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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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MOORCO INTERNATIONAL INC.
(NAME OF SUBJECT COMPANY)
MOORCO INTERNATIONAL INC.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(AND ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
61559L100
(CUSIP NUMBER OF CLASS OF SECURITIES)
JAMES J. NELSON, ESQ.
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
MOORCO INTERNATIONAL INC.
2800 POST OAK BOULEVARD, SUITE 5701
HOUSTON, TEXAS 77056-6111
(713) 993-0999
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING STATEMENT)
COPY TO:
DANIEL A. NEFF, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 403-1000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Moorco International Inc. (the "Company"
or "Moorco"). The address of the principal executive offices of the Company is
2800 Post Oak Boulevard, Suite 5701, Houston, Texas 77056-6111. The title of the
class of equity securities to which this statement relates is the Company's
Common Stock, par value $.01 per share (the "Common Stock"), and the associated
Preferred Stock Purchase Rights (the "Rights").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer by MII Acquisition Corp.
("MII"), a wholly-owned subsidiary of FMC Corporation ("FMC"), to purchase all
outstanding Common Stock, and associated Rights, at $20.00 per share, net to the
seller in cash, on the terms and subject to the conditions set forth in the
Offer to Purchase, dated May 5, 1995, and in the related Letter of Transmittal
(which together constitute the "FMC Offer"). The FMC Offer is disclosed in a
Tender Offer Statement on Schedule 14D-1, dated May 5, 1995, as amended by
Amendment No. 1, dated May 5, 1995, Amendment No. 2, dated May 8, 1995, and
Amendment No. 3, dated May 12, 1995 (as so amended, the "Schedule 14D-1"), as
filed with the Securities and Exchange Commission (the "Commission"). The Offer
to Purchase states that the principal executive offices of MII and FMC are
located at 200 East Randolph Drive, Chicago, Illinois 60601.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b) Except as described herein or in Annex A hereto, to the knowledge of
the Company, as of the date hereof, there are no material contracts, agreements,
arrangements or understandings, or any actual or potential conflicts of
interest, between the Company or its affiliates and (i) the Company, its
executive officers, directors or affiliates, or (ii) FMC, MII or their executive
officers, directors or affiliates.
Certain contracts, agreements, arrangements and understandings between the
Company and certain of its executive officers, directors and affiliates are
described in Annex A hereto, which description is incorporated herein by
reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Company's Board of Directors (the "Board") met on April 25 and 26,
1995 to consider a proposal by FMC to acquire the Company for $20.00 per share
in cash, as set forth in a letter from FMC dated April 3, 1995 (the "FMC
Proposal"), and met on May 18 and 19, 1995 regarding the FMC Offer and related
matters. During those meetings, the Board considered the Company's business,
financial condition, current business strategy and future prospects, recent and
historical market prices for the Common Stock, the terms and conditions of and
potential alternatives to the FMC Offer (at the May meeting) and the terms and
conditions of the FMC Proposal (at the April meeting), and other matters,
including presentations by management and the Company's legal and financial
advisors. At the meeting on April 26, the consensus of the Board was that the
FMC Proposal was inadequate and not in the best interests of the Company or its
stockholders. At the May 19, 1995 meeting, the Board unanimously determined that
the FMC Offer is inadequate and not in the best interests of the Company and its
stockholders. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
REJECT THE FMC OFFER AND NOT TENDER ANY OF THEIR SHARES OF COMMON STOCK OR
RIGHTS PURSUANT THERETO. In response to a request from FMC, the Board, at the
May 19, 1995 meeting, unanimously declined to make Section 203 of the Delaware
General Corporation Law (the "Delaware Law") inapplicable to the FMC Offer or
FMC's proposed second-step merger. Also at the May 19, 1995 meeting, the Board
unanimously determined not to redeem the Rights at this time and has deferred
the date that the Rights will separate from the Common Stock. See Item 8.
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A copy of the letter to the Company's stockholders communicating the
Board's recommendation and the press release relating thereto are filed as
Exhibits 6 and 7 to this Schedule and are incorporated herein by reference.
(b) In reaching the conclusions and recommendations described in Item 4(a)
above, the Board considered a number of factors, including without limitation
the following:
(i) The Company's business, financial condition, results of
operations, current business strategy and future prospects, the nature of
the markets in which the Company operates, including their attractive
growth prospects, the Company's position in such markets and the historical
and current market prices for the Common Stock;
(ii) Presentations by the Company's management relating to the
Company's financial performance and future prospects and the opinion of the
Company's management that the proposed consideration in the FMC Offer is
inadequate;
(iii) Presentations by Salomon Brothers Inc ("Salomon"), financial
advisor to the Company, concerning the Company and the financial aspects of
the FMC Proposal and the FMC Offer;
(iv) The written opinion of Salomon that as of the date of such
opinion the price of $20.00 per share of Common Stock being offered to the
stockholders of the Company (other than FMC) pursuant to the FMC Offer is
inadequate, from a financial point of view, to such stockholders (a copy of
such opinion setting forth assumptions made and matters considered and
limitations set forth by Salomon is included as Annex B hereto and should
be read in its entirety);
(v) The Board's belief, based in part on the factors referred to in
paragraphs (i) through (iv) above, that the per share price of the FMC
Offer does not reflect the current value inherent in the Company or the
long-term value achievable by the Company as an independent entity, and
that stockholders' interests would be best served if the Company were to
actively explore alternatives to maximize stockholder value;
(vi) The significant conditionality of the FMC Offer. Such tender
offer is conditioned, among other things, on the following: (A) there being
tendered and not withdrawn a number of shares of Common Stock which
represents at least a majority of the shares outstanding on a fully diluted
basis, (B) the Company redeeming the Rights or FMC otherwise being
satisfied that the Rights are invalid or inapplicable to the FMC Offer and
FMC's proposed second-step merger, (C) FMC being satisfied that after
consummation of the FMC Offer, the restrictions on "Business Combinations"
contained in Section 203 of the Delaware Law will not apply to FMC's
proposed second-step merger, (D) there being no significant adverse change
in the market price of the Common Stock or generally in securities or
financial markets in the United States or abroad, including, without
limitation, a decline of at least 15% in either the Dow Jones Average of
Industrial Stocks or the Standard & Poor's 500 Index from that existing at
the close of business on May 4, 1995, and (E) a considerable number of
further conditions which are subject to FMC's sole judgment or permit
termination of the FMC Offer for developments which the Company considers
immaterial. Although the FMC Offer is not by its terms subject to a
financing condition, the cumulative effect of all of the FMC Offer's
conditions is an offer which the Board viewed as significantly conditional;
and
(vii) The advice by the Company's independent counsel that significant
legal issues exist with respect to the conduct of FMC in seeking and
obtaining information from employees of the Company prior to the delivery
of the FMC Proposal and commencement of the FMC Offer; in this connection,
the Company has commenced litigation against FMC (see Item 8).
The foregoing discussion of the information and factors considered and
given weight by the Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the FMC
Offer, the Board did not find it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors considered in reaching
its determination. In addition, individual members of the Board may have given
different weights to different factors.
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ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has retained Salomon as its financial advisor with respect to
the FMC Offer and other matters arising in connection therewith, including
assisting the Company in exploring alternatives in light of the FMC Proposal and
the FMC Offer. Pursuant to the agreement between the Company and Salomon dated
April 3, 1995, the Company has paid Salomon a financial advisory fee of
$150,000. The Company has also agreed to pay Salomon during the term of the
agreement (i) a fee of $500,000 upon the Company's signing of a definitive
agreement relating to a Combination Transaction (as hereinafter defined) and
(ii) upon consummation of a Combination Transaction, a fee of 1% of the
Aggregate Consideration (as hereinafter defined) up to $20.00 per share of
Common Stock, plus 1.75% of the Aggregate Consideration in excess of $20.00 per
share of Common Stock (less $650,000 to the extent previously paid). The Company
and Salomon have also agreed that: (i) if the Company pursues an Alternative
Transaction (as hereinafter defined), the Company and Salomon will agree upon an
engagement letter containing customary provisions and terms and providing for
customary fees, the exact amounts to be mutually agreed upon; and (ii) if no
Combination Transaction has been consummated prior to April 3, 1996, Salomon and
the Company shall agree upon an additional fee which shall be negotiated based
on the Aggregate Consideration that would have been paid pursuant to the FMC
Proposal had such proposal been accepted. "Aggregate Consideration" is defined
as the total amount of cash and the fair market value (on the date of payment,
assuming full distribution as of such date in the case of securities) of all
other property paid or payable, directly or indirectly, to or by the Company or
its security holders in connection with a Combination Transaction or a
transaction related thereto (including, without limitation, amounts paid by or
on behalf of the Company or a third party to holders of any warrants, stock
purchase rights or convertible securities of the Company and to holders of any
options or stock appreciation rights issued by the Company, whether or not
vested) and including the fair market value (assuming full distribution as of
such date in the case of securities) of any securities retained by the Company's
security holders in connection with a Combination Transaction. A "Combination
Transaction" is defined as an acquisition of or business combination involving
the Company, or relating to the acquisition of all or any significant portion of
the Company's assets or more than 15% of the Company's equity or voting
securities, directly or indirectly, by any person, corporation or other business
entity, including FMC, which transaction might take the form of a merger, tender
offer, stock sale, asset sale or otherwise (and which includes the transaction
contemplated by the FMC Proposal and the FMC Offer). An "Alternative
Transaction" is defined as a transaction which is not a Combination Transaction.
Salomon's engagement may be terminated by either the Company or Salomon at any
time, with or without cause; provided, however, if the Company terminates
Salomon's engagement other than for cause, or Salomon terminates Salomon's
engagement because of the Company's breach of the terms of the engagement
letter, Salomon nevertheless will be entitled to the full fees described above
under the circumstances relating to April 3, 1996 or in the event that at any
time prior to the expiration of one year after such termination a Combination
Transaction or Alternative Transaction is entered into involving a strategy or
party identified to the Company by Salomon or as to which or whom Salomon
advised the Company hereunder (including, without limitation, FMC) or with whom
the Company had discussions regarding a Combination Transaction or Alternative
Transaction during the term of Salomon's engagement.
The Company also has agreed to reimburse Salomon for its reasonable
out-of-pocket expenses and to indemnify it against certain expenses and
liabilities if incurred in connection with its engagement, including liabilities
arising under the federal securities laws.
The Company has retained MacKenzie Partners, Inc. ("MacKenzie") to assist
the Company in connection with its communication with its stockholders with
respect to, and to provide other services to the Company in connection with, the
FMC Offer. MacKenzie will receive reasonable and customary compensation for its
services and reimbursement of out-of-pocket expenses in connection therewith.
Except as described above, neither the Company, nor any person acting on
its behalf, currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to stockholders on its behalf
concerning the FMC Offer.
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ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the knowledge of the Company, no transactions in Common Stock have
been effected within the past 60 days by the Company or any executive officer,
director, affiliate or subsidiary of the Company.
(b) To the knowledge of the Company, its executive officers, directors,
affiliates and subsidiaries do not presently intend to tender, pursuant to the
FMC Offer, any shares of Common Stock which are held of record or are
beneficially owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a)-(b) At the meetings on April 25 and 26, and May 18 and 19, 1995, the
Board of Directors considered and reviewed the feasibility and desirability of
exploring a variety of possible alternative transactions to the FMC Offer. As
stated in Item 4(b) above, the Board believes, based on the factors referred to
therein, that the per share price of the FMC Offer does not reflect the current
value inherent in the Company or the long-term value achievable by the Company
as an independent entity, and that the interests of the Company's stockholders
would be best served if the Company were to actively explore alternatives to
maximize stockholder value. As an alternative to the FMC Offer, the Company may
undertake negotiations which relate to or could result in (i) sale of the
Company, (ii) a purchase, sale or transfer of a material amount of assets by the
Company or any of its subsidiaries or a sale or issuance of voting stock, rights
or other securities of the Company or any of its subsidiaries, (iii) a tender or
exchange offer for, or open market or privately negotiated purchases or other
acquisitions of securities by or of, the Company, (iv) a material change in the
present capitalization of the Company, or (v) a business combination or joint
venture involving the Company or any of its subsidiaries. In this connection,
the Company is in preliminary stages of discussion or negotiation with a number
of parties concerning a possible extraordinary transaction involving the
Company, having entered into confidentiality and standstill agreements
concerning the furnishing of confidential information to parties indicating an
interest in such a transaction, furnished confidential information to such
parties, and responded to their due diligence inquiries.
The Board has determined that disclosure at this time with respect to these
possible transactions or the parties thereto, and the possible terms of any
other transactions or proposals of the type referred to above in this Item 7,
might jeopardize the continuation or institution of any discussions or
negotiations that the Company may conduct. Accordingly, the Board, on May 19,
1995, adopted a resolution instructing management not to disclose the possible
terms of any such transactions or proposals, or the parties thereto, unless and
until an agreement in principle relating thereto has been reached.
There can be no assurance that any of the foregoing will result in any
transaction being recommended to the Board or that any transaction that may be
recommended will be authorized or consummated, or that a transaction other than
those described herein will not be proposed, authorized or consummated. The
initiation or continuation of any of the foregoing may also be dependent upon
the future actions of FMC with respect to the FMC Offer. The proposal,
authorization, announcement or consummation of any transaction of the type
referred to in this Item 7 could adversely affect or result in withdrawal of the
FMC Offer.
On May 1, 1995, in discussions between the chief executive officers of the
Company and FMC, the Company offered to engage in a process seeking the
maximization of value for the Company's stockholders if FMC would enter into a
reasonable confidentiality and standstill agreement with the Company. The form
of agreement which the Company provided to FMC on May 1 contains the same terms
as the confidentiality and standstill agreements which the Company has entered
into with other third parties, except that the agreements with the other third
parties contain a two-year restriction on control-related activities while the
restriction period the Company proposed to FMC is one year. Although FMC and
representatives of FMC indicated disagreement with certain provisions of the
confidentiality agreement proffered by the Company, on May 2 and 3, 1995
representatives of the Company engaged in substantive discussions with
representatives of FMC regarding the terms of an acceptable form of
confidentiality agreement. In these discussions, the Company's representatives
offered to include a number of additional provisions in the draft
confidentiality agreement to provide FMC assurance that the process to be
pursued by the Company would be fair and would be designed to produce the best
transaction achievable for the Company's stockholders. Among other matters, the
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Company offered to commit contractually to run a fair process and that FMC would
be a full participant in that process if FMC were to sign. The Company offered
to provide that all limitations on FMC would cease if the Company failed to
enter into a definitive agreement for a transaction within a period of months,
which period was to be negotiated, or if the Company's process were to terminate
for any reason. However, FMC was unwilling to execute a confidentiality and
standstill agreement containing terms which the Company considers to be
reasonable and which would enable the Company's Board to conduct and manage a
process designed to obtain the most attractive transaction for the Company's
stockholders. The Company believes FMC's unwillingness to execute a reasonable
confidentiality agreement reflects FMC's desire to inhibit the Board's ability
to conduct a process which is designed to achieve the most attractive
transaction for the Company's stockholders. The Company believes that the
commencement of the FMC Offer while the Company's representatives were seeking
to negotiate a confidentiality agreement with FMC is consistent with this desire
on the part of FMC.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Litigation. Moorco International Inc. v. FMC Corp. On May 5, 1995, the
Company commenced an action against FMC in the District Court of Nueces County,
Texas, 214th Judicial District (the "Texas Court"), entitled Moorco
International Inc. v. FMC Corp., No. 95-2595-F (the "Texas Action"). The
complaint in the Texas Action alleges that FMC fraudulently obtained
confidential information from the Company as part of FMC's effort to determine
whether to make a bid for the Company and what price to offer. Specifically, the
complaint in the Texas Action alleges that two employees of an FMC subsidiary
(Kongsberg Offshore A/S) sought and were given tours of Company plants in Erie,
Pennsylvania and Corpus Christi, Texas in January 1995, during which the FMC
representatives received nonpublic information about the Company and its
operations, including information about the Company's current business,
revenues, productivity, marketing strategies, costs of doing business, new
product development, and manufacturing techniques and processes. The complaint
further alleges that the information provided during the tours was provided in
reliance on the FMC representatives' fraudulent representation that they sought
the information solely for the purpose of establishing a customer/supplier
relationship with the Company.
The Company seeks, among other relief, a preliminary and permanent
injunction enjoining FMC to (i) withdraw the FMC Offer for the Company and enter
into the confidentiality and standstill agreement that had been offered by the
Company to FMC; (ii) refrain from utilizing the confidential information it
obtained during the plant tours in aid of or preparation for any offer to
purchase the Company; (iii) refrain from utilizing the confidential information
in assisting or encouraging any other bid or offer for the Company by any
entity; (iv) turn over to the Company all records, reports, notes or other
documents recording, analyzing, referring to or otherwise reflecting any
information obtained by FMC from the tours of the Company's plants; and (v) turn
over to the Company all nonpublic documents created by or on behalf of the
Company received from any source.
On May 11, 1995, the Texas Court stayed the Texas Action pending
disposition of a lawsuit commenced by FMC and MII against the Company and its
directors in the Court of Chancery of the State of Delaware, New Castle County
(the "Delaware Chancery Court"), entitled FMC Corporation, et al. v. Moorco
International Inc., et al., Del. Ch., C.A. No. 14285. The Texas Court stated in
its order staying the Texas Action that it would reconsider the stay under
certain circumstances. On May 15, 1995, the Company moved for reconsideration of
the order staying the Texas Action. A hearing with respect to the Company's
motion for reconsideration has been scheduled for Monday, May 22, 1995.
Copies of the Company's complaint and the Texas Court's order dated May 11,
1995 are filed as Exhibits 8 and 9 to this Schedule and are incorporated by
reference herein; the foregoing description is qualified in its entirety by
reference to such Exhibits.
FMC Corporation, et al. v. Moorco International Inc., et al. On May 5,
1995, FMC and MII commenced an action against the Company and its directors in
the Delaware Chancery Court, entitled FMC Corporation, et al. v. Moorco
International Inc., et al., Del. Ch., C.A. No. 14285 (the "Delaware State
Action"). The complaint in the Delaware State Action alleges that the Company
has demanded that FMC
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enter into a confidentiality and standstill agreement as a precondition to FMC's
participation in any process for the sale of the Company, and that such demand
is not made for legitimate purposes. The complaint in the Delaware State Action
further alleges that the Company's adoption of a shareholder rights plan
unreasonably precludes FMC from consummating the FMC Offer for the Company. The
complaint also alleges that the Company has advised FMC that the Company may
institute a process leading to the sale of the Company or to another
"extraordinary transaction," and that the Company will exclude FMC from that
process unless FMC executes a standstill agreement. The complaint alleges that
the Company has unlawfully refused to negotiate with FMC unless FMC executes the
requested standstill agreement. The complaint alleges that the Company's alleged
threatened exclusion of FMC from a sale process and refusal to negotiate with
FMC are breaches of fiduciary duty.
As relief, the complaint in the Delaware State Action seeks (i) a
declaratory judgment that the Company and its directors have breached their
fiduciary duties by delaying negotiations, refusing to negotiate actively with
FMC and threatening to exclude FMC from any process for the sale of the Company;
(ii) an order enjoining the Company and its directors to negotiate with FMC and
to not exclude FMC from any process instituted by the Company that may lead to
an "extraordinary transaction" involving the Company; (iii) an order enjoining
the Company, its directors and certain other persons associated with the Company
from taking any action to effectuate the shareholder rights plan and ordering
the Company's directors to redeem the Rights; and (iv) an order enjoining the
Company and its directors from bringing litigation in any other forum based on
or relating to the facts alleged in the complaint in the Delaware State Action.
The complaint filed in the Delaware State Action is included as Exhibit 10
to this Schedule and is incorporated by reference herein; the foregoing
description is qualified in its entirety by reference to such Exhibit.
FMC Corporation, et al. v. Moorco International Inc. On May 8, 1995, FMC
and MII commenced a declaratory judgment action against the Company in the
United States District Court for the District of Delaware, entitled FMC
Corporation, et al. v. Moorco International Inc., D. Del., C.A. No. 95-285 (the
"Delaware Federal Action"). The complaint in the Delaware Federal Action, which
was amended on May 11, 1995, alleges that the Company has asserted that FMC is
in possession of material, nonpublic information about the Company obtained by
means of visits to two Company production facilities, and that the Company
asserts that this information must be disclosed in FMC's Schedule 14D-1. FMC and
MII seek, among other relief, a declaratory judgment declaring that FMC's
Schedule 14D-1 does not violate the Securities Exchange Act of 1934, as amended,
including Section 14(e) thereof, and an order enjoining the Company from
bringing litigation in any other forum based on or relating to the facts alleged
in the complaint in the Delaware Federal Action.
The amended complaint filed in the Delaware Federal Action is included as
Exhibit 11 to this Schedule and is incorporated by reference herein; the
foregoing description is qualified in its entirety by reference to such Exhibit.
Ballan v. Wellin, et al. On April 5, 1995, a purported class action was
commenced in the Delaware Chancery Court against the Company and its directors,
entitled Ballan v. Wellin, et al., Del. Ch., C.A. No. 14187 (the "Ballan
Action"). The Ballan Action was purportedly brought on behalf of the public
stockholders of the Company, and alleges that the Company's directors have
breached their fiduciary duties to those stockholders by allegedly (i) rejecting
FMC's original offer to purchase the Company, as publicly announced on April 4,
1995, without fully evaluating or becoming fully informed with respect to that
offer and without taking steps to maximize stockholder value; (ii) engaging in
unfair dealing for their own benefit and to the detriment of the Company's
public stockholders; and (iii) failing to exercise independent business judgment
and by acting to entrench themselves in positions of control. The complaint in
the Ballan Action further alleges that, as a result of the aforementioned, the
Company and its directors have breached their fiduciary duties by summarily
rejecting FMC's original offer. The Ballan Action seeks, among other relief,
declaratory and injunctive relief requiring the Company and its directors to
maximize the value of the Company's stock, to make disclosures regarding FMC's
original offer, the negotiations between the Company and FMC and certain other
matters, and an award of damages.
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The complaint filed in the Ballan Action is included as Exhibit 12 to this
Schedule and is incorporated by reference herein; the foregoing description is
qualified in its entirety by reference to such Exhibit.
Grossman v. Wellin, et al. On May 8, 1995, a purported class action was
commenced in the Delaware Chancery Court against the Company and its directors,
entitled Grossman v. Wellin, et al., Del. Ch., C.A. No. 14291 (the "Grossman
Action"). The Grossman Action was purportedly brought on behalf of the public
stockholders of the Company, and the complaint therein contains allegations
substantially similar to the allegations set forth in the Ballan Action. In
addition, the complaint in the Grossman Action alleges that the Company has
demanded that FMC enter into an unreasonable and overly restrictive standstill
agreement, and has threatened to exclude FMC from any sale process instituted by
the Company. The Grossman Action seeks, among other relief, declaratory and
injunctive relief requiring the Company and its directors to consider and
evaluate adequately and in good faith all offers for the acquisition of the
Company, and an award of damages.
The complaint filed in the Grossman Action is included as Exhibit 14 to
this Schedule and is incorporated by reference herein; the foregoing description
is qualified in its entirety by reference to such Exhibit.
On May 18, 1995 the Ballan Action and the Grossman Action were consolidated
into an action entitled Moorco International Inc. Shareholder Litigation, Del.
Ch., C.A. No. 14187.
The Rights Agreement. On November 8, 1994, the Board of Directors of the
Company declared a dividend of one Right for each outstanding share of the
Common Stock, to stockholders of record at the close of business on November 18,
1994. Each Right entitles the registered holder to purchase from the Company a
unit consisting of one one-hundredth of a share (a "Fractional Share") of Series
A Junior Participating $1.00 Par Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), at a purchase price of $65.00 per Fractional Share, subject
to adjustment (the "Purchase Price"). The description and terms of the Rights
are set forth in a Rights Agreement dated as of November 8, 1994 as it may from
time to time be supplemented or amended (the "Rights Agreement") between the
Company and The Bank of New York, as Rights Agent.
The Rights are presently attached to all certificates representing
outstanding shares of Common Stock, and no separate certificates for the Rights
("Rights Certificates") will be distributed. The Rights will separate from the
Common Stock and a "Distribution Date" will occur upon the earlier of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 15 percent or more of the outstanding shares
of Common Stock (the date of the announcement being the "Stock Acquisition
Date"), or (ii) 10 business days (or such later date as may be determined by the
Board before the Distribution Date occurs) following the commencement of a
tender offer or exchange offer that would result in a person's becoming an
Acquiring Person. Certain inadvertent acquisitions will not result in a person's
becoming an Acquiring Person if the person promptly divests itself of sufficient
Common Stock. Until the Distribution Date, (a) the Rights will be evidenced by
the Common Stock certificates (together with a copy of the Summary of Rights or
bearing the notation referred to below) and will be transferred with and only
with such Common Stock certificates, (b) new Common Stock certificates issued
after November 18, 1994 will contain a notation incorporating the Rights
Agreement by reference, and (c) the surrender for transfer of any certificate
for Common Stock (with or without a copy of the Summary of Rights) will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on November 8, 2004, unless earlier redeemed or
exchanged by the Company as described below. As soon as practicable after the
Distribution Date, Rights Certificates will be mailed to holders of record of
Common Stock as of the close of business on the Distribution Date and, from and
after the Distribution Date, the separate Rights Certificates alone will
represent the Rights. All shares of Common Stock issued prior to the
Distribution Date will be issued with Rights. Shares of Common Stock issued in
connection with certain employee benefit plans or upon conversion of certain
securities after the Distribution Date will be issued with Rights. Except as
otherwise determined by the Board of Directors, no other shares of Common Stock
issued after the Distribution Date will be issued with Rights.
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In the event (a "Flip-In Event") that a person becomes an Acquiring Person
(except pursuant to a tender or exchange offer for all outstanding shares of
Common Stock at a price and on terms that a majority of the independent
Continuing Directors (as hereinafter defined) determines to be fair to and
otherwise in the best interests of the Company and its stockholders (a
"Permitted Offer")), each holder of a Right will thereafter have the right to
receive, upon exercise of such Right, a number of shares of Common Stock (or, in
certain circumstances, cash, property or other securities of the Company) having
a Current Market Price (as defined in the Rights Agreement) equal to two times
the exercise price of the Right. Notwithstanding the foregoing, following the
occurrence of any Flip-In Event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by or
transferred to any Acquiring Person (or by certain related parties) will be null
and void in the circumstances set forth in the Rights Agreement. However, Rights
are not exercisable following the occurrence of any Flip-In Event until such
time as the Rights are no longer redeemable by the Company as set forth below.
In the event (a "Flip-Over Event") that, at any time from and after the
time an Acquiring Person becomes such, (i) the Company is acquired in a merger
or other business combination transaction (other than certain mergers that
follow a Permitted Offer), or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights that
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise, a number of shares of common stock of the acquiring
company having a Current Market Price equal to two times the exercise price of
the Right. Flip-In Events and Flip-Over Events are collectively referred to as
"Triggering Events."
At any time until 10 days following the first date of public announcement
of the occurrence of a Flip-In Event, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, payable, at the option of
the Company, in cash, shares of Common Stock or such other consideration as the
Board may determine. Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority of
the Continuing Directors. Immediately upon the effectiveness of the action of
the Board ordering redemption of the Rights, with, where required, the
concurrence of the Continuing Directors, the Rights will terminate and the only
right of the holders of Rights will be to receive the $.01 redemption price.
The term "Continuing Director" means any member of the Board, while such
person is a member of the Board, who is not an Acquiring Person, or an affiliate
or associate of an Acquiring Person, or a nominee or representative of an
Acquiring Person or of any such affiliate or associate, if (i) such Person was a
member of the Board prior to the time a Person becomes an Acquiring Person or
(ii) such Person's nomination for election or election to the Board is
recommended or approved by a majority of the then Continuing Directors.
At any time after the occurrence of a Flip-In Event and prior to a person's
becoming the beneficial owner of 50% or more of the shares of Common Stock then
outstanding, the Company (with the concurrence of a majority of the Continuing
Directors) may exchange the Rights (other than Rights owned by an Acquiring
Person or an affiliate or an associate of an Acquiring Person, which will have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock, and/or other equity securities deemed to have the same value as one share
of Common Stock, per Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will have no right
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights should not be
taxable to stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for the
common stock of the acquiring company as set forth above or are exchanged as
provided in the preceding paragraph.
Other than the redemption price, any of the provisions of the Rights
Agreement may be amended by the Board (in certain circumstances, with the
concurrence of the Continuing Directors) as long as the Rights are redeemable.
Thereafter, the provisions of the Rights Agreement may be amended by the Board
(in certain circumstances, with the concurrence of the Continuing Directors) in
order to cure any ambiguity, defect or inconsistency, to make changes that do
not materially adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person), or to shorten or lengthen any time
period under the Rights
8
<PAGE> 10
Agreement; provided, however, that no amendment to lengthen the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the Commission as
Exhibit 15 to this Schedule. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
The Board, at the May 19, 1995 meeting, adopted a resolution pursuant to
the Rights Agreement which has the effect of providing that the Distribution
Date would be deferred until the earlier of (i) 10 days after the Stock
Acquisition Date or (ii) such date as may be subsequently determined by the
Board.
Delaware Takeover Statute. As described in the FMC Offer, Section 203 of
the Delaware Law (the "Delaware Takeover Statute"), may have the effect of
significantly delaying FMC's ability to acquire the entire equity interest in
the Company.
In general, the Delaware Takeover Statute prevents an "Interested
Stockholder" (defined generally as a person that is the "owner" (as defined in
the Delaware Takeover Statute) of 15% or more of a corporation's outstanding
voting stock from engaging in a "Business Combination" (defined as a variety of
transactions, including mergers, as set forth in the second following paragraph)
with a Delaware corporation for three years following the date such person
became an Interested Stockholder unless: (i) before such person became an
Interested Stockholder, the board of directors of the corporation approved the
transaction in which the Interested Stockholder became an Interested Stockholder
or approved the Business Combination; (ii) upon consummation of the transaction
which resulted in the Interested Stockholder becoming an Interested Stockholder,
the Interested Stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding stock
held by directors who are also officers and employee stock ownership plans in
which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer), or (iii) following the transaction in which such person became an
Interested Stockholder, the Business Combination is (x) approved by the board of
directors of the corporation and (y) authorized at a meeting of stockholders by
an affirmative vote of the holders of two-thirds of the outstanding voting stock
of the corporation not owned by the Interested Stockholder.
Under the Delaware Takeover Statute, the restrictions described above do
not apply if, among other things, (i) the corporation's original certificate of
incorporation contains a provision expressly electing not to be governed by the
Delaware Takeover Statute, (ii) the corporation, by action of its board of
directors, adopts an amendment to its by-laws within 90 days of February 2,
1988, the effective date of the Delaware Takeover Statute, expressly electing
not to be governed by the Delaware Takeover Statute, which amendment may not be
further amended by the board of directors, (iii) the corporation, by action of
its stockholders, adopts an amendment to its certificate of incorporation or
by-laws expressly electing not to be governed by the Delaware Takeover Statute,
provided that, in addition to any other vote required by law, such amendment to
the certificate of incorporation or by-laws must be approved by the affirmative
vote of a majority of the shares entitled to vote (such an amendment would not
be effective until 12 months after the adoption of such amendment and shall not
apply to any Business Combination between the corporation and any person who
became an Interested Stockholder of the corporation on or prior to the date of
such adoption), (iv) the corporation does not have a class of voting stock that
is (x) listed on a national securities exchange, (y) authorized for quotation on
an interdealer quotation system of a registered national securities association,
or (z) held of record by more than 2,000 stockholders, unless any of the
foregoing results from action taken, directly or indirectly, by an Interested
Stockholder or from a transaction in which a person becomes an Interested
Stockholder, or (v) a stockholder becomes an Interested Stockholder
"inadvertently" and thereafter divests itself of a sufficient number of shares
so that such stockholder ceases to be an Interested Stockholder. The Delaware
Takeover Statute would also not apply to certain Business Combinations proposed
by an Interested Stockholder following the announcement or notification of one
of certain extraordinary transactions involving the corporation and the person
who had not been an Interested Stockholder during the three years preceding the
date of the Business Combination or who became an Interested Stockholder with
the approval of a majority of the corporation's Board of Directors.
9
<PAGE> 11
The Delaware Takeover Statute provides that during the three-year period
following the date a person becomes an Interested Stockholder, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including, without
limitation, (i) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of either the aggregate market value of all of the assets
of the corporation or the aggregate market value of all of the outstanding stock
of the corporation, (ii) any transaction which results in the issuance or
transfer by the corporation or by certain subsidiaries thereof of any stock of
the corporation to the Interested Stockholder, subject to certain exceptions,
(iii) any transaction involving the corporation or any majority-owned subsidiary
thereof which has the effect of increasing the proportionate share of the stock
of any class or series, or securities convertible into the stock of any class or
series, of the corporation or any such subsidiary which is owned by the
Interested Stockholder (except as a result of immaterial changes due to
fractional share adjustments or as a result of any purchase or redemption of any
shares of stock not caused, directly or indirectly, by the Interested
Stockholder), or (iv) any receipt by the Interested Stockholder of the benefit
(except proportionately as a stockholder of such corporation) of any loans,
advances, guarantees, pledges or other financial benefits provided by or through
the corporation.
Unless FMC acquires a number of shares of Common Stock pursuant to the FMC
Offer sufficient to satisfy the 85% requirement of the Delaware Takeover Statute
or unless the provisions of clause (iii) of the second preceding paragraph or
clauses (i) or (iii) of the third preceding paragraph are complied with, FMC
would be unable to effect a merger with the Company for a period of three years
from the consummation of the FMC Offer and would be prevented from engaging in
certain transactions by the Delaware Takeover Statute.
If FMC acquires a number of shares of Common Stock pursuant to the FMC
Offer sufficient to satisfy the 85% requirement of the Delaware Takeover
Statute, FMC would be able to effect a merger with the Company without any
application of the three-year waiting period. There can be no assurance that FMC
will be able to acquire such number of shares of Common Stock.
In response to a request from FMC, the Board unanimously declined to make
the Delaware Takeover Statute inapplicable to the FMC Offer or FMC's proposed
second-step merger.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
<TABLE>
<S> <C>
Exhibit 1 -- Form of Change-of-Control Agreement with Messrs. Tiner, Nelson
and Levis.
Exhibit 2 -- Form of Change-of-Control Agreement with Messrs. Borth and
Pfleghar.
Exhibit 3 -- 1995 Incentive Bonus Plan.
Exhibit 4 -- Supplemental Executive Retirement Plan for Participants in the
Moorco International Inc. Retirement Income Plan.
Exhibit 5 -- Benefit Restoration Plan for Participants in the Moorco
International Inc. Retirement Income Plan.
Exhibit 6 * -- Letter to Moorco Stockholders, dated May 19, 1995.
Exhibit 7 -- Press Release issued by Moorco International Inc. on May 19,
1995.
Exhibit 8 -- Complaint in Moorco International Inc. v. FMC Corporation
(Texas).
Exhibit 9 -- Order of the Texas Court dated May 11, 1995.
Exhibit 10 -- Complaint in FMC Corporation v. Moorco International Inc.
(Delaware Chancery Court).
Exhibit 11 -- Amended Complaint in FMC Corporation v. Moorco International Inc.
(Delaware federal court).
Exhibit 12 -- Complaint in Ballan v. Wellin (Delaware Chancery Court).
</TABLE>
10
<PAGE> 12
<TABLE>
<S> <C>
Exhibit 13 -- Complaint in Grossman v. Wellin (Delaware Chancery Court).
Exhibit 14 -- Rights Agreement dated as of November 24, 1994.**
Exhibit 15* -- Opinion of Salomon Brothers Inc dated May 19, 1995.
Exhibit 16 -- Indemnification Agreements with various Directors and Executive
Officers.***
</TABLE>
- ---------------
* Included in copy mailed to stockholders.
** Incorporated by reference to Exhibit 1 to the Company's Form 8-K dated
November 8, 1994.
*** Incorporated by reference to Exhibits 10(o) through 10(z) to the Company's
Form 10-K for the fiscal year ended May 31, 1994.
11
<PAGE> 13
SIGNATURE
After reasonable 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.
MOORCO INTERNATIONAL INC.
By: /s/ MICHAEL L. TINER
-------------------------------
Michael L. Tiner
President and
Chief Executive Officer
Dated: May 19, 1995
12
<PAGE> 14
ANNEX A
EXECUTIVE COMPENSATION
GENERAL
The following table sets forth information concerning all compensation for
services rendered in all capacities to the Company during the fiscal years ended
May 31, 1994, May 31, 1993, and May 31, 1992, for each of those persons who
were, at May 31, 1994, (i) the chief executive officer and (ii) the four other
most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
-------------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (SHARES) COMPENSATION(1)
- ------------------------------------- ---- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Michael L. Tiner, President.......... 1994 $250,000 $125,000 -0- $ 5,560
and Chief Executive Officer 1993 144,552 -0- 30,000 4,337
1992 115,440 86,580 7,500 3,463
Richard T. Levis, Senior Vice........ 1994 160,000 80,000 -0- 4,800
President -- Operations 1993 121,183 -0- 12,000 3,636
1992 112,732 84,546 7,500 3,382
James J. Nelson, Vice President,..... 1994 150,660 75,350 -0- 4,520
General Counsel and Secretary 1993 142,104 -0- 12,000 4,263
1992 132,180 99,135 7,500 3,965
David W. Pfleghar, Vice.............. 1994 111,708 39,100 -0- 3,351
President and Controller 1993 111,708 -0- 2,500 3,351
1992 106,896 56,121 5,000 3,207
J. David Borth, Vice................. 1994 111,300 39,000 -0- 3,339
President -- Human Resources 1993 103,000 -0- 5,000 3,150
1992 94,052 41,411 10,000 2,822
</TABLE>
- ---------------
(1) Represents the Company's matching contribution under the Moorco
International Inc. Incentive Savings Plan.
STOCK OPTION PLANS
The Company maintains the Moorco International Inc. 1987 Non-Qualified
Stock Option and Restricted Stock Award Plan (the "1987 Plan") under which the
Company had reserved for issuance 237,980 shares of Common Stock. The Company
also maintains the Moorco International Inc. 1990 Stock Incentive Plan (the
"1990 Plan" and, together with the 1987 Plan, the "Stock Plans") under which the
Company has reserved for issuance 1,000,000 shares of Common Stock. The 1987
Plan provides for grants of non-qualified stock options, and the 1990 Plan
provides for grants of both incentive and non-qualified stock options. Each of
the Stock Plans provides for grants of restricted stock awards to key employees
of the Company. No stock options or shares of restricted stock were granted to
the executive officers named in the Summary Compensation Table during the fiscal
year ended May 31, 1994. The options granted to the executive officers all vest
upon a change of control, to the extent not already vested.
The table set forth below contains information for each of the executive
officers named in the Summary Compensation Table concerning (i) stock options
exercised during the fiscal year ended May 31, 1994, and (ii) the value of
unexercised stock options held at May 31, 1994.
A-1
<PAGE> 15
OPTION EXERCISES IN FISCAL YEAR 1994
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED MAY 31, 1994 MAY 31, 1994
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
- ------------------------------------ --------- --------- ------------- --------------
<S> <C> <C> <C> <C>
Michael L. Tiner.................... -0- -0- 2,500/35,000 $ -0-/$-0-
Richard T. Levis.................... -0- -0- 11,500/17,000 $ 91,350/$-0-
James J. Nelson..................... -0- -0- 2,500/17,000 $ -0-/$-0-
David W. Pfleghar................... -0- -0- 12,653/5,833 $ 114,169/$-0-
J. David Borth...................... -0- -0- 15,334/11,666 $ 120,600/$-0-
</TABLE>
- ---------------
(1) Values stated are based on the closing price of $15.75 per share of the
Common Stock on the New York Stock Exchange on May 31, 1994, the last
trading day of fiscal year 1994.
CHANGE-OF CONTROL-AGREEMENTS
Effective as of May 8, 1995, the Board approved the Company's entering into
individual Change-of-Control employment agreements (the "Change-of-Control
Agreements") with Messrs. Tiner, Nelson and Levis (the "Top Three Officers") and
Messrs. Borth and Pfleghar (the "Other Officers"). The Change-of-Control
Agreements replace the Moorco Severance Plan previously in effect.
Each Change-of-Control Agreement becomes effective upon a "change of
control" of the Company, or if sooner, upon the termination of employment of the
employee at the request of a person seeking to effect a change of control, or
otherwise in connection with a change of control (the "Effective Date"). A
"change of control" is defined in the Change-of-Control Agreement as: (i) the
acquisition by any individual, entity or group of beneficial ownership of 20% or
more of either the then outstanding shares of common stock of the Company or the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (but excluding
acquisitions directly from or by the Company, by any Company employee benefit
plan or any corporation controlled by the Company, or pursuant to a transaction
which complies with clauses (A), (B) and (C) of clause (iii) below); (ii) a
change in a majority of the membership of the Board, but without regard to new
members approved by a majority of the old members other than in connection with
a proxy contest; (iii) stockholder approval of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company unless after the transaction, (A) all or substantially all
of the individuals and entities who were the beneficial owners of the
outstanding common stock and outstanding voting securities of the Company
immediately before the transaction own more than 60% of the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities of the corporation resulting from the transaction in
substantially the same proportions as their prior ownership of the outstanding
common stock and outstanding voting securities of the Company, (B) no person
(excluding any employee benefit plan or related trust of the Company or the
corporation resulting from the transaction) owns 20% or more of the outstanding
shares of common stock or the combined voting power of the outstanding voting
securities of the corporation resulting from the transaction, except to the
extent that such ownership existed prior to the transaction, and (C) at least a
majority of the members of the board of directors of the corporation resulting
from such transaction were members of the Company's board of directors at the
time of the execution of the initial agreement or of the action of the Board
providing for such transaction; or (iv) stockholder approval of a complete
liquidation or dissolution of the Company. Once the Change-of-Control Agreement
becomes effective, the employee will be entitled to severance pay if his or her
employment is terminated by the Company for any reason other than "cause" (as
defined in the Change-of-Control Agreement) or the employee terminates his or
her own employment for "good reason" during the "employment period" (as defined
in the Change-of-Control
A-2
<PAGE> 16
Agreement). "Good reason" means the assignment to the employee of any duties
inconsistent with, or any other action that diminishes, the employee's position,
authority, duties or responsibilities as in effect immediately before the change
of control, or failure to pay the employee compensation at least equal to the
compensation in effect immediately before the change of control; the Company's
requiring the employee to relocate to a location more than 25 miles from the
location where the employee was based immediately before the change of control
or, in the event the employee consents to relocation, the failure of the Company
to pay for his moving expenses and other costs relating to such relocation, with
a gross-up payment for taxes thereon, all in accordance with the Company's
relocation policy as in effect immediately before the Effective Date, or the
Company's requiring the employee to travel on Company business to a
substantially greater extent than required immediately before the change of
control; any purported termination by the Company of the employee not permitted
by the agreement; or any failure by the Company to require a successor to the
Company to assume the agreement. If the Company has requested that the employer
remain for a holdover period of up to six months after the change of control,
the employee will receive severance pay based upon a demotion during the
six-month holdover period only after completion of the holdover period (during
which the employee must continue to work for the Company). Severance pay will
also become due if the employee terminates his or her own employment during a
30-day window period. For the Top Three Officers, the window period will begin
on the first anniversary of the change of control and for the Other Officers, it
will begin on the six-month anniversary of the change of control.
The severance benefits consist of a lump sum payment equal to the present
value of the employee's salary and bonus for 2.2 years, continued health and
other welfare benefits for 2.2 years, and certain fringe benefits. In addition,
the employee will receive an additional pension benefit, payable at the same
time as benefits under the Company's retirement plans, such that the total
retirement benefits received will equal those that would have been paid pursuant
to the Company's retirement plans if the employee had remained employed by the
Company for an additional five years. The Change-of-Control Agreements for the
Top Three Executives also provide for an additional payment to the extent
necessary to make them whole for any excise tax on "excess parachute payments"
(as defined in the Internal Revenue Code) imposed on their severance payments or
any other payments received by them in connection with a change of control, and
the agreements with the Other Officers provide for a reduction in the severance
payments if necessary to avoid having any such payments be excess parachute
payments.
1995 INCENTIVE BONUS PLAN
Effective as of May 8, 1995, the Board adopted the 1995 Incentive Bonus
Program (the "Bonus Program") providing for the payment of bonuses upon the
occurrence of an "extraordinary transaction" (as defined in the Bonus Program).
Messrs. Tiner, Nelson and Levis are the only participants in the Bonus Program,
and their respective percentages of the total bonuses available under the Bonus
Program are 50, 30 and 20 percent. The aggregate bonuses payable under the Bonus
Program range from $500,000 to $4 million, depending upon the value realized by
stockholders in the extraordinary transaction. The program will expire on May 1,
1996, unless an extraordinary transaction has occurred by that date or the Board
extends the Bonus Program.
PENSION PLANS
The Company and its subsidiaries maintain a number of defined benefit
pension plans for their officers and other employees. The pension plans provide
for fixed benefits in the event of retirement at a specified age and after a
specified number of years of service. All of the executive officers of the
Company named in the Summary Compensation Table are participants in the Moorco
International Inc. Retirement Income Plan (the "Moorco Plan").
The Moorco Plan is a defined benefit plan under which participants are
entitled to a monthly benefit upon retirement at age 65 equal to 0.9% of average
monthly covered compensation for the participant's last five years of service
times years of benefit accrual service up to 35 years, less benefits from other
Company-sponsored defined benefit plans. Covered compensation for the
determination of benefits includes all wages paid by the Company, including
deferred compensation under the Moorco International Inc. Incentive
A-3
<PAGE> 17
Savings Plan, up to a maximum of $150,000, the maximum amount of compensation
that the Internal Revenue Code permits to be considered for benefit purposes
under a tax-qualified plan in 1995, but excludes other deferred compensation and
amounts received pursuant to the Stock Plans.
In December of 1994, the Board adopted the Benefit Restoration Plan for
Participants in the Moorco International Inc. Retirement Income Plan (the
"BRP"), and in March of 1995 the Board adopted the Supplemental Executive
Retirement Plan for Participants in the Moorco International Inc. Retirement
Income Plan (the "SERP"), each of which is effective as of January 1, 1995. The
BRP provides to all participants in the Moorco Plan whose benefits under the
Moorco Plan are reduced or limited by the Internal Revenue Code the additional
retirement benefits that they would receive if no such reductions or limitations
applied. The SERP provides an additional retirement benefit based upon an
enhanced formula to certain selected salaried officers and other key management
employees. Currently, Messrs. Tiner, Nelson and Levis are the only Level A
participants in the SERP. The SERP benefit is a monthly benefit upon retirement
at age 65 such that the sum of all monthly benefits payable to the participant
under the SERP, the BRP, the Moorco Plan and Social Security equals 1.6% (in the
case of Level A participants) or 1.3% (in the case of Level B participants) of
average monthly covered compensation for the participant's last five years of
service times years of benefit accrual service up to 35 years. For these
purposes, compensation is defined as base pay plus incentive compensation, up to
$500,000 per year (adjusted beginning in 1996 for inflation). Because the SERP
benefit is subject to an offset for Social Security, while the BRP and the
Moorco Plan benefits are not, in some cases the BRP benefit may exceed the SERP
benefit, in which event only the BRP benefit is paid.
The following table shows the estimated aggregate annual benefits which
would become payable under the Moorco Plan and the BRP (without regard to the
SERP) for a participant who is unmarried at the date benefits commence and who
has the average compensation levels and years of service specified in the table.
The amounts listed in the table do not take into account the limitations upon
benefits imposed by Section 415 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the limitation on compensation imposed by Section 401(a)(17)
of the Code, because such limitations are not applicable to the BRP benefits.
The amounts listed in the table are payable for the life of the employee and are
not subject to any reduction for Social Security benefits or other offsetting
amounts.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- ------------------------------------- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000............................. 4,500 6,750 9,000 11,250 13,500 15,750
100,000............................. 9,000 13,500 18,000 22,500 27,000 31,500
150,000............................. 13,500 20,250 27,000 33,750 40,500 47,250
200,000............................. 18,000 27,000 36,000 45,000 54,000 63,000
250,000............................. 22,500 33,750 45,000 56,250 67,500 78,750
300,000............................. 27,000 40,500 54,000 67,500 81,000 94,500
350,000............................. 31,500 47,250 63,000 78,750 94,500 110,250
400,000............................. 36,000 54,000 72,000 90,000 108,000 126,000
450,000............................. 40,500 60,750 81,000 101,250 121,500 141,750
500,000............................. 45,000 67,500 90,000 112,500 135,000 157,500
</TABLE>
The following table shows the estimated aggregate annual benefits which
would become payable under the Moorco Plan, the BRP and the SERP for a
participant who is unmarried at the date benefits commence and who has the
average compensation levels and years of service specified in the table. The
amounts listed in the table do not take into account the limitations upon
benefits imposed by Section 415 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the limitation on compensation imposed by Section 401(a)(17)
of the Code, because such limitations are not applicable to the BRP and SERP
benefits. The amounts listed in the table are payable for the life of the
employee and are subject to reduction for Social Security benefits.
A-4
<PAGE> 18
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- ------------------------------------- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000............................. 8,000 12,000 16,000 20,000 24,000 28,000
100,000............................. 16,000 24,000 32,000 40,000 48,000 56,000
150,000............................. 24,000 36,000 48,000 60,000 72,000 84,000
200,000............................. 32,000 48,000 64,000 80,000 96,000 112,000
250,000............................. 40,000 60,000 80,000 100,000 120,000 140,000
300,000............................. 48,000 72,000 96,000 120,000 144,000 168,000
350,000............................. 56,000 84,000 112,000 140,000 168,000 196,000
400,000............................. 64,000 96,000 128,000 160,000 192,000 224,000
450,000............................. 72,000 108,000 144,000 180,000 216,000 252,000
500,000............................. 80,000 120,000 160,000 200,000 240,000 280,000
</TABLE>
At April 30, 1995, the executive officers named in the Summary Compensation
Table had the following respective years of benefit accrual service under the
Moorco Plan: Mr. Tiner, 16 years; Mr. Levis, 21 years; Mr. Nelson, 6 years; Mr.
Pfleghar, 16 years; and Mr. Borth, 7 years. In March of 1995, the Board
authorized the creation of a grantor trust to provide a source of funds to pay
retirement benefits pursuant to the BRP and SERP. The assets of the trust will
at all times be subject to the claims of the Company's creditors in the event of
bankruptcy or insolvency, but otherwise may not be used for any purpose other
than the payment of the foregoing retirement benefits, until all such benefits
have been paid in full (at which time any remaining assets would revert to the
Company). On May 18, 1995, the Board authorized the use of the trust to fund the
additional retirement benefits that may become payable under the
Change-of-Control Agreements.
OTHER EMPLOYMENT MATTERS
During fiscal year 1994, the Company provided Mr. Tiner, President and
Chief Executive Officer, an interest-free loan of $450,000 to assist him in his
relocation from Pennsylvania to Texas. The loan was made on October 6, 1993 and
repaid in full on December 17, 1993.
DIRECTORS
COMPENSATION OF DIRECTORS
The Company pays an annual retainer of $45,000 to the Chairman of the
Board, an annual retainer of $23,000 to the Chairman of the Compensation
Committee, and an annual retainer of $18,000 to all other non-management
directors. In addition, the Company pays non-management directors, for each
Board of Directors, Executive Committee or other Board of Directors committee
meeting attended (excluding telephone meetings), compensation of $1,500, $1,000
and $500, respectively. The Chairman of the Board, the Chairman of the Executive
Committee and the chairman of any other committee of the Board receives $2,000,
$1,500 and $1,000 per meeting attended (excluding telephone meetings),
respectively. The Company also pays ordinary and necessary out-of-pocket
expenses for non-management directors to attend Board and committee meetings.
ORGANIZATION OF THE BOARD OF DIRECTORS
The Board of Directors has established an Executive Committee consisting of
Messrs. Wellin (Chairman), Ciotti, Tiner and Witter; a Compensation Committee
consisting of Messrs. Atkins (Chairman), Ciotti, Collinson and Thompson; and an
Audit Committee consisting of Messrs. Donlan (Chairman), Collinson, Thompson and
Witter. The Executive Committee was established to take any action normally
reserved to the Board of Directors to the extent permitted by law. The
Compensation Committee was established to act on behalf of the Board of
Directors with respect to compensation of directors and executive officers. The
Compensation Committee administers the Company's stock option and other benefit
plans. The Audit
A-5
<PAGE> 19
Committee was established to review the results and scope of the audit and
services provided by the Company's independent public accountants.
During fiscal year 1994, the Board of Directors held eight meetings (two of
which were telephone meetings), the Compensation Committee held two meetings,
the Audit Committee held two meetings and the Executive Committee held one
telephone meeting. No incumbent director attended fewer than 75% of the total
meetings held during fiscal year 1994 (i) by the Board of Directors and (ii) by
all committees thereof on which he served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. George A. Ciotti, who is a member of the Compensation Committee, was
the President and Chief Executive Officer of the Company prior to his retirement
in June 1993. Mr. Ciotti receives retirement benefits pursuant to certain of the
Company's retirement plans, including a benefit restoration plan similar to the
BRP described above under "Executive Compensation -- Pension Plans."
INDEMNIFICATION AGREEMENT
The directors and executive officers of the Company have entered into
indemnification agreements whereby the Company has agreed to indemnify such
persons and advance expenses as provided in such agreements to the fullest
extent permitted by applicable law. Upon a "Change in Control" as defined in the
indemnification agreements, such person will be presumed to be entitled to
indemnification under the indemnification agreements and the Company is required
to overcome the presumption in order to avoid the indemnification obligation.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth the number of shares of Common Stock
beneficially owned as of August 5, 1994, except as otherwise noted, by (i) each
director, (ii) each of the executive officers named in the Summary Compensation
Table below, (iii) each person known to be the beneficial owner at that date of
more than 5% of the outstanding shares of Common Stock and (iv) all directors
and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
OWNERSHIP PERCENT
OF COMMON OF
NAME STOCK(1) CLASS(2)
---------- -----
<S> <C> <C>
Keith S. Wellin...................................... 608,365 (3) 5.1%
Michael L. Tiner..................................... 37,500 (4) *
James F. Atkins...................................... 26,875 *
George A. Ciotti..................................... 247,352 2.1%
Jeffrey J. Collinson................................. 70,917 (5) *
James E. Donlan...................................... 26,875 *
Calvin A. Thompson................................... 110,875 (6) *
William D. Witter.................................... 891,030 (7) 7.4%
Richard T. Levis..................................... 101,500 (4) *
James J. Nelson...................................... 24,034 (4) *
David W. Pfleghar.................................... 27,653 (4) *
J. David Borth....................................... 15,334 (4) *
RCM Capital Management(8)............................ 980,200 8.2%
Neuberger & Berman(9)................................ 773,700 6.5%
All directors and executive officers as a group (12
persons, including those individuals listed
above)............................................. 2,188,310 (4) 18.2%
</TABLE>
- ---------------
(1) Except as otherwise noted, each stockholder has sole voting and dispositive
power with respect to the shares of Common Stock.
A-6
<PAGE> 20
(2) An asterisk indicates that the percentage of shares beneficially owned is
less than 1%.
(3) Includes 1,000 shares held by Keith S. Wellin's wife, 40,311 shares held by
three adult children, 108,000 shares held in trust for Mr. Wellin's
grandchildren and 26,875 shares held by Mr. Wellin's son-in-law. Mr. Wellin
possesses shared voting and investment power with respect to all such
shares. Mr. Wellin's address is 2800 Post Oak Boulevard, Suite 5701,
Houston, Texas 77056-6111.
(4) Includes 2,500, 11,500, 2,500, 12,653, 15,334 and 44,487 shares of Common
Stock for Messrs. Tiner, Levis, Nelson, Pfleghar, Borth and all directors
and executive officers as a group, respectively, which are considered to be
beneficially owned by such persons because they may be acquired through the
exercise of outstanding options which are exercisable or become exercisable
within 60 days.
(5) Includes 475 shares held in trust for Jeffrey J. Collinson and 69,956 shares
owned by Schroders Incorporated as to which Mr. Collinson possesses shared
investment and voting power. Mr. Collinson disclaims beneficial ownership of
the shares owned by Schroders Incorporated.
(6) Includes 500 shares held by Calvin A. Thompson's wife. Mr. Thompson
disclaims beneficial ownership of such shares.
(7) Includes 131,000 shares held in trust for William D. Witter's adult children
as to which Mr. Witter possesses shared voting and investment power, 69,274
shares held in a custodial account for Mr. Witter's children, 4,683 shares
held in trust for Mr. Witter's grandchildren and 10,879 shares held by Mr.
Witter's wife. Mr. Witter's address is 153 East 53rd Street, New York, New
York 10022.
(8) Based on Schedule 13G, dated February 10, 1994, filed by RCM Capital
Management ("RCM Capital"), RCM Limited L.P. ("RCM Limited") and RCM General
Corporation ("RCM General") with the Securities and Exchange Commission (the
"SEC"). RCM Limited is the general partner of RCM Capital and RCM General is
the general partner of RCM Limited. RCM Capital reports sole voting power as
to 736,200 of such shares. RCM Capital's address is Four Embarcadero Center,
Suite 2900, San Francisco, California 94111.
(9) Based on Schedule 13G, dated January 31, 1994, filed by Neuberger & Berman
with the SEC. Neuberger & Berman reports sole voting power as to 679,200 of
such shares and sole dispositive power as to none of such shares. Neuberger
& Berman's address is 605 Third Avenue, New York, New York 10158.
A-7
<PAGE> 21
ANNEX B
[SALOMON BROTHERS INC LETTERHEAD]
May 19, 1995
Moorco International Inc.
2800 Post Oak Boulevard
Suite 5701
Houston, TX 77056
Attention: Members of the Board of Directors
Dear Sirs:
We understand that MII Acquisition Corp., a wholly owned subsidiary of FMC
Corporation, a Delaware corporation (together "FMC"), has made a tender offer
(the "FMC Offer") to purchase all of the outstanding shares of Common Stock, par
value $.01 per share (including the associated Preferred Stock Purchase Rights)
(the "Shares") of Moorco International Inc., a Delaware corporation (the
"Company"), at $20.00 net per Share in cash (the "Consideration"). The FMC Offer
is set forth in the Offer to Purchase dated May 5, 1995 and we understand that,
in summary, it is conditioned upon, among other things, (i) the Company's
Preferred Stock Purchase Rights having been redeemed by the Company's Board of
Directors or FMC being otherwise satisfied that such rights are invalidated or
inapplicable to the FMC Offer, (ii) the valid tender of a number of Shares,
which when added to the Shares beneficially owned by FMC, would represent at
least a majority of the total number of outstanding Shares of the Company on a
fully diluted basis and (iii) FMC being satisfied that the restrictions on
business combinations contained in Section 203 of the Delaware General
Corporation Law are inapplicable to the proposed merger contemplated by the FMC
Offer. You have asked us to advise you as to the adequacy, from a financial
point of view, of the Consideration offered to the holders of the Shares (other
than FMC) pursuant to the FMC Offer.
In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) the Schedule 14D-1 filed by FMC with the
Securities and Exchange Commission regarding the FMC Offer; (ii) certain
publicly available business and financial information concerning the Company and
FMC; (iii) certain internal information of the Company, primarily financial in
nature(including projections, forecasts and analyses prepared by or on behalf of
the Company's management), concerning the business, assets, liabilities,
operations and prospects of the Company, furnished to us by the Company for
purposes of our analysis; (iv) certain publicly available and other information
concerning the trading of, and the trading market for, the Shares; (v) the
financial terms of the FMC Offer and such other transactions which we consider
relevant to our inquiry; (vi) certain publicly available information with
respect to other companies that we believe to be relevant or comparable in
certain respects to the Company or one or more of its businesses or assets and
the trading markets for certain of such other companies' securities; and (vii)
such other information, financial studies, analyses, investigations and
financial, economic, market and trading criteria that we considered relevant to
our inquiry. In addition, we have taken into account various discussions with
third parties with respect to such third parties' potential interest in the
acquisition of all or part of the Company or other strategic transactions
involving the Company. We have also met with certain officers and employees of
the Company to discuss the foregoing as well as other matters we believe
relevant to our inquiry. We have also taken into account our assessment of
general economic, market and financial conditions and our experience in
securities valuation generally.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to, reviewed for or discussed with us or publicly available
and have not assumed any responsibility for independent verification of any such
B-1
<PAGE> 22
information. We have also relied upon the reasonableness and accuracy of the
financial projections, forecasts and analyses provided to us and we have assumed
that they were reasonably prepared on bases reflecting the best currently
available estimates and judgment of the Company's management and we express no
opinion with respect to such forecasts, projections and analyses or the
assumptions on which they are based. We have not made or obtained any
independent evaluations or appraisals of any of the Company's assets, properties
or facilities, nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon business, market, economic and
other conditions and circumstances as they exist on, and can be evaluated as of,
the date hereof.
As you are aware, Salomon Brothers Inc has acted as financial advisor to
the Company in connection with the FMC Offer and will receive a fee for our
services. Additionally, Salomon Brothers Inc is currently engaged by the Company
to render financial advisory and investment banking services (including with
respect to the Company's publicly announced proposal to acquire Daniel
Industries, Inc.) and has received, and would under certain circumstances
receive, fees for the rendering of such services. In addition, in the ordinary
course of our business we may actively trade the debt or equity securities of
the Company and FMC for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that as of the date hereof, the Consideration to be offered to the
holders of Shares (other than FMC) pursuant to the FMC Offer is inadequate, from
a financial point of view, to such holders.
Very truly yours,
SALOMON BROTHERS INC
B-2
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ------------------ -------------------------------------------------------------------------------
<S> <C> <C>
Exhibit 1 -- Form of Change-of-Control Agreement with Messrs. Tiner, Nelson and
Levis.
Exhibit 2 -- Form of Change-of-Control Agreement with Messrs. Borth and Pfleghar.
Exhibit 3 -- 1995 Incentive Bonus Plan.
Exhibit 4 -- Supplemental Executive Retirement Plan for Participants in the Moorco
International Inc. Retirement Income Plan.
Exhibit 5 -- Benefit Restoration Plan for Participants in the Moorco International
Inc. Retirement Income Plan.
Exhibit 6* -- Letter to Moorco Stockholders, dated May 19, 1995.
Exhibit 7 -- Press Release issued by Moorco International Inc. on May 19, 1995.
Exhibit 8 -- Complaint in Moorco International Inc. v. FMC Corporation (Texas).
Exhibit 9 -- Order of the Texas Court dated May 11, 1995.
Exhibit 10 -- Complaint in FMC Corporation v. Moorco International Inc. (Delaware
Chancery Court).
Exhibit 11 -- Amended Complaint in FMC Corporation v. Moorco International Inc.
(Delaware federal court).
Exhibit 12 -- Complaint in Ballan v. Wellin (Delaware Chancery Court).
Exhibit 13 -- Complaint in Grossman v. Wellin (Delaware Chancery Court).
Exhibit 14 -- Rights Agreement dated as of November 24, 1994.**
Exhibit 15* -- Opinion of Salomon Brothers Inc dated May 19, 1995.
Exhibit 16 -- Indemnification Agreements with various Directors and Executive
Officers.***
</TABLE>
- ---------------
* Included in copy mailed to stockholders.
** Incorporated by reference to Exhibit 1 to the Company's Form 8-K dated
November 8, 1994.
*** Incorporated by reference to Exhibits 10(o) through 10(z) to the Company's
Form 10-K for the fiscal year ended May 31, 1994.
<PAGE> 1
EXHIBIT 1
[Form of Agreement
for Top Three Officers]
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between Moorco International Inc., a Delaware
corporation (the "Company") and __________________ (the "Executive"), dated as
of the 8th day of May, 1995.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
<PAGE> 2
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) Accrued Obligations has the meaning set
forth in Section 5(a)(i)(A).
(b) Affiliated Companies means all companies controlled by,
controlling or under common control with the Company.
(c) Annual Base Salary has the meaning set forth in Section 3(b)(i).
(d) Annual Bonus has the meaning set forth in Section 3(b)(ii).
(e) Bonus Amount has the meaning set forth in Section 5(a)(i)A.
(f) Cause has the meaning set forth in Section 4(c).
(g) Change of Control means:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (x) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (y) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions
-2-
<PAGE> 3
shall not constitute a Change of Control: (A) any acquisition directly
from the Company, (B) any acquisition by the Company, (C) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company or (D) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (A), (B) and (C) of subsection (iii) of this definition; or
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business Combination,
(A) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
60% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Person (excluding
any employee benefit plan or related trust of the Company or such
corporation resulting from such Business Combination) beneficially
-3-
<PAGE> 4
owns, directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(h) Change of Control Period means the period commencing on the date
hereof and ending on the third anniversary of the date hereof.
(i) Code means the Internal Revenue Code of 1986, as amended.
(j) Company means Moorco International Inc. and any successor
thereto.
(k) Date of Termination has the meaning set forth in Section 4(f).
(l) Discount Rate means the lowest yield reported in The Wall Street
Journal for the first business day of the month in which the relevant payment is
made pursuant to this Agreement, for U.S. Treasury Bonds and Notes maturing in
the month two years after the date of payment hereunder, or if no
-4-
<PAGE> 5
such yield is reported for such month, the lowest yield reported for the
immediately preceding month.
(m) Effective Date means the first date during the Change of Control
Period on which a Change of Control occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive that
such termination of employment (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of Control, then
for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(n) Employment Period has the meaning set forth in Section 2.
(o) Good Reason has the meaning set forth in Section 4(d).
(p) Holdover Period means the period following a Change of Control
that (i) begins on the date that the Company provides the Executive with written
notice that the Company requires the services of the Executive and (ii) ends
-5-
<PAGE> 6
on the date specified in such notice but no later than six months after the
date of the Change of Control.
(q) Notice of Termination has the meaning set forth in Section 4(e).
(r) Protected Period means the period of time beginning upon the
later of (i) the date of a Change of Control and (ii) the last day of the
Holdover Period (if any) and ending 2.2 years after such later date.
(s) Retirement Plans means all qualified and nonqualified retirement
plans and programs of the Company and its affiliates in which the Executive
participates, including without limitation and to the extent applicable, the
Moorco International Inc. Retirement Income Plan, the Smith Meter, Inc. Salaried
Retirement Plan, the Benefit Restoration Plan for Participants in the Moorco
International Inc. Retirement Income Plan, the Supplemental Executive Retirement
Plan for Participants in the Moorco International Inc. Retirement Income Plan,
and the Benefit Restoration Plan for Participants in the Smith Meter, Inc.
Salaried Retirement Plan.
(t) Retirement Severance Period means the period of 5 years following
the Date of Termination.
(u) Severance Period means the period of 2.2 years following the Date
of Termination.
-6-
<PAGE> 7
(v) Window Period means the 30 days immediately following the first
anniversary of the Effective Date.
2. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending upon the expiration of the
Protected Period (the "Employment Period").
3. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned to the Executive at any time during the
120-day period immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was employed
immediately preceding the Effective Date, or at another location not more than
25 miles from such location. If there is a Holdover Period, then notwithstanding
a violation of clause (A) of the preceding sentence, the Executive shall be
obligated to remain employed by the Company until the end of the Holdover
Period, but such violation shall be considered to be a "Good Reason" described
in clause (i) of Section 4(d) of this Agreement.
-7-
<PAGE> 8
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base
-8-
<PAGE> 9
salary ("Annual Base Salary"), which shall be payable at least monthly, at a
rate at least equal to the greater of (A) $[ ]* per annum and (B) twelve
times the highest monthly base salary paid or payable, including any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve-month period immediately
preceding the month in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed no more than 12 months after
the last salary increase awarded to the Executive prior to the Effective Date
and thereafter at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase and
the term Annual Base Salary as utilized in this Agreement shall refer to Annual
Base Salary as so increased.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to [ ]* percent of
the Annual Base Salary. Each such Annual Bonus shall be paid no later than the
end of the third month of the fiscal year next following the fiscal year for
which the Annual Bonus is
- ----------
* Insert present salary.
* Insert present bonus percentage.
-9-
<PAGE> 10
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices,
-10-
<PAGE> 11
policies and programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company
and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
-11-
<PAGE> 12
(vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and, if applicable, annual
physical examinations and use of an automobile and payment of related expenses,
in accordance with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
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<PAGE> 13
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties.
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<PAGE> 14
(b) Disability means the absence of the Executive from the
Executive's duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative.
(c) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean the Executive's willful dishonesty or commission of a felony for
which he is convicted and which, in either case, may cause material harm to the
Company. For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board [or upon the instructions of the Chief Executive Officer or
a senior officer of the Company]* or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the
- -------------
* Bracketed language for use in all agreements except CEO's.
-14-
<PAGE> 15
Company. The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in the definition of
"Cause" above, and specifying the particulars thereof in detail.
(d) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities
as contemplated by Section 3(a) of this Agreement, or any other action by
the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
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<PAGE> 16
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 3(a)(i)(B) hereof or,
in the event the Executive consents to relocation, the failure of the
Company to pay (or reimburse the Executive for) all reasonable moving
expenses and other costs incurred by the Executive relating to a change
in the Executive's principal residence in connection with such relocation,
with a gross-up payment for taxes thereon, all in accordance with the
Company's relocation policy as in effect immediately before the Effective
Date, or the Company's requiring the Executive to travel on Company
business to a substantially greater extent than required immediately prior
to the Effective Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
10(c) of this Agreement.
For purposes of this Section 4(d), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. Anything in this Agreement
to the contrary notwithstanding: a termination by the Executive based solely
upon an event described in clause (i) above, which event occurs during the
Holdover Period, shall be deemed to be without Good Reason unless the Executive
continues to render services to the Company pursuant to this Agreement until
the end of the Holdover Period; and a termination by the Executive for any
reason during the Window Period shall be deemed to be a termination for Good
Reason for all purposes of this Agreement.
(e) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall
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<PAGE> 17
be communicated by Notice of Termination to the other party hereto given in
accordance with Section 11(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated and (iii) to the extent necessary, specifies the
Date of Termination (as defined below). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(f) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, other than for a Good Reason specified in clause (i)
of Section 4(d) that occurs during the Holdover Period, the date of receipt of
the Notice of Termination or any later date specified therein (but not more than
thirty days after the giving of such notice), (ii) if the Executive's employment
is terminated by the Company other than for Cause or Disability,
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<PAGE> 18
the date on which the Company notifies the Executive of such termination, (iii)
if the Executive's employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the
case may be, and (iv) if the Executive's employment is terminated by the
Executive for a Good Reason specified in clause (i) of Section 4(d) that occurs
during the Holdover Period, the latest of (A) the date of receipt of the Notice
of Termination, (B) the last day of the Holdover Period, and (C) any later date
specified in the Notice of Termination (but not more than thirty days after the
giving of such Notice).
5. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the
product of (x) [ ]* percent of the Annual Base Salary (the "Bonus
Amount") and (y) a fraction, the numerator of which is the number of
days in the current fiscal year through the Date of Termination, and
the denominator of which is 365 (the "Fraction"), (3) the product of
(A) the amount that the Company would have contributed to the Moorco
International
- ------------
* Insert current bonus percentage.
-18-
<PAGE> 19
Inc. Incentive Savings Plan, or any successor thereto, for the
Executive's account for the plan year in which the Date of
Termination occurs, assuming that the rate of contribution would be
the same as that in effect immediately before the Change of Control
(the "Savings Plan Amount") and (B) the Fraction, less (C) the
amount (if any) previously contributed to such plan for the
Executive's account for such plan year, and (4) any compensation
previously deferred by the Executive (together with any accrued
interest or earnings thereon), any accrued vacation pay and pay for
any earned but unutilized vacation, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1),
(2), and (3) and (4) shall be hereinafter referred to as the
"Accrued Obligations"); and
B. the present value (calculated using the Discount Rate) of the
Executive's Annual Base Salary, Bonus Amount and Savings Plan Amount
for the Severance Period;
(ii) for the Severance Period, the Company shall continue benefits to
the Executive and/or the Executive's family at least equal to those which would
have been provided to them in accordance with the plans, programs, practices and
policies described in Section 3(b)(iv) of this Agreement if the Executive's
employment had not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies and their families; provided, however,
that if the Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under another employer-provided
plan, the medical and other welfare benefits described herein shall be secondary
to those provided under such other plan during such applicable period of
eligibility, and for purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be considered to
have remained employed during the Severance Period and to have retired on the
last day of the Severance Period; and provided, further, that the Company shall
have the option to satisfy its obligations under this clause (ii) in full by
paying the Executive an additional lump sum equal to the present value
(calculated using the Discount Rate) of twenty percent of the Executive's Annual
Base Salary for the Severance Period;
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<PAGE> 20
(iii) the Company shall provide the Executive with a nonqualified
retirement benefit (the "Additional Benefit") in addition to the aggregate
benefits payable to the Executive and his surviving spouse and/or
beneficiaries under the Retirement Plans, such Additional Benefit to be
payable at such times and in such form as such benefits under the
Retirement Plans become payable, such that the aggregate of the Additional
Benefits and the benefits payable to the Executive and his surviving
spouse and/or beneficiaries under the Retirement Plans equals the benefits
that would have been payable under the Retirement Plans if the Executive
(A) had remained employed by the Company through the end of the Retirement
Severance Period, (B) had received annual compensation during the
Retirement Severance Period equal to the Annual Base Salary plus the Bonus
Amount and (C) terminated employment on the last day of the Retirement
Severance Period;
(iv) the Company shall, at the Company's election, transfer
unencumbered title to the automobile most recently furnished to the
Executive by the Company (if any), or a lump-sum cash payment equal to the
then current fair market value of such automobile;
(v) the Company shall transfer to the Executive all club memberships
maintained by the Company for the Executive at or immediately prior to the
Date of Termination, to the extent such memberships are transferable;
(vi) the Company shall provide an outplacement service (provided by
one or more firms selected by the Executive) to the Executive until the
first to occur of (i) the expiration of the Severance Period or (ii) the
date upon which the Executive accepts full-time employment; such service
to include access to an office, routine office equipment and services
necessary to conduct a job search, and employment counseling; and
(vii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies, including without
limitation all payments pursuant to Section 8 below (such other amounts
and benefits shall be hereinafter referred to as the "Other Benefits").
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<PAGE> 21
(b) Death. (i) If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period (other than during
the Holdover Period, if any), this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 5(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate and/or the
Executive's beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its affiliated
companies and their beneficiaries.
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<PAGE> 22
(ii) If (A) the Executive's employment is terminated by reason of
the Executive's death during the Holdover Period, or (B) the Executive dies
after becoming entitled to payments and benefits pursuant to Section 5(a) above
but before receiving all such payments and benefits, the Executive's surviving
spouse (or if there is no such surviving spouse, the Executive's estate) shall
be entitled to the payments and benefits set forth in Section 5(a). In the case
described in clause (A) of the preceding sentence, such payments and benefits
shall be determined as if the Executive's employment had been terminated by the
Company without Cause on the date of his death, and in both cases described in
the preceding sentence, such payments and benefits shall be determined as if the
Executive had survived until the expiration of the Retirement Severance Period.
(iii) For purposes of this Section 5(b), the Executive will be
deemed to be in a Holdover Period for the six-month period immediately following
a Change of Control unless the Executive has received written notice from the
Company stating that a Holdover Period is not applicable to the Executive or
unless the time period prescribed by the Company for the Holdover Period has
expired.
(c) Disability. (i) If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period (other than
during the Holdover Period,
-22-
<PAGE> 23
if any), this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 5(c) shall include without limitation, and the Executive shall
be entitled after the Disability Effective Date to receive, disability and other
benefits at least equal to the most favorable of those generally provided by the
Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its affiliated
companies and their families.
(ii) If the Executive's employment is terminated by reason of the
Executive's Disability during the Holdover Period, the Executive shall receive
the payments and benefits provided for in Section 5(a) above, as if the
Executive's employment had been terminated by the Company without
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<PAGE> 24
Cause on the Date of Termination; provided, that in lieu of the lump sum payment
provided for in clause B of Section 5(a)(i), the Executive shall receive annual
compensation during the Severance Period equal to the Annual Base Salary
(reduced, but not below zero, by the amount of any amounts received by the
Executive pursuant to any statutory disability benefit program and the Company's
long-term disability program), the Bonus Amount and the Savings Plan Amount,
paid on a monthly basis.
(iii) For purposes of this Section 5(c), the Executive will be
deemed to be in a Holdover Period for the six-month period immediately following
a Change of Control unless the Executive has received written notice from the
Company stating a Holdover Period is not applicable to the Executive or unless
the time period prescribed by the Company for the Holdover Period has expired.
(d) Cause; Other than for Good Reason. If the Executive's employment
is terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) the Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for
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<PAGE> 25
Good Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued Obligations shall be paid
to the Executive in a lump sum in cash within 30 days of the Date of
Termination.
6. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
11(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
7. Full Settlement; Legal Fees. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall
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<PAGE> 26
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and except as
specifically provided in Section 5(a)(ii), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest (regardless
of the outcome thereof) by the Company, the Executive or others of the validity
or enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
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<PAGE> 27
otherwise, but determined without regard to any additional payments required
under this Section 8) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Arthur
Andersen LLP or such other certified public accounting firm as may be designated
by the Executive (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has
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<PAGE> 28
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 8, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 8(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
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<PAGE> 29
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest
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<PAGE> 30
and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income
tax (including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Section 8(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the
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<PAGE> 31
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 8(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 8(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
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<PAGE> 32
9. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
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(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to
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<PAGE> 34
the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
-------------------
If to the Company:
-----------------
Moorco International Inc.
2800 Post Oak Boulevard
Suite 5701
Houston, Texas 77056-6111
Attention: [General Counsel]*
[Chief Executive Officer]*
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
- -----------
* Use for all except General Counsel.
* Use for General Counsel.
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<PAGE> 35
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 4(d)(i)-(v) of this Agreement,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, prior to the Effective Date, the Executive's employment may be terminated
by either the Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under this Agreement.
From and after the Effective Date, the Executive shall not participate in the
Moorco International Inc. Change in Control Severance Plan or any other
severance plan or policy of the Company, and this Agreement shall supersede any
other agreement between the parties with respect to the subject matter hereof.
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<PAGE> 36
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused this Agreement to be executed in its name on its behalf, all as of
the day and year first above written.
--------------------------------
[Executive]
MOORCO INTERNATIONAL INC.
By
-----------------------------
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<PAGE> 1
EXHIBIT 2
[Form of Agreement for
Other Officers]
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between Moorco International Inc., a Delaware
corporation (the "Company") and _________ _________ (the "Executive"), dated as
of the 8th day of May, 1995.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control
(as defined below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control
and to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of
other corporations. Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
<PAGE> 2
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) Accrued Obligations
has the meaning set forth in Section 5(a)(i)(A).
(b) Affiliated Companies means all companies controlled
by, controlling or under common control with the Company.
(c) Annual Base Salary has the meaning set forth in Section
3(b)(i).
(d) Annual Bonus has the meaning set forth in Section
3(b)(ii).
(e) Bonus Amount has the meaning set forth in Section
5(a)(i)A.
(f) Cause has the meaning set forth in Section 4(c).
(g) Change of Control means:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (x) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (y) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions
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<PAGE> 3
shall not constitute a Change of Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the
Company or (D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this definition; or
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(iii) Approval by the shareholders of the Company
of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company
(a "Business Combination"), in each case, unless, following such
Business Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any employee benefit plan or related trust of the
Company or such corporation resulting from such Business Combination)
beneficially
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<PAGE> 4
owns, directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (C)
at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(iv) Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company.
(h) Change of Control Period means the period commencing
on the date hereof and ending on the third anniversary of the date hereof.
(i) Code means the Internal Revenue Code of 1986, as
amended.
(j) Company means Moorco International Inc. and any
successor thereto.
(k) Date of Termination has the meaning set forth in
Section 4(f).
(l) Discount Rate means the lowest yield reported in The
Wall Street Journal for the first business day of the month in which the
relevant payment is made pursuant to this Agreement, for U.S. Treasury Bonds
and Notes maturing in the month two years after the date of payment hereunder,
or if no
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<PAGE> 5
such yield is reported for such month, the lowest yield reported for the
immediately preceding month.
(m) Effective Date means the first date during the Change
of Control Period on which a Change of Control occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control
or (ii) otherwise arose in connection with or anticipation of a Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of employment.
(n) Employment Period has the meaning set forth in
Section 2.
(o) Good Reason has the meaning set forth in Section 4(d).
(p) Holdover Period means the period following a Change
of Control that (i) begins on the date that the Company provides the Executive
with written notice that the Company requires the services of the Executive and
(ii) ends
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<PAGE> 6
on the date specified in such notice but no later than six months after the
date of the Change of Control.
(q) Notice of Termination has the meaning set forth in
Section 4(e).
(r) Protected Period means the period of time beginning
upon the later of (i) the date of a Change of Control and (ii) the last day of
the Holdover Period (if any) and ending 2.2 years after such later date.
(s) Retirement Plans means all qualified and nonqualified
retirement plans and programs of the Company and its affiliates in which the
Executive participates, including without limitation and to the extent
applicable, the Moorco International Inc. Retirement Income Plan, the Smith
Meter, Inc. Salaried Retirement Plan, the Benefit Restoration Plan for
Participants in the Moorco International Inc. Retirement Income Plan, the
Supplemental Executive Retirement Plan for Participants in the Moorco
International Inc. Retirement Income Plan, and the Benefit Restoration Plan for
Participants in the Smith Meter, Inc. Salaried Retirement Plan.
(t) Retirement Severance Period means the period of 5
years following the Date of Termination.
(u) Severance Period means the period of 2.2 years
following the Date of Termination.
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<PAGE> 7
(v) Window Period means the 30 days immediately following
the six-month anniversary of the Effective Date.
2. Employment Period. The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending upon the expiration
of the Protected Period (the "Employment Period").
3. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned to the Executive at
any time during the 120-day period immediately preceding the Effective Date and
(B) the Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date, or at another
location not more than 25 miles from such location. If there is a Holdover
Period, then notwithstanding a violation of clause (A) of the preceding
sentence, the Executive shall be obligated to remain employed by the Company
until the end of the Holdover Period, but such violation shall be considered to
be a "Good Reason" described in clause (i) of Section 4(d) of this Agreement.
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<PAGE> 8
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company
in accordance with this Agreement. It is expressly understood and agreed that
to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual base
-8-
<PAGE> 9
salary ("Annual Base Salary"), which shall be payable at least monthly, at a
rate at least equal to the greater of (A) $[ ]* per annum and (B) twelve
times the highest monthly base salary paid or payable, including any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve-month period immediately
preceding the month in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed no more than 12 months after
the last salary increase awarded to the Executive prior to the Effective Date
and thereafter at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase and
the term Annual Base Salary as utilized in this Agreement shall refer to Annual
Base Salary as so increased.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to [ ]*
percent of the Annual Base Salary. Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is
- ---------------------
* Insert present salary.
* Insert present bonus percentage.
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<PAGE> 10
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at
any time during the 120-day period immediately preceding the Effective Date or
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices,
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<PAGE> 11
policies and programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company
and its affiliated companies.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Company and its affiliated companies
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
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<PAGE> 12
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and, if applicable,
annual physical examinations and use of an automobile and payment of related
expenses, in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal secretarial
and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as provided generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
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<PAGE> 13
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
4. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 11(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties.
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<PAGE> 14
(b) Disability means the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative.
(c) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean the Executive's willful dishonesty or commission
of a felony for which he is convicted and which, in either case, may cause
material harm to the Company. For purposes of this provision, no act or
failure to act, on the part of the Executive, shall be considered "willful"
unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission was in the
best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of the Company
or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall
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<PAGE> 15
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in the definition of "Cause" above, and specifying the
particulars thereof in detail.
(d) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 3(a) of this Agreement,
or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any
of the provisions of Section 3(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be
based at any office or location other than as provided in Section
3(a)(i)(B) hereof or, in the event the Executive consents to
relocation, the failure of the Company to pay (or reimburse the
Executive for) all
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<PAGE> 16
reasonable moving expenses and other costs incurred by the Executive
relating to a change in the Executive's principal residence in
connection with such relocation, with a gross-up payment for taxes
thereon, all in accordance with the Company's relocation policy as in
effect immediately before the Effective Date, or the Company's
requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the
Effective Date;
(iv) any purported termination by the Company of
the Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 10(c) of this Agreement.
For purposes of this Section 4(d), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. Anything in this Agreement
to the contrary notwithstanding: a termination by the Executive based solely
upon an event described in clause (i) above, which event occurs during the
Holdover Period, shall be deemed to be without Good Reason unless the Executive
continues to render services to the Company pursuant to this Agreement until
the end of the Holdover Period; and a termination by the Executive for any
reason during the Window Period shall be deemed to be a termination for Good
Reason for all purposes of this Agreement.
(e) Notice of Termination. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party
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<PAGE> 17
hereto given in accordance with Section 11(b) of this Agreement. For purposes
of this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) to the extent necessary,
specifies the Date of Termination (as defined below). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executive's or the Company's rights hereunder.
(f) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, other than for a Good Reason specified in clause (i)
of Section 4(d) that occurs during the Holdover Period, the date of receipt of
the Notice of Termination or any later date specified therein (but not more
than thirty days after the giving of such notice), (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such
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<PAGE> 18
termination, (iii) if the Executive's employment is terminated by reason of
death or Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be, and (iv) if the Executive's employment is
terminated by the Executive for a Good Reason specified in clause (i) of
Section 4(d) that occurs during the Holdover Period, the latest of (A) the date
of receipt of the Notice of Termination, (B) the last day of the Holdover
Period, and (C) any later date specified in the Notice of Termination (but not
more than thirty days after the giving of such Notice).
5. Obligations of the Company upon Termination. (a) Good
Reason; Other Than for Cause, Death or Disability. If, during the Employment
Period, the Company shall terminate the Executive's employment other than for
Cause or Disability or the Executive shall terminate employment for Good
Reason:
(i) the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) [ ]* percent of
the Annual Base Salary (the "Bonus Amount") and (y) a
fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the
denominator of which is 365 (the "Fraction"), (3) the product
of (A) the amount that the Company would have contributed to
the Moorco International Inc. Incentive Savings Plan, or any
successor thereto, for the Executive's account for the plan
- ---------------------
* Insert current bonus percentage.
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<PAGE> 19
year in which the Date of Termination occurs, assuming that
the rate of contribution would be the same as that in effect
immediately before the Change of Control (the "Savings Plan
Amount") and (B) the Fraction, less (C) the amount (if any)
previously contributed to such plan for the Executive's
account for such plan year, and (4) any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon), any accrued vacation
pay and pay for any earned but unutilized vacation, in each
case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) and (4) shall
be hereinafter referred to as the "Accrued Obligations"); and
B. the present value (calculated using the
Discount Rate) of the Executive's Annual Base Salary, Bonus
Amount and Savings Plan Amount for the Severance Period;
(ii) for the Severance Period, the Company shall
continue benefits to the Executive and/or the Executive's family at
least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described
in Section 3(b)(iv) of this Agreement if the Executive's employment
had not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies and their
families; provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the medical
and other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period of
eligibility, and for purposes of determining eligibility (but not the
time of commencement of benefits) of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed during the
Severance Period and to have retired on the last day of the Severance
Period; and provided, further, that the Company shall have the option
to satisfy its obligations under this clause (ii) in full by paying
the Executive an additional lump sum equal to the present value
(calculated using the Discount Rate) of twenty percent of the
Executive's Annual Base Salary for the Severance Period;
(iii) the Company shall provide the Executive with a
nonqualified retirement benefit (the "Additional
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<PAGE> 20
Benefit") in addition to the aggregate benefits payable to the
Executive and his surviving spouse and/or beneficiaries under the
Retirement Plans, such Additional Benefit to be payable at such times
and in such form as such benefits under the Retirement Plans become
payable, such that the aggregate of the Additional Benefits and the
benefits payable to the Executive and his surviving spouse and/or
beneficiaries under the Retirement Plans equals the benefits that
would have been payable under the Retirement Plans if the Executive
(A) had remained employed by the Company through the end of the
Retirement Severance Period, (B) had received annual compensation
during the Retirement Severance Period equal to the Annual Base Salary
plus the Bonus Amount and (C) terminated employment on the last day of
the Retirement Severance Period;
(iv) the Company shall, at the Company's election,
transfer unencumbered title to the automobile most recently furnished
to the Executive by the Company (if any), or a lump-sum cash payment
equal to the then current fair market value of such automobile;
(v) the Company shall transfer to the Executive
all club memberships maintained by the Company for the Executive at or
immediately prior to the Date of Termination, to the extent such
memberships are transferable;
(vi) the Company shall provide an outplacement
service (provided by one or more firms selected by the Executive) to
the Executive until the first to occur of (i) the expiration of the
Severance Period or (ii) the date upon which the Executive accepts
full-time employment; such service to include access to an office,
routine office equipment and services necessary to conduct a job
search, and employment counseling; and
(vii) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive any
other amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy or
practice or contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
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<PAGE> 21
(b) Death. (i) If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period (other than
during the Holdover Period, if any), this Agreement shall terminate without
further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate and/or the
Executive's beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its affiliated
companies and their beneficiaries.
-21-
<PAGE> 22
(ii) If (A) the Executive's employment is terminated
by reason of the Executive's death during the Holdover Period, or (B) the
Executive dies after becoming entitled to payments and benefits pursuant to
Section 5(a) above but before receiving all such payments and benefits, the
Executive's surviving spouse (or if there is no such surviving spouse, the
Executive's estate) shall be entitled to the payments and benefits set forth in
Section 5(a). In the case described in clause (A) of the preceding sentence,
such payments and benefits shall be determined as if the Executive's employment
had been terminated by the Company without Cause on the date of his death, and
in both cases described in the preceding sentence, such payments and benefits
shall be determined as if the Executive had survived until the expiration of
the Retirement Severance Period.
(iii) For purposes of this Section 5(b), the
Executive will be deemed to be in a Holdover Period for the six-month period
immediately following a Change of Control unless the Executive has received
written notice from the Company stating that a Holdover Period is not
applicable to the Executive or unless the time period prescribed by the Company
for the Holdover Period has expired.
(c) Disability. (i) If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period
(other than during the Holdover Period,
-22-
<PAGE> 23
if any), this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 5(c) shall include without limitation, and the
Executive shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect generally
with respect to other peer executives and their families at any time during the
120-day period immediately preceding the Effective Date or, if more favorable
to the Executive and/or the Executive's family, as in effect at any time
thereafter generally with respect to other peer executives of the Company and
its affiliated companies and their families.
(ii) If the Executive's employment is terminated by
reason of the Executive's Disability during the Holdover Period, the Executive
shall receive the payments and benefits provided for in Section 5(a) above, as
if the Executive's employment had been terminated by the Company
-23-
<PAGE> 24
without Cause on the Date of Termination; provided, that in lieu of the lump
sum payment provided for in clause B of Section 5(a)(i), the Executive shall
receive annual compensation during the Severance Period equal to the Annual
Base Salary (reduced, but not below zero, by the amount of any amounts received
by the Executive pursuant to any statutory disability benefit program and the
Company's long-term disability program), the Bonus Amount and the Savings Plan
Amount, paid on a monthly basis.
(iii) For purposes of this Section 5(c), the
Executive will be deemed to be in a Holdover Period for the six-month period
immediately following a Change of Control unless the Executive has received
written notice from the Company stating a Holdover Period is not applicable to
the Executive or unless the time period prescribed by the Company for the
Holdover Period has expired.
(d) Cause; Other than for Good Reason. If the Executive's
employment is terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive (x) the Annual Base Salary through the Date
of Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for
-24-
<PAGE> 25
Good Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination.
6. Non-exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in
any plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor, subject to
Section 11(f), shall anything herein limit or otherwise affect such rights as
the Executive may have under any contract or agreement with the Company or any
of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract
or agreement except as explicitly modified by this Agreement.
7. Full Settlement; Legal Fees. The Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall
-25-
<PAGE> 26
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and except as
specifically provided in Section 5(a)(ii), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to
pay as incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.
8. Certain Reductions in Payments.
(a) Notwithstanding any other provision of this Agreement, in
the event it shall be determined that any payment or distribution by the
Company to or for the benefit of
-26-
<PAGE> 27
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise) (a "Payment") would be
nondeductible by the Company for Federal income tax purposes because of Section
280G of the Code, then the aggregate present value of amounts payable or
distributable to or for the benefit of the Executive pursuant to this Agreement
(such payments or distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not below zero) to
the Reduced Amount. The "Reduced Amount" shall be an amount expressed in
present value that maximizes the aggregate present value of Agreement Payments
without causing any Payment to be nondeductible by the Company because of
Section 280G of the Code. For purposes of this Section X, present value shall
be determined in accordance with Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this Section
8 shall be made by Arthur Andersen LLP (the "Accounting Firm"), which shall
provide detailed supporting calculations to both the Company and the Executive
within 15 business days of the Date of the Change of Control and such other
times as requested by the Company. Any such determination by the Accounting
Firm shall be binding upon the Company and the Executive. The Executive shall
determine which and how much of the Agreement Payments (or, at the election of
the Executive, other Payments) shall be eliminated or reduced consistent with
the requirements of this
-27-
<PAGE> 28
Section 8, provided that, if the Executive does not make such determination
within ten business days of the receipt of the calculations made by the
Accounting Firm, the Company shall elect which and how much of the Agreement
Payments shall be eliminated or reduced consistent with the requirements of
this Section 8 and shall notify the Executive promptly of such election.
Within five business days thereafter, the Company shall pay to or distribute to
or for the benefit of the Executive such amounts as are then due to the
Executive under this Agreement.
(c) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Agreement Payments will have
been made by the Company that should not have been made ("Overpayment") or that
additional Agreement Payments that will have not been made by the Company could
have been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. In the event that the Accounting Firm
determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Executive, which the Executive shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code; provided, however, that no
amount shall be payable by the Executive to the Company (or if paid by the
Executive to the Company shall be
-28-
<PAGE> 29
returned to the Executive) if and to the extent such payment would not reduce
the amount which is subject to taxation under Section 4999 of the Code. In the
event that the Accounting Firm determines that an Underpayment has occurred,
any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code.
9. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 9 constitute a basis for deferring or withholding
any
-29-
<PAGE> 30
amounts otherwise payable to the Executive under this Agreement.
10. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by
and construed in accordance with the laws of the
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<PAGE> 31
State of Texas, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
If to the Company:
Moorco International Inc.
2800 Post Oak Boulevard
Suite 5701
Houston, Texas 77056-6111
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
-31-
<PAGE> 32
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 4(d)(i)-(v) of this
Agreement, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is
"at will" and, prior to the Effective Date, the Executive's employment may be
terminated by either the Executive or the Company at any time prior to the
Effective Date, in which case the Executive shall have no further rights under
this Agreement. From and after the Effective Date, the Executive shall not
participate in the Moorco International Inc. Change in Control Severance Plan
or any other severance plan or policy of the Company,
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<PAGE> 33
and this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused this Agreement to be executed in its name on
its behalf, all as of the day and year first above written.
-------------------------------
[Executive]
MOORCO INTERNATIONAL INC.
By
-----------------------------
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<PAGE> 1
EXHIBIT 3
MOORCO INTERNATIONAL INC.
1995 INCENTIVE BONUS PROGRAM
WHEREAS, the Board of Directors (the "Board") of Moorco
International Inc. (the "Company") has determined that the Company should
explore certain possible extraordinary transactions, and
WHEREAS, the Board believes that it is in the best interests of
the Company and its stockholders that senior management of the Company remain in
the Company's employ during the period in which the Board is exploring such
transactions and be provided with additional incentive to develop the most
desirable alternatives for the Company and its stockholders,
THEREFORE, the Board has adopted the Moorco International Inc.
1995 Incentive Bonus Program (the "Program") effective as of May 1, 1995, upon
the following terms:
Section 1. Eligibility. The participants in this Program (the
"Participants") are set forth on Schedule A hereto. Pursuant to the Program,
Participants shall be entitled to receive cash awards ("Bonuses") upon the
occurrence of specified events.
Section 2. Amount Available. The total amount distributable
under the Program shall be up to $4 million in cash (the "Bonus Pool"), which
shall be distributed to
<PAGE> 2
1995 Incentive Bonus Program
Page 2
Participants as Bonuses in accordance with Section 3 hereof. The portion of the
Bonus Pool which is allocated for possible payment under the Program to a
Participant who forfeits his right to a Bonus pursuant to Section 3(b) shall be
distributed under the Program, whether to the other Participants or to others,
only if specifically authorized by the Board. If the Board does not authorize
the distribution of amounts which had been allocated to such a Participant, the
amount of the Bonus Pool shall be correspondingly reduced.
Section 3. Bonuses. (a) The Bonuses shall be paid to
Participants, subject to subsection (b) below, upon an acquisition by any
person, entity or group (including the Company) of more than fifty percent of
the Company's Common Stock, par value $0.01 per share (the "Company Common
Stock"), the consummation of a merger, consolidation or reorganization involving
the Company, a sale of all or substantially all of the Company's assets or a
recapitalization of the Company (in each case, an "Extraordinary Transaction,"
which shall also include any other transaction or series of transactions which
the Board determines for purposes of this Program is an "Extraordinary
Transaction"). Each Participant shall receive the percentage of the Bonus Pool
that is set forth opposite his name on Schedule A hereto. The amount of the
Bonus Pool shall be determined as follows, based upon the Transaction Price (as
defined in Section 3(c) below):
<PAGE> 3
1995 Incentive Bonus Program
Page 3
<TABLE>
<CAPTION>
Transaction Price Bonus
(per share) Pool
----------------- -----
<S> <C>
$20 . . . . . . . . . . . $0.50 million
21 . . . . . . . . . . . 0.75 million
22 . . . . . . . . . . . 1.00 million
23 . . . . . . . . . . . 1.50 million
24 . . . . . . . . . . . 2.00 million
25 . . . . . . . . . . . 2.50 million
26 . . . . . . . . . . . 3.00 million
27 . . . . . . . . . . . 3.50 million
28 . . . . . . . . . . . 3.75 million
29 or greater . . . . . 4.00 million
</TABLE>
For an Extraordinary Transaction in which the Transaction Price is between two
values shown in the above schedule, the amount in the Bonus Pool shall be
determined by interpolation between the Bonus Pool amounts corresponding to the
two nearest Transaction Prices specified in the above schedule.
(b) A Participant whose employment terminates for any reason
before the occurrence of an Extraordinary Transaction, other than a termination
by the Company at the request of a person seeking to consummate an Extraordinary
Transaction, shall forfeit the right to receive any Bonus pursuant to the
Program, unless otherwise determined by the Board.
<PAGE> 4
1995 Incentive Bonus Program
Page 4
(c) As used in the Program, "Transaction Price" means the
highest amount per share of Company Common Stock received by any stockholder of
the Company in the Extraordinary Transaction. In the event that the
consideration received in an Extraordinary Transaction is paid in whole or in
part in the form of securities, the value of such securities received per share
of Company Common Stock, for purposes of calculating the Transaction Price,
shall be the fair market value thereof on the day prior to the consummation of
such Extraordinary Transaction, as determined in their sole discretion by those
individuals who constitute the Compensation Committee of the Board immediately
before the Extraordinary Transaction (the "Compensation Committee Members");
provided, however, that if such securities consist of securities with an
existing public trading market, the value thereof shall be determined by the
average of the last sales prices for such securities on each of the three
trading days which immediately precede the date of consummation of the
Extraordinary Transaction. The value of any other noncash consideration received
by stockholders of the Company in connection with an Extraordinary Transaction
shall be the fair market value thereof per share of Company Common Stock as
determined in their sole discretion by the Compensation Committee Members. If
any payments arising from the Extraordinary Transaction are contingent at the
time the Bonuses are initially paid and are made thereafter, such payments shall
<PAGE> 5
1995 Incentive Bonus Program
Page 5
be valued in accordance with this subsection (c) and the amount thereof added to
the Transaction Price as previously calculated. In such event, the Bonus Pool
shall be correspondingly increased, and the resulting increases in the Bonuses
shall be paid when and as such formerly contingent payments are made. Any
valuation of any such formerly contingent payment which is required shall be
made by the Compensation Committee Members or as many thereof as are available
or if none of the Compensation Committee Members are available, any such
valuation which is required shall be made by Salomon Brothers Inc or any
successor thereto.
Section 4. Miscellaneous. (a) Nothing in the adoption of this
Program shall confer on any Participant the right to continued employment with
the Company or any of its affiliates, or affect in any way the right of the
Company or any of its affiliates to terminate the employment or change the
responsibilities of any Participant at any time.
(b) All amounts payable hereunder shall be subject to
applicable federal, state and local tax withholding.
(c) Questions of construction and interpretation of the Program
shall be conclusively determined by the Board or any duly authorized committee
thereof prior to the date of consummation of the Extraordinary Transaction and
by the
<PAGE> 6
1995 Incentive Bonus Program
Page 6
Compensation Committee Members after the date of consummation of the
Extraordinary Transaction.
(d) The Program may not be terminated or amended from and after
an Extraordinary Transaction so as to adversely affect the rights of
Participants. For purposes of this subsection (d), any amendment or termination
of this Program made in anticipation of an Extraordinary Transaction or at the
request of a party intending to consummate an Extraordinary Transaction shall be
deemed to have occurred after the occurrence of an Extraordinary Transaction.
(e) This Program shall terminate by its terms on the earlier of
May 1, 1996 and the date on which all Bonuses shall have been paid in full,
unless extended by the Board, provided, however, that such termination shall not
affect any Bonuses payable as a result of the occurrence of an Extraordinary
Transaction consummated before such termination (including without limitation
with respect to any contingent payments received relating to such an
Extraordinary Transaction which are paid after the date of such termination).
<PAGE> 7
SCHEDULE A
PARTICIPANTS
M. L. Tiner: 50 percent
J. J. Nelson: 30 percent
R. T. Levis: 20 percent
<PAGE> 1
EXHIBIT 4
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR PARTICIPANTS IN THE
MOORCO INTERNATIONAL INC. RETIREMENT INCOME PLAN
(Established as of January 1, 1995)
<PAGE> 2
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR PARTICIPANTS IN THE
MOORCO INTERNATIONAL INC. RETIREMENT INCOME PLAN
(Established as of January 1, 1995)
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I ESTABLISHMENT AND PURPOSE . . . . . . . . . . . 1
Section:
1.1 Establishment . . . . . . . . . . . . . . . . . 1
1.2 Purpose . . . . . . . . . . . . . . . . . . . 1
1.3 Application of Plan . . . . . . . . . . . . . . 1
1.4 ERISA Status . . . . . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS AND CONSTRUCTION . . . . . . . . . 1
Section:
2.1 Definitions . . . . . . . . . . . . . . . . . . 1
2.2 Gender and Number . . . . . . . . . . . . . . . 5
2.3 Severability . . . . . . . . . . . . . . . . . 5
2.4 Applicable Law . . . . . . . . . . . . . . . . 5
2.5 Plan Not an Employment Contract . . . . . . . . 5
2.6 Funding . . . . . . . . . . . . . . . . . . . 6
2.7 Tax Withholding . . . . . . . . . . . . . . . . 6
2.8 Effect on Other Plans . . . . . . . . . . . . . 6
ARTICLE III PARTICIPATION . . . . . . . . . . . . . . . . . 7
ARTICLE IV BENEFITS. . . . . . . . . . . . . . . . . . . . 7
Section:
4.1 Normal Retirement Benefit . . . . . . . . . . . 7
4.2 Early Retirement Benefit . . . . . . . . . . . 8
4.3 Disability Benefit . . . . . . . . . . . . . . 8
4.4 Vested Separation Benefit . . . . . . . . . . . 9
4.5 Death Benefits . . . . . . . . . . . . . . . . 10
4.6 Form of Payment . . . . . . . . . . . . . . . . 11
4.7 Participation Agreement . . . . . . . . . . . . 11
4.8 Transfer of Employment . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V ADMINISTRATION . . . . . . . . . . . . . . . . . 11
Section:
5.1 Administration . . . . . . . . . . . . . . . . 12
5.2 Expenses . . . . . . . . . . . . . . . . . . . 12
5.3 Indemnification and Exculpation . . . . . . . . 12
5.4 Non-Alienation of Benefits . . . . . . . . . . 12
5.5 Resolution of Disputes . . . . . . . . . . . . 13
ARTICLE VI MERGER, AMENDMENT AND TERMINATION . . . . . . . 13
Section:
6.1 Merger, Consolidation or
Acquisition . . . . . . . . . . . . . . . . . 13
6.2 Amendment and Termination . . . . . . . . . . . 13
6.3 Adoption Procedure . . . . . . . . . . . . . . 14
</TABLE>
-ii-
<PAGE> 4
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR PARTICIPANTS IN THE
MOORCO INTERNATIONAL INC. RETIREMENT INCOME PLAN
(Established as of January 1, 1995)
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1 Establishment: Moorco International Inc., a Delaware
corporation (the "Company"), hereby establishes, effective as of January 1,
1995, an unfunded plan to be known as the Supplemental Executive Retirement
Plan for Participants in the Moorco International Inc. Retirement Income Plan
(the "Plan"), for the benefit of a select group of management or highly
compensated employees of the affiliates of the Company that adopt the Plan
pursuant to Section 6.3 hereof.
1.2 Purpose: The purpose of this Plan is generally to provide to
certain selected salaried officers and other key management employees a method
of supplementing the retirement benefit under the Moorco International Inc.
Retirement Income Plan (the "Retirement Plan").
1.3 Application of Plan: The terms of this Plan are applicable only
to those employees of any Employer (i) who are participants in the Retirement
Plan and (ii) who are designated as participants in this Plan under a
Participation Agreement.
1.4 ERISA Status: The Plan is intended to qualify for the
exemptions provided under Title I of the Employee Retirement Income Security
Act ("ERISA") for plans that are not qualified and that are maintained
primarily to provide deferred compensation for a select group of management or
highly compensated employees.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Definitions: Except as otherwise indicated herein, the terms
used in this Plan shall have the same meaning as they have under the Retirement
Plan.
<PAGE> 5
For purposes of this Plan, the following definitions shall apply:
a. "Actuarial Equivalent" shall mean an amount or a benefit of
equivalent current value to the retirement benefit which would otherwise
be provided to a Participant under this Plan, determined on the basis of
the Unisex Pension 1984 Mortality Table and the immediate interest rate
published by the Pension Benefit Guaranty Corporation and in effect on the
first day of each calendar year.
b. "Accrual Service" shall have the same meaning as the term
Credited Service under the Retirement Plan.
c. "Administrative Committee" shall mean the person or committee
designated as the Plan Administrator under the Retirement Plan from time to
time by the Board of Directors of the Company or as otherwise designated
under Section 5.1 of the Plan.
d. "Average SERP Pay" shall mean a Participant's average
Compensation during the Participant's final five full calendar years of
Accrual Service. If a Participant has less than five full calendar years
of Accrual Service in which the Participant received Compensation, Average
SERP Pay will be equal to the Participant's average Compensation during the
Participant's calendar years of Accrual Service. In no event shall Average
SERP Pay exceed $500,000; provided however, such limit shall be adjusted
each January 1, beginning January 1, 1996, to reflect the percentage change
in the CPI-U for the 12 month period ending on the preceding October 31.
e. "Beneficiary" shall mean any person designated by a
Participant to receive any payment of benefits under this Plan in the event
the Participant dies leaving no Surviving Spouse, or if no such designation
is made, such Participant's estate.
f. "Benefit Restoration Plan" shall mean the Benefit Restoration
Plan for Participants in the Moorco International Inc. Retirement Income
Plan as established effective January 1, 1995 and as thereafter amended.
-2-
<PAGE> 6
g. "Board of Directors" shall mean the Board of Directors of the
Company.
h. "Change in Control" shall be deemed to have occurred on the
first day following January 1, 1995 upon which any person or group of
persons or entity or group of entities acquires either (i) direct or
indirect voting power sufficient to elect a majority of the directors of
the Company or (ii) stock or assets of some or all of the Company's
operating units comprising 60% or more of the Company's total assets (as
shown on the Company's financial statements for the immediately preceding
fiscal year).
i. "Company" shall mean Moorco International Inc. or any
successor thereto.
j. "Compensation" shall mean a Participant's base pay plus any
incentive bonus paid in a calendar year.
k. "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors.
l. "CPI-U" shall mean the Consumer Price Index for all Urban
Consumers as published by the U.S. Department of Labor Bureau of Labor
Statistics.
m. "Disability" shall mean Disability as defined in Article I
of the Retirement Plan.
n. "Disability Benefit" shall mean the benefit payable to a
Participant pursuant to Section 4.3 of the Plan.
o. "Early Retirement Benefit" shall mean the annual retirement
benefit payable to a Participant pursuant to Section 4.2 of the Plan.
p. "Employee" shall mean any person who is regularly employed
full-time on a salaried basis by an Employer, including, but not limited
to, any employee who is also an officer or director of an Employer.
q. "Employer" shall mean (i) Smith Meter Inc., Crosby Valve &
Gage Company and Moorco Service Inc., during such time as each of these
companies is a Participating Affiliate, and (ii) any Participating
Affiliate that (A) has been offered participation in the Plan by the
Company and (B) has adopted the Plan by action of its board of directors
in accordance with Section 6.3.
-3-
<PAGE> 7
r. "Level A Participant" shall mean an Employee designated as a
Level A Participant in the Participation Agreement.
s. "Level B Participant" shall mean an Employee designated as a
Level B Participant in the Participation Agreement.
t. "Normal Retirement Age" shall mean termination of employment
of a Participant at (i) age 62 or later provided the Participant has
completed 10 years of Vesting Service or (ii) age 65; provided however,
that the Normal Retirement Age of an Employee hired after age 60 is the
date he completes the service requirements for eligibility for a benefit
under the Retirement Plan.
u. "Normal Retirement Benefit" shall mean the annual retirement
benefit payable to a Participant pursuant to Section 4.1 of this Plan.
v. "Normal Retirement Date" shall mean the later of (i) the
first day of the month coincident with or next following the date the
Participant attains the Normal Retirement Age or (ii) the first day of the
month coincident with or next following the date the Participant
terminates employment with the Company.
w. "Participant" shall mean an Employee who is a participant in
the Retirement Plan and who is eligible to participate in this Plan under
Article III.
x. "Participating Affiliate" shall mean an affiliate of the
Company that has adopted, and has not terminated participation in or
withdrawn from, the Retirement Plan in accordance with the provisions
thereof.
y. "Participation Agreement" shall mean the Participation
Agreement between the Employee and an Employer designating the Employee as
a Participant under the Plan and specifying whether the Employee is a
Level A Participant or Level B Participant. Notwithstanding anything to
the contrary in this Plan, the Participation Agreement may set forth
specific terms or provisions modifying the terms of this Plan with respect
to the named Participant, and the terms of such Participation Agreement
shall be controlling.
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<PAGE> 8
z. "Primary Social Security Benefit" shall mean the monthly
amount of primary old age insurance benefit under the Social Security Act
available to a Participant at the time set forth in Article IV of this
Plan.
aa. "Retirement Plan" shall mean the Moorco International Inc.
Retirement Income Plan, as amended from time to time; provided, however,
that for purposes of all definitions of terms, in the event the Moorco
International Inc. Retirement Income Plan is merged with or into another
retirement plan or is terminated, the term "Retirement Plan" shall refer
to the Moorco International Inc. Retirement Income Plan in effect
immediately prior to the merger or termination.
bb. "Surviving Spouse" shall mean the person married to a
Participant at the date of his death.
cc. "Vested Benefit" shall mean the annual retirement benefit
payable to a Participant pursuant to Section 4.4 of the Plan.
dd. "Vesting Service" shall mean the years of service credited
to a Participant under Article IV of the Retirement Plan or any successor
plan for purposes of determining the Participant's vested percentage in
his benefit under that plan.
2.2 Gender and Number: Except when otherwise indicated by the
context, any masculine terminology when used in the Plan shall also include the
feminine gender, and the definition of any term in the singular shall also
include the plural.
2.3 Severability: In the event any provision of the Plan shall be
held invalid or illegal for any reason, any illegality or invalidity shall not
affect the remaining parts of the Plan, but the Plan shall be construed and
enforced as if the illegal or invalid provision had never been inserted, and
the Company shall have the privilege and opportunity to correct and remedy
questions of illegality or invalidity by amendment as provided in the Plan.
2.4 Applicable Law: This Plan shall be governed and construed in
accordance with the laws of the State of Texas.
2.5 Plan Not an Employment Contract: The Plan is not an employment
contract. Eligibility for benefits under the Plan does not give to any person
the right to be continued in employment by an Employer, and all persons remain
subject to
-5-
<PAGE> 9
change of salary, transfer, change of job, discipline, layoff, discharge (with
or without cause), or any other change of employment status.
2.6 Funding: Subject to Section 4.8, the benefits described in this
Plan are contractual obligations of each Employer to pay compensation for
services, and shall constitute a liability to the Participant of the Employer
entering into the Participation Agreement and/or his or her beneficiaries in
accordance with the terms hereof. All amounts paid under this Plan shall be
paid in cash from the general assets of each Employer, and benefits shall be
reflected on the accounting records of the Employer but shall not be construed
to create, or require the creation of, a trust, custodial or escrow account.
However, the Employers may, in their discretion, purchase insurance contracts
as unrestricted assets of the Employer or establish a rabbi trust arrangement
for the purpose of providing payments due hereunder. No special or separate
fund need be established and no segregation of assets need be made to assure
the payment of such benefits. No Participant shall have any right, title or
interest whatever in or to any investment reserves, accounts, funds or assets
that the Employer may purchase, establish or accumulate to aid in providing the
benefits described in this Plan, except to the extent the Participant may be a
beneficiary of any rabbi trust arrangement that the Employer may in its
discretion establish. Nothing contained in this Plan shall create or be
construed to create a trust or a fiduciary relationship of any kind between an
Employer and a Participant or any other person. Notwithstanding anything to the
contrary in this Plan, however, the Company agrees to remain liable for any
benefits otherwise payable by Moorco Service Inc., to the extent not paid, and
if and to the extent the Company has such a liability it shall be considered an
Employer under this Plan.
2.7 Tax Withholding: The Employer may withhold from a payment of a
benefit hereunder any federal, state, or local taxes required by law to be
withheld with respect to such payment.
2.8 Effect on Other Plans: Amounts accrued or paid under this Plan
shall not be considered compensation for the purposes of the qualified plans
or life insurance plans of the Company or any Employer.
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<PAGE> 10
ARTICLE III
PARTICIPATION
An Employee shall become a Participant in this Plan if (i) the
Employee is an officer, subsidiary president or a member of a select group of
management or highly compensated employees, (ii) the Employee is selected by the
Compensation Committee to participate in the Plan, and (iii) an Employer has
entered into a Participation Agreement with the Employee specifying the
effective date of participation and the designation of the Employee as a Level A
or Level B Participant.
ARTICLE IV
BENEFITS
4.1 Normal Retirement Benefit: If the Participant terminates
employment with in Employer on or after the date the Participant attains Normal
Retirement Age, the Company shall pay a Normal Retirement Benefit commencing on
such Participant's Normal Retirement Date equal to:
(a) (i) For all Level A Participants, 1.6% of Average SERP Pay
multiplied by the Participant's years of Accrual Service at
termination of employment (not to exceed 30 years of Accrual Service)
or (ii) for all Level B Participants, 1.3% of Average SERP Pay
multiplied by the Participant's years of Accrual Service at
termination of employment (not to exceed 30 years of Accrual Service),
minus
(b) any retirement benefits that would be payable to such
Participant under the Retirement Plan, or any successor plan to the
Retirement Plan, and the Benefit Restoration Plan, calculated by
assuming such Retirement Plan benefit and Benefit Restoration Plan
benefit commence on the same date as the benefit payable under this
Plan and are payable in the form of a single life annuity; minus
(c) the Participant's Primary Social Security Benefit at time of
termination.
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<PAGE> 11
4.2 Early Retirement Benefit: If the Participant terminates
employment with an Employer prior to Normal Retirement Age but after the date
such Participant attains age 55 and completes 10 Years of Vesting Service, the
Company shall pay an Early Retirement Benefit equal to:
(a) (i) For all Level A Participants, 1.6% of Average SERP Pay
multiplied by the Participant's years of Accrual Service at
termination of employment (not to exceed 30 years of Accrual Service),
reduced by 6% per year for each full year that commencement of
benefits precedes the Participant's attainment of Normal Retirement
Age or (ii) for all Level B Participants, 1.3% of Average SERP Pay
multiplied by the Participant's years of Accrual Service at
termination of employment (not to exceed 30 years of Accrual Service),
reduced by 6% per year for each full year that commencement of
benefits precedes the Participant's attainment of Normal Retirement
Age, minus
(b) any retirement benefits that would be payable to such
Participant under the Retirement Plan, or any successor plan to the
Retirement Plan, and the Benefit Restoration Plan assuming such
Retirement Plan benefit and Benefit Restoration Plan benefit commence
on the same date as the benefit payable under this Plan and are
payable in the form of a single life annuity; minus
(c) the Participant's Primary Social Security Benefit projected
to be payable at age 62 based on Social Security Act provisions in
effect at the date of Participant's termination of employment, or if a
lesser amount, using the provisions in effect at the time benefits
commence under this Plan, and reduced by 6% per year for each full
year that commencement of benefits precedes the Participant's
attainment of Normal Retirement Age.
Such Early Retirement Benefit shall be payable simultaneously with the
commencement of an annuity under the Retirement Plan or, if the Participant
does not elect an annuity under the Retirement Plan, on such date as the
Participant elects by written notice to the Administrative Committee.
4.3 Disability Benefit: If a Participant terminates employment with
an Employer because of Disability prior to such Participant's Normal Retirement
Age, the Participant shall be entitled to a Disability Benefit equal to the
retirement benefit payable under this Plan at Normal Retirement Age, calculated
by assuming the Participant had continued service at the same rate of
Compensation in effect on termination until the
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<PAGE> 12
earlier of Normal Retirement Age or the date the Participant has no Disability.
Payments of the Disability Benefit, if any, shall commence at Normal Retirement
Age, unless the Employer and the Participant agree to an earlier commencement
date.
4.4 Vested Separation Benefit: If a Participant (i) has terminated
employment with an Employer prior to being eligible for a Normal Retirement
Benefit or Early Retirement Benefit under this Plan and (ii) has completed five
years of Vesting Service with an Employer, such Participant shall be eligible
for a Vested Benefit equal to:
(a) (i) For all Level A Participants, 1.6% of Average SERP Pay
multiplied by the Participant's years of Accrual Service at
termination of employment (not to exceed 30 years of Accrual Service)
or (ii) for all Level B Participants, 1.3% of Average SERP Pay
multiplied by the Participant's years of Accrual Service at
termination of employment (not to exceed 30 years of Accrual Service),
minus
(b) any retirement benefits that would be payable to such
Participant under the Retirement Plan or any successor plan to the
Retirement Plan and the Benefit Restoration Plan assuming such
Retirement Plan benefit and Benefit Restoration Plan benefit commence
at Normal Retirement Age under this Plan and are payable in the form
of a single life annuity; minus
(c) the Participant's Primary Social Security Benefit projected
to be payable at normal Retirement Age based on the Social Security
Act provisions in effect at the date of Participant's termination of
employment, or if a lesser amount, using the provisions in effect at
the time benefits commence under this Plan.
Such Vested Benefit shall be payable at Normal Retirement Age; provided
however, that if a Participant elects to commence payment of benefits under the
Retirement Plan in the form of an annuity, the benefit under this Plan shall
commence simultaneously with such Retirement Plan benefit (but shall not
commence before attainment of age 55). If the Participant does not elect
payments under the Retirement Plan in the form of an annuity, the Participant
may elect to commence the Vested Benefit at any time after attainment of age 55
by written notice to the Administrative Committee. If the Participant's
commencement date for the Vested Benefit precedes his Normal Retirement Date,
his Vested Benefit shall be reduced to an amount which is the Actuarial
Equivalent of the Participant's Vested Benefit payable at his Normal Retirement
Date.
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<PAGE> 13
4.5 Death Benefits:
(a) Prior to commencement of Benefits. If a Participant dies
prior to commencement of benefits under this Plan but after such Participant (i)
has attained Normal Retirement Age, (ii) has terminated due to Disability or
(iii) has completed five years of Vesting Service, such Participant shall be
entitled to a death benefit as follows:
a. If the Participant has a Surviving Spouse, the Surviving
Spouse shall be entitled to a benefit in the form of a survivor
annuity. If the Participant dies after attainment of age 55, the
Surviving Spouse shall receive as a survivor annuity the same benefit
that would have been payable to the survivor if the Participant had
retired with an immediate joint and 50% survivor annuity on the day
before the Participant's date of death. If the Participant dies on or
before attainment of age 55, the Participant's Surviving Spouse shall
receive the same benefit that would have been payable if the
Participant had (i) terminated employment on the termination of
employment or the date of death, (ii) survived to his attainment of
age 55, (iii) retired with an immediate joint and 50% survivor annuity
at attainment of age 55, and (iv) died on the day after attainment of
age 55. A Surviving Spouse shall begin to receive payments as of the
first day of the month following the later of (i) the date the
Participant would have attained age 55, or (ii) the Participant's date
of death, and shall continue to be paid monthly for the life of the
Surviving Spouse.
b. If the Participant does not have a Surviving Spouse, the
Participant's Beneficiary shall be entitled to a death benefit which
shall consist of monthly payments for a period of 60 months. If the
Participant dies on or after attainment of age 55, the amount of each
such monthly payment shall be the benefit such deceased Participant
would have been entitled to receive, pursuant to this Plan had he
elected to receive, beginning as of the date immediately prior to his
death, a single life annuity with a term certain of 60 months. In the
event the Participant's death occurs prior to attainment of age 55,
such benefit shall be the Actuarial Equivalent of the benefit of the
Participant would have been eligible to receive if the Participant had
(i) termi-
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<PAGE> 14
nated employment on the earlier of actual termination of employment or
the date of death, (ii) survived to his attainment of age 55, (iii)
retired with an immediate single life annuity with a term certain of
60 months at attainment of age 55, and (iv) died on the date after
attainment of age 55. Payment of this death benefit shall begin as of
the first day of the month following the later of (i) the date the
Participant would have attained age 55, or (ii) the Participant's date
of death and end as of the first day of the month in which a total of
60 monthly payments have been made to the Beneficiary of the
Participant.
(b) After commencement of Benefits. Any death benefit payable
after payment of benefits has commenced under this Plan will be paid in
accordance with the form of payment selected by Participant at the date of
commencement of benefits under this Plan.
4.6 Form of Payment: The Employer shall pay the annual benefit
described in Section 4.1, 4.2, 4.3 and 4.4 of this Plan in the form of a monthly
annuity for the life of the Participant; provided however, that a Participant
may elect to have the Actuarial Equivalent of the benefit under this Plan
payable in the form of any optional form of benefit payment available pursuant
to the terms of the Retirement Plan.
4.7 Participation Agreement: Each Participant eligible for a benefit
under this Plan must sign a Participation Agreement. The Participation Agreement
shall be by and between the Participant and the Participant's Employer. Benefits
payable pursuant to a Participation Agreement shall cease to accrue as of the
date the Participant terminates employment with the Employer; provided, however,
that Participant transfers employment to another Employer, benefits shall
continue to accrue and shall be paid pursuant to Section 4.8.
4.8 Transfer of Employment: If a Participant transfers employment to
another Employer, benefits shall continue to accrue under the Participation
Agreement and shall be paid, in their entirety, by the Employer for whom the
Participant last performs services as an Employee. In such event, all previous
Employers of the Employee shall be relieved of all liability for the payment of
benefits under this Plan and the related Participation Agreement.
-11-
<PAGE> 15
ARTICLE V
ADMINISTRATION
5.1 Administration: The Administrative Committee shall be the Plan
Administrator and shall be responsible for the administration and operation of
the Plan; provided that immediately following a Change in Control, the Board of
Directors of the Company shall designate a successor Plan Administrator which
shall in all events be independent of the Company and any affiliate of the
Company and shall serve as the Administrative Committee hereunder. The
determinations by the Administrative Committee as to any disputed questions
arising under the Plan, including the Employees who are eligible to be
Participants in the Plan and the amounts of their benefits under the Plan, and
the construction and interpretation by the Administrative Committee of any
provision of the Plan, shall be final, conclusive and binding upon all persons
including Participants; their beneficiaries, the Company, its stockholders and
Employees and the Employers.
5.2 Expenses: The expenses of administering the Plan shall be borne
by the Employers.
5.3 Indemnification and Exculpation: The members of the
Administrative Committee and its agents shall be indemnified and held harmless
by the Company against and from any and all loss, cost, liability or expense
that may be imposed upon or reasonably incurred by them in connection with or
resulting from any claim, action, suit or proceeding to which they may be a
party or in which they may be involved by reason of any action taken or failure
to act under this Plan and against and from any and all amounts paid by them in
settlement (with the Company's written approval) or paid by them in satisfaction
of a judgment in any such action, suit or proceeding. The foregoing provisions
shall not be applicable to any person if the loss, cost, liability or expense is
due to such person's gross negligence or willful misconduct.
5.4 Non-Alienation of Benefits: Except by mutual agreement among the
Company, the Employer and the Participant, any benefit payable under this Plan
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt at such shall be
void, and any such benefit shall not in any way be subject to the debts,
contract, liabilities, engagements or torts of the person who shall be entitled
to such benefit, nor shall it be subject to attachment or legal process for or
against such person.
-12-
<PAGE> 16
5.5 Resolution of Disputes:
(a) All costs, fees and expenses of any arbitration or litigation
in connection with this Plan which results in any decision or settlement
requiring an Employer to make a payment to the Participant, including,
without limitation, attorneys' fees, shall be borne by, and be the
obligation of, the Employer. In no event shall the Participant be required
to reimburse the Employer for any of the costs and expenses incurred by the
Employer relating to arbitration or litigation.
(b) Pending the outcome or resolution of any arbitration or
litigation, the Employer shall continue payment of all amounts due the
Participant without regard to any dispute.
ARTICLE VI
MERGER, AMENDMENT AND TERMINATION
6.1 Merger, Consolidation or Acquisition: In the event of (i) a
merger, consolidation or acquisition where an Employer is not the surviving
corporation, unless the successor or acquiring corporation shall elect to
continue and carry on the Plan, or (ii) the Employer's termination of status as
a Participating Affiliate, this Plan shall terminate with respect to such
Employer, and no additional benefits shall accrue for the Employees of such
Employer. Unpaid benefits shall continue to be paid as scheduled unless the
successor or acquiring corporation elects to accelerate payment and the
Participant consents to the accelerated payment.
6.2 Amendment and Termination: The Board of Directors of the Company
may amend, modify, or terminate the Plan in whole or in part at any time, and
any adopting Employer may terminate the Plan as to its own Employees at any
time, provided, however, that no amendment to Section 2.1(h) or Article V shall
be applicable to any Employee who entered a Participation Agreement prior to the
action amending the Plan. In the event of a termination of the Plan pursuant to
this Section, unpaid benefits shall continue to be an obligation of the Employer
and be paid as provided herein. The Employer may amend, modify or terminate a
Participation Agreement, in whole or in part, at any time. No amendment or
termination of the Plan or any Participation Agreement shall divest a
Participant of any benefit which bad previously accrued to him or which had
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<PAGE> 17
previously become payable to him prior to the amendment or termination under
this Plan or the Participation Agreement.
6.3 Adoption Procedure: With the consent of the Company, any
Participating Affiliate may adopt this Plan for its Employees, on express
condition that the Company assumes no liability as a result of any such adoption
of this Plan by any Participating Affiliate. Such Participating Affiliate may
adopt this Plan by action of its board of directors and by
(a) executing an adoption instrument adopting the Plan with
respect to all or any particular classification or classifications of
persons in its employment, and agreeing to be bound as an Employer by all
the terms, provisions, conditions, and limitations of the Plan; and
(b) compiling and submitting all information required by the
Company with reference to its Employees eligible for participation in the
Plan.
The adoption instrument executed by any such Participating Affiliate may
contain such changes and variations in the Plan terms as may be acceptable to
the Company. The adoption instrument shall specify the effective date of such
adoption of the Plan and the name of the Plan as it pertains to such adopting
organization and its Employees and shall become, as to such organization and
persons in its employment, a part of this Plan.
IN WITNESS WHEREOF, the Company and each Employer have caused this
instrument to be executed by their duly authorized officers in a number of
copies, each of which shall be deemed an original but all of which shall
constitute one and the same instrument, this May 18, 1995, but effective
as of January 1, 1995.
MOORCO INTERNATIONAL INC.
By /s/ Michael L. Tiner
-----------------------
President
ATTEST:
/s/ James J. Nelson
- ------------------------
Secretary
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<PAGE> 18
ADOPTION BY PARTICIPATING AFFILIATES
SMITH METER INC.
By /s/ Michael L. Tiner
---------------------------------
Vice President
ATTEST:
/s/ James J. Nelson
- ----------------------------------
Secretary
CROSBY VALVE & GAGE COMPANY
By /s/ Michael L. Tiner
---------------------------------
Vice President
ATTEST:
/s/ James J. Nelson
- ----------------------------------
Secretary
MOORCO SERVICE INC.
By /s/ Michael L. Tiner
---------------------------------
President
ATTEST:
/s/ James J. Nelson
- ----------------------------------
Secretary
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<PAGE> 1
EXHIBIT 5
BENEFIT RESTORATION PLAN
FOR PARTICIPANTS IN THE
MOORCO INTERNATIONAL INC. RETIREMENT INCOME PLAN
(Established as of January 1, 1995)
<PAGE> 2
BENEFIT RESTORATION PLAN
FOR PARTICIPANTS IN THE
MOORCO INTERNATIONAL INC. RETIREMENT INCOME PLAN
(Established as of January 1, 1995)
I N D E X
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I ESTABLISHMENT AND PURPOSE................................ 1
Section:
1.1 Establishment............................................ 1
1.2 Purpose.................................................. 1
1.2 Application of Plan...................................... 1
1.3 ERISA Status ............................................ 1
ARTICLE II DEFINITIONS AND CONSTRUCTION ............................ 1
Section:
2.1 Definitions.............................................. 1
2.2 Gender and Number........................................ 3
2.3 Severability ............................................ 3
2.4 Applicable Law .......................................... 3
2.5 Plan Not an Employment Contract.......................... 3
2.6 Funding.................................................. 3
2.7 Tax Withholding.......................................... 4
2.8 Effect on Other Plans.................................... 4
ARTICLE III PARTICIPATION............................................ 4
ARTICLE IV BENEFITS .............................................. 5
Section:
4.1 Calculation of Restoration Benefit ...................... 5
4.2 Form of Payment and Commencement Date.................... 5
4.3 Participation Agreement.................................. 5
4.4 Vesting.................................................. 6
4.5 Transfer of Employment................................... 6
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE V ADMINISTRATION .......................................... 6
Section:
5.1 Administration .......................................... 6
5.2 Expenses ................................................ 6
5.3 Indemnification and Exculpation.......................... 6
5.4 Non-Alienation of Benefits .............................. 7
5.5 Resolution of Disputes .................................. 7
ARTICLE VI MERGER, AMENDMENT AND TERMINATION........................ 7
Section:
6.1 Merger, Consolidation or Acquisition .................... 7
6.2 Amendment and Termination................................ 8
6.3 Adoption Procedure ...................................... 8
</TABLE>
(ii)
<PAGE> 4
BENEFIT RESTORATION PLAN
FOR PARTICIPANTS IN THE
MOORCO INTERNATIONAL INC. RETIREMENT INCOME PLAN
(Established as of January 1, 1995)
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1 Establishment: Moorco International Inc., a Delaware corporation
(the "Company"), hereby establishes, effective as of January 1, 1995, an
unfunded plan to be known as the Benefit Restoration Plan for Participants in
the Moorco International Inc. Retirement Income Plan (the "Plan"), for the
benefit of a select group of management or highly compensated employees of the
affiliates of the Company that adopt the Plan pursuant to Section 6.3 hereof.
1.2 Purpose: The purpose of this Plan is generally to provide the
amount of the benefit which would otherwise be paid from the Moorco
International Inc. Retirement Income Plan (the "Retirement Plan") but which
cannot be paid under the Retirement Plan due to the provisions imposed by the
Internal Revenue Code of 1986, as amended (the "Code"), which limit benefits
under qualified benefit plans.
1.3 Application of Plan: The terms of this Plan are applicable only to
those employees of any Employer (i) who are participants in the Retirement Plan,
(ii) whose benefits payable under the Retirement Plan are reduced or limited
pursuant to provisions set forth in the Code which limit benefits under
qualified benefit plans, and (iii) who are designated as participants in this
Plan under a Participation Agreement.
1.4 ERISA Status: The Plan is intended to qualify for the exemptions
provided under Title I of ERISA for plans that are not qualified and that are
maintained primarily to provide deferred compensation for a select group of
management or highly compensated employees.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Definitions: Except as otherwise indicated, the terms used in this
Plan shall have the same meaning as they have under the Retirement Plan.
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<PAGE> 5
For purposes of this Plan, the following definitions shall apply:
a. "Administrative Committee" shall mean the person or committee
designated as the Plan Administrator under the Retirement Plan from time
to time by the Board of Directors of the Company or as otherwise
designated under Section 5.1 of the Plan.
b. "Board of Directors" shall mean the Board of Directors of the
Company.
c. "Change in Control" shall be deemed to have occurred on the
first day following January 1, 1995 upon which any person or group of
persons or entity or group of entities acquires either (i) direct or
indirect voting power sufficient to elect a majority of the directors of
the Company or (ii) stock or assets of some or all of the Company's
operating units comprising 60% or more of the Company's total assets (as
shown on the Company's financial statements for the immediately
preceding fiscal year).
d. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
e. "Company" shall mean Moorco International Inc. or any
successor thereto.
f. "Employee" shall mean any person who is regularly employed
full-time on a salaried basis by an Employer, including, but not limited
to, any employee who is also an officer or director of an Employer.
g. "Employer" shall mean (i) Smith Meter Inc., Crosby Valve &
Gage Company and Moorco Service Inc., during such time as each of these
companies is a Participating Affiliate, and (ii) any Participating
Affiliate that (A) has been offered participation in the Plan by the
Company and (B) has adopted the Plan by action of its board of directors
in accordance with Section 6.3.
h. "Participant" shall mean an Employee who is a participant in
the Retirement Plan and who is eligible to participate in this Plan.
i. "Participating Affiliate" shall mean an affiliate of the
Company that has adopted, and has not terminated participation in or
withdrawn from, the
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<PAGE> 6
Retirement Plan in accordance with the provisions thereof.
j. "Participation Agreement" shall mean the participation
agreement between the Employee and an Employer designating the Employee
as a Participant under the Plan.
k. "Retirement Plan" shall mean the Moorco International Inc.
Retirement Income Plan, as amended from time to time.
2.2 Gender and Number: Except when otherwise indicated by the
context, any masculine terminology when used in the Plan shall also include the
feminine gender, and the definition of any term in the singular shall also
include the plural.
2.3 Severability: In the event any provision of the Plan shall be
held invalid or illegal for any reason, any illegality or invalidity shall not
affect the remaining parts of the Plan, but the Plan shall be construed and
enforced as if the illegal or invalid provision had never been inserted, and the
Company shall have the privilege and opportunity to correct and remedy questions
of illegality or invalidity by amendment as provided in the Plan.
2.4 Applicable Law: This Plan shall be governed and construed in
accordance with the laws ofthe State of Texas.
2.5 Plan Not an Employment Contract: The Plan is not an employment
contract. Eligibility for benefits under the Plan does not give to any person
the right to be continued in employment by an Employer, and all persons remain
subject to change of salary, transfer, change of job, discipline, layoff,
discharge (with or without cause), or any other change of employment status.
2.6 Funding: Subject to Section 4.5, the benefits described in this
Plan are contractual obligations of each Employer to pay compensation for
services, and shall constitute a liability to the Participant of the Employer
entering into the Participation Agreement and/or his or her beneficiaries in
accordance with the terms hereof. All amounts paid under this Plan shall be
paid in cash from the general assets of each Employer, and benefits shall be
reflected on the accounting records of the Employer but shall not be construed
to create, or require the creation of, a trust, custodial or escrow account.
However, the Employers may, in their discretion, purchase insurance contracts as
unrestricted assets of the
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<PAGE> 7
Employer or establish a rabbi trust arrangement for the purpose of providing
payments due hereunder. No special or separate fund need be established and no
segregation of assets need be made to assure the payment of such benefits. No
Participant shall have any right, title or interest whatever in or to any
investment reserves, accounts, funds or assets that the Employer may purchase,
establish or accumulate to aid in providing the benefits described in this Plan,
except to the extent the Participant may be a beneficiary of any rabbi trust
arrangement that the Employer may in its discretion establish. Nothing
contained in this Plan shall create or be construed to create a trust or a
fiduciary relationship of any kind between an Employer and a Participant or any
other person. Notwithstanding anything to the contrary in this Plan, however,
the Company agrees to remain liable for any benefits otherwise payable by Moorco
Service Inc., to the extent not paid, and if and to the extent the Company has
such a liability it shall be considered an Employer under this Plan.
2.7 Tax Withholding: The Employer may withhold from a payment of a
benefit hereunder any federal, state, or local taxes required by law to be
withheld with respect to such payment.
2.8 Effect on Other Plans: Amounts accrued or paid under this Plan
shall not be considered compensation for the purposes of the qualified plans or
life insurance plans of the Company or any Employer.
ARTICLE III
PARTICIPATION
An Employee shall become a Participant in this Plan if (i) one of the
limitations imposed by the Code applies to and has the effect of reducing the
amount of benefits payable under the Retirement Plan; provided, however, that
nothing in this Plan shall entitle a Participant to receive an amount that
exceeds the total benefits that would have been his due under the Retirement
Plan, (ii) the Employee is a member of a select group of management or highly
compensated employees, and (iii) an Employer has entered into a Participation
Agreement with the Employee specifying the effective date of participation.
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<PAGE> 8
ARTICLE IV
BENEFITS
4.1 Calculation of Restoration Benefit: When a Participant's
retirement benefit commences or a death benefit payable with respect to a
Participant commences under the Retirement Plan, the Administrative Committee
will calculate a benefit equal to the excess of (i) the amount of the retirement
benefit or survivor death benefit, as the case may be, which would have been
payable under the terms of the benefit formula in the Retirement Plan but for
the limitations expressly imposed by the Code (whether or not such limitations
are incorporated in the terms of the Retirement Plan) over (ii) the amount of
the retirement benefit or survivor death benefit actually payable under the
Retirement Plan.
4.2 Form of Payment and Commencement Date:
(a) Form of Payment: The Employer shall pay a restoration
benefit to the Participant or to such other persons, at such times and
in such manner as the Retirement Plan benefit is payable pursuant to the
terms of the Retirement Plan; provided, however, that the Employer may
in its sole discretion determine to convert the payment of the
restoration benefit into a lump-sum payment if the Participant consents.
Any lump-sum payment shall be a lump-sum payment that is actuarially
equivalent to the value of the restoration benefit if it were paid in
the same time and manner as the benefit payable under the Retirement
Plan, as determined by the Administrative Committee with the advice of
the actuary for the Retirement Plan, employing those actuarial
assumptions as are currently employed in converting Retirement Plan
benefits from one form to another. No spousal consent shall be required
for the payment of any form of benefit hereunder.
(b) Commencement Date: Any benefits payable under this Plan in
monthly payments shall commence on or about the same date that benefits
commence under the Retirement Plan.
4.3 Participation Agreement: Each Participant eligible for a benefit
under this Plan must sign a Participation Agreement. The Participation
Agreement shall be by and between the Participant and the Participant's
Employer. Benefits payable pursuant to a Participation Agreement shall cease to
accrue as of the date the Participant terminates employment with the Employer;
provided, however, that if the Participant
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<PAGE> 9
transfers employment to another Employer, benefits shall continue to accrue and
shall be paid pursuant to Section 4.5.
4.4 Vesting: A Participant shall become vested in the benefit
payable under Article IV hereof at the same time that such Participant becomes
vested in a benefit under the Retirement Plan.
4.5 Transfer of Employment: If a Participant transfers employment to
another Employer, benefits shall continue to accrue under the Participation
Agreement and shall be paid, in their entirety, by the Employer for whom the
Participant last performs services as an Employee. In such event, all previous
Employers of the Employee shall be relieved of all liability for the payment of
benefits under this Plan and the related Participation Agreement.
ARTICLE V
ADMINISTRATION
5.1 Administration: The Administrative Committee shall be the Plan
Administrator and shall be responsible for the administration and operation of
the Plan; provided that immediately following a Change in Control, the Board of
Directors of the Company shall designate a successor Plan Administrator which
shall in all events be independent of the Company and any affiliate of the
Company. The determinations by the Administrative Committee as to any disputed
questions arising under the Plan, including the Employees who are eligible to be
Participants in the Plan and the amounts of their benefits under the Plan, and
the construction and interpretation by the Administrative Committee of any
provision of the Plan, shall be final, conclusive and binding upon all persons
including Participants, their beneficiaries, the Company, its stockholders and
employees and the Employers.
5.2 Expenses: The expenses of administering the Plan shall be borne
by the Employers.
5.3 Indemnification and Exculpation: The members of the
Administrative Committee and its agents shall be indemnified and held harmless
by the Company against and from any and all loss, cost, liability or expense
that may be imposed upon or reasonably incurred by them in connection with or
resulting from any claim, action, suit or proceeding to which they may be a
party or in which they may be involved by reason of any action taken or failure
to act under this Plan and against and
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<PAGE> 10
from any and all amounts paid by them in settlement (with the Company's written
approval) or paid by them in satisfaction of a judgment in any such action, suit
or proceeding. The foregoing provisions shall not be applicable to any person
if the loss, cost, liability or expense is due to such person's gross negligence
or willful misconduct.
5.4 Non-Alienation of Benefits: Except by mutual agreement between
the Company, the Employer and the Participant, any benefit payable under this
Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt at such
shall be void, and any such benefit shall not in any way be subject to the
debts, contract, liabilities, engagements or torts of the person who shall be
entitled to such benefit, nor shall it be subject to attachment or legal process
for or against such person.
5.5 Resolution of Disputes:
(a) All costs, fees and expenses of any arbitration or litigation
in connection with this Plan which results in any decision or settlement
requiring an Employer to make a payment to the Participant, including,
without limitation, attorneys' fees, shall be borne by, and be the
obligation of, the Employer. In no event shall the Participant be
required to reimburse the Employer for any of the costs and expenses
incurred by the Employer relating to arbitration or litigation.
(b) Pending the outcome or resolution of any arbitration or
litigation, the Employer shall continue payment of all amounts due the
Participant without regard to any dispute. 5.
ARTICLE VI
MERGER, AMENDMENT AND TERMINATION
6.1 Merger, Consolidation or Acquisition: In the event of (i) a
merger, consolidation or acquisition where an Employer is not the surviving
corporation, unless the successor or acquiring corporation shall elect to
continue and carry on the Plan, or (ii) the Employer's termination of status as
a Participating Affiliate, this Plan shall terminate with respect to such
Employer, and no additional benefits shall accrue for the Employees of such
Employer. Unpaid benefits shall continue
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<PAGE> 11
to be paid as scheduled unless the successor or acquiring corporation elects to
accelerate payment and the Participant consents to the accelerated payment.
6.2 Amendment and Termination: The Board of Directors of the Company
may amend, modify, or terminate the Plan in whole or in part at any time, and
any adopting Employer may terminate the Plan as to its own Employees at any
time. In the event of a termination of the Plan pursuant to this Section,
unpaid benefits shall continue to be an obligation of the Employer and shall be
paid as provided herein. No amendment or termination shall divest a
Participant of any benefit which had previously accrued to him prior to the
amendment or termination or which had previously become payable to him prior to
the amendment or termination under this Plan.
6.3 Adoption Procedure: With the consent of the Company, any
Participating Affiliate may adopt this Plan for its Employees, on express
condition that the Company assumes no liability as a result of any such adoption
of this Plan by any Participating Affiliate. Such Participating Affiliate may
adopt this Plan by action of its board of directors and by
(a) executing an adoption instrument adopting the Plan with
respect to all or any particular classification or classifications of
persons in its employment, and agreeing to be bound as an Employer by
all the terms, provisions, conditions, and limitations of the Plan; and
(b) compiling and submitting all information required by the
Company with references to its Employees eligible for participation in
the Plan.
The adoption instrument executed by any such Participating Affiliate may contain
such changes and variations in the Plan terms as may be acceptable to the
Company. The adoption instrument shall specify the effective date of such
adoption of the Plan and the name of the Plan as it pertains to such adopting
organization and its Employees and shall become, as to such organization and
persons in its employment, a part of this Plan.
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<PAGE> 12
IN WITNESS WHEREOF, the Company and each Employer have caused this
instrument to be executed by their duly authorized officers in a number of
copies, each of which shall be deemed an original but all of which shall
constitute one and the same instrument, this May 18, 1995, but effective
as of January 1, 1995.
MOORCO INTERNATIONAL INC.
By /s/ Michael L. Tiner
-------------------------------------
President
ATTEST:
/s/ James J. Nelson
- --------------------------------
Secretary
ADOPTION BY PARTICIPATING AFFILIATES
SMITH METER INC.
By /s/ Michael L. Tiner
-------------------------------------
Vice President
ATTEST:
/s/ James J. Nelson
- ---------------------------------
Secretary
CROSBY VALVE & GAGE COMPANY
By /s/ Michael L. Tiner
-------------------------------------
Vice President
ATTEST:
/s/ James J. Nelson
- ---------------------------------
Secretary
MOORCO SERVICE INC.
By /s/ Michael L. Tiner
-------------------------------------
Vice President
ATTEST:
/s/ James J. Nelson
- ---------------------------------
Secretary
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<PAGE> 1
Exhibit 6
[MOORCO INTERNATIONAL INC. LETTERHEAD]
May 19, 1995
To Our Stockholders:
On May 5, 1995, a subsidiary of FMC Corporation began a tender offer (the
"FMC Offer") for all of the Company's outstanding Common Stock (together with
the associated Preferred Stock Purchase Rights) at a price of $20 per share in
cash. YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE FMC OFFER IS
INADEQUATE AND NOT IN THE BEST INTERESTS OF THE COMPANY OR ITS STOCKHOLDERS.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU REJECT THE
FMC OFFER AND NOT TENDER YOUR SHARES TO FMC.
In reaching the determination that the FMC Offer is inadequate and not in
the best interests of Moorco or its stockholders, your Board gave careful
consideration to Moorco's financial performance and future prospects, the
opinion of the Company's financial advisors, Salomon Brothers Inc, that the FMC
Offer is inadequate from a financial point of view, the significant conditions
to consummation of the FMC Offer, the conduct of FMC prior to the commencement
of the FMC Offer, and the other factors described in the attached Schedule
14D-9. We urge you to read carefully the attached document in its entirety,
including the opinion of Salomon Brothers Inc included as an annex, so that you
will be fully informed as to the Board's recommendation.
Your Board of Directors believes that the FMC Offer fails to recognize the
current value of the Company, as reflected, in part, by the current market price
for the Common Stock. The Board concluded that the interests of the stockholders
would be best served by the Company exploring alternatives to maximize
stockholder value and the Company is actively engaged in that effort.
Under the terms of its tender offer, FMC cannot accept or pay for any
Common Stock before 12:00 midnight, New York City time, on Friday, June 2, 1995.
Accordingly, you need not take any action at this time to participate in the FMC
Offer. In addition, any Common Stock already tendered may be withdrawn, if so
desired, before June 2, 1995.
Your Directors thank you for your continued support.
On behalf of the Board of Directors,
<TABLE>
<S> <C>
/s/ KEITH S. WELLIN /s/ MICHAEL L. TINER
Keith S. Wellin Michael L. Tiner
Chairman of the Board President and Chief
Executive Officer
</TABLE>
<PAGE> 1
EXHIBIT 7
[Moorco Press Release Letterhead]
FOR IMMEDIATE RELEASE #95-14
MOORCO REJECTS FMC OFFER; ACTIVELY EXPLORING ALTERNATIVES
HOUSTON, TEXAS -- May 19, 1995 -- The Board of Directors of Moorco International
Inc. (NYSE: MRC) has unanimously voted to reject the offer of a subsidiary of
FMC Corporation (NYSE: FMC) to acquire all of the outstanding shares of Common
Stock of the Company at a price of $20 per share and to recommend to Moorco's
stockholders that they not tender any shares to FMC pursuant to the tender
offer.
After considering a variety of factors, including the opinion of its financial
advisor, Salomon Brothers Inc, the Board concluded that the FMC offer is
inadequate and not in the best interests of Moorco or its stockholders. A
letter mailed to stockholders states that "The Directors believe the FMC offer
fails to recognize the current value of the Company." Moorco's Board concluded
that the interests of the Company's stockholders would be best served by the
Company exploring alternatives to maximize stockholder value and the Company is
actively engaged in that effort.
The Board also delayed the separation date of the Company's Preferred Stock
Purchase Rights until such later date as may be determined by the Board.
Accordingly, the Rights will continue to trade with the Company's Common Stock.
Moorco International Inc., headquartered in Houston, Texas, is a leading
supplier of fluid measurement and pressure control products for the petroleum,
industrial process and electric power generation industries.
CONTACT: Daniel H. Burch - 212-929-5748
Stanley J. Kay - 212-929-5940
MacKenzie Partners, Inc.
# # #
<PAGE> 1
EXHIBIT 8
NO. 95-2595F
MOORCO INTERNATIONAL INC., ) IN THE DISTRICT COURT OF
a Delaware corporation, )
)
Plaintiff, )
) NUECES COUNTY, TEXAS
v. )
)
FMC CORPORATION, )
a Delaware corporation, )
)
Defendant. ) JUDICIAL DISTRICT
PLAINTIFF'S ORIGINAL PETITION
AND APPLICATION FOR INJUNCTIVE RELIEF
TO THE HONORABLE JUDGE OF SAID COURT:
Plaintiff Moorco International Inc. files this Original
Petition and Application for Injunctive Relief complaining of FMC Corporation,
and in support thereof would show this Court the following:
I
INTRODUCTION
1. This action arises out of Defendant FMC Corporation's ("FMC")
fraudulent and unlawful scheme to injure Plaintiff Moorco International Inc.
("Moorco"), its business, its shareholders, and its employees. Acting under
false pretenses, FMC obtained confidential information from Moorco essential to
FMC's corporate decisionmaking. This information was obtained by agents of FMC
who knowingly and fraudulently represented to Moorco that they sought the
information solely for purposes of establishing a customer/supplier
relationship with Moorco. In fact, at all relevant times FMC's purported
interest in entering into such a business relationship was a subterfuge;
throughout this entire period, FMC was in fact actively considering an effort
to obtain ownership and/or control of Moorco. The nonpublic information FMC
sought about Moorco was intended to be used solely to determine whether Moorco
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<PAGE> 2
was a desirable property and to aid FMC in deciding how much to pay for Moorco.
As explained below, FMC's unlawful, unethical, and indefensible conduct
threatens to irreparably injure Moorco, its business, its shareholders, and its
employees.
II
THE PARTIES
2. Moorco International Inc. is a corporation organized and
existing under the laws of the State of Delaware with its principal executive
offices in Houston, Texas. Moorco supplies fluid measurement and pressure
control products to the petroleum, industrial process, and electric power
industries. Moorco's operating subsidiary Smith Meter Inc. serves as a
manufacturer of Moorco's electronic metering systems and equipment.
3. FMC Corporation is a corporation organized and existing under
the laws of the State of Delaware with its principal place of business in
Chicago, Illinois. FMC maintains one or more offices in Texas, including one
in Houston, and is qualified to do business in the State of Texas. FMC may be
served with process through its registered agent CT Corporation, located at 350
N. St. Paul Street, Dallas, Texas 75201.
III
JURISDICTION AND VENUE
PERSONAL JURISDICTION
4. This Court has jurisdiction over FMC Corporation because, as
described more fully below, FMC is licensed to do business in Texas, has
committed a tort in whole or in part in Texas, and has continuous and
systematic contacts with Texas.
SUBJECT MATTER JURISDICTION
5. This Court has jurisdiction over this controversy because the
relief sought is within the jurisdictional purview of this Court.
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<PAGE> 3
VENUE
6. Venue is proper in this Court under Tex. Civ. Prac. & Rem.
Code Ann. Sections 15.001, 15.037 because all or part of Moorco's
causes of action arose in Nueces County, Texas and because FMC is a foreign
corporation, not incorporated under the laws of Texas, that is doing business
in Texas.
IV
THE FACTS
7. In December 1994, officials of Kongsberg Offshore A/S
("Kongsberg") contacted Moorco's Smith Meter subsidiary in Europe regarding the
possibility of visiting Smith Meter's manufacturing facilities in the United
States. Kongsberg is, and was at all relevant times, a wholly owned subsidiary
of FMC. At all relevant times, Kongsberg acted as an agent of FMC, and
Kongsberg employees remained in close contact with FMC officials. The December
1994 contact from Kongsberg occurred at approximately the same time as FMC
determined to proceed with an acquisition of Moorco, which FMC had been
considering for some time previous.
8. Kongsberg officials told Smith Meter representatives that
Kongsberg needed a new supplier for various types of metering systems and
metering systems components. Kongsberg officials further represented that the
company was specifically interested in creating such a supply relationship with
Moorco's Smith Meter subsidiary and voiced special interest in its capabilities
in systems fabrication. They requested the opportunity to meet with Smith
Meter officials and to tour Smith Meter facilities to learn more about its
products and manufacturing capabilities. A copy of the facsimile documenting
Kongsberg's request is attached as Exhibit A to this Petition.
9. Kongsberg's representations concerning the purpose of the
visit were entirely false, and were made with knowledge of that falsity. In
fact, at the same time Kongsberg officials were making those representations to
Moorco's Smith Meter subsidiary, Kongsberg's
3
<PAGE> 4
parent company, FMC, was moving forward with plans to make a hostile bid to
acquire Moorco, including obtaining FMC board authorization for an acquisition
proposal and retaining an investment banking firm to advise FMC. As part of
its plan, FMC intended to and did use its Kongsberg subsidiary to gather
proprietary information about Moorco to be used in FMC's takeover bid, under
the false pretense that Kongsberg was interested in entering into a supply
relationship with Smith Meter. Moorco and its Smith Meter subsidiary were
unaware of FMC's acquisition plans at the time, and had no reason to disbelieve
Kongsberg's false representations as to its purposes.
10. In reliance on these representations concerning a commercial
relationship between Kongsberg and Moorco's Smith Meter subsidiary, Moorco
officials organized a special tour of Moorco facilities for two Kongsberg
representatives: Edmund-Hugo Lunde and Herjinder Hawkins. Lunde represented
that he was a development manager in the metering systems division. Hawkins
was represented to be a mechanical engineer with Kongsberg. In fact, Hawkins
works in FMC's strategic development group.
11. On January 18, 1995, Moorco officials at its Smith Meter plant
in Erie, Pennsylvania escorted Lunde and Hawkins on a private tour of Moorco's
manufacturing facility. The tour lasted a full day and covered various
confidential and proprietary aspects of Moorco's Erie operations. Indeed,
Lunde and Hawkins were given access to the most sensitive areas of Moorco's
facility. They toured, among other areas at the plant, Smith Meter's research
and development center, its flow test laboratory, and its electronics
development center.
12. Because Lunde and Hawkins claimed to be particularly
interested in new products development, Moorco officials also provided them
with proprietary information about new Moorco products. The information
revealed to the Kongsberg officials on the basis of these representations
included discussions of proprietary designs and strategies that have not yet
been
4
<PAGE> 5
publicly announced. For example, Lunde and Hawkins were shown a new liquid
flow computer that was in development and that had not yet been publicly
disclosed. They were also shown a prototype mass-meter that represented a new,
and nonpublic, Smith Meter product development.
13. Furthermore, the detailed tour allowed Lunde and Hawkins to
gather important basic information about how the Smith Meter facility operated
and the techniques and technology employed by the company. As a result, they
gained valuable knowledge about Moorco's processes and manufacturing capacity.
This information is confidential and nonpublic.
14. Finally, Lunde and Hawkins also asked a variety of detailed
questions designed to elicit other types of confidential information from
Moorco. For example, they asked for and were given an organizational chart.
Moorco officials responded to these questions in good faith because they were
induced to believe that Kongsberg would only enter into a supply relationship
with Moorco if Moorco provided detailed information about its operations.
15. On January 28, 1995, Lunde and Hawkins also toured Moorco's
Smith Meter facility in Corpus Christi, Texas. The Kongsberg officials were
again provided this tour in response to their stated purpose of considering
Moorco as a future supplier.
16. Like the Erie tour, the Corpus Christi tour was a private tour
that provided Lunde and Hawkins with detailed information about Moorco's
operations. Lunde and Hawkins repeatedly represented their deep interest in
Moorco's products and facilities. As a direct result of these representations,
they were shown several competitively sensitive pieces of equipment during the
course of their tour. Lunde and Hawkins also witnessed a demonstration of
control room consoles for metering systems destined for Russia, and they were
given a tour of a subcontractor's facility where a Smith Meter metering system
was under construction.
5
<PAGE> 6
17. The two plant tours allowed FMC to gain confidential
information about Moorco's current business, revenues, productivity, marketing
strategies, costs of doing business, new product development, and manufacturing
techniques and processes. This information is all confidential and some of it
constitutes Moorco's trade secrets. None of this information would have been
revealed but for the false representations by Kongsberg officials regarding the
purpose of their visits and the prospects for a supply relationship between
Kongsberg and Moorco.
18. After having fraudulently induced Moorco to provide it with
confidential, proprietary information, FMC used this nonpublic information to
formulate and make a hostile bid to acquire the company. On April 3, 1995, FMC
made an unsolicited offer to purchase Moorco at a price of $20.00 per share.
FMC falsely claimed in its offer letter that its decision to purchase Moorco
was "[b]ased upon study and analysis of publicly available information." FMC
subsequently released its April 3 letter to the public. A copy of the letter
is attached hereto as Exhibit B.
V
CLAIMS AGAINST FMC
FIRST CAUSE OF ACTION: FRAUD
19. Moorco repeats and realleges the allegations in paragraphs
1-18.
20. FMC has engaged in two instances of actionable fraud. First,
representatives of FMC's Kongsberg subsidiary fraudulently misrepresented the
nature and purpose of their January 1995 visits to Moorco's Smith Meter
facilities in Erie and Corpus Christi. Lunde and Hawkins represented that
Kongsberg wished to enter into a supply relationship with Moorco. In fact,
Lunde and Hawkins were engaged in a covert effort to gather highly confidential
and proprietary information about Moorco in order to facilitate FMC's hostile
takeover bid for Moorco. These material misrepresentations were relied upon by
Moorco
6
<PAGE> 7
to its detriment. Absent these representations of interest in forming a
commercial relationship between Kongsberg and Moorco, Moorco would not have
permitted Lunde and Hawkins to inspect Moorco's Erie and Corpus Christi
facilities, nor would it have provided confidential product and manufacturing
information to them. These material misrepresentations allowed FMC to acquire
confidential information about all aspects of Moorco's Smith Meter operations
that would otherwise be unobtainable.
21. Second, FMC has committed fraud by concealing its possession
of the highly confidential and proprietary information that it has unlawfully
obtained and by falsely representing to the public that its bid is based solely
on "publicly available information." While FMC is clearly in possession of
confidential information gathered by its Kongsberg subsidiary, FMC continues to
maintain that its bid for Moorco is based entirely on an assessment of publicly
available information. This misrepresentation deliberately and materially
distorts the character of the offer FMC has made for Moorco and severely
disadvantages Moorco's shareholders' ability to evaluate the FMC offer.
SECOND CAUSE OF ACTION: MISAPPROPRIATION OF TRADE SECRETS
22. Moorco repeats and realleges the allegations in paragraphs
1-21.
23. FMC's conduct constitutes multiple violations of trade secrets
laws. The misrepresentations by Lunde and Hawkins concerning the nature of
their visits allowed them to acquire confidential, competitively sensitive
information about Moorco manufacturing processes and new product developments.
This information constitutes Moorco's trade secrets, the discovery of which
through improper means is tortious conduct. In addition, FMC has improperly
used the confidential trade secrets information it acquired through its
Kongsberg subsidiary. Kongsberg came into possession of Moorco's trade secrets
by falsely claiming an interest in forming a supply relationship with Moorco.
It then turned the information over to FMC, which used it to formulate a
hostile bid for Moorco.
7
<PAGE> 8
Because the trade secrets information originally imparted to FMC through its
Kongsberg subsidiary was not intended for this purpose, FMC has misused the
trade secrets information obtained from Moorco. This action constitutes
tortious conduct as well.
THIRD CAUSE OF ACTION: BREACH OF FIDUCIARY DUTY
24. Moorco repeats and realleges the allegations in paragraphs
1-23.
25. FMC has breached the fiduciary duty it owes to Moorco. This
fiduciary duty arises out of the relationship of special trust and confidence
created by Kongsberg's contacts with Smith Meter Inc. Kongsberg, by falsely
representing to Smith Meter that it was interested in forming a supply
relationship with Smith Meter and by then asking for confidential and
proprietary information purportedly required to form that relationship, created
a confidential relationship between the two companies regarding that
information. Pursuant to that confidential relationship, Smith Meter revealed
to Kongsberg confidential and proprietary information about its business.
Kongsberg was under a duty to use that information only as necessary to
facilitate the formation of a supply relationship between Smith Meter and
itself. The subsequent use of the confidential and proprietary information
Kongsberg acquired to facilitate FMC's hostile bid for Moorco violated the
relationship of special trust and confidence formed by Kongsberg's initial
representations to Smith Meter. This violation of a special relationship
constitutes an actionable breach of fiduciary duty under Texas law.
CLAIM FOR INJUNCTIVE RELIEF
26. Moorco repeats and realleges the allegations in paragraphs
1-25.
27. FMC's hostile bid to acquire Moorco must be enjoined. Moorco
has no adequate remedy at law for the actions of the Defendant, and if FMC is
not enjoined from proceeding with its unsolicited offer, Moorco will suffer
imminent and irreparable harm.
8
<PAGE> 9
FMC used its Kongsberg subsidiary as an agent to covertly gather confidential
and proprietary information about Moorco, a company FMC now admits to having
long considered as a possible target of acquisition. It then used this
information as the basis for its hostile bid to acquire Moorco. These
activities will cause irreparable harm to Moorco.
28. Moorco is suffering such harm now. By falsely representing to
the investment public that its offer to Moorco is a bona fide offer based on
public information, FMC has manipulated the price of Moorco stock and caused a
dramatic change in the composition of Moorco's stock ownership. In the
aftermath of FMC's unilateral decision to announce its offer and to falsely
represent that it was based solely on public information, numerous short-term
investors and arbitrageurs purchased positions in Moorco. In Wall Street
parlance, FMC has used its confidential information to put Moorco "in play" as
a takeover candidate. This creates enormous uncertainty about Moorco's future,
and this uncertainty adversely affects Moorco's ability to obtain orders, to
maintain customer relationships, to pfbeattract and retain key personnel, to
pursue acquisitions, to pursue its strategic objectives, and otherwise to
manage its business in the interests of its shareholders.
29. Furthermore, by its fraud, by its unlawful acquisition and use
of Moorco's protectible trade secrets, and by its breach of a relationship of
special trust and confidence. Absent an injunction, FMC will have obtained
through fraud the entire object of its scheme: the acquisition of Moorco at an
inadequate price through conduct that violates applicable law. Such a result
constitutes irreparable injury to Moorco, its employees, and its shareholders,
since once FMC's scheme succeeds and FMC acquires Moorco, FMC will cause this
litigation to be discontinued.
30. Finally, the harm caused to Moorco by FMC's unlawful conduct
can only increase if FMC's hostile bid is allowed to proceed on its current
basis. FMC intends to consummate its acquisition plans for Moorco by making an
offer directly to Moorco's
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<PAGE> 10
shareholders. In order to comply with applicable law, in any such offer FMC
will have to reveal the confidential business information it unlawfully
obtained through the conduct described herein. Disclosure of such information
will irreparably harm plaintiff and its business prospects.
31. Moorco has no remedy at law adequate to address these harms.
FMC has already acquired Moorco's confidential and proprietary information.
The fruit of this unlawful acquisition is FMC's hostile tender offer to
purchase Moorco announced May 5, 1995. FMC seeks to use the information it has
fraudulently obtained to consummate its purchase of Moorco, allowing it to
avoid all of Moorco's claims at law.
VI
CONCLUSION AND PRAYER FOR RELIEF
Wherefore, premises considered, Moorco prays that this Court,
after notice and hearing thereon, issue a temporary injunction, and that after
such final hearing, the Court continue and make permanent such injunction
restraining, prohibiting, and enjoining the Defendant to:
(1) withdraw its unsolicited offer for the Plaintiff which was
made based upon fraudulently obtained confidential information
and enter into the confidentiality and standstill agreement
which has been offered by Plaintiff to Defendant;
(2) refrain from utilizing the fraudulently obtained confidential
information in aid or preparation for any offer to purchase
Plaintiff;
(3) refrain from utilizing the fraudulently obtained confidential
information in assisting or encouraging any other bid or offer
for the Plaintiff by any entity;
(4) turn over to Plaintiff all records, reports, notes, or other
documents of whatsoever description recording, analyzing,
referring to, or otherwise reflecting any information obtained
by Defendant from its tours of Plaintiff's facilities; and
(5) turn over to Plaintiff all nonpublic documents created by or
on behalf of Moorco received from any source.
10
<PAGE> 11
Plaintiff further prays for recovery of all costs of Court,
reasonable attorney's fees and for such other and further relief at law or in
equity, special and general, to which it may show itself justly entitled.
Respectfully submitted,
ALLISON, HUERTA, HASTINGS
& ALLISON
By /s/ Rebecca E. Hamilton
-------------------------------
Guy H. Allison
State Bar No. 01086000
Rebecca E. Hamilton
State Bar No. 08837050
920 Leopard Street
P.O. Box 23080
Corpus Christi, Texas 78403
(512) 884-1632
(512) 884-7013 (Fax)
BAKER & BOTTS, L.L.P.
Joseph D. Cheavens
State Bar No. 04170000
James Edward Maloney
State Bar No. 12881500
Paul R. Elliott
State Bar No. 06547500
910 Louisiana
Houston, Texas 77002
(713) 229-1234
(713) 229-1522 (Fax)
ATTORNEYS FOR PLAINTIFF
MOORCO INTERNATIONAL INC.
OF COUNSEL:
WACHTELL, LIPTON, ROSEN & KATZ
Paul K. Rowe
51 West 52nd Street
New York, New York 10019
(212) 403-1000
(212) 403-2000 (Fax)
11
<PAGE> 12
NO. _______________
MOORCO INTERNATIONAL INC., ) IN THE DISTRICT COURT OF
a Delaware corporation, )
)
Plaintiff, )
) NUECES COUNTY, TEXAS
v. )
)
FMC CORPORATION, )
a Delaware corporation, )
)
Defendant. ) _______ JUDICIAL DISTRICT
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, on this day personally
appeared Michael L. Tiner, who being by me duly sworn, stated under oath that
he is a representative of Moorco International Inc.; that he is authorized to
execute this verification on its behalf; that he has read the above petition;
and that every statement contained therein is true and correct to the best of
his knowledge and belief.
/s/ Michael L. Tiner
-------------------------------
Michael L. Tiner
SWORN TO AND SUBSCRIBED before me on the 25th day of April,
1995, to certify which witness my hand and official seal.
/s/ Paul Keith Rowe
-------------------------------
Notary Public
My Commission Expires:
July 31, 1995
-------------------------------
12
<PAGE> 1
EXHIBIT 9
CAUSE NO. 95-2595-F
MOORCO INTERNATIONAL INC., ) IN THE DISTRICT COURT
a Delaware corporation, )
)
Plaintiff, )
) 214TH JUDICIAL DISTRICT
vs. )
)
FMC CORPORATION, )
a Delaware corporation, )
)
Defendant. ) NUECES COUNTY, TEXAS
ORDER
This 11th day of May, 1995, came on to be heard the Motion of the
Defendant FMC CORPORATION that this cause be stayed; and it appearing unto the
Court that the Motion is well taken and should be granted, it is therefore
ORDERED, ADJUDGED and DECREED that this cause be stayed pending disposition of
the suit styled FMC Corporation, et al. v. Moorco International, Inc., et al.,
Civil Action No. 14285, in the Court of Chancery of the State of Delaware, in
and for New Castle County.
The Court may reconsider this stay if Plaintiff MOORCO INTERNATIONAL,
INC. demonstrates to this Court that the substantive law question is
substantially different in the State of Delaware, and the way it would be
treated in the State of Delaware.
<PAGE> 2
SIGNED and ENTERED this 11th day of May, 1995
/s/ Mike Westergren
----------------------
JUDGE PRESIDING
APPROVED AS TO FORM:
/s/ Joseph D. Cheavens
- -----------------------
Joseph D. Cheavens
BAKER & BOOTS, L.L.P.
901 Louisiana
Houston, Texas 77002
Phone: 713-223-1234
Fax: 713-229-1522
Attorneys for Plaintiff,
Moorco International, Inc.
/s/ James W. Wray, Jr.
- ------------------------
James W. Wray, Jr.
WRAY, WOOLSEY & ANTHONY, L.L.P.
500 W. Water St., Suite 1000N
Corpus Christi, Texas 76471
Phone: 512-886-3200
Fax: 512-886-3299
Attorneys for Defendant,
FMC Corporation
<PAGE> 1
EXHIBIT 10
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
FMC CORPORATION and MII )
ACQUISITION CORP., )
)
Plaintiffs, )
)
v. ) Civil Action No. ________
)
MOORCO INTERNATIONAL INC., )
KEITH S. WELLIN, MICHAEL L. )
TINER, JAMES F. ATKINS, )
GEORGE A. CIOTTI, JEFFREY J. )
COLLINSON, JAMES E. DONLAN, )
CALVIN A. THOMPSON and )
WILLIAM D. WITTER, )
)
Defendants. )
COMPLAINT
Plaintiffs FMC Corporation and MII Acquisition Corp.
(collectively "FMC"), by their undersigned attorneys, for their Complaint
herein allege upon knowledge as to themselves and their own actions and upon
information and belief as to all other matters, as follows:
SUMMARY OF THE ACTION
1. FMC brings this action to obtain the judicial
relief necessary to allow the common stockholders of Moorco International Inc.
("Moorco") to accept FMC's tender offer for all of the common stock of Moorco.
On April 3, 1995 FMC communicated to Moorco a proposal to acquire Moorco for
approximately $223 million in a negotiated merger transaction which would
provide the Moorco shareholders with
<PAGE> 2
$20 per share, in cash, for all the outstanding common stock of Moorco (the
"FMC Proposal" or the "Proposal"). This proposed price represented an
approximately 45% premium over the last closing market price prior to the
Proposal. In addition, FMC indicated a willingness to consider an even higher
price if, based upon information not publicly available, Moorco could
demonstrate additional value.
2. Subsequent to April 3, 1995, FMC repeatedly
indicated its willingness to negotiate with Moorco and respond to any questions
about its Proposal. Despite FMC's premium proposal and FMC's willingness to
negotiate, Moorco resolutely refused to negotiate with FMC unless FMC would
agree to enter into an overbroad, one-year "standstill" agreement that Moorco
proffered to FMC. The standstill agreement would have -- among other things --
precluded FMC from making its proposal available to Moorco's shareholders
through a tender offer or a consent or proxy solicitation. In addition, Moorco
(i) advised FMC that, if FMC executed the standstill agreement, Moorco would
undertake a "process" that might lead to the sale of Moorco, (ii) threatened
that, if FMC did not execute the standstill agreement, FMC would be excluded
from any such "process" as an "outsider", and (iii) claimed that a one-year
standstill was required because of possible changes in the capital gains tax
law, possible developments in a pending lawsuit and possible improvements in
Moorco's business. Although Moorco's representatives indicated that they might
agree to certain
-2-
<PAGE> 3
modifications in the proposed standstill, they did not provide any detailed
proposal or other assurance that Moorco's shareholders would have an
opportunity to accept a proposal from FMC.
3. In light of Moorco's continued insistence that
FMC forego for an unreasonably long period the ability to give Moorco's
shareholders the right to act upon an offer by FMC, on May 5, 1995, FMC
commenced a tender offer for all the outstanding common stock of Moorco at $20
per share in cash (the "Tender Offer"). Neither the Tender Offer nor the FMC
Proposal contain any financing condition, and FMC has adequate financial
resources for the FMC Proposal and the Tender Offer. The Tender Offer is
scheduled to close on Friday, June 2, 1995. However, under its terms, the
Tender Offer cannot close if Moorco's existing Preferred Stock Purchase Rights
(the "Poison Pill") are triggered by such closing.
4. Moorco has threatened that it will exclude FMC
from receiving information (even though FMC is willing to sign a
confidentiality agreement with respect thereto) or otherwise participating as a
bidder in any auction or other process to maximize stockholder value that
Moorco may determine to commence. Moorco has stated that it has data
demonstrating that the Moorco common stock is more valuable than the $20 per
share proposed by FMC but it has refused to provide such data to FMC even
though FMC has agreed to sign a confidentiality agreement. This refusal has
been Moorco's
-3-
<PAGE> 4
response to FMC's expressed willingness to consider offering Moorco
shareholders even more than $20 per share if supported by non-public
information.
5. FMC seeks the following relief: (a) an
injunction preliminarily and permanently enjoining the enforcement or
effectuation of the terms of the Poison Pill or ordering its redemption by the
Moorco Board of Directors to allow the Moorco shareholders to accept the Tender
Offer; (b) an injunction preliminarily and permanently enjoining Moorco from
excluding FMC from any "auction" or other processes undertaken by Moorco for
the purpose of any extraordinary corporate transaction, (c) an injunction
preliminarily and permanently enjoining Moorco from effectuating any
transaction, whether as an alternative to the Tender Offer or not, that has the
reasonably foreseeable effect of precluding the shareholders from choosing
between that transaction and the Tender Offer; and (d) a declaration that
Moorco is not reasonably justified in excluding FMC from any auction process,
refusing to negotiate with FMC and demanding a one-year standstill agreement as
a pre-condition to negotiation.
-4-
<PAGE> 5
THE PARTIES
6. Plaintiff FMC Corporation is a corporation
organized and existing under the laws of the State of Delaware with its
principal place of business at 200 E. Randolph Drive, Chicago, Illinois 60601.
FMC Corporation is one of the world's leading producers of chemicals and
machinery for industry, government and agriculture with annual sales of $4
billion in 1994 and net income of $173.4 million in 1994. On March 28, 1995,
FMC acquired beneficial ownership of, and currently beneficially owns, 100
shares of Moorco common stock.
7. Plaintiff MII Acquisition Corp. is a corporation
organized and existing under the laws of the State of Delaware with its
principal place of business at 200 E. Randolph Drive, Chicago, Illinois 60601.
MII Acquisition Corp. is a newly formed, wholly-owned subsidiary of FMC
Corporation.
8. Defendant Moorco is a corporation organized and
existing under the laws of the State of Delaware with its principal place of
business located at 2800 Post Oak Blvd., Houston, Texas 77056. Moorco is a
supplier of fluid measurement and pressure control products for the petroleum,
industrial process, and electric power generation industries. Moorco's stock
is listed and actively traded on the New York Stock Exchange. For the fiscal
year ending May 31, 1994, Moorco had sales of approximately $210 million and
net income of $14.3 million.
-5-
<PAGE> 6
9. Defendant Keith S. Wellin is the Chairman of the
Board of Directors and a director of Moorco. According to Moorco's Proxy
Statement dated August 12, 1994, Wellin beneficially owns approximately 5.1% of
Moorco common stock.
10. Defendant Michael L. Tiner is President, Chief
Executive Officer, and a director of Moorco.
11. Defendant William D. Witter is a director of
Moorco. According to Moorco's Proxy Statement dated August 12, 1994, Witter
beneficially owns approximately 7.4% of Moorco common stock.
12. Defendant James F. Atkins is a director of Moorco.
13. Defendant George A. Ciotti is a director of
Moorco.
14. Defendant Jeffrey J. Collinson is a director of
Moorco.
15. Defendant James E. Donlan is a director of Moorco.
16. Defendant Calvin A. Thompson is a director of
Moorco.
FMC'S PROPOSAL AND THE DEFENDANTS' RESPONSE
17. On April 3, 1995, FMC proposed to acquire Moorco
in a negotiated merger transaction whereby Moorco shareholders would receive
$20.00 a share in cash, or approximately $223 million in the aggregate. The
FMC Proposal represents approximately a 45% premium over the
-6-
<PAGE> 7
$13.75 closing price of Moorco's common stock on Friday, March 31, 1995.
Further, in a letter from Mr. Robert N. Burt, Chairman and Chief Executive
Officer of FMC, to Mr. Tiner, Moorco's President and Chief Executive Officer,
dated April 3, 1995, FMC stated that it would consider an even higher price, if
Moorco could demonstrate additional value.
18. The FMC Proposal presents Moorco shareholders
with an outstanding opportunity to maximize the value of their Moorco shares
for the following reasons:
(a) Moorco has struggled with declining earnings and
revenues. Moorco's sales for the nine months ended February 28, 1995 were
$134,795,000 compared to $149,035,000 for the first nine-months of last year.
For the nine months ended February 1995, net income was $4,698,000 and earnings
per share were $0.40 compared to net income of $8,740,000 and earnings per
share of $0.73 in the first nine-months of last year.
(b) The market showed great enthusiasm for the FMC
Proposal upon its disclosure on April 3, 1995. The market price of common
shares of Moorco immediately rose $7.75, from $13.75 at the close of trading on
March 31, 1995 to $21.375 at the close of trading on April 3, 1995.
(c) The FMC Proposal presents a possible opportunity
to maximize shareholder value even in excess of the $223 million through
negotiation with FMC.
19. On April 5, 1995, Moorco issued a press
release announcing that its Board of Directors would
-7-
<PAGE> 8
evaluate the proposal from FMC and had retained Salomon Brothers Inc. as its
financial advisor to assist with the evaluation. Despite the opportunity
represented by the FMC Proposal and despite FMC's willingness to negotiate, the
first meeting between FMC and Moorco did not occur until nearly two weeks
later, on April 18, 1995. This meeting was attended by Mr. Burt and Mr. Joseph
H. Netherland, General Manager of FMC's Energy and Transportation Group, and
Mr. Tiner and Mr. James J. Nelson, Vice President and General Counsel of
Moorco.
20. At the meeting on April 18, 1995 FMC provided
Moorco with additional information regarding FMC and the FMC Proposal and
repeated FMC's willingness to enter into negotiations regarding the FMC
Proposal. At this meeting, Mr. Burt referred to the common interests of both
companies, as evidenced by FMC previously visiting a Moorco plant to explore a
cooperative relationship with Moorco. However, Mr. Tiner declined to enter
into any substantive negotiations and committed only that he would present the
additional FMC information to a meeting of the Moorco Board of Directors, which
was yet unscheduled. Mr. Burt called Mr. Tiner on April 19 and told him that
FMC was willing to consider various items raised by Mr. Tiner at the April 18
meeting if Moorco would supply related information.
21. On May 1, 1995, Mr. Burt met again with Mr.
Tiner. The meeting was requested by Mr. Tiner to report the Moorco Board of
Directors' response to the FMC Proposal.
-8-
<PAGE> 9
Moorco proffered to FMC a proposed "confidentiality/standstill agreement,"
which Moorco demanded FMC execute before Moorco would consider either engaging
in negotiations with FMC or providing FMC certain confidential information.
The standstill agreement contained provisions, inter alia, precluding FMC or
others with which FMC might associate from:
a) seeking, offering, proposing or requesting
permission to acquire any asset of Moorco or any security issued by Moorco for
one year;
b) seeking representation on Moorco's board of
directors or from soliciting any proxy or consent with respect to any
securities of Moorco for one year;
c) entering into any discussion to do any of the
foregoing for one year;
d) disclosing at any time before or after expiration
of one year to Moorco stockholders any information about Moorco received by FMC
even if disclosure of such information would be required to inform Moorco's
stockholders fully regarding a tender offer or other transaction proposed by
FMC; and
e) initiating for one year any contact with any
officer, director or employee of Moorco regarding Moorco's operations, assets,
prospects or finances.
The standstill agreement also required FMC for one year, to inform Moorco
promptly of any approach by any third party concerning FMC or such third party
participating in any
-9-
<PAGE> 10
transaction involving the assets of Moorco or securities issued by Moorco.
22. The standstill agreement demanded by Moorco as a
pre-condition to negotiations and the production of non-public information is
overbroad, unreasonable, and designed to prevent, rather than encourage, offers
for Moorco. On the evening of May 1, 1995 and subsequently, FMC's
representatives communicated FMC's willingness to enter into a confidentiality
agreement, including an agreement with a reasonable thirty-day "standstill"
period, but FMC was not and is not willing to stand still for one year. In
response, Moorco claimed that a one-year standstill was "carefully chosen" for
several reasons, including the possibility of a reduction in the capital gains
tax and possible favorable developments in certain litigation. Moorco's
representatives also asserted that Moorco had the right to exclude FMC from
participating in any sale process and thus keep Moorco's shareholders from
being able to accept any FMC proposal because FMC purportedly had obtained
confidential information about Moorco improperly during certain visits by FMC
personnel to Moorco plants.
23. Moorco's representatives also threatened that,
if Moorco instituted a "process" leading to the potential sale of Moorco or
some other extraordinary transaction, FMC would be excluded from any such
"process" as an "outsider," unless FMC capitulated to the demanded standstill
agreement.
-10-
<PAGE> 11
24. In subsequent discussions on May 2 and May 3,
1995, FMC's representatives suggested to Moorco's representatives the
possibility of FMC agreeing to a 45-day standstill and repeated the desire of
FMC to negotiate with Moorco. Moorco's representatives nevertheless repeated
the demand for a one-year standstill period and, although suggesting several
modifications to the proposed agreement, failed to agree that Moorco's
stockholders would have a reasonable opportunity to accept an offer by FMC.
Moorco's representatives reiterated the threat to exclude FMC from any process
for the sale of Moorco.
25. Moorco's demand for the one-year standstill
agreement as a pre-condition to negotiation or participation in any "process"
for the sale of Moorco is unreasonable and the justifications offered by Moorco
do not withstand scrutiny. Given the past performance of Moorco and the
attractiveness of the FMC Proposal, it is not in the best interests of the
Moorco shareholders to delay consideration of the FMC Proposal for one year or
to preclude FMC from pursuing an offer for Moorco absent the consent of
Moorco's directors.
THE POISON PILL
26. On November 8, 1994, Moorco announced that its
Board of Directors had adopted a shareholders rights plan (the "Poison Pill").
The plan (with a 15% trigger) entails a distribution of one right for each
outstanding
-11-
<PAGE> 12
share of Moorco common stock. Each right will entitle the holder to buy one
one-hundredth (1/100th) of a share of a new series of junior participating
preferred stock at an exercise price of $65 per share. Each one one-hundredth
of a share of junior participating preferred stock will be essentially the
economic equivalent of one share of Moorco common stock. The rights will
attach to and trade with Moorco common stock and will not be exercisable until
a person or group acquires 15% of Moorco's common stock or commences a tender
offer that would result in ownership of 15% of Moorco's common stock.
27. If any person becomes a 15% stockholder, the
rights not held by the 15% stockholder "flip in" and become rights to buy
shares of Moorco common stock at a 50% discount. After a "flip in" event and
prior to a person becoming the beneficial owner of 50% or more of the Company's
common stock, the Board of Directors may, in lieu of allowing the rights to be
exercised, issue one share of common stock in exchange for all or any pro rata
portion of the rights. In the event Moorco is merged and its common stock is
exchanged or converted, the new rights "flip over" and require that provision
be made so as to entitle the holders to buy shares of the acquiring party's
common stock at 50% discount.
28. Moorco stated, on November 8, 1994, that the
shareholder rights plan becomes effective if any person acquires 15% of the
Company, and is designed to require
-12-
<PAGE> 13
prospective buyers to negotiate with Moorco's Board. As a consequence, by
implementing the Poison Pill, the defendants have assumed a heightened duty to
the Moorco shareholders. The refusal to negotiate with FMC except on terms
harmful to the Moorco shareholders is a violation of such duty.
29. The practical effect of the Poison Pill is to
preclude FMC from consummating its offer to purchase Moorco's shares at a
substantial premium.
IRREPARABLE INJURY
30. If the FMC Proposal and/or the Tender Offer are
impeded by the breaches of duty described herein and by Moorco's refusal to
redeem the Poison Pill, FMC and the Moorco shareholders will lose the
opportunity represented by FMC's Proposal and FMC's Tender Offer. FMC and the
Moorco shareholders will lose forever the opportunity to have the FMC Proposal
and Tender Offer fairly considered by the Moorco directors and stockholders.
FMC will lose the irreplaceable opportunity to create a new combined
FMC/Moorco entity with unique business strengths. The Moorco shareholders
will lose the opportunity to sell their shares at a generous premium
over the market price. Damages for these losses cannot readily be
calculated and, in any event, could not compensate for the unique loss that
would have been suffered by FMC.
-13-
<PAGE> 14
COUNT I
(Improper Efforts To Impede Or Block
The FMC Proposal And The Tender Offer)
31. FMC repeats and realleges each of the allegations
of the preceding paragraphs as if fully set forth herein.
32. Moorco has attempted to utilize its proposed
one-year standstill agreement not for legitimate purposes consistent with the
interests of the Moorco shareholders, but unreasonably to prevent or delay and
impede the FMC Proposal and any possible tender offer by FMC, including the
Tender Offer. Rather than seeking to delay the FMC Proposal and create
additional obstacles to that Proposal, Moorco should be acting to facilitate
FMC's ability to offer a higher price for Moorco by negotiating with FMC and
providing additional information to FMC. The demanded one-year standstill
agreement is a defensive reaction that is not a reasonable response to any
threat posed either by the FMC Proposal or by the FMC Tender Offer. The
purported reasons Moorco gave for the standstill agreement do not provide a
legitimate or lawful basis for Moorco's actions to prevent or delay and impede
the FMC Proposal and the FMC Tender Offer and are contrary to the interests of
the Moorco shareholders.
33. The directors of Moorco adopted a Poison Pill
ostensibly for the purpose of compelling any potential acquiror of Moorco to
negotiate with the Board of Directors
-14-
<PAGE> 15
of Moorco before completing an acquisition. In the present case, however, FMC
is ready and willing to negotiate with the Board of Directors of Moorco.
Nevertheless, Moorco's Board refuses to engage in such negotiations without
attaching conditions that would prevent FMC from proceeding with its Tender
Offer or otherwise giving Moorco shareholders any opportunity to benefit from
FMC's Proposal. Despite over 30 days having elapsed since FMC's Proposal and
despite FMC's willingness to accept a thirty-day standstill, Moorco makes a
claim that a one-year standstill is required as a pre-condition to any
negotiations with FMC or any process to maximize stockholder value. From these
facts, it is apparent that Moorco intends to utilize any means at its disposal,
including the Poison Pill, to preclude FMC from acquiring Moorco without regard
to FMC's willingness to negotiate with Moorco or the adverse consequences to
Moorco's shareholders.
34. The utilization of the Poison Pill to preclude
the Tender Offer is unreasonable in that:
(a) The Tender Offer does not represent any threat to
the Moorco shareholders, and those shareholders are capable of making a fully
informed and voluntary decision with respect to the Tender Offer;
(b) The Poison Pill is being utilized not for the
purpose of negotiating with FMC, but for the purpose of precluding the Tender
Offer without regard to its
-15-
<PAGE> 16
adequacy or the rights of the Moorco shareholders to make their own choice; and
(c) The Poison Pill is being utilized not for the
purpose of searching for an alternative to the Tender Offer that will provide
real value in excess of the value of the Tender Offer, but for the purpose of
thwarting or delaying the Tender Offer.
35. FMC is without an adequate remedy at law.
COUNT II
(Exclusion Of FMC As A Bidder)
36. FMC repeats and realleges each of the allegations
of the preceding paragraphs as if fully set forth herein.
37. Moorco has advised FMC that it may institute a
"process" leading either to the sale of Moorco or to another extraordinary
transaction and that Moorco will exclude FMC from that process unless FMC
executes the one-year standstill agreement. Further, Moorco has refused to
negotiate with FMC unless FMC executes the one-year standstill agreement.
38. Moorco's refusal to negotiate and its threatened
exclusion of FMC from any sale process are not reasonably related to the best
interests of the Moorco shareholders and are not calculated to produce the
highest offer for the Moorco common stock. In effect, the only reason that
Moorco refuses to negotiate with FMC and the only reason that FMC is being
excluded is that FMC declines
-16-
<PAGE> 17
to relinquish its right to make a non-consensual tender offer or to solicit
consents or proxies from Moorco's shareholders. However, FMC's refusal to
restrict its ability to take its proposals directly to Moorco's shareholders
does not justify the actions of Moorco. Moorco should be acting to facilitate
a higher offer by FMC, both by negotiating with FMC and by providing
confidential information to FMC. Moorco should pursue this course of action
regardless of whether FMC retains its ability to proceed with an offer on a
nonconsensual basis or otherwise.
39. The reasons put forth by Moorco for the one-year
standstill agreement do not provide a legitimate or lawful basis for Moorco's
actions to prevent or delay and impede the FMC Proposal and the FMC Tender
Offer, and Moorco's actions are contrary to the interests of the Moorco
shareholders.
40. FMC is without an adequate remedy at law.
WHEREFORE, plaintiff demands judgment and preliminary
and permanent relief, including injunctive and declarative relief, in its favor
as follows:
(a) A declaratory judgment that the defendants have
breached their fiduciary duties by delaying negotiations, refusing to negotiate
actively with FMC and threatening to exclude FMC from any process for the sale
of Moorco;
-17-
<PAGE> 18
(b) An order preliminarily and permanently enjoining
the defendants to carry out their fiduciary duties by
(i) promptly, actively and in good faith negotiating
with FMC; and
(ii) not excluding FMC from any auction or other
process that may be instituted by Moorco and that may lead to an
extraordinary transaction involving Moorco.
(c) An order preliminarily and permanently enjoining
Moorco, the defendant directors, Moorco's officers, agents, servants, employees
and those persons who act in concert or participation with them who receive
actual notice thereof, from taking any action to effectuate the "flip-in,"
"flip-over" or other terms of the Poison Pill and ordering the defendant
directors to redeem the Poison Pill;
(d) An order preliminarily and permanently enjoining
the defendants from bringing suit or litigation in any other forum based on or
relating to the facts alleged in this Complaint;
(e) An award to FMC of the costs and disbursements of
this action, including reasonable attorneys' and experts' fees; and
(f) Granting such other and further relief as this
Court may deem just and proper.
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<PAGE> 19
YOUNG, CONAWAY, STARGATT & TAYLOR
{SIGNATURE OF DAVID C. MCBRIDE}
-----------------------------------
David C. McBride
Josy W. Ingersoll
Jan R. Jurden
Martin S. Lessner
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6639
Attorneys for Plaintiffs
OF COUNSEL:
Donald G. Kempf, Jr.
Robert J. Kopecky
Jean Reed Haynes
KIRKLAND & ELLIS
Citicorp Center
153 East 53rd. St.
New York, NY 10022
(212) 446-4800
-19-
<PAGE> 1
EXHIBIT 11
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
FMC CORPORATION and MII :
ACQUISITION CORP., :
:
Plaintiffs, :
: C.A. NO. 95-285 ( ____ )
:
v. :
:
MOORCO INTERNATIONAL INC., :
:
Defendant. :
AMENDED COMPLAINT
Plaintiffs FMC Corporation and MII Acquisition Corp.
(collectively "FMC"), by their undersigned attorneys, for their Amended
Complaint herein allege upon knowledge as to themselves and their own actions
and upon information and belief as to all other matters, as follows:
JURISDICTION AND VENUE
1. Subject matter jurisdiction is conferred upon this
Court pursuant to section 14(e) of the Securities Exchange Act of 1934 (the
"1934 Act") and by the Declaratory Judgments Act, 28 U.S.C. Sections
2201 and 2202. Jurisdiction and venue are predicated on 15 U.S.C. Section
78aa, in that acts and transactions at issue in this litigation are occurring
in this District and are being carried out through the instrumentalities of
interstate commerce, including the United States mail and wires.
<PAGE> 2
Defendant Moorco International Inc. ("Moorco") is found in this District.
THE PARTIES
2. Plaintiff FMC Corporation is a corporation organized
and existing under the laws of the State of Delaware with its principal place
of business at 200 E. Randolph Drive, Chicago, Illinois 60601. FMC Corporation
is one of the world's leading producers of chemicals and machinery for
industry, government and agriculture with annual sales of $4 billion in 1994
and net income of $173.4 million in 1994.
3. Plaintiff MII Acquisition Corp. is a corporation
organized and existing under the laws of the State of Delaware with its
principal place of business at 200 E. Randolph Drive, Chicago, Illinois 60601.
MII Acquisition Corp. is a newly formed, wholly-owned subsidiary of FMC
Corporation.
4. Defendant Moorco is a corporation organized and
existing under the laws of the State of Delaware with its principal place of
business located at 2800 Post Oak Blvd., Houston, Texas 77056. Moorco is a
supplier of fluid measurement and pressure control products for the petroleum,
industrial process, and electric power generation industries. Moorco's stock
is listed and actively traded on the New York Stock Exchange.
-2-
<PAGE> 3
SUMMARY OF THE ACTION
5. By this action, FMC seeks a declaratory judgment that
its 14D-1 dated May 5, 1995, a copy of which is annexed hereto as Exhibit A
(the "FMC Schedule 14D-1"), does not violate section 14(e) of the 1934 Act, 15
U.S.C. Section 78n(e) and the rules and regulations promulgated thereunder by
the Securities and Exchange Commission.
THE FACTS
6. On April 3, 1995 FMC communicated to Moorco a
proposal to acquire Moorco for approximately $223 million in a negotiated
merger transaction that would provide Moorco's shareholders with $20 per share,
in cash, for all the outstanding common stock of Moorco (the "FMC Proposal" or
the "Proposal").
7. On May 5, 1995, FMC commenced a tender offer for all
the outstanding common stock of Moorco at $20 per share in cash (the "Tender
Offer"). The Tender Offer is scheduled to close on Friday, June 2, 1995.
8. On May 5, 1995, FMC filed a complaint against Moorco
and its directors in the Delaware Court of Chancery, captioned FMC Corporation
v. Moorco Int'l Inc., Del. Ch., C.A. No. 14285. The complaint seeks
preliminary and permanent injunctive and declarative relief based on the Moorco
defendants'
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<PAGE> 4
breaches of fiduciary duties relating to the FMC Proposal and Tender Offer.
9. Later that same day, Moorco filed suit against FMC
in Texas state court, captioned Moorco International Inc. v. FMC Corporation,
District Court of Nueces County, C.A. No. 95-2595-F (the "Texas Action") (a
copy of the complaint in the Texas Action ("Moorco-Tex Compl.") is attached as
Exhibit B hereto).
10. In the Texas Action, Moorco alleges, inter alia: (a)
that FMC wrongfully gained access to confidential information about Moorco's
current business, finances, marketing, and product development (Moorco-Tex
Compl. Paragraph 17); (b) that, in a letter dated April 3, 1994 that is part
of the FMC Schedule 14D-1, FMC falsely claimed that its decision to purchase
Moorco was "[b]ased upon study and analysis of publicly available
information," and that FMC subsequently released its April 3 letter to the
public (Moorco-Tex Compl. Paragraph 18); (c) that FMC has committed fraud by
allegedly misrepresenting that its proposal is based on publicly available
information, thereby disadvantaging Moorco's shareholders' ability to
evaluate the FMC Proposal (Moorco-Tex Compl. Paragraph 21); and (d) that
such alleged confidential information must be disclosed in the FMC
Schedule 14D-1 (Moorco-Tex Compl. Paragraph 30).
11. Contrary to Moorco's claim, FMC neither possesses nor
used in connection with the FMC Proposal or the Tender Offer non-public,
material information about Moorco.
-4-
<PAGE> 5
The FMC Schedule 14D-1 is not misleading, and FMC need not disclose any
information in that Schedule not already disclosed.
12. There is, accordingly, a substantial and continuing
justiciable controversy between FMC and Moorco as to the truthfulness and
completeness of the FMC Schedule 14D-1.
CLAIM FOR RELIEF
13. FMC incorporates the allegations of foregoing
paragraphs in this claim for relief.
14. FMC believes and alleges that statements made in its
14D-1 do no violate the 1934 Act, including section 14(e), and that the
Schedule 14D-1 is complete in every material respect.
15. Because Moorco has alleged that FMC has used
material, nonpublic information to formulate and make a hostile bid to acquire
Moorco, and that such alleged information must be disclosed by FMC, an actual
and justiciable controversy exists between the parties as to the information
disclosed in the FMC Schedule 14D-1.
16. Pursuant to 228 U.S.C. Sections 2201-02, FMC
seeks declaratory judgment that FMC's 14D-1 does not violate the 1934 Act,
including section 14(e).
WHEREFORE, plaintiff seeks the following judgment and
declarative and injunctive relief:
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<PAGE> 6
(a) A declaration that the FMC Schedule 14D-1
does not violate section 14(e) of the 1934 Act;
(b) An order preliminarily and permanently
enjoining the defendants from bringing suit or litigation in any other forum
based on or relating to the facts alleged in this Complaint;
(c) An award to FMC of the costs and
disbursements of this action, including reasonable attorneys' and experts'
fees; and
(d) Granting such other and further relief as
this Court may deem just and proper.
-6-
<PAGE> 7
YOUNG, CONAWAY, STARGATT & TAYLOR
/s/
----------------------------------
Bruce M. Stargatt #516
David C. McBride #408
Josy W. Ingersoll #1088
Jan R. Jurden #2658
Martin S. Lessner #3109
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6639
Attorneys for Plaintiffs
OF COUNSEL:
Donald G. Kempf, Jr.
Robert J. Kopecky
Jean Reed Haynes
KIRKLAND & ELLIS
Citicorp Center
153 East 53rd St.
New York, NY 10022
(212) 446-4800
Dated: May 11, 1995
-7-
<PAGE> 1
EXHIBIT 12
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- -------------------------------------------x
ERIK BALLAN, :
:
Plaintiff, :
: Civil Action No. 14187
-against- :
: CLASS ACTION COMPLAINT
KEITH S. WELLIN, MICHAEL L. TINER, :
JAMES F. ATKINS, GEORGE A. CIOTTI, :
JEFFREY J. COLLINSON, JAMES E. :
DONLAN, CALVIN A. THOMPSON :
WILLIAM D. WITTER, and MOORCO :
INTERNATIONAL INC. :
:
Defendants. :
- -------------------------------------------x
Plaintiff, Erik Ballan, by his attorneys, alleges upon
information and belief, except for paragraph 1 hereof, which is alleged upon
personal knowledge, as follows:
THE PARTIES
1. Plaintiff owns shares of common stock of defendant Moorco
International Inc. ("Moorco" or the "Company") and has been the owner
continuously of such shares since prior to the wrongs complained of herein.
2. Defendant Moorco is a corporation organized and existing
under the laws of the State of Delaware with its principal place of business
located at 2800 Post Oak Blvd., Houston, Texas 77056. Moorco is a leading
supplier of fluid measurement and pressure control products for the petroleum,
<PAGE> 2
industrial process, and electric power generation industries. Moorco's stock
is listed and actively traded on the New York Stock Exchange.
3. Defendant Keith S. Wellin ("Wellin") is the Chairman of
the Board of Directors and a director of Moorco. According to the Company's
Proxy Statement dated August 12, 1994, Wellin holds approximately 5.1% of
Moorco common stock.
4. Defendant Michael L. Tiner ("Tiner") is President, Chief
Executive Officer, and a director of the Company. According to the Company's
Proxy Statement dated August 12, 1994, Tiner received compensation from Moorco
in the amount of $380,560 during fiscal year 1993.
5. Defendant William D. Witter ("Witter") is a director of
the Company. According to the Company's Proxy Statement dated August 12, 1994,
Witter holds approximately 7.4% of Moorco common stock.
6. Defendant James F. Atkins ("Atkins") is a director of
Moorco.
7. Defendant George A. Ciotti ("Ciotti") is a director of
Moorco.
8. Defendant Jeffrey J. Collinson ("Collinson") is a director
of Moorco.
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<PAGE> 3
9. Defendant James E. Donlan ("Donlan") is a director of
Moorco.
10. Defendant Calvin A. Thompson ("Thompson") is a director
of Moorco.
11. The above-named individual defendants (collectively the
"Individual Defendants") as officers and/or directors of Moorco and/or as
significant shareholders of Moorco, owe fiduciary duties of good faith,
loyalty, fair dealing, due care, and candor to plaintiff and the other members
of the Class (as defined below).
CLASS ACTION ALLEGATIONS
12. Plaintiff brings this action pursuant to Rule 23 of the
Rules of this Court, on behalf of himself and all other stockholders of Moorco
as of April 5, 1995 (except defendants herein, members of their immediate
families, and any subsidiary, 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.
13. This action is properly maintainable as a class action
for the following reasons:
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<PAGE> 4
(a) The Class is so numerous that joinder of all members is
impracticable. There are more than approximately 9 million shares of Moorco
common stock held by approximately 139 shareholders of record who are members
of the Class. The holders of these shares are geographically dispersed
throughout the United States. Moorco stock is listed and actively traded on
the New York Stock Exchange.
(b) there are questions of law and fact which are common to
members of the Class including, inter alia, the following:
(i) whether defendants have engaged in conduct constituting
unfair dealing to the detriment of the Class;
(ii) whether defendants are engaging in a plan or scheme
to thwart and/or summarily reject offers that may maximize the value
of shareholders' investment in Moorco, to the detriment of the Class;
(iii) whether defendants are engaging in a plan or scheme
to entrench themselves at the expense of the public stockholders of
Moorco; and
(iv) whether plaintiff and the other members of the Class
would be irreparably damaged by the wrongs complained of;
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<PAGE> 5
(c) the claims of plaintiff are typical of the claims of the
other members of the Class and plaintiff has no interest that is adverse or
antagonistic to the interests of the Class;
(d) plaintiff is committed to prosecuting this action and has
retained counsel competent and experienced in litigation of this nature.
Plaintiff is an adequate representative of the Class and will fairly and
adequately protect the interests of the Class;
SUBSTANTIVE ALLEGATIONS
A. The Adoption Of The Poison Pill
14. On November 6, 1994, Moorco announced that its Board of
Directors had adopted a shareholders rights plan. The plan (with a 15%
trigger) entails a distribution of one right for each outstanding share of
Moorco common stock. Each right will entitle the holder to buy one
one-hundreth (1/100th) of a share of a new series of junior participating
preferred stock at an exercise price of $65 per share. Each one one-hundreth
of a share of junior participating preferred stock will be essentially the
economic equivalent of one share of Moorco common stock. The rights will
attach to and trade with Moorco common stock and will not be exercisable until
a person or group acquires 15% of Moorco's common stock or commences a
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<PAGE> 6
tender offer that would result in ownership of 15% of Moorco's common stock.
15. If any person becomes a 15% stockholder, the rights not
held by the 15% stockholder "flip in" and become rights to buy shares of Moorco
common stock at a 50% discount. After a "flip in" event and prior to a
person's becoming the beneficial owner of 50% or more of the Company's common
stock, the Board of Directors may, in lieu of allowing the rights to be
exercised, issue one share of common stock in exchange for all or any pro rata
portion of the rights. In the event Moorco is merged and its common stock is
exchanged or converted, the new rights, "flip over" and require that provision
be made so as to entitle the holders to buy shares of the acquiring person's
common stock at 50% discount.
16. The Company stated, on November 8, 1994, that the
shareholder rights plan becomes effective if any person acquires 15% of the
Company, and is designed to require prospective buyers to negotiate with
Moorco's Board. As a consequence, by implementing the poison pill, the
defendants have a heightened duty to ascertain whether a highly beneficial
acquisition offer can be obtained from a potential offeror.
-6-
<PAGE> 7
B. The Offer by FMC
17. On April 4, 1995, it was publicly disclosed, on The PR
Newswire, that FMC Corp. ("FMC") has offered to buy Moorco in an all-cash
merger valued at $20.00 a share, or approximately $223 million (the "Offer").
The Offer represents a 45% premium over the $13.75 closing price of Moorco's
common stock on Friday, March 31, 1995, and a multiple of 21.5 times Moorco's
latest twelve months' net income.
18. Further, in a letter to Tiner, Moorco's President and
Chief Executive Officer, dated April 4, 1995, FMC states that it will consider
offering a higher price, if Moorco can demonstrate "additional value."
19. In response to the Offer, Moorco common stock, on April
4, 1995, rose $7.75 to $21.375, rising above the $20 per share buyout price
offered by FMC.
20. In spite of this Offer to Moorco's shareholders by FMC,
Reuters, on April 4, 1995, reported that Moorco executives were not publicly
responding to the Offer. Further, The Wall Street Journal, on April 5, 1995,
stated that FMC wants to discuss its Offer with Moorco, but that Tiner, "didn't
respond to a call from Robert N. Burt, FMC's Chairman."
-7-
<PAGE> 8
21. The Offer presents plaintiff and the Class with an
outstanding opportunity to maximize the value of their Moorco shares for the
following reasons:
(a) Moorco's has struggled with declining earnings and
revenues, and the Company is not poised for future growth. The Company's sales
for its third-quarter ended February 28, 1995 were $45,093,000 compared to
$50,032,000 in the third quarter of last year. Net income was $1,636,000 and
earnings per share were $0.15 compared to the $2,948,000 and $0.25 per share
earned in the same period last year. Sales for the Company's nine-months ended
February 28, 1995 were $134,795,000 compared to $149,035,000 for the first
nine-months of last year. Net income was $4,698,000 and earnings per share
were $0.40 compared to the $8,740,000 and $0.73 per share earned in the first
nine-months of last year.
(b) The market showed great enthusiasm for the disclosure on
April 4, 1995 of FMC's proposal. The market price of common shares of Moorco
immediately rose $7.75, from $13.75 at the close of trading on March 31, 1995
to $21.375 at the close of trading on April 4, 1995.
(c) The Offer presents a possible opportunity to maximize
shareholder value even in excess of $223 million through negotiation with FMC
and/or putting Moorco up for auction.
-8-
<PAGE> 9
CAUSE OF ACTION AGAINST ALL DEFENDANTS
22. The Individual Defendants have breached their fiduciary
duties to plaintiff and the Class by rejecting the Offer out-of-hand without
fully evaluating or becoming fully informed with regard to the Offer and
without taking any steps to maximize shareholder value for plaintiff and the
members of the Class.
23. By virtue of the acts and conduct herein, the Individual
Defendants are not acting in good faith and have breached their fiduciary and
other common law duties which they owe to plaintiff and the other members of
the Class, have engaged in unfair dealing for their own benefit and to the
detriment of the Class, and have pursued a course of conduct designed to
entrench themselves in their positions of control within the Company.
24. The Individual Defendants have violated their fiduciary
duties owed to plaintiff and the other members of the Class in that they have
not and are not exercising independent business judgment and have acted and are
acting to the detriment of the Class in order to benefit themselves and
solidify their positions of control and enjoyment of the perquisites of office.
-9-
<PAGE> 10
25. As a result of the foregoing, defendants' summary
rejection of the Offer is a breach of the defendants' fiduciary duties and
should be enjoined.
26. 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 the representative of the Class;
(b) declaring defendants' rejection of the Offer to be a
breach of defendants' fiduciary duties to plaintiff and the Class;
(c) ordering the Individual Defendants to carry out their
fiduciary duties to plaintiff and the other members of the Class by:
(i) requiring defendants to consider the Offer in good
faith, to take all possible measures maximizing the value of Moorco
stock by, for example, engaging in a course of due diligence and
negotiating with FMC, or otherwise maximizing the value of the Company
to plaintiff and the Class; and
(ii) requiring defendants to make full and fair disclosure of
the Offer, the negotiations between Moorco and
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<PAGE> 11
FMC, and all other matters concerning a possible acquisition or merger
of Moorco which a reasonable investor would consider important;
(d) ordering defendants, jointly and severally, to pay to
plaintiff and other members of the Class all damages suffered and to be
suffered by them as a result of the acts and transactions alleged herein;
(e) awarding plaintiff the costs and disbursements of this
action, including a reasonable allowance for plaintiffs attorneys and experts'
fees; and
(f) granting such other and further relief as the Court may
deem just and equitable.
Dated: April 5, 1995
ROSENTHAL, MONHAIT, GROSS &
GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
--------------------------------
Joseph A. Rosenthal
Suite 214, First Federal Plaza
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
Of Counsel:
WOLF POPPER ROSS WOLF & JONES
845 Third Avenue
New York, New York 10022
(212) 759-4600
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<PAGE> 1
EXHIBIT 13
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - - - - - - -x
STANLEY GROSSMAN, :
:
Plaintiff, :
: C.A. No. 14291
-against- :
:
KEITH S. WELLIN, MICHAEL L. TINER, :
JAMES F. ATKINS, GEORGE A. CIOTTI, :
JEFFREY J. COLLINSON, JAMES E. :
DONLAN, CALVIN A. THOMPSON, :
WILLIAM D. WITTER, and MOORCO :
INTERNATIONAL INC., :
:
Defendants. :
- - - - - - - - - - - - - - - - - - - - - - -x
COMPLAINT
Plaintiff, by his attorneys, for his Complaint, alleges upon
information and belief, except as to the allegations contained in paragraph 1,
which plaintiff alleges upon knowledge, as follows:
THE PARTIES
1. Plaintiff Stanley Grossman owns and has owned, at all
times material hereto, 1000 shares of the common stock of Moorco International
Inc. ("Moorco" or the "Company").
2. Defendant Moorco is a Delaware corporation with its
principal place of business located at 2800 Post Oak Blvd., Houston, Texas
77056. Moorco is a leading supplier of fluid
<PAGE> 2
measurement and pressure control products for the petroleum, industrial
process, and electric power generation industries. Moorco's stock is listed
and actively traded on the New York Stock Exchange.
3. Defendant Keith S. Wellin is the Chairman of Moorco's
Board of Directors. As of August 12, 1994, Wellin owned or controlled
approximately 5.1% of Moorco common stock.
4. Defendant Michael L. Tiner ("Tiner") is President,
Chief Executive Officer, and a director of the Company. For the fiscal year
ended May 31, 1994, Tiner received total compensation from Moorco in the amount
of $380,560.
5. Defendant William D. Witter is a director of the
Company. As of August 12, 1994, Witter owned or controlled approximately 7.4%
of Moorco common stock.
6. Defendants James F. Atkins, George A. Ciotti, Jeffrey
J. Collinson, James E. Donlan and Calvin A. Thompson are directors of Moorco.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action pursuant to Rule 23 of
the Rules of this Court, for declaratory, injunctive and other relief on his
own behalf and as a class action, on behalf of all common stockholders of
Moorco (except defendants herein
-2-
<PAGE> 3
and any person, firm, trust, corporation or other entity related to or
affiliated with any of the defendants) and their successors in interest, who
are being deprived of the opportunity to maximize the value of their Moorco
shares by the wrongful acts of defendants complained of herein.
8. This action is properly maintainable as a class
action for the following reasons:
9. The class of stockholders for whose benefit this
action is brought is so numerous that joinder of all Class members is
impracticable. There are more than approximately 9 million share of Moorco
common stock held by approximately 139 shareholders of record who are members
of the Class. The holders of these shares are geographically dispersed
throughout the United States. Moorco stock is listed and actively traded on
the New York Stock Exchange.
10. There are questions of law and fact which are common
to the members of the Class including, inter alia, the following:
a. whether defendants, in bad faith and for improper
motives, have prevented members of the Class from receiving the
maximum value achievable for their shares of Moorco common stock;
-3-
<PAGE> 4
b. whether defendants have failed to consider, in good
faith, the adequacy of unsolicited offers for the Company;
c. whether defendants have engaged in conduct
constituting unfair dealing to the detriment of the public
stockholders of Moorco; and
d. whether defendants have breached their fiduciary and
common law duties owed by them to plaintiff and the other members of
the Class, including their duties of care and loyalty.
11. The claims of plaintiff are typical of the claims of
the other members of the Class, and plaintiff has no interests that are adverse
or antagonistic to the interests of the Class.
12. Plaintiff is committed to the vigorous prosecution of
this action and has retained competent counsel experienced in litigation of
this nature. Accordingly, plaintiff is an adequate representative of the Class
and will fairly and adequately protect the interests of the Class.
13. 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
-4-
<PAGE> 5
the Class, which would establish incompatible standards of conduct for the party
opposing the Class.
14. Defendants have acted and are about to act on grounds
generally applicable to the Class, thereby rendering final injunctive or
corresponding declaratory relief appropriate with respect to the Class as a
whole.
SUBSTANTIVE ALLEGATIONS
15. In recent years, Moorco has struggled with declining
earnings and revenues. For example, the Company reported sales for its
third-quarter ended February 28, 1995, of $45,093,000 compared to $50,032,000
in the third quarter of the prior year. Net income was reported at $1,636,000,
and earnings per share were $0.15, down from the $2,948,000 and $0.25 per share
earned in the prior year. In addition, the Company's sales for the nine-months
ended February 28, 1995 were $134,795,000 compared to the $149,035,000 attained
in the first nine months of the prior year; and net income was $4,698,000 and
earnings per share were $0.40, down from the $8,740,000 and $0.73 per share
earned in the same nine-month period during the prior year. As a result of
Moorco's declining earnings and the resulting decline in the market price of
its stock, Moorco has become a takeover candidate.
-5-
<PAGE> 6
16. In response to marketplace rumors of a possible
unsolicited acquisition and to entrench themselves in their executive and
directorial positions, Moorco's Board of Directors (the "Board") adopted a
shareholder rights plan, or "Poison Pill," on or about November 9, 1994. The
Poison Pill entails a distribution of one right for each outstanding share of
Moorco common stock. Each right entitles the holder to buy one one-hundredth
(1/100th) of a share of a new series of junior participating preferred stock at
an exercise price of $65 per share. Each one one-hundredth of a share of
junior participating preferred stock is essentially the economic equivalent of
one share of Moorco common stock. The rights attach to and trade with Moorco
common stock and are not exercisable until a person or group acquires 15% of
Moorco's common stock or commences a tender offer that would result in
ownership of 15% of Moorco's common stock.
17. Under the Poison Pill, if any person becomes a 15%
stockholder of Moorco, the rights not held by the 15% stockholder "flip in" and
become rights to buy shares of Moorco common stock at a 50% discount. After a
"flip in" event and prior to a person's becoming the beneficial owner of 50% or
more of the Company's common stock, the Board of Directors may, in lieu of
allowing the rights to be exercised, issue one share of common stock in
exchange for all or any pro rata portion of the rights. In the event Moorco is
merged and its common stock
-6-
<PAGE> 7
is exchanged or converted, the new rights, "flip over" and require that
provision be made so as to entitle the holders to buy shares of the acquiring
person's common stock at a 50% discount.
18. In actuality, the Poison Pill's primary purpose is to
enable management to entrench themselves in their lucrative positions with the
Company by preventing a hostile takeover of the Company or by forcing a
potential acquirer to give management hefty "golden parachutes." As a
consequence of implementing the poison pill, the defendants are bound to a
heightened duty to consider whether any acquisition offer is in the best
interest of Moorco's shareholders, and to negotiate in good faith with the
potential acquirer in order to maximize shareholder value.
19. An attractive offer to acquire Moorco and maximize
shareholder value did, in fact, materialize on April 4, 1995, when FMC
Corporation ("FMC"), a leading producer of chemicals and machinery for
industry, government and agriculture, announced that it had offered to buy
Moorco in an all-cash transaction valued at $20.00 a share, or approximately
$223 million (the "FMC Offer"). The FMC Offer represented a 45% premium over
the $13.75 closing price of Moorco's common stock on Friday, March 31, 1995,
and a multiple of 21.5 times Moorco's latest twelve months' net income.
Furthermore, in a
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<PAGE> 8
letter to defendant Tiner, dated April 4, 1995, FMC stated that it will
consider offering a higher price, if Moorco can demonstrate "additional value."
20. The market showed great enthusiasm for the disclosure
on April 4, 1995 of the FMC Offer. The market price of common shares of Moorco
immediately rose $7.75, increasing from $13.75 to $21.375 in the course of
trading on that day.
21. On April 5, 1995, Moorco issued a press release
announcing that its Board of Directors would evaluate the proposal from FMC and
had retained Salomon Brothers Inc. as its financial advisor to assist with the
evaluation. Despite the opportunity represented by the FMC Offer and despite
FMC's willingness to negotiate, the first meeting between FMC and Moorco did
not occur until nearly two weeks later, on April 18, 1995. This meeting was
attended by high level executives from both FMC and Moorco, including defendant
Tiner.
22. At the meeting on April 18, 1995, FMC provided Moorco
with additional information regarding FMC and the FMC Offer and repeated FMC's
willingness to enter into negotiations regarding the FMC Offer. At this
meeting, FMC referred to the common interests of both companies, as evidenced by
FMC's previously visiting a Moorco plant to explore a cooperative relationship
with Moorco. However, Moorco declined to enter into any substantive
negotiations and committed only that it would
-8-
<PAGE> 9
present the additional FMC information to a meeting of the Moorco Board of
Directors, which was yet unscheduled.
23. On May 1, 1995, FMC met again with Moorco. The
meeting was requested by defendant Tiner to report the Moorco Board of
Directors' response to the FMC Offer. Moorco proffered to FMC a proposed
"confidential/standstill agreement," which Moorco demanded FMC execute before
Moorco would consider either engaging in negotiations with FMC or providing FMC
certain confidential information. The standstill agreement contained
unreasonable and overly restrictive provisions which, inter alia, precluded FMC
or others with which FMC might associate from:
a. seeking, offering, proposing or requesting permission
to acquire any asset of Moorco or any security issued by Moorco for
one year;
b. seeking representation on Moorco's board of directors
or soliciting any proxy or consent with respect to any securities of
Moorco for one year;
c. entering into any discussion to do any of the
foregoing for one year;
d. disclosing at any time before or after expiration of
one year to Moorco stockholders any information about Moorco received
by FMC even if disclosure of such
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<PAGE> 10
information would be required to inform Moorco's stockholders fully
regarding a tender offer or other transaction proposed by FMC; and
e. initiating for one year any contact with any officer,
director or employee of Moorco regarding Moorco's operation, assets,
prospects or finances. The standstill agreement also required FMC,
for one year, to inform Moorco promptly of any approach by any third
party concerning FMC's or such third party's participating in any
transaction involving the assets of Moorco or securities issued by
Moorco.
24. The standstill agreement demanded by Moorco as a
pre-condition to negotiations and the production of non-public information is
overbroad, unreasonable, and designed to prevent, rather than encourage, offers
for Moorco. It is particularly unreasonable in light of the protection already
offered by the Poison Pill which, as discussed above, would prevent any
takeover of Moorco not approved by the Company's Board of Directors.
25. On the evening of May 1, 1995 and subsequently, FMC's
representatives communicated FMC's willingness to enter into some form of
confidentiality agreement, including an agreement with a reasonable thirty-day
"standstill" period. In
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response, Moorco claimed that a one-year standstill was "carefully chosen" for
several reasons, including the possibility of a reduction in the capital gains
tax and possible favorable developments in certain litigation. Moorco's
representatives also asserted that Moorco had the right to exclude FMC from
participating in any sale process and thus keep Moorco's shareholders from
being able to accept any FMC proposal because FMC purportedly had obtained
confidential information about Moorco "improperly" during certain visits by FMC
personnel to Moorco plants.
26. Moorco's representatives also threatened that, if
Moorco instituted a "process" leading to the potential sale of Moorco or some
other extraordinary transaction, FMC would be excluded from any such "process"
as an outsider," unless FMC capitulated to the demanded standstill agreement.
27. In subsequent discussions on May 2 and May 3, 1995,
FMC's representatives suggested to Moorco's representatives the possibility of
FMC agreeing to a 45-day standstill and repeated the desire of FMC to negotiate
with Moorco. Moorco's representatives nevertheless repeated the demand for a
one-year standstill period and, although suggesting several modifications to
the proposed agreement, failed to agree that Moorco's stockholders should have
a reasonable opportunity to accept an offer by FMC. Moorco's representatives
reiterated
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the threat to exclude FMC from any process for the sale of Moorco.
28. On May 5, 1995, as a result of Moorco's continued
failure to negotiate with FMC for a sale of the Company, FMC announced that it
had commenced a tender offer for all Moorco Shares at $20 per share in cash.
The tender offer will expire at 12:00 Midnight, on June 2, 1995 and is
conditioned on, among other things, Moorco's redemption of the Poison Pill. As
a result of the tender offer announcement, Moorco's shares rose $7/8 to close
at $22 5/8, on unusually high volume.
22. Commenting on the tender offer, FMC Chairman and CEO
Robert N. Burt stated:
More than a month has passed since we made our original proposal to
Moorco in our letter of April 3 . . . . We have had neither
constructive dialogue nor substantive negotiations since Moorco's
announcement that its board of directors would evaluate the proposal.
Moorco's stockholders should be given the opportunity to decide for
themselves whether to accept our proposal.
22. Mr. Burt also sent a letter to defendant Tiner and
the Moorco Board expressing FMC's disappointment in Moorco's failure to
negotiate in good faith:
We are extremely disappointed to have learned that your board has
responded [to the FMC Offer] with an unreasonable set of conditions
and threats regarding such discussions. Specifically, your
characterization of our cash offer of $20 per share as grossly
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inadequate is inconsistent with traditional and reasonable valuation
measures and not at all justified. Your insistence upon our agreeing
to a one-year standstill is inconsistent with the objective of
delivering to your stockholders a full and fair value in a timely
fashion. Finally your threat of excluding FMC from a process leading
to the sale of the company, should one be initiated by Moorco, is
contrary to the best interests of your stockholders . . . .
In light of all this, we have reluctantly concluded that our
only alternative is to pursue this transaction by going directly to
Moorco's stockholders with our offer . . . .
We would still prefer to have a constructive dialogue and
negotiate an agreement. Although we have commenced a tender offer, we
remain interested in entering negotiations with you to reach an
agreement that could be approved by your board of directors. That
course would truly be in the best interests of your stockholders.
CAUSE OF ACTION AGAINST ALL DEFENDANTS
30. As described above, Moorco's management has shown a
pattern of entrenchment and failure to consider in good-faith FMC's Offer.
Accordingly, there is a substantial likelihood that, in the absence of this
Court's intervention, the defendants will continue this pattern and refuse to
consider in good faith FMC's tender offer and other acquisition offers that may
arise. By virtue of these acts and conduct, the defendants are carrying out a
preconceived plan to prevent the sale of the Company to any party, including
FMC, in violation of their fiduciary duties and to the detriment of Moorco's
public shareholders. As a result, the public stockholders of
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Moorco will be wrongfully deprived of their ability to avail themselves of the
substantial premium included in FMC's tender offer, and other acquisition
offers which may materialize, thereby depriving them of their right to maximize
the value of their shares.
31. The primary objective of defendants' plan to thwart
acquisition offers for the Company is to entrench themselves in managerial and
directorial positions to the detriment of Moorco's shareholders. Indeed, by
their actions, defendants have acted in a manner to prevent the shareholders of
Moorco from availing themselves of offers for their stock which are
substantially higher than its current market price.
32. Defendants have committed further breaches of their
fiduciary duty to the public stockholders of Moorco, by (i) failing to
undertake an adequate evaluation of Moorco's worth as a potential merger or
acquisition candidate; (ii) failing to give adequate consideration to the offer
for Moorco submitted by FMC; (iii) imposing extreme and unreasonable measures
on FMC to prevent the sale of the Company; and/or (iv) failing to act so that
the interests of the public stockholders of Moorco are protected.
33. Unless enjoined by this Court, defendants will
continue to breach fiduciary duties owed to plaintiff and the other members of
the Class, and will not only prevent Moorco's
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shareholders from selling their shares to FMC for a fair and adequate price,
but also will prevent other parties from making premium offers to acquire
Moorco, all to the irreparable harm of the Class.
34. Plaintiff and the other members of the Class have no
adequate remedy at law.
WHEREFORE, plaintiff demands judgment and relief in his favor
and in favor of the Class and against defendants, as follows:
A. Declaring that this action be certified as a proper
class action and certifying plaintiff as Class representative;
B. Declaring that defendants and each of them have
committed a gross abuse of trust and have breached their fiduciary duties to
plaintiff and other members of the Class;
C. Ordering that defendants take appropriate measures to
assure that the FMC tender offer and any other offers for the acquisition of
Moorco or any of its divisions is considered and evaluated by Moorco management
adequately and in good faith in order to maximize shareholder value;
D. Awarding compensatory damages in an amount to be
determined upon the proof submitted to the Court;
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E. Awarding the costs and disbursements of this action;
F. Awarding plaintiff's counsel fees; and
G. Awarding such other and further relief which the
Court may deem just and proper.
DATED: May 8, 1995
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/
-----------------------------
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LITOWITZ BERGER
& GROSSMANN
Vincent R. Cappucci
Henry A. Diamond
1285 Avenue of the Americas
New York, New York 10019
(212) 554-1400
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<PAGE> 1
Exhibit 15
[SALOMON BROTHERS INC LETTERHEAD]
May 19, 1995
Moorco International Inc.
2800 Post Oak Boulevard
Suite 5701
Houston, TX 77056
Attention: Members of the Board of Directors
Dear Sirs:
We understand that MII Acquisition Corp., a wholly owned subsidiary of FMC
Corporation, a Delaware corporation (together "FMC"), has made a tender offer
(the "FMC Offer") to purchase all of the outstanding shares of Common Stock, par
value $.01 per share (including the associated Preferred Stock Purchase Rights)
(the "Shares") of Moorco International Inc., a Delaware corporation (the
"Company"), at $20.00 net per Share in cash (the "Consideration"). The FMC Offer
is set forth in the Offer to Purchase dated May 5, 1995 and we understand that,
in summary, it is conditioned upon, among other things, (i) the Company's
Preferred Stock Purchase Rights having been redeemed by the Company's Board of
Directors or FMC being otherwise satisfied that such rights are invalidated or
inapplicable to the FMC Offer, (ii) the valid tender of a number of Shares,
which when added to the Shares beneficially owned by FMC, would represent at
least a majority of the total number of outstanding Shares of the Company on a
fully diluted basis and (iii) FMC being satisfied that the restrictions on
business combinations contained in Section 203 of the Delaware General
Corporation Law are inapplicable to the proposed merger contemplated by the FMC
Offer. You have asked us to advise you as to the adequacy, from a financial
point of view, of the Consideration offered to the holders of the Shares (other
than FMC) pursuant to the FMC Offer.
In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) the Schedule 14D-1 filed by FMC with the
Securities and Exchange Commission regarding the FMC Offer; (ii) certain
publicly available business and financial information concerning the Company and
FMC; (iii) certain internal information of the Company, primarily financial in
nature(including projections, forecasts and analyses prepared by or on behalf of
the Company's management), concerning the business, assets, liabilities,
operations and prospects of the Company, furnished to us by the Company for
purposes of our analysis; (iv) certain publicly available and other information
concerning the trading of, and the trading market for, the Shares; (v) the
financial terms of the FMC Offer and such other transactions which we consider
relevant to our inquiry; (vi) certain publicly available information with
respect to other companies that we believe to be relevant or comparable in
certain respects to the Company or one or more of its businesses or assets and
the trading markets for certain of such other companies' securities; and (vii)
such other information, financial studies, analyses, investigations and
financial, economic, market and trading criteria that we considered relevant to
our inquiry. In addition, we have taken into account various discussions with
third parties with respect to such third parties' potential interest in the
acquisition of all or part of the Company or other strategic transactions
involving the Company. We have also met with certain officers and employees of
the Company to discuss the foregoing as well as other matters we believe
relevant to our inquiry. We have also taken into account our assessment of
general economic, market and financial conditions and our experience in
securities valuation generally.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to, reviewed for or discussed with us or publicly available
and have not assumed any responsibility for independent verification of any such
<PAGE> 2
information. We have also relied upon the reasonableness and accuracy of the
financial projections, forecasts and analyses provided to us and we have assumed
that they were reasonably prepared on bases reflecting the best currently
available estimates and judgment of the Company's management and we express no
opinion with respect to such forecasts, projections and analyses or the
assumptions on which they are based. We have not made or obtained any
independent evaluations or appraisals of any of the Company's assets, properties
or facilities, nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon business, market, economic and
other conditions and circumstances as they exist on, and can be evaluated as of,
the date hereof.
As you are aware, Salomon Brothers Inc has acted as financial advisor to
the Company in connection with the FMC Offer and will receive a fee for our
services. Additionally, Salomon Brothers Inc is currently engaged by the Company
to render financial advisory and investment banking services (including with
respect to the Company's publicly announced proposal to acquire Daniel
Industries, Inc.) and has received, and would under certain circumstances
receive, fees for the rendering of such services. In addition, in the ordinary
course of our business we may actively trade the debt or equity securities of
the Company and FMC for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that as of the date hereof, the Consideration to be offered to the
holders of Shares (other than FMC) pursuant to the FMC Offer is inadequate, from
a financial point of view, to such holders.
Very truly yours,
SALOMON BROTHERS INC
