<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-9
(RULE 14d-101)
Solicitation/Recommendation Statement
Under Section 14(d)(4) of the Securities Exchange Act of 1934
----------------
Specialty Equipment Companies, Inc.
(Name of Subject Company)
Specialty Equipment Companies, Inc.
(Name of Person Filing Statement)
Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
847497203
(CUSIP Number of Class of Securities)
----------------
JEFFREY P. RHODENBAUGH
President and Chief Executive Officer
Specialty Equipment Companies, Inc.
1245 Corporate Boulevard, Suite 401
Aurora, Illinois 60504
(630) 585-5111
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Persons Filing Statement)
----------------
With a copy to:
ANDREW L. WEIL, ESQ.
MICHAEL D. ROSENTHAL, ESQ.
PAUL D. ZIER, ESQ.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
(312) 876-8000
[_]Check the box if the filing relates solely to preliminary communications
made before the
commencement of a tender offer.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
Item 1. Subject Company Information.
The name of the subject company is Specialty Equipment Companies, Inc., a
Delaware corporation (the "Company"). The address of the Company's principal
executive offices is 1245 Corporate Boulevard, Suite 401, Aurora, Illinois
60504, and the telephone number of the Company at that address is (630) 585-
5111.
The title of the class of Company securities to which this statement relates
is the common stock, par value $.01 per share (the "Shares"), of the Company.
As of October 12, 2000, there were 19,515,887 Shares outstanding.
Item 2. Identity and Background of Filing Person.
The name, business address and business telephone number of the Company,
which is the subject company and the entity filing this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule 14D-
9"), are set forth in Item 1 above.
This Statement relates to the cash tender offer disclosed in the Tender
Offer Statement on Schedule TO, dated October 23, 2000 (the "Schedule TO"), the
Offer to Purchase filed as Exhibit (a)(1) thereto (the "Offer to Purchase"),
and the related Letter of Transmittal filed as Exhibit (a)(2) thereto, filed
with the United States Securities Exchange Commission (the "Commission") on
October 23, 2000 by United Technologies Corporation, a Delaware corporation
("UTC"), and Solar Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of UTC ("Purchaser"). The cash tender offer by Purchaser is for the
purchase of all of the outstanding Shares at a price of $30.50 per Share, net
to the seller in cash, without interest (such price, or such higher amount per
Share as may be payable in the Offer, being referred to herein as the "Per
Share Amount"), upon the terms and subject to the conditions set forth in the
Offer to Purchase and the related Letter of Transmittal and any amendments or
supplements thereto (which together constitute the "Offer").
The Offer is being made pursuant to the terms of an Agreement and Plan of
Merger, dated as of October 13, 2000, among the Company, UTC and Purchaser (the
"Merger Agreement"), a copy of which has been filed as Exhibit (e)(1) hereto
and is incorporated herein by reference. The Merger Agreement provides, among
other things, for the making of the Offer by Purchaser and further provides
that, upon the terms and subject to the conditions set forth in the Merger
Agreement and in accordance with applicable law, Purchaser will be merged with
and into the Company (the "Merger" and, together with the Offer, the
"Transaction") as promptly as practicable after the later of consummation of
the Offer or, if required by the Delaware General Corporation Law, as amended
("DGCL"), the approval of the Merger Agreement by the stockholders of the
Company. Following the consummation of the Merger (the "Effective Time"), the
Company will be the surviving corporation (the "Surviving Corporation") and
will be a wholly owned subsidiary of UTC.
The Offer is conditioned upon, among other things, (1) there having been
validly tendered and not properly withdrawn prior to expiration of the Offer
that number of Shares which, when aggregated with any Shares beneficially owned
by Parent (excluding Shares held by an employee benefit plan), represents at
least a majority of the issued and outstanding Shares (determined on a fully
diluted basis assuming exercise of all outstanding Company stock options) (the
"Minimum Condition") and (2) the expiration of any and all applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the expiration or termination of any waiting
period and the receipt of any required approval under any applicable foreign
antitrust and competition laws or regulations. See Section 13 of the Offer to
Purchase which provides a more complete description of the conditions to the
Offer.
Based on information in the Schedule TO, each of UTC and Purchaser has its
principal executive offices at One Financial Plaza, Hartford, Connecticut 06101
and the telephone number of both UTC and Purchaser at that address is (860)
728-7000.
<PAGE>
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
Except as described below or incorporated by reference herein, to the
knowledge of the Company, as of the date hereof, there exists no material
contract, agreement, arrangement or understanding and no actual or potential
conflict of interest between the Company or its affiliates and (1) the Company,
its executive officers, directors or affiliates or (2) UTC or Purchaser or
their executive officers, directors or affiliates.
(1) Arrangements with UTC, Purchaser or Their Executive Officers, Directors
or Affiliates.
Certain information with respect to certain contracts, agreements,
arrangements or understandings between the Company and UTC or Purchaser or
certain of their respective executive officers, directors or affiliates is set
forth under the captions "Election of Directors," "Executive Officers of the
Company" and "Executive Compensation" in the Proxy Statement of the Company
which accompanies this Schedule 14D-9 (the "Proxy Statement"), and is
incorporated herein by reference.
The following is a summary of certain provisions of:
(a) the Merger Agreement,
(b) the Stockholder Agreement, dated as of October 13, 2000, among UTC,
Purchaser and the Malcolm I. Glazer Family Limited Partnership, Kevin E.
Glazer and Avram A. Glazer (collectively, the "Glazer Family") (the
"Stockholder Agreement"), and
(c) the Confidentiality and Standstill Agreement, dated as of August 14,
2000, between the Company and UTC (the "Confidentiality and Standstill
Agreement").
This summary does not purport to be complete and is qualified in its
entirety by reference to the full text of the Merger Agreement, the Stockholder
Agreement and the Confidentiality and Standstill Agreement which have been
filed as Exhibits (e)(1), (e)(2) and (e)(3), respectively, to this Schedule
14D-9, each of which is incorporated herein by reference. The Merger Agreement,
the Stockholder Agreement and the Confidentiality and Standstill Agreement may
be examined and a copy may be obtained at the place and in the manner set forth
in Section 8 of the Offer to Purchase.
Merger Agreement
The summary of the Merger Agreement and the description of the conditions of
the Offer contained in Section 11 and Section 13 of the Offer to Purchase,
which is being mailed to stockholders together with this Schedule 14D-9, are
incorporated herein by reference. Such summary and description are qualified in
their entirety by reference to the Merger Agreement, which has been filed as
Exhibit (e)(1) to this Schedule 14D-9 and is incorporated herein by reference.
Stockholder Agreement
The summary of the Stockholder Agreement contained in Section 11 under the
caption "The Stockholder Agreement" of the Offer to Purchase, which is being
mailed to stockholders together with this Schedule 14D-9, is incorporated
herein by reference. Such summary is qualified in its entirety by reference to
the Stockholder Agreement, which has been filed as Exhibit (e)(2) to this
Schedule 14D-9 and is incorporated herein by reference.
Confidentiality and Standstill Agreement
The summary of the Confidentiality and Standstill Agreement contained in
Section 11 under the caption "The Confidentiality and Standstill Agreement" of
the Offer to Purchase, which is being mailed to stockholders together with this
Schedule 14D-9, is incorporated herein by reference. Such summary is qualified
in its entirety by reference to the Confidentiality and Standstill Agreement,
which has been filed as Exhibit (e)(3) to this Schedule 14D-9 and is
incorporated herein by reference.
2
<PAGE>
(2) Arrangements with Executive Officers, Directors or Affiliates of the
Company.
Consummation of the transactions contemplated by the Merger Agreement and
related documents will have certain effects under certain employment,
compensation and stock option arrangements which officers and directors of the
Company participate in or are a party to, as summarized below.
Effects of the Offer and the Merger Under Company Stock Plans and Employment
Agreements
Certain members of the Company's management, including Messrs. Rhodenbaugh,
Greenwood, McKay and Friedl, have interests in the transactions contemplated by
the Merger Agreement that are in addition to their interests as Company
stockholders generally, as described below. The Board of Directors of the
Company was aware of these interests and considered them, among other matters,
in approving the Merger Agreement and the transactions contemplated thereby.
Certain Employment and Employee Benefit Arrangements
The Merger Agreement contains various provisions dealing with certain
employment, bonus, stock option, retirement plan and other employee benefit
arrangements which are applicable to directors and executive officers of the
Company. See Section 11 of the Offer to Purchase under the captions "The Merger
Agreement--Conversion of Shares," "Indemnification; Directors' and Officers'
Insurance," "Employee Benefit Arrangements" and "Employee Agreements" (the
provisions of which are incorporated in this Schedule 14D-9 by reference).
Certain information with respect to certain contracts, agreements, arrangements
or understandings between the Company and certain of its executive officers,
directors and affiliates is set forth in the Proxy Statement under the captions
"Election of Directors," "Executive Officers of the Company," "Aggregated 1993
Non-Employee Director Option Plan Exercises in Last Fiscal Year and Fiscal Year
End Option Values" and "Executive Compensation" which has been filed as Exhibit
(e)(7) to this Schedule 14D-9 and is incorporated herein by reference.
Change-in-Control Arrangements
On June 12, 2000, the Company entered into amended employment retention
agreements with each of Messrs. Rhodenbaugh, Greenwood, Friedl and McKay, among
others, whereby the Company agrees to retain each of them and each of them
agreed to remain in the employ of the Company for a three year term. The term
automatically extends on a daily basis from the first anniversary of its
original effective date unless either party delivers notice of non-renewal, in
which event the agreement expires two years from the date of such notice.
Under the terms of the employment retention agreement for the executive
officers, each executive officer is to receive: a salary equal to his salary as
of the date of his agreement, subject to discretionary increases; a bonus
determined by the Compensation Committee with the approval of the Board of
Directors with a target bonus percentage of 60% of salary (100% for Mr.
Rhodenbaugh); participation in any employee stock option program, such as the
Employee Plan, that may be adopted; participation in other incentive, savings
and retirement plans, welfare benefit plans and fringe benefits, expense
reimbursement and vacation policies applicable to Company executives; and
indemnification for liabilities arising from his service whether arising before
or during the term of his employment agreement.
Also, each executive officer, upon (i) termination without cause, (ii)
death, (iii) permanent disability or (iv) termination by the executive for good
reason, will be entitled to: (a) a lump sum cash payment within 30 days of
termination equal to two times his annual base salary as of the date of
termination (subject to a minimum of $450,000 for Mr. Friedl), plus an amount
equal to the incentive payments for the most recent two fiscal years (four
times the average incentive payments for the most recent four fiscal years for
Mr. Rhodenbaugh, and subject to a minimum of $167,500 for Mr. Friedl if
termination occurs before May 1, 2002), plus any deferred compensation; (b)
continuation of incentive, savings, retirement, and welfare plan benefits and
fringe benefits for a period of six months from the termination date (two years
from the termination date if termination occurs
3
<PAGE>
after a change of control), or cash in lieu thereof; and (c) the vesting of any
unvested options as of the termination date. (For Mr. Rhodenbaugh, the
aggregate cash payment described in (a) above is subject to a minimum of $2.8
million.)
For purposes of the agreements, "good reason" is a material adverse change
in the executive officer's function, duties, or responsibilities (not promptly
cured); a failure by the Company to provide required compensation and plan,
welfare and fringe benefits (or cash in lieu thereof); a failure to secure
assumption of the agreement by any applicable successor company; or the
occurrence of a change of control if the executive provides the Company with a
notice of termination within 90 days thereafter (at any time for a period of
five years thereafter, unless and until the board of the successor corporation
approves comparable reporting responsibilities, for Mr. Rhodenbaugh).
For this last purpose only, a "change of control" is a 66 2/3% acquisition
by a person or group, a failure of incumbent directors to constitute 66 2/3% of
the Board of Directors, a merger or similar transaction (absent 66 2/3%
continuity of shareholder interest), or a liquidation or dissolution of the
Company. For other purposes (i.e., vesting of options and continuation of plan,
welfare and fringe benefits for two years rather than six months), a "change of
control" is a 50% acquisition by a person or group, a failure of incumbent
directors to constitute a majority of the Board of Directors, a merger or
similar transaction (absent 50% continuity of shareholder interest), or a
liquidation or dissolution of the Company. A change of control will occur under
one or both of these definitions (depending on the number of shares of Common
Stock that are tendered) upon consummation of the Offer. If a change of control
has not already occurred as a result of the Offer it will occur upon
consummation of the Merger. If a change of the ownership or effective control
of a substantial portion of the assets of the Company results in any executive
officer becoming subject to the 20% excise tax on excess parachute payments,
the Company will reimburse such person for the amount of the excise tax due and
all taxes on the reimbursement up to a maximum reimbursement limit of five
times the excise tax.
On October 13, 2000, the employment retention agreements for Messrs.
Rhodenbaugh and Friedl (among others but not Messrs. Greenwood and McKay) were
further amended, effective (and conditional) upon the closing ("Closing") of
the transaction contemplated by the Merger Agreement and only if the Closing
occurs on or before March 1, 2001. Under the amended agreements, the Company
agrees to employ such employee and the employee agrees to be employed by the
Company until the second anniversary of the closing of the Merger, unless
terminated sooner in accordance with the amended agreements. Under the amended
agreements, each employee will be entitled to receive a transition payment,
which shall be payable in monthly installments for two years following the
closing of the Merger, provided that the employee remains employed by the
Company following the Merger. The amended agreements also provide that each
employee will not compete against the Company during his employment with the
Company and for a one-year period following the termination of his employment.
In the case of Mr. Rhodenbaugh, the amendment provides that his position
(including status, perquisites, offices, titles, reporting requirements and
responsibilities), authority and duties will be that of a Level One Executive
of UTC. The amended agreements provide base salary for Mr. Rhodenbaugh of
$400,000 annually before the Closing and $275,000 annually after the Closing;
and for Mr. Friedl at $225,000 before the Closing and $175,000 after the
Closing.
The amended agreements provide bonuses for Mr. Rhodenbaugh in accordance
with the Company's current incentive plan benefit for the fiscal year ending
January 31, 2001, and for Mr. Friedl a cash incentive payment in the amount of
$67,500 in respect of the fiscal year ending January 31, 2001 and $100,000 for
the year ending December 31, 2001. Beginning January 1, 2001, the amended
agreements provide for both Messrs. Rhodenbaugh and Friedl to participate in
UTC's annual incentive compensation program, and Parent's Continuous
Improvement Incentive Plan for long-term incentives, at target ranges
appropriate for their compensation levels. The amended agreements also provide
for a "transition payment" so that cash payments to those executives after the
Closing are in no event less than base compensation and target bonus as in
effect before the Closing.
4
<PAGE>
For both Messrs. Rhodenbaugh and Friedl, the amended agreements provide that
"good reason" for termination does not include the changes in compensation and
benefits described above, nor (prior to the second anniversary of the Closing)
the changes in position, authority and duties (other than geographic relocation
of more than 50 miles without the executive's consent) contemplated by the
amended agreements, nor the occurrence of a change of control. The lump sum
benefit payable upon termination without cause, death, disability or for good
reason (as redefined in the amended agreements) will be based on post-Closing
base salary and reduced by the transition payment. However, the lump sum
benefit will be paid as, in substance, a retention bonus, on the second
anniversary of the Closing if the executive is still employed on such date. The
amended agreements also provide a post-employment covenant against competition
for one year regardless of the circumstances of such termination.
The foregoing summary does not purport to be complete and is qualified in
its entirety by reference to the full text of Exhibits (e)(5), (e)(6), (e)(7),
(e)(8), (e)(9), and (e)(10) to this Schedule 14D-9, each of which is
incorporated in this Schedule 14D-9 by reference.
Stock Option Plans
The Merger Agreement provides that, as of the effective time of the Merger,
each outstanding option under the Company's stock option plans will be
cancelled and the holder thereof will, whether such option is vested or not,
receive a cash payment equal to the excess of $30.50 (or such other amount as
may be payable pursuant to the Offer) over the exercise price of the option,
times the number of shares issuable upon exercise of the option. See Section 11
of the Offer to Purchase under the caption "The Merger Agreement--Conversion of
Shares" (incorporated in this Schedule 14D-9 by reference). Mr. Friedl has
unvested options to purchase 35,000 Shares at an exercise price of $18.75 per
share. No other executive officers have outstanding unvested options. Each of
the Company's non-employee directors (i.e. Messrs. Avram Glazer, Kevin Glazer,
Malcolm Glazer, Charles Hutchinson, Richard Kent and Barry MacLean) has
unvested options to purchase 2,800 Shares at an exercise price of $20.625 per
Share.
Indemnification
Section 145 of the DGCL empowers a Delaware corporation to indemnify any
persons who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
such corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the
request of such corporation as an officer, director, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided that such officer
or director acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, for criminal
proceedings, had no reasonable cause to believe his conduct was unlawful. A
Delaware corporation may indemnify officers and directors against expenses
(including attorneys' fees) in an action by or in the right of the corporation
under the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such director actually and reasonably
incurred.
In accordance with Section 102(b)(7) of the DGCL, the Company's Certificate
of Incorporation contains a provision to limit the personal liability of the
directors of the Company for violations of their fiduciary duty. This provision
eliminates director's liability to the Company or its stockholders for monetary
damages except (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL providing for liability of directors for unlawful
payment of dividends or unlawful stock
5
<PAGE>
repurchases or redemptions or (iv) for any transaction from which the director
derived an improper personal benefit. The effect of this provision is to
eliminate the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence.
The Company's Certificate of Incorporation and By-laws provide that the
Company may indemnify and advance expenses incurred in relation to any action,
suit or proceeding to officers of the Company, and shall indemnify and advance
expenses incurred in relation to any action, suit or proceeding to directors of
the Company, to the fullest extent permitted by the DGCL. The Company has
entered into indemnification agreements with each director and certain officers
of the Company mandating such indemnification to the fullest extent permitted
by the DGCL. The Company also has in effect insurance policies providing both
directors' and officers' liability coverage and corporation reimbursement
coverage.
The Merger Agreement contains provisions pertaining to the indemnification
of directors and officers and the maintenance of directors' and officers'
liability insurance after consummation of the Offer. See Section 11 of the
Offer to Purchase under the caption "Indemnification; Directors' and Officers'
Insurance" (the provisions of which are incorporated in this Schedule 14D-9 by
reference) for further explanation.
The foregoing summary does not purport to be complete and is qualified in
its entirety by reference to the full text of the Company's Certificate of
Incorporation, By-laws and the form of Indemnification Agreement, copies of
which have been filed as Exhibits (e)(11), (e)(12) and (e)(13), respectively,
to this Schedule 14D-9, each of which is incorporated in this Schedule 14D-9 by
reference.
Item 4. The Solicitation or Recommendation.
(a) Recommendation. At a meeting held on October 13, 2000, the Board of
Directors of the Company unanimously (1) determined that the Merger Agreement,
the Stockholder Agreement and the transactions contemplated thereby, including,
without limitation, the Offer and the Merger, are advisable and fair to and in
the best interest of the Company's stockholders, (2) approved the Merger
Agreement and the transactions contemplated thereby, including, without
limitation, the Offer and the Merger, (3) resolved to recommend that
stockholders of the Company accept the Offer, tender their Shares thereunder to
Purchaser and adopt the Merger Agreement and (4) resolved that Section 203 of
the DGCL (generally, limiting an aquiror's ability to consummate certain take-
over transactions) would not apply to the Merger Agreement and the Stockholder
Agreement or the transactions contemplated thereby including the Offer and the
Merger. Accordingly, the Board unanimously recommends that the stockholders of
the Company accept the Offer and tender their Shares pursuant to the Offer. A
press release announcing the Merger Agreement and the transactions contemplated
thereby and a form of letter to stockholders of the Company communicating the
Board's recommendation have been filed with the Commission as Exhibits (a)(3)
and (a)(5), respectively, to this Schedule 14D-9, and are incorporated herein
by reference.
(b)(1) Background.
During late September and October of 1999, Mr. Avram Glazer, a director of
the Company, received a series of correspondences from a participant in the
industrial equipment industry (the "Industry Buyer") discussing potential
interest in a strategic combination of the two companies. As part of these
correspondences the Industry Buyer provided the Company with an initial summary
of the terms and conditions of a stock-for-stock-merger. In addition, Mr. Avram
Glazer, at the request of the Industry Buyer, met with representatives of the
Industry Buyer to discuss their proposal. After reviewing these terms, the
Board determined not to further pursue negotiations regarding a stock-for-stock
merger between the Company and the Industry Buyer.
In early April of 2000, the President and Chief Executive Officer of the
Industry Buyer reinitiated contact with the Company, and requested a meeting to
explore a possible strategic transaction between the two companies. On April
14, 2000, Mr. Daniel Greenwood, Chairman of the Board of the Company, and Mr.
6
<PAGE>
Jeffrey Rhodenbaugh, Chief Executive Officer and President of the Company, held
a face-to-face meeting with the President and Chief Executive Officer of the
Industry Buyer in Chicago to further discuss a potential business combination.
These discussions were on a general basis regarding the strategic direction of
each of the companies and the potential business combination of the two
companies. In particular, the Industry Buyer indicated its willingness to
consider a cash acquisition of the Company, in lieu of a stock-for-stock
transaction.
On May 15, 2000, Mr. Greenwood received an indication of interest letter
from the Industry Buyer. In its letter, the Industry Buyer outlined an all cash
proposal to acquire the Company at $30 per share with a reference to fully
committed financing, subject to limited due diligence. The Industry Buyer
requested a response from the Company regarding the proposed acquisition offer
by June 15, 2000.
On May 31, 2000, the Company retained Credit Suisse First Boston Corporation
("CSFB") as the Company's financial advisor to assist the Board in evaluating
its strategic alternatives.
On June 7, 2000, the Board convened to discuss the indication of interest
from the Industry Buyer. The Board also received a detailed presentation from
CSFB which included its analyses of the various alternatives available to the
Board. After careful consideration, the Board concluded that the combination of
the Company with another company in the industrial equipment industry would
likely maximize stockholder value and involve the least amount of execution
risk relative to other strategic alternatives available to the Company. The
Board authorized management to pursue further discussions with the Industry
Buyer.
On June 26, 2000, the Industry Buyer delivered a draft of a financing
commitment to the Company. The Company, with the assistance of its legal and
financial advisors, provided extensive comments on this financing commitment to
the Industry Buyer and its financial advisor.
On July 20, 2000, the Company and the Industry Buyer agreed to the terms of
a confidentiality and standstill agreement. The Industry Buyer began formal due
diligence with a presentation by the Company's senior management on July 26,
2000.
On August 3, 2000, in light of the Industry Buyer's inability to proceed
quickly with the proposed transaction as a result of lengthy due diligence and
concerns regarding its ability to secure unconditional financing, the Board
authorized senior management and CSFB to begin a process of contacting
companies that might be interested in a business combination with the Company.
In considering how to maximize stockholder value, the Board determined not to
pursue a public sale process because such a process risked serious damage to
the Company's business and organization, with no guarantee that a deal would be
completed or a higher price achieved. Accordingly, the Company's management,
with the assistance of CSFB, identified a number of third parties in the
industrial equipment industry that might have an interest in a business
combination with the Company. Commencing in early August, representatives of
CSFB contacted a number of third parties in an effort to ascertain, on a
preliminary basis, their level of interest in a business combination with the
Company. Through the period from early August to early September, CSFB
contacted a number of parties and furnished certain publicly available
information to several parties that expressed interest in a business
combination with the Company. During this time, the Company's management and
representatives of CSFB had various discussions with certain potentially
interested parties including UTC.
On August 4, 2000, counsel for the Industry Buyer distributed to the Company
and its counsel an initial draft of a merger agreement and a stockholder
agreement.
On August 8, 2000, UTC provided an oral indication of its interest to CSFB
in an acquisition of all the Shares of the Company for cash, and requested a
meeting with the management of the Company.
In early August, CSFB had discussions with the Industry Buyer's financial
advisor regarding the preliminary reactions of the Company to the proposed
draft merger agreement and the issues raised thereby.
On August 14, 2000, the Company and UTC entered into the Confidentiality and
Standstill Agreement, a copy of which has been filed as Exhibit (e)(3) hereto.
7
<PAGE>
On August 15, 2000, the management of the Company, including Mr. Rhodenbaugh
and Mr. Donald McKay, Executive Vice President of the Company, met with
representatives of UTC and its wholly owned subsidiary Carrier Corporation,
including Mr. Jack Keller, Manager, Corporate Strategy and Development of UTC,
and Mr. Nicholas Pinchuk, President of Carrier Refrigeration Operations, a
division of Carrier Corporation, in Chicago to discuss the Company's business.
On August 22, 2000, the Company received a non-binding, written indication
of interest from Mr. Ari Bousbib, Vice President, Corporate Strategy and
Development of UTC, with a range of $30-$34 per Share in an all cash offer to
acquire the Company subject to satisfaction of certain conditions.
On August 23, 2000, the Company received from the Industry Buyer its
financing commitment letters that included various conditions to funding. In
particular, the conditions included further due diligence efforts which would
result in further delay in the process. Also on August 23, 2000, the Company's
management and CSFB updated the Board on the results of the Company's efforts
to solicit additional indications of interest and the resulting indication of
interest from UTC. After extensive discussions, the Board again authorized
management and CSFB to continue the process of pursuing a possible business
combination.
From August 24 through 29, 2000, representatives of UTC and its advisors met
with the Company's management, toured the Company's plants and conducted a due
diligence investigation of the Company.
On August 26, 2000, the Company distributed a proposed form of Merger
Agreement to UTC.
On September 4, 2000, UTC indicated to CSFB a proposed price of $30 per
Share for the acquisition.
On September 5, 2000, the Board convened to evaluate the proposals from the
Industry Buyer and UTC. The Board reviewed the status of the Industry Buyer's
due diligence review and the Industry Buyer's requests to conduct additional
due diligence, including contacting certain key customers of the Company. CSFB
informed the Board of UTC's proposal of $30 per Share. The Board authorized
CSFB to clarify whether due diligence was complete and the ability of UTC to
increase its offered price per Share.
On September 6, 2000, counsel to UTC distributed to the Company and its
counsel its comments to the draft Merger Agreement, as well as a draft of a
Stockholder Agreement proposed to be entered into by the Company's principal
stockholders.
On September 14, 2000, Mr. Bousbib confirmed to CSFB that UTC continued to
believe that a $30 per Share offer price was appropriate. Also on September 14,
2000, CSFB inquired of the financial advisor to the Industry Buyer as to its
willingness to improve its price from the previously stated $30 per Share. The
financial advisor for the Industry Buyer indicated to CSFB that the Industry
Buyer was unwilling to offer any additional value beyond its then current offer
and that the Industry Buyer would require further due diligence to proceed on
its proposed acquisition.
During the period from August 3, 2000 until September 20, 2000, Mr.
Rhodenbaugh and other members of the Company's senior management regularly
updated the members of the Board regarding the negotiations with the Industry
Buyer and UTC and the efforts to solicit additional indications of interest.
On September 20, 2000, the Board convened to discuss the potential sale
proposals and evaluate its strategic alternatives. The Company's legal counsel,
Sonnenschein Nath & Rosenthal ("Sonnenschein"), presented to the Board an
overview of the Board's legal and fiduciary duties under Delaware law to the
Company's stockholders in a possible sale transaction. Also at that meeting,
CSFB updated the Board on the status of the discussions with UTC and the
Industry Buyer and again reviewed with the Board the Company's strategic
alternatives. After an extensive discussion, the Board reconfirmed that given
market and industry conditions and the Company's size, financial position and
strategic circumstances, continuing to pursue a combination of the Company with
another company in the industrial equipment industry was likely to result in
the greatest stockholder value and involve the least amount of execution risk
relative to other strategic alternatives available to the Company. The Board
also discussed with the Glazer Family their intention with respect to UTC's
proposal and the proposed Stockholder Agreement. The Glazer Family indicated
that its
8
<PAGE>
willingness to enter into the Stockholder Agreement was contingent, among other
things, upon the price of the deal being acceptable.
On September 27 and 28, 2000, Mr. Malcolm Glazer met with Mr. George David,
Chairman and Chief Executive Officer of UTC, and Mr. Bousbib to discuss the
proposed acquisition, and in particular the terms under which the Glazer Family
would be willing to agree to the terms of the Stockholder Agreement. UTC
indicated to Mr. Glazer that it would be willing to increase its proposed offer
price to $30.50 per Share if the Glazer Family would enter into the Stockholder
Agreement that provided UTC an option to purchase the Shares beneficially owned
by the Glazer Family at a price of $30.50 per Share.
On September 29, 2000, the Company delivered a revised Merger Agreement to
UTC.
On October 2, 2000, UTC's Board of Directors approved the acquisition of the
Company at a purchase price of $30.50 per Share.
On October 3, 2000, counsel for the Company and counsel for UTC discussed
the principal issues under the Merger Agreement. Negotiations between the
parties continued during the period from October 3 through October 13. During
the course of these negotiations and related activities, Mr. Rhodenbaugh and
other members of the Company's senior management regularly provided updates to
the members of the Board.
On October 4, 2000, at the instruction of management of the Company, CSFB
contacted the financial advisor to the Industry Buyer to advise it that its
offer was not viewed as compelling based on Industry Buyer's unwillingness to
provide an unconditional offer. CSFB advised the financial advisor to the
Industry Buyer that, in light of the Industry Buyer's stated position and in
the absence of an improved proposal, the Company would be reviewing its
strategic alternatives. Mr. Rhodenbaugh contacted the Chief Executive Officer
of the Industry Buyer to communicate a similar message.
On October 5, 2000, the Board met to receive presentations from the
Company's legal and financial advisors. Sonnenschein presented to the Board an
overview of the Board's legal and fiduciary duties under Delaware law to the
Company's stockholders in a possible sale transaction. Additionally, CSFB
presented to the Board an update on the status of its discussions with the
Industry Buyer and UTC.
On October 10, 2000, Mr. Rhodenbaugh and Mr. McKay, together with the
Company's legal and financial advisors, met with Mr. Bousbib and Mr. Keller of
UTC and UTC's legal advisors to discuss unresolved issues related to the Merger
Agreement.
On October 11 through 13, 2000, Mr. Rhodenbaugh met with certain executives
of UTC's Carrier Corporation to discuss issues relating to UTC's proposals for
the Company to amend the employment agreements of certain key executives.
During these discussions, the parties continued to negotiate and discuss the
open issues on the Merger Agreement and the Stockholder Agreement.
During the afternoon of October 13, 2000, the Board met to receive an update
regarding the progress of the negotiations with UTC. The Board extensively
discussed the key terms of the Merger Agreement including the proposals
relating to the termination fee, and the status of the Company's efforts to
amend certain employment agreements.
On Friday night, October 13, 2000, the Company entered into amendments to
the employment agreements of certain of its employees. The Board held a meeting
to discuss the proposed transaction with UTC and the terms of the Offer, the
Merger, the Merger Agreement, the Stockholder Agreement and other related
agreements. At the meeting, Sonnenschein again reviewed with the Board its
legal and fiduciary duties under Delaware law in connection with considering
the proposed transaction and presented a review of the key terms contained in
the Merger Agreement, the Stockholder Agreement and other related agreements.
In addition, CSFB made a financial presentation and orally delivered its
fairness opinion, which it subsequently confirmed
9
<PAGE>
in writing, that, as of such date and based upon and subject to the
assumptions, limitations and qualifications set forth in its written opinion,
the consideration to be received by the holders of Shares pursuant to the Offer
and the Merger was fair to such holders, other than UTC and its affiliates,
from a financial point of view. After discussion and consideration of the
factors and reasons described below under the caption "Reasons for the
Recommendation," the Board unanimously determined that the terms of the Offer
and the Merger were advisable, fair to and in the best interest of, the
stockholders of the Company, unanimously approved the Offer, the Merger, the
Merger Agreement, the Stockholder Agreement and the other transactions
contemplated thereby, and unanimously determined to recommend that the
Company's stockholders accept the Offer and tender their Shares pursuant to the
Offer and approve and adopt the Merger Agreement. Following the meeting of the
Board, UTC, the Purchaser and the Company executed the Merger Agreement.
On October 16, 2000, prior to the opening of financial markets, a press
release was issued announcing the execution of the Merger Agreement.
On October 23, 2000, in accordance with the Merger Agreement, the Purchaser
commenced the Offer.
(b)(2) Reasons for the Recommendation. In making the determination and
recommendation set forth in paragraph (a) above, the Board of Directors of the
Company considered many factors including, but not limited to, the following:
(i) the current and historical financial condition and results of
operations of the Company, as well as the prospects and strategic
objectives of the Company, including risks involved in achieving those
prospects and objectives, and the current and expected conditions in the
industry in which the Company operates;
(ii) the trend toward globalization among the Company's customers and
competitors requires that the Company expand its capability to serve
customers throughout the world and this necessitates access to significant
additional capital for both acquisitions and internal growth;
(iii) the oral and written presentations of CSFB at the October 13, 2000
Board meeting and the written opinion of CSFB dated October 13, 2000 that,
based upon and subject to the matters set forth therein and as of the date
thereof, the consideration to be received by the holders of Shares in the
Offer and the Merger was fair to such holders, other than UTC and its
affiliates, from a financial point of view (a copy of such written opinion,
setting forth the assumptions made, procedures followed, matters considered
and limitations of the review undertaken by CSFB in rendering its opinion,
is attached as Annex A to this Schedule 14D-9 and should be read in its
entirety);
(iv) historical and current market prices and trading information for
the Company's Shares, including the fact that the $30.50 Offer Price
represents a premium of approximately 26% over the closing price of
$24.1875 per Share on October 13, 2000, the last trading day prior to the
public announcement of the Offer and a premium of approximately 20% over
the $25.47917 average closing price for the 30-day trading period ending on
October 13, 2000 and was the highest offer received by the Company;
(v) the terms of other proposals received for the acquisition of the
Company, including the fact that management and CSFB contacted a number of
potential bidders over an extended period of time in a process designed to
elicit third party proposals to acquire the Company and enhance stockholder
value and that participants in such process had been afforded sufficient
time and information to formulate and submit proposals had they wished to
do so;
(vi) the Board's review, based in part on presentations by the Company's
management and financial advisors, of possible alternatives to the Offer
and the Merger, including continuing to operate the Company as a separate
entity;
(vii) the possibility, based on an evaluation of market risks and the
financial prospects of the Company, of obtaining a higher stock price by
continuing to operate the Company as an independent entity;
10
<PAGE>
(viii) the review of information with regard to the financial condition,
results of operations, business and prospects of the Company, as reflected
in the Company's projections, as well as the risks involved in achieving
those prospects, current economic and market conditions (including current
conditions in the industry in which the Company is engaged) and the going
concern value of the Company (as reflected in part in its historical and
projected operating results);
(ix) the expected timing of the transactions contemplated by the Merger
Agreement, including the structure of the transactions as a tender offer
for all of the Shares, which allows stockholders to receive the transaction
consideration earlier than in an alternative form of transaction, followed
by the Merger in which stockholders will receive the same consideration as
received by stockholders who tender their Shares in the Offer;
(x) the desirability of providing liquidity to the Company's
stockholders;
(xi) the terms and conditions of the Merger Agreement, including the
fact that UTC's obligation to consummate the Offer and the Merger is
subject only to a limited number of conditions and the fact that the Offer
is not conditioned upon financing;
(xii) the fact that, although the Merger Agreement does not permit the
Company, its subsidiaries and its representatives to initiate or solicit
any potential acquisition proposal, in the event of an unsolicited
acquisition proposal the Company may engage in negotiations or discussions
with, or provide information to, a third party if the Board determines, in
good faith, after receipt of advice from outside legal counsel, that in the
exercise of its fiduciary responsibilities such information should be
provided or such discussions held; and the fact that, in the event that the
Board decided to accept an Acquisition Proposal by a third party, the Board
may terminate the Merger Agreement upon payment of a $20 million
termination fee to UTC;
(xiii) the desire of the Glazer Family, which owns approximately 38% of
the outstanding Shares on a fully diluted basis, to sell its Shares;
(xiv) the willingness of the Glazer Family to enter into the Stockholder
Agreement, pursuant to which the Glazer Family would agree to tender its
Shares pursuant to the Offer and vote its Shares in favor of the Merger
Agreement; and
(xv) the interest of certain Company executives in the Offer and the
Merger (see Item 3 under the caption "Arrangements with Executive Officers,
Directors or Affiliates of the Company").
The foregoing describes all material factors considered and given weight by
the Board in connection with its decision to approve the Merger Agreement and
recommend that all holders tender their Shares pursuant to the Offer and in its
determination that the terms of the Offer and the Merger were advisable, fair
to and in the best interest of the stockholders of the Company. The Board
evaluated the factors listed above in light of their knowledge of the business
and operations of the Company and their business judgment. In view of the
variety of factors considered in connection with its evaluation of the Offer
and the Merger, the Board did not find it practicable to, and did not, qualify
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 weight to different factors.
The Board of Directors recognized that UTC and Purchaser would be able to
close the Offer and effect the Merger without the vote of any other stockholder
of the Company if they acquire a majority of the outstanding Shares pursuant to
the Offer. In addition, the Board recognized that, while the acquisition of the
entire equity interest of the Company was structured as a cash tender offer
followed by a cash merger in order to provide a prompt and orderly transfer of
ownership of the Company, the Offer would be outstanding for a minimum of 20
business days, and that UTC could extend the expiration date of the Offer under
certain circumstances described in Section 1 of the Offer to Purchase (which is
hereby incorporated herein by reference). The Board also recognized that, while
the consummation of the Transaction offers stockholders the opportunity to
realize a significant premium over the price at which Shares were traded prior
to the public announcement of the proposed Transaction, the Transaction would
eliminate the opportunity of all stockholders other than UTC to
11
<PAGE>
participate in the future growth of the Company. The Board believes, however,
that this loss of opportunity was reflected in the Per Share Amount of $30.50
per Share, and also recognized that there can be no assurance as to the level
of growth to be attained by the Company in the future.
(c) Intent to Tender
To the best of the Company's knowledge, except as described in Section 11 of
the Offer to Purchase under the caption "The Merger Agreement--Conversion of
Shares" (the provisions of which are hereby incorporated herein by reference)
and subject to applicable securities laws and personal considerations
(including tax planning), all directors and executive officers of the Company
presently intend to tender pursuant to the Offer all Shares owned beneficially
or of record by such persons. The foregoing does not include any Shares over
which, or with respect to which, any such director or executive officer acts in
a fiduciary or representative capacity or is subject to the instructions of a
third party with respect to such tender. Additionally, the Glazer Family, which
owns approximately 38% of the outstanding Shares on a fully diluted basis, has
agreed to tender (and not withdraw) all of its Shares pursuant to the offer.
The Glazer Family has also granted Purchaser an option to purchase all of its
Shares at a price of $30.50 per Share (or any other price payable in the Offer)
upon the occurrence of certain events.
Item 5. Person/Assets Retained, Employed, Compensated or Used.
Except as described below, neither the Company nor any person acting on its
behalf has employed, retained or agreed to compensate any other person to make
solicitations or recommendations to stockholders of the Company concerning the
Offer.
CSFB is acting as exclusive financial advisor to the Company in connection
with the Offer and other matters arising in connection therewith pursuant to a
letter agreement, dated as of May 31, 2000, between CSFB and the Company. Under
the terms of the engagement letter, CSFB agreed to render certain financial
advisory and investment banking services in connection with a possible
acquisition or business combination or other attempts to effect a change in
control of the Company. The Board retained CSFB based upon CSFB's
qualifications, experience, reputation, and familiarity with the Company's
business. CSFB is an internationally recognized investment banking and advisory
firm. As part of its investment banking and financial advisory business, CSFB
is continuously engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes. In addition, CSFB
is a full-service securities firm engaged in securities trading, brokerage and
financing activities. In the ordinary course of its business, CSFB and its
affiliates may actively trade the debt and equity securities of both the
Company and UTC for its and such affiliates' own accounts and for the accounts
of customers and, accordingly, may at any time hold a long or short position in
such securities. In the past, CSFB and its affiliates have provided financial
services for the Company and UTC.
Pursuant to the terms of the engagement letter, the Company agreed to pay
CSFB an annual financial advisory fee of $75,000 as long as the agreement is in
effect (but in any event for at least two years). If the Company consummates a
Sale, these financial advisory fees are fully creditable, to the extent paid,
against the transaction fee payable to CSFB. For this purpose, a "Sale"
includes the sale of all or a substantial amount of the assets or the capital
stock of the Company, as well as any recapitalization, restructuring or
liquidation of the Company, or any other form of disposition which results in
the effective sale of the principal business and operations of the Company by
its current owners.
In the event that a Sale is consummated, the engagement letter provides that
the Company will pay to CSFB a fee equal to (1) 0.65% of the aggregate
consideration received, directly or indirectly, by the Company or its
stockholders in connection with a Sale to certain identified potential
acquirors or (2) 0.75% of the aggregate consideration received in connection
with a Sale to other interested parties, including UTC. The Company has also
agreed to reimburse CSFB for reasonable out-of-pocket expenses as incurred. In
addition,
12
<PAGE>
the Company has agreed to indemnify CSFB, its directors, officers, agents and
employees and each person, if any, controlling CSFB against certain liabilities
and expenses, including certain liabilities under the federal securities laws,
arising out of CSFB's engagement.
Item 6. Interest in Securities of the Subject Company.
To the best of the Company's knowledge, no transactions in the Shares have
been effected during the last 60 days by the Company or any executive officer,
director, affiliate or subsidiary of the Company.
Item 7. Purposes of the Transaction and Plans or Proposals.
(a) Except as described in Sections 10 and 11 of the Offer to Purchase and
Item 4 above (the provisions of which are hereby incorporated herein by
reference), no negotiation is being undertaken or is underway by the Company in
response to the Offer which relates to or would result in (1) an extraordinary
transaction, such as a merger, reorganization or liquidation, involving the
Company or any subsidiary of the Company, (2) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company, (3)
a tender offer or other acquisition of the Company's securities by the Company,
any of its subsidiaries, or any other person, or (4) any material change in the
present dividend rate or policy, or indebtedness or capitalization of the
Company.
(b) Except as described in Sections 10 and 11 of the Offer to Purchase and
Item 4 above (the provisions of which are hereby incorporated herein by
reference), there are no transactions, board resolutions, agreements in
principle or signed contracts in response to the Offer which relate to or would
result in one or more of the matters referred to in paragraph (a) of this Item
7.
Item 8. Additional Information.
(a) Delaware General Corporation Law. Under the DGCL, if the Purchaser
acquires, pursuant to the Offer or otherwise, at least 90% of the outstanding
shares of Common Stock, the Purchaser will be able to effect the Merger after
consummation of the Offer without a vote of the Company's stockholders.
However, if the Purchaser does not acquire at least 90% of the Shares pursuant
to the Offer or otherwise and a vote of the Company's stockholders is required
under Delaware law, a significantly longer period of time will be required to
effect the Merger. The Purchaser and UTC have each agreed to cause all of the
Shares owned by them to be voted in favor of the adoption of the Merger
Agreement, so stockholder approval of the Merger is assured if the Offer is
completed.
(b) Regulatory Approvals. Under the HSR Act and the rules that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer is subject to such
requirements.
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares under the Offer may be consummated following the expiration or earlier
termination of a 15 calendar day waiting period following the filing by
Purchaser of a Notification and Report Form with respect to the Offer, unless
Purchaser receives a request for additional information or documentary material
from the Antitrust Division of the U.S. Department of Justice (the "Antitrust
Division") or the U.S. Federal Trade Commission (the "FTC"). Purchaser expects
to make its filing with the Antitrust Division and the FTC on or about October
23, 2000, and the waiting period is expected to terminate within 15 calendar
days thereafter. If, within the initial 15-day waiting period, either the FTC
or the Antitrust Division requests additional information or documentary
material from Purchaser, the waiting period will be extended and would expire
at 11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Purchaser with such request. Only one extension of
the waiting period pursuant to a request for additional information is
authorized by the HSR Act. Thereafter, such waiting
13
<PAGE>
period may be extended only by court order or with the consent of Purchaser. If
the acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may be extended and, in any event, the purchase of
and any payment for Shares will be deferred until the expiration date of the
Offer. Unless the Offer is extended, any extension of the waiting period may
not give rise to any additional withdrawal rights.
In practice, complying with a request for additional information or
documentary material can take a significant amount of time. In addition, if the
Antitrust Division or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could take such
action under the antitrust laws of the United States as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking divestiture of the Shares so acquired
or divestiture of substantial assets of UTC or its subsidiaries, or the Company
or its subsidiaries. Private parties (including individual States) may also
bring legal actions under the antitrust laws of the United States. The Company
does not, and the Purchaser has advised the Company that it does not, believe
that the consummation of the Offer will result in a violation of any applicable
antitrust laws. However, there can be no assurance that a challenge to the
Offer on antitrust grounds will not be made, or if such a challenge is made,
what the result will be. Sections 13 and 14 of the Offer to Purchase which is
being mailed to stockholders together with this Schedule 14D-9 is incorporated
in this Schedule 14D-9 by reference.
UTC, Purchaser and the Company have been advised that notice filings with
respect to the Offer are required in Argentina, Austria, Brazil, Germany,
Ireland, Italy, the Netherlands, Poland, South Africa, and Taiwan. Other
regulatory filings may also be required or advisable in connection with the
completion of the Merger. UTC, Purchaser and the Company are currently in the
process of reviewing whether filings or approvals may be required or desirable
in these jurisdictions. It is possible that one or more of these filings may
not be made or one or more of these approvals may not be obtained prior to the
Expiration Date. Under the Merger Agreement, either Purchaser or Company has
the option in their respective sole discretion to extend the Expiration Date
until as late as the Outside Date if the sole reason that Purchaser has not
accepted for payment and paid for Shares pursuant to the Offer is the failure
of the applicable waiting period under the HSR Act and Foreign Antitrust Laws
to expire or failure to obtain any required governmental or regulatory
approval.
The Purchaser is not required to purchase any Shares in the Offer if a
statute, rule, regulation, legislation, judgment, order or injunction is
promulgated, enacted, entered, enforced or deemed applicable by a government
entity to UTC, Purchaser, the Company, any other affiliate of UTC or the
Company, the Offer or the Merger that would or is reasonably likely to (1) make
the acceptance for payment of, or payment for or purchase of all or a
substantial number of the Shares pursuant to the Offer illegal, or otherwise
materially restrict or prohibit the consummation of the Offer or the Merger,
(2) result in a material delay in the ability of Purchaser to accept for
payment, pay for or purchase all or a substantial number of the Shares pursuant
to the Offer or to effect the Merger, (3) render Purchaser unable to accept for
payment or pay for or purchase all or a substantial number of the Shares
pursuant to the Offer, (4) impose material limitations on the ability of UTC,
Purchaser or any of their respective subsidiaries or affiliates to acquire or
hold, transfer or dispose of, or effectively to exercise all rights of
ownership of, all or a substantial number of the Shares including the right to
vote the Shares purchased by it pursuant to the Offer on an equal basis with
all other Shares on all matters properly presented to the stockholders of the
Company, (5) require the divestiture by UTC, Purchaser or any of their
respective subsidiaries or affiliates of any Shares, or require Purchaser, UTC,
the Company, or any of their respective subsidiaries or affiliates to dispose
of all or any material portion of their respective businesses, assets or
properties or impose any material limitations on the ability of any of such
entities to conduct their respective
14
<PAGE>
businesses or own such assets, properties or Shares or on the ability of UTC or
Purchaser to conduct the business of the Company and its subsidiaries and own
the assets and properties of the Company and its subsidiaries, or (6) impose
any material limitations on the ability of UTC, Purchaser or any of their
respective subsidiaries or affiliates effectively to control the business or
operations of the Company, UTC, Purchaser or any of their respective
subsidiaries or affiliates.
(c) Designation of Persons to be Elected to the Board of Directors. The
Proxy Statement being mailed to stockholders with this Schedule 14D-9 is being
furnished in connection with the possible designation by UTC and Purchaser,
pursuant to the terms of the Merger Agreement, of certain persons to be elected
to the Board of Directors of the Company.
(d) Certain Projected Financial Data for the Company. Prior to entering into
the Merger Agreement, the Company provided to UTC certain information which was
not publicly available, including certain projected financial data (the
"Projections") for the fiscal years 2001 through 2003. The Company does not
publicly disclose projections, and the Projections were not prepared with a
view to public disclosure.
The projections include the following information regarding the Company's
anticipated results of operations for the years ended January 31, 2001, January
31, 2002 and January 31, 2003:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------
January 31, January 31, January 31,
2001 2002 2003
----------- ----------- -----------
(in millions, except percentages)
<S> <C> <C> <C>
Consolidated Revenue................. $508.6 $573.4 $630.5
Consolidated projected earnings from
operations before interest expense,
income taxes and amortization
("EBITA")........................... $ 72.6 $ 86.6 $ 97.3
Consolidated EBITA Margins........... 14.3% 15.1% 15.4%
</TABLE>
The Projections were not prepared with a view to public disclosure or
compliance with published guidelines of the Commission, the guidelines
established by the American Institute of Certified Public Accountants for
Prospective Financial Information or generally accepted accounting principles.
The Company's certified public accountants have not examined or compiled any of
the Projections or expressed any conclusion or provided any form of assurance
with respect to the Projections and, accordingly, assume no responsibility for
the Projections. The Projections were not prepared with the approval of the
Board. The Projections are included herein to give the Company's stockholders
access to certain information that was not publicly available and that the
Company provided to UTC and Purchaser.
The Projections are forward-looking statements that are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those statements and should be read with caution. The Projections are
subjective in many respects and thus susceptible to interpretations and
periodic revisions based on actual experience and recent developments. While
presented with numerical specificity, the Projections were not prepared by the
Company in the ordinary course and are based upon a variety of estimates and
hypothetical assumptions made by management of the Company with respect to,
among other things, industry performance, general economic, market, interest
rate and financial conditions, sales, cost of goods sold, operating and other
revenues and expenses, capital expenditures and working capital of the Company,
and other matters which may not be realized and are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
all of which are difficult to predict and many of which are beyond the
Company's control. Accordingly, there can be no assurance that the assumptions
made in preparing the Projections will prove accurate, and actual results may
be materially greater or less than those contained in the Projections. More
specifically, based upon the Company's year to date performance, the Company
may not achieve its projected revenue and EBITA for the fiscal year 2001. In
addition, the Projections do not take into account any of the transactions
contemplated by the Merger Agreement, including the Offer and the Merger. These
events may cause actual results to materially differ from the Projections.
15
<PAGE>
For these reasons, as well as the bases and assumptions on which the
Projections were compiled, the inclusion of such Projections herein should not
be regarded as an indication that the Company, UTC, the Purchaser or any of
their respective affiliates or representatives considers such information to be
an accurate prediction of future events, and the Projections should not be
relied on as such. None of such persons assumes any responsibility for the
reasonableness, completeness, accuracy or reliability of such Projections. No
party nor any of their respective affiliates or representatives has made, or
makes, any representation to any person regarding the information contained in
the Projections and none of them intends to update or otherwise revise the
Projections to reflect circumstances existing after the date when made or to
reflect the occurrences of future events even in the event that any or all of
the assumptions are shown to be in error.
(e) Available Information. The Company is subject to the informational
filing requirements of the Exchange Act and, in accordance therewith, is
required to file periodic reports, proxy statements and other information with
the Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons
in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and also should be available for inspection at the Commission's regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048 and the Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such materials may also be obtained by
mail, upon payment of the Commission's customary fees, by writing to its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a World Wide Website on the Internet at
http://www.sec.gov that contains reports and other information regarding
issuers that file electronically with the Commission.
Item 9. Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ---------------------------------------------------------------------
<C> <S>
(a)(1) Offer to Purchase, dated October 23, 2000 (incorporated by reference
to Exhibit (a)(1)(A) to the Schedule TO of the Purchaser filed with
the Securities and Exchange Commission on October 23, 2000).
(a)(2) Form of Letter of Transmittal (incorporated by reference to Exhibit
(a)(1)(B) to the Schedule TO of the Purchaser filed with the
Securities and Exchange Commission on October 23, 2000).
(a)(3) Text of Press Release issued by Parent and the Company on October 23,
2000 (incorporated by reference to Exhibit (a)(1)(G) to the Schedule
TO of the Purchaser filed with the Securities and Exchange Commission
on October 23, 2000).
(a)(4) Opinion of Credit Suisse First Boston Corporation dated October 13,
2000 (attached to this Schedule 14D-9 as Annex A).
(a)(5) Form of Letter, dated October 23, 2000, to stockholders of the
Company.*
(a)(6) Sections 1, 8, 11, 13 and 14 of the Offer to Purchase, dated October
23, 2000 (incorporated by reference to Exhibit (a)(1)(A) to the
Schedule TO of the Purchaser filed with the Securities and Exchange
Commission on October 23, 2000).
(e)(1) Agreement and Plan of Merger, dated as of October 13, 2000, among
Parent, Purchaser and the Company (incorporated by reference to
Exhibit (d)(1) to the Schedule TO of the Purchaser filed with the
Securities and Exchange Commission on October 23, 2000).
(e)(2) Stockholder Agreement, dated as of October 13, 2000, among Parent and
Purchaser, the Malcolm I. Glazer Family Limited Partnership, Kevin E.
Glazer and Avram A. Glazer (incorporated by reference to Exhibit
(d)(2) to the Schedule TO of the Purchaser filed with the Securities
and Exchange Commission on October 23, 2000).
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ----------------------------------------------------------------------
<C> <S>
(e)(3) Confidentiality and Standstill Agreement, dated August 14, 2000,
between the Company and Parent (incorporated by reference to Exhibit
10.4 to the Current Report on Form 8-K filed by the Company with the
Securities and Exchange Commission on October 20, 2000).
(e)(4) Proxy Statement, dated October 23, 2000 prepared by the Company on
Schedule 14A under the Exchange Act (incorporated by reference to the
Schedule 14A filed by the Company with the Securities and Exchange
Commission on October 23, 2000).
(e)(5) Amended Employment Retention Agreement, dated July 12, 2000, by and
between the Company and Daniel B. Greenwood (incorporated by reference
to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed by the
Company with the Securities and Exchange Commission on September 14,
2000).
(e)(6) Amended Employment Retention Agreement, dated July 12, 2000, by and
between the Company and Donald K. Mckay (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the Company
with the Securities and Exchange Commission on September 14, 2000).
(e)(7) Amended Employment Retention Agreement, dated July 12, 2000, by and
between the Company and Jeffrey P. Rhodenbaugh (incorporated by
reference to Exhibit 10.1 to the Form 10-Q filed by the Company with
the Securities and Exchange Commission on September 14, 2000).
(e)(8) Amendment No. 1 to Amended Employment Retention Agreement, dated
October 13, 2000, by and between the Company and Jeffrey P.
Rhodenbaugh (incorporated by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed by the Company with the Securities and
Exchange Commission on October 20, 2000).
(e)(9) Amended Employment Retention Agreement, dated July 12, 2000, between
the Company and Robert R. Friedl (incorporated by reference to Exhibit
10.4 to the Quarterly Report on Form 10-Q filed by the Company with
the Securities and Exchange Commission on September 14, 2000).
(e)(10) Amendment No. 1 to the Amended Employment Retention Agreement, dated
October 13, 2000, by and between the Company and Robert R. Friedl
(incorporated by reference to Exhibit 10.2 to the Current Report on
Form 8-K filed by the Company with the Securities and Exchange
Commission on October 20, 2000).
(e)(11) Amended and Restated Certificate of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 to the Company's
Current Report on Form 8-K filed by the Company with the Securities
and Exchange Commission on October 20, 2000).
(e)(12) Amended and Restated By-laws of the Company (incorporated herein by
reference to Exhibit 3.2 to the Company's Current Report on Form 8-K
filed by the Company with the Securities and Exchange Commission on
October 20, 2000).
(e)(13) Form of Indemnification Agreement between the Company and certain of
its officers and directors (incorporated herein by reference to
Exhibit 10.3 to the Company's Current Report on Form 8-K filed by the
Company with the Securities and Exchange Commission on October 20,
2000).
(g) Not applicable.
</TABLE>
--------
*Included in copies mailed to stockholders.
17
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
SPECIALTY EQUIPMENT COMPANIES, INC.
/S/ DON K. MCKAY
By: _________________________________
Name: Donald K. McKay
Title: Executive Vice President
and Secretary
Dated: October 23, 2000
18
<PAGE>
Annex A
October 13, 2000
Board of Directors
Specialty Equipment Companies, Inc.
1245 Corporate Boulevard
Aurora, IL 60504
Members of the Board:
You have asked us to advise you with respect to the fairness to the holders of
Company Common Stock (as defined below) of Specialty Equipment Companies, Inc.
(the "Company"), other than United Technologies Corporation (the "Acquiror")
and its affiliates, from a financial point of view, of the Consideration (as
defined below) to be received by such holders pursuant to the Agreement and
Plan of Merger, dated as of October 13, 2000 (the "Agreement"), among the
Company, the Acquiror and Solar Acquisition Corp., a wholly owned subsidiary of
the Acquiror (the "Sub"). The Agreement provides, among other things, (i) for
the Sub to commence a cash tender offer (the "Offer") for all outstanding
shares of the common stock, par value $.01 per share, of the Company ("Company
Common Stock") at a purchase price of $30.50 per share in cash (the
"Consideration"), and (ii) following consummation of the Offer, the merger of
the Sub with the Company (the "Merger" and, together with the Offer, the
"Transaction") pursuant to which each outstanding share of Company Common
Stock, other than shares owned by the Acquiror and its subsidiaries, will be
converted into the right to receive the Consideration and the Company will
become a wholly owned subsidiary of the Acquiror.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company, as well as the
Agreement. We have also reviewed certain other information, including financial
forecasts, provided to us by the Company and have met with the Company's
management to discuss the business and prospects of the Company.
We have also considered certain financial and stock market data of the Company,
and we have compared those data with similar data for other publicly held
companies in businesses similar to the Company and we have considered the
financial terms of certain other business combinations and other transactions
which have recently been effected. We also considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's management as to the future financial performance of the Company. In
addition, we have not been requested to make, and have not made, an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company, nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon financial, economic, market
and other conditions as they exist and can be evaluated on the date hereof. In
connection with our engagement we were requested to approach third parties to
solicit indications of interest in a possible acquisition of the Company and
held preliminary discussions with certain of these parties prior to the date
hereof.
We have acted as financial advisor to the Company in connection with the
Transaction and will receive a fee for our services, a significant portion of
which is contingent upon the consummation of the Transaction.
In the past, we and our affiliates have performed certain financial services
for the Company and the Acquiror unrelated to the Transaction for which we have
received compensation.
<PAGE>
In the ordinary course of our business, we and our affiliates may actively
trade the debt and equity securities of both the Company and the Acquiror for
our and such affiliates' own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors of the Company in connection with its consideration of the
Transaction and does not constitute a recommendation to any holder of Company
Common Stock as to whether such holder should tender shares of the Company
Common Stock pursuant to the Offer or how such holder should vote or act on any
matter relating to the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Consideration to be received by the holders of Company Common Stock
in the Transaction is fair to such holders, other than the Acquiror and its
affiliates, from a financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ----------------------------------------------------------------------
<C> <S>
(a)(1) Offer to Purchase, dated October 23, 2000 (incorporated by reference
to Exhibit (a)(1)(A) to the Schedule TO of the Purchaser filed with
the Securities and Exchange Commission on October 23, 2000).
(a)(2) Form of Letter of Transmittal (incorporated by reference to Exhibit
(a)(1)(B) to the Schedule TO of the Purchaser filed with the
Securities and Exchange Commission on October 23, 2000).
(a)(3) Text of Press Release issued by Parent and the Company on October 23,
2000 (incorporated by reference to Exhibit (a)(1)(G) to the Schedule
TO of the Purchaser filed with the Securities and Exchange Commission
on October 23, 2000).
(a)(4) Opinion of Credit Suisse First Boston Corporation dated October 13,
2000 (attached to this Schedule 14D-9 as Annex A).
(a)(5) Form of Letter, dated October 23, 2000, to stockholders of the
Company.*
(a)(6) Sections 1, 8, 11, 13 and 14 of the Offer to Purchase, dated October
23, 2000 (incorporated by reference to Exhibit (a)(1)(A) to the
Schedule TO of the Purchaser filed with the Securities and Exchange
Commission on October 23, 2000).
(e)(1) Agreement and Plan of Merger, dated as of October 13, 2000, among
Parent, Purchaser and the Company (incorporated by reference to
Exhibit (d)(1) to the Schedule TO of the Purchaser filed with the
Securities and Exchange Commission on October 23, 2000).
(e)(2) Stockholder Agreement, dated as of October 13, 2000, among Parent and
Purchaser, the Malcolm I. Glazer Family Limited Partnership, Kevin E.
Glazer and Avram A. Glazer (incorporated by reference to Exhibit
(d)(2) to the Schedule TO of the Purchaser filed with the Securities
and Exchange Commission on October 23, 2000).
(e)(3) Confidentiality and Standstill Agreement, dated August 14, 2000,
between the Company and Parent (incorporated by reference to Exhibit
10.4 to the Current Report on Form 8-K filed by the Company with the
Securities and Exchange Commission on October 20, 2000).
(e)(4) Proxy Statement, dated October 23, 2000 prepared by the Company on
Schedule 14A under the Exchange Act (incorporated by reference to the
Schedule 14A filed by the Company with the Securities and Exchange
Commission on October 23, 2000).
(e)(5) Amended Employment Retention Agreement, dated July 12, 2000, by and
between the Company and Daniel B. Greenwood (incorporated by reference
to Exhibit 10.3 to the Form 10-Q filed by the Company with the
Securities and Exchange Commission on September 14, 2000).
(e)(6) Amended Employment Retention Agreement, dated July 12, 2000, by and
between the Company and Donald K. Mckay (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the Company
with the Securities and Exchange Commission on September 14, 2000).
(e)(7) Amended Employment Retention Agreement, dated July 12, 2000, by and
between the Company and Jeffrey P. Rhodenbaugh (incorporated by
reference to Exhibit 10.1 to the Form 10-Q filed by the Company with
the Securities and Exchange Commission on September 14, 2000).
(e)(8) Amendment No. 1 to Amended Employment Retention Agreement, dated
October 13, 2000, by and between the Company and Jeffrey P.
Rhodenbaugh (incorporated by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed by the Company with the Securities and
Exchange Commission on October 20, 2000).
(e)(9) Amended Employment Retention Agreement, dated July 12, 2000, between
the Company and Robert R. Friedl (incorporated by reference to Exhibit
10.4 to the Quarterly Report on Form 10-Q filed by the Company with
the Securities and Exchange Commission on September 14, 2000).
(e)(10) Amendment No. 1 to the Amended Employment Retention Agreement, dated
October 13, 2000, by and between the Company and Robert R. Friedl
(incorporated by reference to Exhibit 10.2 to the Current Report on
Form 8-K filed by the Company with the Securities and Exchange
Commission on October 20, 2000).
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ---------------------------------------------------------------------
<C> <S>
(e)(11) Amended and Restated Certificate of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 to the Company's
Current Report on Form 8-K filed by the Company with the Securities
and Exchange Commission on October 20, 2000).
(e)(12) Amended and Restated By-laws of the Company (incorporated herein by
reference to Exhibit 3.2 to the Company's Current Report on Form 8-K
filed by the Company with the Securities and Exchange Commission on
October 20, 2000).
(e)(13) Form of Indemnification Agreement between the Company and certain of
its officers and directors (incorporated herein by reference to
Exhibit 10.3 to the Company's Current Report on Form 8-K filed by the
Company with the Securities and Exchange Commission on October 20,
2000).
</TABLE>
--------
*Included in copies mailed to stockholders.
ii
