERT L. SMIALEK, J. DAVID :
CARTWRIGHT, MARTIN L. ANDERSON, JOHN W.
GUFFEY, JR., WILLIAM P. MONTAGUE, :
DONALD D. LENNOX, SILIAS L. NICHOLS and
JULIAN W. ATWATER :
Defendant. :
- - - - - - - - - - - - - - - - - - - -x
Plaintiff, individually and on behalf of all persons similarly
situated, alleges upon personal knowledge as to himself and his own acts
and as to all other matters upon information and belief, as follows:
THE PARTIES
1. Plaintiff has been the owner of shares of common stock of
defendant Gleason Corporation ("Gleason" or the "Company") and has owned
such shares continuously since prior to the wrongs complained of herein.
2. (a) Gleason is a corporation duly existing and organized
under the laws of the State of Delaware with its principal executive
offices located at 1000 University Avenue, P.O. Box 22970, Rochester, New
York. The Company is a world-wide leader in the development, manufacture
and sale of gear production machinery and related equipment for the
automotive, aerospace, agriculture, construction and marine industries.
(b) As of September 30, 1999, the Company had approximately
9,586,178 shares of common stock issued and outstanding. The Company's
common stock trades actively on the New York Exchange under the symbol
"GLE."
3. Defendant Vestar Capital Partners, Inc. ("Vestar") is an
investment banking firm specializing in management buy-outs and growth
capital investments, with offices located in New York, New York.
4. (a) Defendant James S. Gleason ("J. Gleason") is and was,
at all times relevant hereto, Chairman of the Board of Directors, President
and Chief Executive Officer of the Company and its wholly-owned subsidiary,
The Gleason Works ("GWR"). J. Gleason owns or controls approximately 15%
of the Company's outstanding shares of common stock.
(b) Defendant David J. Burns is an Executive Vice President
and a Director of the Company and owns or controls approximately 1% of the
Company's outstanding shares of common stock.
(c) Defendant Robert L. Smialek, J. David Cartwright,
Martin L. Anderson, John W. Guffey, Jr., William P. Montague, Donald D.
Lennox, Silias L. Nichols and Julian W. Atwater are and were, at all times
relevant hereto, Directors of the Company.
(d) The individual defendants referred to above are
collectively referred to herein as the "Director Defendants."
5. By reason of the Director Defendants' positions with the
Company, they are in a fiduciary relationship with plaintiff and the other
public shareholders of Gleason and thereby owe plaintiff and the other
public shareholders of Gleason the highest duties of good faith, fidelity,
fair dealing, due care, loyalty and full, candid and adequate disclosure.
6. Plaintiff brings this action on his own behalf and as a
class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on
behalf of all common shareholders of the Company or their successors in
interest, who are or will be threatened with the deprivation of their
equity interest in the Company by reason of defendants' actions as more
fully described herein (the "Class"). Excluded from the Class are
defendants herein and any person, firm, trust, corporation, or other entity
related to or affiliated with any of the defendants and/or their
predecessors or successors in interest.
7. This action is properly maintainable as a class action.
(a) The members of the Class are so numerous that joinder
of all members is impracticable. As of September 30, 1999, the Company had
approximately 9,586,178 shares of common stock issued and outstanding.
Upon information and belief, plaintiff believes that there are hundreds, if
not thousands, of members of the Class widely dispersed throughout the
United States.
(b) There are questions of law and fact which are common to
the Class and which predominate over questions affecting any individual
Class members, including, inter alia, the following: (i) whether
defendants have breached, or aided and abetted the breach of fiduciary and
other common law duties owed to plaintiff and the other members of the
Class; (ii) whether defendants are pursuing a scheme and course of business
designed to eliminate the public shareholders of Gleason in violation of
the law of the State of Delaware in order to enrich themselves at the
expense and detriment of plaintiff and members of the Class; (iii) whether
defendants engaged or will engage in conduct constituting unfair dealing to
the detriment of plaintiff and members of the Class; (iv) whether the terms
of the proposed merger are grossly unfair to the public shareholders of
Gleason; and (v) whether plaintiff and the other members of the Class are
entitled to injunctive relief or damages as a result of defendants'
wrongful conduct complained of herein.
(c) Plaintiff will fairly and adequately protect the
interests of the members of the Class and has retained counsel competent
and experienced in class action litigation. Plaintiff has no interests
antagonistic to, nor in conflict with, the Class that plaintiff seeks to
represent;
(d) Plaintiff's claims are typical of the claims of the
members of the Class and plaintiff has the same interests as the other
members of the Class;
(e) Defendants have acted in a manner which similarly
affects plaintiff and all members of the Class, thereby making appropriate
injunctive relief and/or corresponding declaratory relief with respect to
the Class as a whole;
(f) A class action is superior to any other available
methods for the fair and efficient adjudication of the claims asserted
herein, because joinder of all members is impracticable. Furthermore,
since the damages suffered by the individual Class members may be
relatively small, the expense and burden of individual litigation make it
virtually impossible for the Class members to redress the wrongs done to
them. The likelihood of individual Class members prosecuting separate
claims is remote; and
(g) Plaintiff anticipates no unusual difficulties in the
management of this action as a class action.
SUBSTANTIVE ALLEGATIONS
8. On December 9, 1999, the Company announced that it had
entered into a definitive merger agreement providing for the purchase of
all the outstanding common shares of Gleason by J. Gleason, Gleason senior
management and Vestar (the "Acquiring Persons") for $23 per share in cash
(the "proposed merger"). The proposed merger was unanimously approved by
the Director Defendants based upon the unanimous recommendation of a
Special Committee of Gleason's Board of Directors whose members included
defendants Smialek, Guffey and Montague. The Company and a newly formed
company controlled by Vestar will commence a joint tender offer to purchase
all of the Company's outstanding shares of common stock for $23 per share
in cash on December 15, 1999.
9. The proposed merger represents an improper attempt to
eliminate the public shareholders of Gleason to permit the Acquiring
Persons to retain for themselves Gleason's valuable business and assets.
Indeed, the price of the Company's common stock has recently declined
substantially as a result of a temporary decline in U.S. demand for
metalworking machinery. The Company, however, expects that sales and
operating income will be higher in the fourth quarter of 1999 compared to
each of the prior three quarters because machine shipments are frequently
the highest in the fourth quarter as many customers request delivery prior
to the fiscal year-end. Defendants are thereby attempting to take
advantage of this temporary decline in Gleason's common share price to
purchase the Company at a wholly unfair and inadequate price to the
detriment of plaintiff and the members of the Class.
10. The terms offered to plaintiff and the Class pursuant to the
proposed merger are unconscionable, unfair and grossly inadequate because,
among other things: (a) the proposed merger unfairly undervalues Gleason's
business, operations and assets, particularly in light of the Company's
future prospects for continued growth and profitability; (b) the $23 per
share offer price is wholly unfair and offers an inadequate premium to
Gleason's public shareholders over the then-market price of Gleason's
common stock; and (c) the $23 offer price is not the result of arm's length
negotiations or the result of a third-party bidding process, but an amount
fixed arbitrarily by the Acquiring Persons to "cap" the market price of
Gleason's common stock. The aforesaid proposal is in furtherance of a plan
and scheme which, if its consummation is not enjoined, will result in
forcing Gleason's public shareholders to exchange their investment in the
Company for grossly unfair and inadequate consideration.
11. It is clear that Gleason's management, and concomitantly the
Acquiring Persons, believe the Company to be poised for further continued
growth. The announcement of the proposed merger is timed to "cap" the
market price for Gleason's stock so that the market price will not
appreciate as a result of Gleason's favorable prospects, as hereinabove
described. Following consummation of the proposed merger, only the
Acquiring Persons will be in a position to take advantage of Gleason's
future profitability and growth which was funded in large part by Gleason's
resources.
12. Because the Acquiring Persons and the Director Defendants
are in possession of corporate information concerning Gleason's future
business and financial prospects, the degree of knowledge and economic
power between defendants and the Class is unequal, making it grossly and
inherently unfair for defendants to obtain ownership of Gleason's assets
from the public common shareholders at the unfair and inadequate price
which defendants have unilaterally and arbitrarily set.
13. By offering a grossly unfair and inadequate price for
Gleason's common shares, and failing to provide full and adequate
disclosure of all material facts concerning Gleason and the terms of the
proposed merger, defendants are seeking to force Gleason's public
shareholders to approve the proposed merger, and have violated their
fiduciary duties to treat the public shareholders of Gleason with the
highest degrees of good faith, fidelity, fair dealing, due care, loyalty
and full, candid and adequate disclosure.
14. By reason of the foregoing, defendants have breached and
continue to breach their fiduciary duties to plaintiff and members of the
Class and are engaging in improper overreaching and wrongful and coercive
conduct in attempting to carry out the proposed merger. The terms of the
proposed merger do not meet the test of entire fairness.
15. By reason of the foregoing, the Director Defendants have
violated their fiduciary duties to plaintiff and the Class.
16. Plaintiff and the Class will suffer irreparable damage
unless defendants are enjoined from breaching their fiduciary duties and
from carrying out the aforesaid plan and scheme to cash out the public
shareholders for the grossly unfair and inadequate price of $23 per share.
17. Vestar knowingly aided and abetted the breaches of fiduciary
duty complained of herein. The proposed merger could not be consummated
without the knowing and voluntary participation of Vestar.
18. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. declaring this action to be a proper class action and
certifying plaintiff as Class representative and the
undersigned counsel as Class counsel;
B. enjoining, preliminarily and permanently, the proposed
merger under the terms presently proposed and requiring
defendants to make full and fair disclosure of all material
facts to the Class;
C. to the extent, if any, that the proposed merger is
consummated prior to the entry of this Court's final
judgment, rescinding such transaction or transactions,
and/or granting, inter alia, rescisorry damages;
D. directing that defendants account to plaintiff and the Class
for all damages caused to them and account for all profits
and any special benefits obtained by defendants as a result
of their unlawful conduct;
E. awarding to plaintiff the costs and disbursements of this
class action, including a reasonable allowance for the fees
and expenses of plaintiff's attorneys and experts; and
F. granting plaintiff and the Class such other and further
relief as may be just and proper in the circumstances.
ROSENTHAL, MONHAIT GROSS
& GODDESS, P.A.
By______________________________
Mellon Bank Center, Suite 1401
P.O. Box 1070
Wilmington, DE 19801
(302) 656-4433
OF COUNSEL:
LOWEY DANNENBERG BEMPORAD
& SELINGER, P.C.
Richard Bemporad, Esq.
Vincent Briganti, Esq.
The Gateway, 11th Floor
One North Lexington Avenue
White Plains, NY 10601-1714
(914) 997-0500
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
_______________________________________x
ISADORE RAPKIN, :
:
Plaintiff, : C.A. No. 17672NC
:
- against - :
:
SILAS L. NICHOLS, ROBERT L. :
SMIALEK, DAVID J. BURNS, J. DAVID : CLASS ACTION COMPLAINT
CARTWRIGHT, JAMES S. GLEASON, :
MARTIN L. ANDERSON, JOHN W. :
GUFFEY, JR., WILLIAM P. MONTAGUE, :
GLEASON CORPORATION and :
VESTAR CAPITAL PARTNERS, INC. :
:
Defendants. :
_______________________________________x
Plaintiff, alleges upon information and belief, except for
paragraph 2 hereof, which is alleged upon personal knowledge, as follows:
1. Plaintiff brings this action pursuant to Rule 23 of the
Rules of the Court of Chancery individually and as a class action on behalf
of all persons, other than defendants and those in privity with them, who
own the common stock of Gleason Corporation ("Gleason Corp." or the
"Company").
2. Plaintiff has been the owner of the common stock of the
Company since prior to the transaction herein complained of and
continuously to date.
3. Gleason Corp. is a corporation duly organized and existing
under the laws of the State of Delaware. The Company is a world leader in
the manufacture of gear production machinery and related equipment. The
Company maintains its principal offices at 1000 University Avenue,
Rochester, New York.
4. Defendant Vestar Capital Partners, Inc. ("Vestar") is a New
York based investment firm which manages more than $1 billion in equity
capital and specializes in management buyouts and growth capital
investments.
5. Defendant James S. Gleason ("J. Gleason") is Chairman of the
Board, President and Chief Executive Officer of the Company and owns or
controls 15% of the Company's outstanding common stock.
6. Defendant David J. Burns is an Executive Vice President and
a Director of the Company.
7. Defendants Silas S. Nichols, Robert L. Smialek, J. David
Cartwright, Martin L. Anderson, John W. Guffey, Jr., and William P.
Montague are Directors of the Company.
8. The individual defendants, by reason of their corporate
directorships and executive positions, stand in a fiduciary position
relative to the Company's public shareholders, whose fiduciary duties, at
all times relevant herein, required them to exercise their best judgment,
and to act in a prudent manner, and in the best interest of the Company's
shareholders. Said defendants owed the public shareholders of Gleason Corp.
the highest duty of good faith, fair dealing, due care, loyalty, and full,
candid and adequate disclosure.
CLASS ACTION ALLEGATIONS
9. Plaintiff brings this action on his own behalf and as a
class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on
behalf of all security holders of the Company (except the defendants herein
and any person, firm, trust, corporation, or other entity related to or
affiliated with any of the defendants) and their successors in interest,
who are or will be threatened with injury arising from defendants' actions
as more fully described herein (the "Class").
10. This action is properly maintainable as a class action.
(a) The Class is so numerous that joinder of all members
is impracticable. As of March 11, 1999, there were approximately 9,608,135
shares of Gleason Corp. common stock outstanding, owned by shareholders
throughout the country.
(b) There are questions of law and fact which are common
to the Class, including, inter alia, the following: (i) whether defendants
have breached their fiduciary and other common law duties owed by them to
plaintiff and the members of the Class; (ii) whether defendants are
pursuing a scheme and course of business designed to eliminate the public
securities holders of Gleason Corp. in violation of the laws of the State
of Delaware in order to enrich themselves at the expense and to the
detriment of the plaintiff and the Class; (iii) whether the said proposed
acquisition, hereinafter described, constitutes a breach of the duty of
fair dealing with respect to the plaintiff and the other members of the
Class; and, (iv) whether the Class is entitled to injunctive relief or
damages as a result of the wrongful conduct committed by defendants.
(c) Plaintiff is committed to prosecuting this action and
has retained competent counsel experienced in litigation of this nature.
The claims of the plaintiff are typical of the claims of other members of
the Class and plaintiff has the same interests as the other members of the
Class. Plaintiff will fairly and adequately represent the Class. A class
action is superior to any other type of adjudication of this controversy.
11. Defendants have acted in a manner which similarly affects
plaintiff and all members of the Class, thereby making appropriate
injunctive relief and/or corresponding declaratory relief with respect to
the Class as a whole.
12. The prosecution of separate actions by individual members
of the Class would create a risk of inconsistent or varying adjudications
with respect to individual members of the Class, which would establish
incompatible standards of conduct for defendants, or adjudications with
respect to individual members of the Class which would, as a practical
matter, be dispositive of the interests of other Class members or
substantially impair or impede their ability to protect their interests.
SUBSTANTIVE ALLEGATIONS
13. On December 9, 1999, the Company announced that it had
entered into a definitive merger agreement to be acquired by the management
of Gleason Corp. and Vestar (hereinafter collectively the "Vestar Group")
whereby the Vestar Group will purchase all of the Company's outstanding
common stock held by the public for $23 per share (the "proposed merger").
The proposed merger was unanimously approved by the Company's board of
directors. Defendants expect to commence a joint tender offer for all of
the Company's outstanding shares on December 15, 1999.
14. The proposed merger represents an improper attempt to
eliminate the public shareholders of Gleason Corp. to permit defendants to
retain for themselves Gleason Corp.'s valuable business and assets. Indeed,
the Company's shares have recently dropped significantly due to a temporary
decline in U.S. demand for metalworking equipment. Defendants are
attempting to take advantage of this decline in Gleason Corp.'s stock price
to buy the Company at an inadequate price.
15. The price of $23 per share to be paid to the Class members
is unconscionable, unfair and grossly inadequate consideration because,
among other things: (a) the intrinsic value of the stock of Gleason Corp.
is materially in excess of $23 per share, giving due consideration to the
possibilities of growth and profitability of Gleason Corp. in light of its
business, earnings and earnings power, present and future; (b) the $23 per
share price is inadequate and offers an inadequate premium to the public
stockholders of Gleason Corp.; and (c) the $23 per share price is not the
result of arm's length negotiations but was fixed arbitrarily by Vestar
Group to "cap" the market price of Gleason Corp. stock, as part of a plan
for defendants to obtain complete ownership of Gleason Corp.'s assets and
business at the lowest possible price.
16. The proposed bid serves no legitimate business purpose of
Gleason Corp. but rather is an attempt by defendants to unfairly benefit
themselves from the transaction at the expense of Gleason Corp.'s public
stockholders. The proposed plan will, for a grossly inadequate
consideration, deny plaintiff and the other members of the Class their
right to share proportionately in the future success of Gleason Corp. and
its valuable assets, while permitting Vestar Group to reap huge benefits
from the transaction.
17. By reason of the foregoing, the individual defendants have
violated their fiduciary duties to plaintiff and the Class.
18. Plaintiff and the Class have suffered and will suffer
irreparable damage unless defendants are enjoined from breaching their
fiduciary duties and from carrying out the aforesaid plan and scheme.
19. Vestar Capital knowingly aided and abetted the breaches of
fiduciary duty by the individual defendants. The proposed transaction could
not take place without the knowing participation of Vestar Capital.
20. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. declaring this action to be a class action and
certifying plaintiff as Class representative;
B. enjoining, preliminary and permanently, the
consummation of the proposed merger;
C. to the extent, if any, that the proposed merger is
consummated prior to the entry of this Court's
final judgment, rescinding the transaction, and/or
granting, inter alia, rescissory damages;
D. directing that defendants account to plaintiff and
the Class for all damages caused to them and
account for all profits and any special benefits
obtained by defendants as a result of their
unlawful conduct;
E. awarding plaintiff the costs and disbursements of
this action, including a reasonable allowance for
the fees and expenses of plaintiff's attorneys and
experts, and
F. granting plaintiff such other and further relief as
may be just and proper in the circumstances.
Dated: December 14, 1999
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:_____________________________
P.O. Box 1070
919 N. Market Street
Suite 1401
Mellon Bank Center
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
STULL, STULL & BRODY
6 East 45th Street
New York, NY 10017
(212) 687-7230
