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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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CLUB CAR, INC.
(NAME OF SUBJECT COMPANY)
CLUB CAR, INC.
(NAME OF PERSONS FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
18947B103
(CUSIP NUMBER OF CLASS OF SECURITIES)
A. MONTAGUE MILLER
PRESIDENT, CHIEF OPERATING OFFICER AND SECRETARY
CLUB CAR, INC.
4152 WASHINGTON ROAD
MARTINEZ, GEORGIA 30907
(706) 863-3000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING
STATEMENT)
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COPY TO:
WELLFORD L. SANDERS, JR., ESQ.
MCGUIRE, WOODS, BATTLE & BOOTHE, L.L.P.
ONE JAMES CENTER
901 EAST CARY STREET
RICHMOND, VIRGINIA 23219
(804) 775-1000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Club Car, Inc., a Delaware corporation
(the "Company"), and the address of the principal executive offices of the
Company is 4152 Washington Road, Martinez, Georgia, 30907. The title of the
class of equity securities to which this Statement relates is the common stock,
par value $.01 per share (the "Common Stock"), of the Company and the associated
Preferred Stock Purchase Rights (the "Rights" and, together with the Common
Stock, the "Shares") issued pursuant to the Rights Agreement dated as of
September 24, 1993 (as amended, the "Rights Agreement"), between the Company and
Trust Company Bank, as Rights Agent (the "Rights Agent").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer by Clark Acquisition Sub, Inc.,
a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Clark
Equipment Company, a Delaware corporation ("Clark"), disclosed in a Tender Offer
Statement on Schedule 14D-1, dated February 8, 1995 (the "Schedule 14D-1"), to
purchase all of the outstanding Shares at a price of $25 per Share, net to the
seller in cash (the "Offer Price") without interest thereon, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
February 8, 1995 (the "Offer to Purchase") and the related Letter of Transmittal
(which, together with the Offer to Purchase, constitute the "Offer"). As set
forth in the Offer to Purchase, each of the Purchaser and Clark has its
principal executive offices at 100 North Michigan Street, South Bend, Indiana,
46634.
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 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
(i) the Company's executive officers, directors or affiliates or (ii) the
Purchaser or its executive officers, directors or affiliates.
Certain contracts, agreements, arrangements and understandings between the
Company and certain of its directors and executive officers are described under
the heading "Compensation of Executive Officers" in the Company's Proxy
Statement dated December 16, 1994 (the "1994 Proxy Statement"). A copy of the
1994 Proxy Statement is filed herewith as exhibit (a) and the portions thereof
referred to above are incorporated herein by reference. Reference is also made
to Schedule I of this Statement for additional information in response to this
Item.
LIMITATION OF LIABILITY AND INDEMNIFICATION AGREEMENTS
The Company's Restated Certificate of Incorporation and Restated Bylaws
provide that to the fullest extent permitted by the Delaware General Corporation
Law ("Delaware Law"), a director of the Company shall not be liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director. Under current Delaware Law, liability of a director may not be
limited (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 that involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases and (iv)
for any transaction from which the director derives an improper personal
benefit. The effect of the provision of the Company's Restated Certificate of
Incorporation is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of the fiduciary duty of care as
a director (including breaches resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) through (iv) above.
This provision does not limit or eliminate the rights of the Company or any
stockholder to seek nonmonetary relief such as an injunction or recision in the
event of a breach of a director's duty of care.
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In addition, in August, 1993 the Company entered into agreements (the
"Indemnification Agreements"), the form of which is filed herewith as exhibit
(b), with each of the directors and officers of the Company pursuant to which
the Company agrees to indemnify such director or officer from claims,
liabilities, damages, expenses, losses, costs, penalties or amounts paid in
settlement incurred by such director or officer and arising out of his capacity
as a director, officer, employee and/or agent of the corporation of which he is
a director or officer to the maximum extent provided by applicable law. In
addition, such director or officer shall be entitled to an advance of expenses
to the maximum extent authorized or permitted by law to meet the obligations
indemnified against. The Indemnification Agreements also obligate the Company to
purchase and maintain insurance for the benefit and on behalf of its directors
and officers insuring against all liabilities that may be incurred by such
director or officer in or arising out of his capacity as a director, officer,
employee and/or agent of the Company.
MERGER AGREEMENT.
The following is a summary of certain provisions of the Merger Agreement,
dated as of February 3, 1995, among the Company, Clark and the Purchaser (the
"Merger Agreement") and is qualified in its entirety by reference to the Merger
Agreement, a copy of which is filed herewith as exhibit (c).
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that the
Purchaser may modify the terms of the Offer, including without limitation,
except as provided below, to extend the Offer beyond any scheduled expiration
date, except that, without the written consent of the Company, the Purchaser
will not decrease the Offer Price, decrease the number of Shares sought in the
Offer, waive the condition that there be validly tendered and not properly
withdrawn prior to expiration of the Offer a majority of the Shares calculated
on a fully diluted basis (the "Minimum Condition"), change the form of
consideration payable in the Offer, or modify or add to the conditions of the
Offer. Notwithstanding the foregoing, the Offer may not be extended beyond any
scheduled expiration date unless (i) any person has made an Acquisition Proposal
(as defined herein) or (ii) any of the conditions to the Offer described below
shall not have been satisfied; provided, further, (x) notwithstanding that the
conditions to the Offer have not been satisfied, unless an Acquisition Proposal
has been made, the Offer may not be extended beyond June 8, 1995 and (y) if the
conditions to the Offer have been satisfied, then the Offer may be extended for
an additional five business days so long as at the time of such extension, all
conditions to Clark's obligations to purchase Shares pursuant to the Offer are
irrevocably waived.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with Delaware Law, the Purchaser shall be
merged with and into the Company (the "Merger"). As a result of the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the surviving corporation (the "Surviving Corporation").
The Merger Agreement provides that at the effective time of the Merger (the
"Effective Time"), each issued and outstanding Share (other than Shares that are
owned directly or indirectly by Clark or any subsidiary of Clark or by the
Company as treasury stock and other than Shares owned by stockholders who have
properly exercised rights of appraisal under Section 262 of Delaware Law) shall
be converted into the right to receive the Offer Price, without interest.
Pursuant to the Merger Agreement, each issued and outstanding share of
common stock, par value $.01 per share, of the Purchaser shall be converted into
one fully paid and non-assessable share of Common Stock of the Company.
The Company's Board of Directors. The Merger Agreement provides that,
promptly upon the acceptance for payment, and payment by the Purchaser, in
accordance with the Offer for more than 50% of the outstanding Shares (on a
fully diluted basis), the Purchaser will be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the
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product of the total number of directors on such Board of Directors (giving
effect to the directors designated pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by the
Purchaser, Clark or any of their affiliates bears to the total number of Shares
then outstanding and the Company and its Board of Directors will, at such time,
take any and all such action needed to cause the Purchaser's designees to be
appointed to the Company's Board of Directors (including to cause directors to
resign). Notwithstanding the foregoing, neither the Company, Clark nor the
Purchaser will take any action to remove or replace any member of the Special
Committee (as defined herein) during the period after consummation of the Offer
and prior to the Effective Time, and if for any reason during such period there
are fewer than two members of the Special Committee on the Company's Board of
Directors, the Company, Clark and the Purchaser will use their reasonable
efforts to ensure that two members ("Continuing Directors") of the Company's
Board of Directors are either members of the Special Committee or persons who
are neither officers nor employees of the Company or associated or affiliated
with, or designated by, Clark. The Company's obligation to appoint the
Purchaser's designees to the Board of Directors is subject to Section 14(f) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
14f-1 promulgated thereunder. The Merger Agreement also provides that following
the election or appointment of Clark's designees to the Company's Board of
Directors and prior to the Effective Time, if requested by the majority of the
Continuing Directors, such designees will abstain from acting upon, and the
approval of the majority of the Continuing Directors will be required to
authorize, any termination of the Merger Agreement by the Company, or any
amendment of the Merger Agreement requiring action by the Board of Directors, or
any extension of time for performance of any obligations or other acts of Clark
or the Purchaser under the Merger Agreement or any waiver of compliance with any
other covenants, agreements or conditions under the Merger Agreement for the
benefit of the Company.
Stockholders Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call, give
notice of, convene and hold a special meeting of its stockholders (the "Special
Meeting") as soon as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the purpose of
voting upon the Merger Agreement and the Merger. The Merger Agreement provides
that the Company will, if required by applicable law in order to consummate the
Merger, prepare and file with the Securities and Exchange Commission (the
"Commission") a preliminary proxy or information statement relating to the
Merger and the Merger Agreement and use its reasonable efforts (i) to obtain and
furnish the information required to be included by the Commission in the Proxy
Statement (as defined herein) and, after consultation with Clark and the
Purchaser, to respond promptly to any comments made by the Commission with
respect to the preliminary proxy or information statement and cause a definitive
proxy or information statement (the "Proxy Statement") to be mailed to its
stockholders and (ii) to obtain the necessary approvals of the Merger and the
Merger Agreement by its stockholders. If the Purchaser acquires at least a
majority of the outstanding Shares, the Purchaser will have sufficient voting
power to approve the Merger, even if no other stockholder votes in favor of the
Merger. The Company has agreed, subject to the limitations described below under
the heading "No Solicitation," to include in the Proxy Statement the
recommendation of the Board of Directors that stockholders of the Company vote
in favor of the approval of the Merger and the adoption of the Merger Agreement.
Interim Operations. In the Merger Agreement, the Company has agreed that,
except as expressly contemplated by the Merger Agreement or agreed to by Clark,
prior to the closing of the Merger, the business of the Company and its
subsidiaries shall be conducted only in the ordinary and usual course and, to
the extent consistent therewith, each of the Company and its subsidiaries will
use its reasonable best efforts to preserve its business organization intact and
maintain satisfactory relations with licensors, customers, suppliers,
distributors, employees, creditors and others having business relationships with
it. In addition, each of the Company and its subsidiaries will not (i) issue or
sell any shares of its capital stock (other than in connection with the exercise
of options outstanding on the date of the Merger Agreement) or any of its other
securities, or issue any securities convertible into, or options, warrants or
rights to purchase or subscribe to, or enter into any arrangement or contract
with respect to the issuance or sale of, any shares of its capital stock or any
of its other securities or make any other changes in its capital structure; (ii)
sell or pledge or agree to sell or pledge any stock owned by it in any of its
subsidiaries; (iii) declare, pay, set aside or make any dividend or other
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distribution or payment with respect to, or split, combine, redeem or
reclassify, any shares of its capital stock; (iv) enter into any contract or
commitment with respect to capital expenditures in excess of $200,000 for items
or projects which were not included in the Company's 1995 capital plan
previously approved by the Company's Board of Directors without first informing
and consulting with Clark's Chief Executive Officer or enter into any other
material contracts except contracts in the ordinary course of business; (v)
acquire a material amount of assets (other than inventory) or securities or
release or relinquish any material contract rights; (vi) adopt or amend any
Employee Plan (as defined in the Merger Agreement) or non-employee benefit plan
or program, employment agreement, license agreement or retirement agreement, or,
except in the ordinary course of business consistent with past practice, pay any
bonus or contingent or other extraordinary compensation; (vii) other than in the
ordinary course of business consistent with past practice, transfer, lease,
license, guarantee, sell, mortgage, pledge, dispose of, encumber or subject to
any lien, any assets or incur or modify any indebtedness or other liability or
issue any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for the obligations of any person; (viii) agree
to the settlement of any material claim or litigation; (ix) make any material
tax election or settle or compromise any material tax liability; (x) permit any
insurance policy naming it as beneficiary or a loss payable payee to be
cancelled without notice to Clark; (xi) make any material change in its method
of accounting; (xii) make any change in or amendment to its Restated Certificate
of Incorporation or By-Laws (or comparable corporate documents); and (xiii)
agree, in writing or otherwise, to take any of the foregoing actions.
No Solicitation. In the Merger Agreement, the Company has agreed that
neither the Company nor any of its subsidiaries or affiliates will, directly or
indirectly, take (and the Company will not authorize or permit its or its
subsidiaries' officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents or affiliates, to so
take) any action to (i) solicit or initiate the submission of any proposed
merger or other business combination, sale or other disposition of any material
amount of assets, sale of shares of capital stock, tender offer or exchange
offer or similar transactions involving the Company or any of its subsidiaries
(an "Acquisition Proposal"), (ii) enter into an agreement for the sale or other
disposition by the Company or any of its subsidiaries of a material amount of
assets or a sale of shares of capital stock whether by merger or other business
combination or tender or exchange offer or (iii) participate in any way in
discussions or negotiations with, or, furnish any information to, any Person, as
defined in the Merger Agreement, (other than Clark or the Purchaser) in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal. The Merger Agreement provides that the Company may
participate in discussions or negotiations with or furnish information to any
third party which proposes a transaction which the Board of Directors of the
Company reasonably believes will result in an Acquisition Proposal, if the Board
of Directors believes (and has been advised by counsel) that failing to take
such action would constitute a breach of its fiduciary duties. In addition,
neither the Board of Directors of the Company nor any committee thereof will
withdraw or modify in a manner adverse to Clark the approval and recommendation
of the Offer and the Merger Agreement or approve or recommend any Acquisition
Proposal, provided that the Company may recommend to its stockholders an
Acquisition Proposal and in connection therewith withdraw or modify its approval
or recommendation of the Offer or the Merger if (i) the Board of Directors of
the Company has determined that the Acquisition Proposal is a bona fide proposal
made by a third party to acquire all of the outstanding Common Stock of the
Company pursuant to a tender offer or a merger, or to purchase all or
substantially all of the assets of the Company on terms which a majority of the
members of the Board of Directors of the Company determines in its good faith
reasonable judgment (based on the advice of its financial and legal advisors) to
be more favorable to the Company and its stockholders than the transactions
contemplated by the Offer or Merger, and which does not provide for any breakup
fee or other inducement to the acquiror other than reimbursement of documented
out-of-pocket expenses incurred in connection with such proposal, (ii) all the
conditions to the Company's right to terminate the Merger Agreement have been
satisfied (including the payment of a termination fee), and (iii) simultaneously
with such withdrawal, modification or recommendation, the Merger Agreement is
properly terminated. The Company has agreed to promptly advise Clark of any
request for information or of any Acquisition Proposal, the material terms and
conditions of such request or Acquisition Proposal, and the identity of the
Person making any such Acquisition Proposal. The Company has agreed to use its
reasonable best efforts to keep Clark informed of the status and
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details (including amendments or proposed amendments) of any such request or
Acquisition Proposal or inquiry.
Directors' and Officers' Insurance and Indemnification. The Merger
Agreement provides that the Company shall either (i) maintain the Company's
existing directors' and officers' liability insurance covering those persons who
were covered on the date of the Merger Agreement by the Company's directors' and
officers' liability insurance policy ("Indemnified Parties") for a period of
five years after the Effective Time, except that the Company may substitute
therefor policies of substantially similar coverage and amounts containing terms
no less advantageous and provided that said substitution does not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time or (ii) cause Clark's directors' and officers' liability
insurance then in effect to cover those persons who are covered on the date of
the Merger Agreement by the Company's directors' and officers' liability
insurance policy with respect to those matters covered by the Company's
directors' and officers' liability policy. The Merger Agreement provides that in
no event shall the Company be required to expend in any one year an amount in
excess of 200% of the annual premiums currently paid by the Company for such
insurance and that if the annual premiums of such insurance coverage exceed that
amount, the Company shall be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
In the Merger Agreement, Clark has agreed, from and after the date of
purchase of Shares pursuant to the Offer, to indemnify all Indemnified Parties
to the fullest extent permitted by applicable law, including, subject to certain
limitations, reasonable legal and other expenses, with respect to all acts and
omissions arising out of such individuals' services as officers, directors,
employees or agents of the Company or any of its subsidiaries, occurring prior
to the Effective Time including, without limitation, the transactions
contemplated by the Merger Agreement. If such indemnity will not be available
with respect to any Indemnified Party, then the Company and the Indemnified
Party shall contribute to the amount payable in such proportion as is
appropriate to reflect relative faults and benefits.
Compensation and Benefits. Pursuant to the Merger Agreement, Clark has
agreed that, during the period commencing at the Effective Time and ending on
the second anniversary thereof, the employees of the Company and its
subsidiaries will continue to be provided with employee benefit plans (other
than stock option, employee stock ownership or other plans involving the
potential issuance of securities of the Company or of Clark) which in the
aggregate are substantially comparable to those currently provided by the
Company and its subsidiaries to such employees. Clark will honor employee (or
former employee) benefit obligations and contractual rights existing as of the
Effective Time and all employment, incentive and deferred compensation or
severance agreements, plans or policies adopted by the Board of Directors of the
Company (or any committee thereof) prior to the date of the Merger Agreement in
accordance with their terms other than stock option, employee stock ownership or
other plans involving the potential issuance of securities of the Company or of
Clark.
Options. Pursuant to the Merger Agreement, Clark and, prior to the
Effective Time, the Board of Directors of the Company (or, if appropriate, any
committee thereof) will adopt appropriate resolutions and take all other actions
necessary to provide for the cancellation, effective at the Effective Time of
all the outstanding stock options to purchase Common Stock (the "Options")
heretofore granted under any stock option plan of the Company (the "Stock
Plans"). Immediately prior to the Effective Time, (i) each Option, whether or
not then vested or exercisable, shall no longer be exercisable for the purchase
of shares of Common Stock but shall entitle each holder thereof, in cancellation
and settlement therefor, to payments in cash (subject to any applicable
withholding taxes, the "Cash Payment"), at the Effective Time, or as soon as
practicable thereafter, subject to certain considerations, equal to the product
of (x) the total number of shares of Common Stock subject to such Option,
whether or not then vested or exercisable, and (y) the excess of the Offer Price
over the exercise price per share of Common Stock subject to such Option, each
such Cash Payment to be paid to each holder of an outstanding Option at the
Effective Time and (ii) each share of Common Stock previously issued in the form
of grants of restricted stock or grants of contingent shares shall fully vest in
accordance with their respective terms. Any then outstanding stock appreciation
rights or limited stock appreciation rights shall be cancelled as of immediately
prior to the Effective Time without any payment therefor. As provided herein,
the Stock Plans and any other plan, program or arrangement providing for the
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issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary shall terminate as of the Effective Time. The Company
will take all steps to ensure that neither the Company nor any of its
subsidiaries is or will be bound by any Options, other options, warrants, rights
or agreements which would entitle any Person, other than Clark or its
affiliates, to own any capital stock of the Company or any of its subsidiaries
or to receive any payment in respect thereof. The Company will use its best
efforts to obtain all necessary consents to ensure that after the Effective
Time, the only rights of the holders of Options to purchase shares of Common
Stock in respect of such Options will be to receive the Cash Payment in
cancellation and settlement thereof.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Clark and the Purchaser with
respect to, among other things, its organization, capitalization, financial
statements, public filings, labor relations, conduct of business, employee
benefit plans, insurance, compliance with laws, litigation, tax matters,
property, consent and approvals, opinions of financial advisors, undisclosed
liabilities and the absence of certain changes with respect to the Company since
September 25, 1994.
Confidentiality. The Merger Agreement provides that the information
obtained by Clark and the Purchaser pursuant to the Merger Agreement will be
subject to the Confidentiality Agreement, dated January 23, 1995, between the
Company and Clark pursuant to which Clark has agreed, among other things, to
keep confidential certain non-public confidential or proprietary information of
the Company furnished to Clark by or on behalf of the Company.
Conditions of the Offer. Notwithstanding any other provisions of the Offer,
and in addition to (and not in limitation of) the Purchaser's rights to extend
and amend the Offer at any time in its sole discretion (subject to the
provisions of the Merger Agreement), the Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate the Offer as to any Shares not then
paid for, if (i) any applicable waiting period under the HSR Act (as defined
herein) has not expired or terminated, (ii) the Minimum Condition has not been
satisfied or (iii) at any time on or after February 3, 1995 and before the time
of payment for any such Shares, any of the following events shall occur or shall
be determined by the Purchaser to have occurred:
(a) (x) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency (i)
challenging or seeking to, or which could reasonably be expected to make
illegal, impede, delay or otherwise directly or indirectly restrain,
prohibit or make materially more costly the Offer or the Merger or seeking
to obtain material damages, (ii) seeking to prohibit or materially limit
the ownership or operation by Clark or the Purchaser of all or any material
portion of the business or assets of the Company or any of its subsidiaries
taken as a whole or to compel Clark or the Purchaser to dispose of or hold
separately all or any material portion of the business or assets of Clark
or the Purchaser or the Company or any of its subsidiaries taken as a
whole, or seeking to impose any material limitation on the ability of Clark
or the Purchaser to conduct its business or own such assets, (iii) seeking
to impose material limitations on the ability of Clark or the Purchaser
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by the
Purchaser or Clark on all matters properly presented to the Company's
stockholders, (iv) seeking to require divestiture by Clark or the Purchaser
of any Shares, or (v) otherwise materially adversely affecting the
Condition (as defined in the Merger Agreement) of the Company and its
subsidiaries taken as a whole; or (y) any court shall have entered an order
which is in effect and which (i) makes illegal, impedes, delays or
otherwise directly or indirectly restrains, prohibits or makes materially
more costly the Offer or the Merger, (ii) prohibits or materially limits
the ownership or operation by Clark or the Purchaser of all or any material
portion of the business or assets of the Company or any of its subsidiaries
taken as a whole or compels Clark or the Purchaser to dispose of or hold
separately all or any material portion of the business or assets of Clark
or the Purchaser or the Company or any of its subsidiaries taken as a
whole, or imposes any material limitation on the ability of
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Clark or the Purchaser to conduct its business or own such assets, (iii)
imposes material limitations on the ability of Clark or the Purchaser
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by the
Purchaser or Clark on all matters properly presented to the Company's
stockholders, (iv) requires divestiture by Clark or the Purchaser of any
Shares, or (v) otherwise materially adversely affects the Condition of the
Company and its subsidiaries taken as a whole; provided, however, that in
the case of a preliminary injunction to the effect described in this
subparagraph (y), the provisions of this subparagraph (y) shall not be
deemed to have been triggered until the earlier of (X) the date on which
such injunction becomes final or (Y) the Company ceases its efforts to have
such preliminary injunction dissolved;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended, issued or deemed applicable to (i) Clark,
the Purchaser, the Company or any subsidiary of the Company or (ii) the
Offer or the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, other than the routine application of the waiting period
provisions of the HSR Act to the Offer or to the Merger, which could
reasonably be expected to directly or indirectly, result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) (x)
above;
(c) any change shall have occurred or been threatened (or any
condition, event or development shall have occurred or been threatened
involving a prospective change), that is reasonably likely to have a
material adverse effect on the business, properties, assets, liabilities,
operations, results of operations, conditions (financial or otherwise) or
prospects of the Company and its subsidiaries;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) any decline in either the
Dow Jones Industrial Average or the Standard & Poor's Index of 400
Industrial Companies or in the New York Stock Exchange Composite Index in
excess of 20% measured from the close of business on the trading day next
preceding the date of the Merger Agreement, (iii) any material change in
United States or any other currency exchange rates or a suspension of, or
limitation on, the markets therefor, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or (v) a commencement or escalation of a war or armed hostilities or
other national or international calamity directly or indirectly involving
the United States;
(e) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Clark or the Purchaser with or from any governmental or regulatory
entity in connection with the execution, delivery and performance of the
Merger Agreement, the Offer and the consummation of the transactions
contemplated by the Merger Agreement shall not have been made or obtained
and such failure could reasonably be expected to have a material adverse
effect on the Condition of the Company and any of its subsidiaries, taken
as a whole or could be reasonably likely to prevent or materially delay
consummation of the transactions contemplated by the Merger Agreement;
(f) any representation or warranty made by the Company in the Merger
Agreement shall be untrue or incorrect in any material respect;
(g) there shall have been a breach by the Company of any of its
covenants or agreements in any material respect contained in the Merger
Agreement;
(h) the Company's Board of Directors shall have withdrawn, modified or
amended in any respect adverse to Clark or the Purchaser its recommendation
of the Offer or the Merger, or shall have resolved to do so; or
(i) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of the Purchaser, in any such case and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
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The foregoing conditions are for the sole benefit of the Purchaser and may
be waived by the Purchaser, in whole or in part at any time and from time to
time in its sole discretion; provided, however, that without the consent of the
Company, the Purchaser may not waive the Minimum Condition. The failure by the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligation of each party to effect the Merger is subject to the satisfaction, at
or prior to the Effective Time, of the following conditions: (i) to the extent
required by applicable law, the Merger Agreement and the Merger shall have been
approved and adopted by holders of a majority of the Shares in accordance with
applicable law (if required by applicable law) and the Company's Restated
Certificate of Incorporation and By-Laws; (ii) any waiting period (and any
extension thereof) under the HSR Act applicable to the Merger shall have expired
or been terminated; (iii) no preliminary or permanent injunction or other order
shall have been issued by any court or by any governmental or regulatory agency,
body or authority which prohibits the consummation of the Offer or the Merger
and the transactions contemplated by the Merger Agreement and which is in effect
at the Effective Time, provided, however, that, in the case of a decree,
injunction or other order, each of the parties shall have used reasonable
efforts to prevent the entry of any such decree, injunction or other order and
to appeal as promptly as possible any decree, injunction or other order that may
be entered; (iv) no statute, rule, regulation, executive order, decree or order
of any kind shall have been enacted, entered, promulgated or enforced by any
court or governmental authority which prohibits the consummation of the Offer or
the Merger or has the effect of making the purchase of the Shares illegal; and
(v) the Purchaser shall have accepted for payment and paid for the Shares
tendered pursuant to the Offer. The obligations of Clark and the Purchaser to
effect the Merger are subject to the satisfaction or waiver of the condition
that the Company shall have terminated the Company's Employee Stock Ownership
Plan. The obligation of the Company to effect the Merger is subject to the
satisfaction or waiver of the condition that each of Clark and the Purchaser
shall have performed in all material respects all obligations and agreements and
complied in all material respects with all covenants and conditions required to
be performed or complied with by them in connection with the appointment or
election of the Purchaser's designees to the Company's Board of Directors upon
the acceptance for payment and request by the Purchaser for more than 50% of the
outstanding Shares.
Termination; Fees. The Merger Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company, (a) by mutual consent of the Company, on the one hand, and of Clark
and the Purchaser, on the other hand; (b) by either Clark, on the one hand, or
the Company, on the other hand, if any governmental or regulatory agency shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for payment of,
or payment for, Shares pursuant to the Offer or the Merger and such order,
decree or ruling or other action shall have become final and nonappealable; (c)
by Clark, on the one hand, or the Company, on the other hand, if the Effective
Time shall not have occurred within eight months after commencement of the Offer
unless the Effective Time shall not have occurred because of a material breach
of any representation, warranty, obligation, covenant, agreement or condition
set forth in the Merger Agreement on the part of the party seeking to terminate
the Merger Agreement; (d) by Clark, on the one hand, or the Company, on the
other hand, if the Offer is terminated or expires in accordance with its terms
without the Purchaser having purchased any Shares thereunder due to a failure to
satisfy any of the conditions to the Offer, unless such termination or
expiration has been caused by or results from the failure of the party seeking
to terminate the Merger Agreement to perform in any material respect any of its
respective covenants or agreements contained in the Merger Agreement; (e) by
either Clark, on the one hand, or the Company, on the other hand, if the Board
of Directors of the Company, in its good faith reasonable judgment, based upon
the advice of its financial and legal advisors, determines that an Acquisition
Proposal made by a third party is more favorable to the Company and its
stockholders than the Offer and the Board of Directors believes (and has been
advised by counsel) that a failure to terminate the Merger Agreement and enter
into an agreement to effect such other proposal would constitute a breach of its
fiduciary duties; provided, however, the Company may not terminate the Merger
Agreement for such reason unless the Company has notified Clark and the
Purchaser in writing promptly after receipt thereof, of the receipt of any such
Acquisition Proposal and following such notification the Company has fully
cooperated with Clark, including, without limitation, informing Clark of the
terms and
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conditions of such Acquisition Proposal (and any modification thereto), and the
identity of the party making such Acquisition Proposal, with the intent of
enabling the parties to the Merger Agreement to agree to a modification of the
terms and conditions of the Merger Agreement so that the Offer and the Merger
may be effected and prior to such termination Clark has received the amount of
$7,250,000 by wire transfer in same day funds; and (f) prior to the consummation
of the Offer, by the Company, if (i) any of the representations and warranties
of Clark or the Purchaser contained in the Merger Agreement were untrue or
incorrect in any material respect when made or have since become, and at the
time of termination remain, incorrect in any material respect, or (ii) Clark or
the Purchaser shall have breached or failed to comply in any material respect
with any of their respective obligations under the Merger Agreement, including,
without limitation, their obligation to commence the Offer within the time
period required by the Merger Agreement.
If the Merger Agreement is terminated by Clark (i) as a result of a
material breach of a covenant by the Company, (ii) because the Board of
Directors of the Company shall have withdrawn, modified or amended in any
respect adverse to Clark its recommendation that the Company's stockholders
accept the Offer or (iii) because the Company shall have determined to enter
into an agreement with another party providing for a merger or other business
combination with such other party or for such other party's acquisition of a
material amount of the Company's capital stock or assets, then the Company will
be obligated to pay to Clark, in same day funds, $7,250,000.
STOCK TENDER AGREEMENT
Immediately after the execution of the Merger Agreement, the Purchaser and
KIA III -- Club Car, L.P., Kelso Equity Partners II, L.P. and certain other
stockholders of the Company (the "Stock Tender Parties") entered into the Stock
Tender Agreement (the "Stock Tender Agreement"). Pursuant to such Agreement, so
long as the Board of Directors of the Company has not withdrawn its
recommendation of the Offer in accordance with the Merger Agreement, the Stock
Tender Parties will validly tender (and not thereafter withdraw) the Shares
owned by them pursuant to and in accordance with the terms of the Offer. As of
February 6, 1995, the Stock Tender Parties owned a total of 2,916,329 Shares,
representing 28.6% of the outstanding Shares on a fully diluted basis.
In connection with the Stock Tender Agreement, the Stock Tender Parties
have made certain customary representations, warranties and covenants, including
with respect to (i) ownership of the Shares, (ii) the Stock Tender Parties'
authority to enter into and perform their obligations under the Stock Tender
Agreement, (iii) the ability of the Stock Tender Parties to enter into the Stock
Tender Agreement without violating other agreements to which they are party,
(iv) the absence of liens and encumbrances on and in respect of the Stock Tender
Parties' Shares and (v) restrictions on the transfer of the Stock Tender
Parties' Shares.
RIGHTS AGREEMENT.
As provided in the Merger Agreement, the Company has amended the Rights
Agreement (the "Rights Amendment") to provide that neither the (i) execution,
delivery and performance of the Merger Agreement and the Stock Tender Agreement,
(ii) commencement of the Offer nor (iii) acceptance of and payment for Shares by
Clark or the Purchaser or any of its subsidiaries in accordance with the terms
of the Merger Agreement shall (A) trigger the exercisability of the Rights (as
defined in the Rights Agreement), (B) cause the separation of the Rights from
the certificates representing Shares to which they are attached, (C) cause the
occurrence of a Distribution Date (as defined in the Rights Agreement) or a
Shares Acquisition Date (as defined in the Rights Agreement) or (D) cause Clark,
Purchaser or any of Clark's subsidiaries or affiliates to be deemed an Acquiring
Person (as defined in the Rights Agreement).
Copies of the Merger Agreement between Clark and the Company, the Stock
Tender Agreement and the Rights Amendment are filed herewith as exhibits (c),
(d) and (e), respectively, and are incorporated herein by reference, and the
foregoing summary is qualified in its entirety by reference thereto.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors.
The Company's Board of Directors has determined unanimously that the Offer
and the Merger are fair to and in the best interests of the stockholders of the
Company and recommends that all stockholders of the Company accept the Offer and
tender all of their Shares pursuant to the Offer. This recommendation is based
in part upon an opinion received from Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") that the $25.00 per Share cash consideration to be received
by the Company's stockholders pursuant to the Offer and the Merger is fair to
the stockholders from a financial point of view. THE FULL TEXT OF THE FAIRNESS
OPINION RECEIVED BY THE COMPANY FROM DLJ, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS OF THE REVIEW UNDERTAKEN BY DLJ, IS FILED
HEREWITH AS EXHIBIT (F) AND ATTACHED HERETO AS SCHEDULE II. STOCKHOLDERS ARE
URGED TO READ SUCH OPINION IN ITS ENTIRETY.
As set forth in the Purchaser's Offer to Purchase, the Purchaser will
purchase Shares tendered prior to the close of the Offer if the Minimum
Condition shall have been satisfied by that time and if all other conditions to
the Offer have been satisfied (or waived). Stockholders considering not
tendering their Shares in order to wait for the Merger should note that the
Purchaser is not obligated to purchase any Shares, and can terminate the Offer
and the Merger Agreement and not proceed with the Merger, if the Minimum
Condition is not satisfied or any of the other conditions to the Offer are not
satisfied. Under Delaware Law, the approval of the Board and the affirmative
vote of the holders of a majority of the issued and outstanding Shares are
required to approve and adopt the Merger. Accordingly, if the Minimum Condition
is satisfied, the Purchaser will have sufficient voting power to cause the
approval and adoption of the Merger Agreement and the transactions contemplated
thereby without the affirmative vote of any other stockholder.
The Offer is scheduled to expire at 12:00 Midnight, New York City time, on
March 8, 1995, unless the Purchaser, with the consent of the Company under
certain circumstances, elects to extend the period of time for which the Offer
is open. A copy of the press release issued jointly by Clark and the Company
announcing the Merger and the Offer is filed as exhibit (g) to this Schedule
14D-9 and is incorporated herein by reference in its entirety.
(b) Background of the Offer, Reasons for the Recommendation.
In reaching its conclusions described in paragraph (a) above, the Board of
Directors of the Company considered a number of factors, including, without
limitation, the following: (i) the opinion of DLJ that as of the date of its
opinion the $25.00 per Share in cash to be received by the holders of the Shares
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view; (ii) the unanimous determination of the Special Committee of the
Board that the Offer and the Merger are fair to and in the best interests of the
stockholders of the Company and the recommendation of the Special Committee (as
defined herein) that the Board approve the Offer and the Merger; (iii)
information with respect to the financial condition, results of operations and
business of the Company, on both a historical and a prospective basis, and
current industry, economic and market conditions; (iv) the historical market
prices and recent trading patterns of the Shares and the market prices and
financial data relating to other companies engaged in similar businesses; (v)
the prices paid in other recent comparable acquisition transactions; (vi) the
potential impact that the Merger will have on the Company's employees, suppliers
and customers; and (vii) the terms and conditions of the Offer and the Merger,
including, without limitation, the fact that, to the extent required by the
fiduciary obligations of the Board of Directors of the Company to the
stockholders under Delaware Law, the Company may terminate the Merger Agreement
in order to approve a tender offer or exchange offer for the Shares by a third
party on terms more favorable to the Company's stockholders than the Offer and
the Merger taken together upon the payment of a $7,250,000 termination fee.
BACKGROUND
In late August, 1994, CS First Boston Corporation ("CS First Boston")
contacted the Company's principal stockholder to discuss Clark's interest in
acquiring the outstanding common stock of the Company. On September 30, CS First
Boston and Clark met with a representative of the Company's principal
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stockholder, who is also a director of the Company, to discuss Clark's interest
in acquiring the Company. The stockholder representative indicated that, at that
point in time, the principal stockholder was not likely to support a sale of the
Company.
During the next two months a limited number of telephone conversations took
place among Clark, certain non-management directors of the Company and CS First
Boston concerning a possible acquisition and possible price ranges for such an
acquisition. At a regularly scheduled meeting of the Board of Directors of the
Company on December 6, 1994, the Board of Directors authorized a meeting between
members of the Board and Clark. On December 21, 1994 that meeting was held
between two management directors and one non-management director of the Company
and representatives of Clark to discuss further aspects of Clark's interest.
Pricing was not discussed at this meeting.
During the first week of January, two non-management directors of the
Company contacted CS First Boston and indicated the price at which they would
support an acquisition of the Company. After consultation with Clark, CS First
Boston contacted the two non-management directors and indicated a price at which
Clark would be willing to acquire the Company, which price was lower than the
price previously communicated to CS First Boston by the two directors. Following
CS First Boston's communication to the two directors, Clark and a representative
of the principal stockholder, who is also a director of the Company, had several
conversations regarding the price at which Clark would be interested in
acquiring the Company. On January 10, 1995 the Board of Directors of the Company
authorized the formation of a special committee (the "Special Committee")
composed of the members of the Board of Directors other than management and
authorized the retention by the Special Committee of legal and financial
advisors. The Special Committee authorized two of its members to contact Clark.
On January 11, 1995, such members of the Special Committee contacted Clark and
requested that Clark provide the Special Committee with a written proposal to
effect the acquisition of the Company.
On January 13, 1995, Clark delivered a letter to the Company expressing
Clark's interest in purchasing all of the outstanding shares of the Company
(including Shares subject to options) at a purchase price of $25 in cash per
Share. Clark's letter stated that Clark would require break-up fee and expense
reimbursement provisions as well as customary agreements from the Company's
principal stockholder and officers and directors with respect to the sale to
Clark of all Shares owned by such persons. Clark also conditioned its interest
in pursuing the transaction upon the Company keeping the letter of interest
confidential. Clark requested a response from the Company by January 18, 1995.
On January 18, 1995, two members of the Special Committee contacted Clark and
indicated that the Special Committee would be willing to commence negotiations
with respect to Clark's acquisition of the Company. On January 20, Clark
delivered to the Special Committee a proposed form of Merger Agreement and on
January 23, Clark and the Company entered into a confidentiality agreement.
On January 23, the Company began to supply non-public due diligence
materials to Clark and its representatives. From January 23 to February 2, Clark
and its advisors conducted legal and business due diligence and representatives
of Clark and the Company negotiated the terms of a merger agreement. On January
24, at the request of the Special Committee, Clark forwarded to the Special
Committee a proposed form of stock option agreement which Clark would require
from the Company's principal stockholders and officers and directors. On January
26, the Special Committee informed Clark that it would not approve a transaction
in which such agreements formed a part. Clark indicated that it would be willing
to consider alternative arrangements with respect to the Shares owned by the
Company's principal stockholders and officers and directors which would be
acceptable to the Special Committee. On February 1, Clark provided to the
Special Committee a proposed form of stock tender agreement.
On February 1, 1995, the Board of Directors of the Company, at its
regularly scheduled meeting, reviewed the state of negotiations with Clark. The
Company's financial advisor presented the Board of Directors with its
preliminary financial analysis of the fairness of the proposed consideration to
be offered to the stockholders in the transaction from a financial point of
view. The Special Committee also met with the Company's financial advisor during
an adjournment of the Board of Directors meeting to discuss further the
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status of negotiations. Based upon such information, the Board of Directors
authorized the Company and its financial advisors to continue and seek to
conclude the negotiation of definitive agreements promptly.
On February 2, 1995, the Special Committee met to consider the terms of the
final draft of the Merger Agreement and to hear the Company's financial
advisor's oral report of its fairness opinion. Based upon such reports, the
Special Committee unanimously voted to recommend the Merger and the Offer to the
Board of Directors.
Immediately following such meeting, the Board of Directors met by telephone
with representatives of the Company's financial advisor present at which time
the Company's financial advisor reiterated its oral fairness opinion. Following
such report, the Board of Directors unanimously approved the Merger and the
Offer, subject to receipt of the Company's financial advisor's executed fairness
opinion, the Board of Directors of the Company also approved Clark and the
Purchaser negotiating the definitive terms of the Stock Tender Agreement with
the Stock Tender Parties and entering into the Stock Tender Agreement with such
persons.
On February 3, 1995, the Company's financial advisor delivered its written
fairness opinion, Clark, the Purchaser and the Company executed the Merger
Agreement and Clark, the Purchaser and the Stock Tender Parties executed the
Stock Tender Agreement. Thereafter, Clark and the Company jointly announced the
transaction.
The Company's principal stockholder and members of management have
periodically been contacted by investment banking firms inquiring whether the
Company or its principal stockholder would consider a transaction that would
result in a sale of the Company. In each instance the inquiring firm did not
disclose its client, did not make a specific proposal and merely asked whether
the Company and its principal stockholder would be interested in meeting to
discuss possible proposals. In each instance, the inquiring firm was told that
the Company was not for sale and that the principal stockholder would only
consider a transaction if the offered price per Share was at a substantial
premium to the trading price of the Shares. In January and February of 1995, two
of such investment banking firms disclosed for whom they were working, but in no
instance has management of the Company or its principal stockholder received any
further indication that a definitive proposal would be forthcoming.
OPINION OF FINANCIAL ADVISOR
As described above under "Background of the Offer; Reasons for the
Recommendation," at the meeting of the Board of Directors held on February 2,
1995, DLJ delivered its oral opinion (subsequently confirmed in writing) to the
Board and the Special Committee to the effect that, based upon the assumptions
made, matters considered and limits of the review undertaken, as set forth in
such opinion, the consideration to be received by the holders of the Shares of
the Company in the Offer and the Merger is fair to such holders from a financial
point of view.
The full text of DLJ's written opinion, dated February 2, 1995, is attached
hereto as Schedule II to this Schedule 14D-9. STOCKHOLDERS ARE URGED TO READ THE
OPINION IN ITS ENTIRETY FOR THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS
OF THE REVIEW UNDERTAKEN BY DLJ. The opinion of DLJ is directed only to the
fairness from a financial point of view of the consideration to be received by
the holders of the Shares of the Company and does not constitute a
recommendation to any stockholder of the Company as to whether such stockholder
should tender Shares in the Offer or how such stockholder should vote on the
Merger. The summary of the opinion of DLJ set forth in this Schedule 14D-9 is
qualified in its entirety by reference to the full text of such opinion.
In arriving at its opinion, DLJ reviewed the Merger Agreement. DLJ also
reviewed financial and other information that was publicly available or
furnished to DLJ by the Company, including information provided during
discussions with the Company's management. Included in the information provided
during discussions with management were certain financial projections for the
Company for the period beginning October 2, 1994 and ending September 30, 1999
prepared by the management of the Company. In addition, DLJ compared certain
financial and securities data of the Company with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the Shares, reviewed prices and premiums paid in other
business combinations and conducted such other financial studies, analyses and
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investigations DLJ deemed appropriate for purposes of its opinion. DLJ was not
requested to, nor did DLJ, solicit the interest of any other party in acquiring
the Company.
In arriving at its opinion, DLJ relied upon and assumed without independent
verification the accuracy, completeness and fairness of all of the financial and
other information that was available from public sources, that was provided DLJ
by the Company or its representatives, or that was otherwise reviewed by DLJ.
With respect to the financial projections supplied to DLJ by the Company, DLJ
assumed that they have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of the Company as
to the future operating and financial performance of the Company. DLJ has not
assumed any responsibility for making an independent evaluation of the Company's
assets or liabilities or for making any independent verification of any of the
information reviewed by DLJ. DLJ has relied as to all legal matters on advice of
counsel to the Company.
DLJ's opinion is necessarily based on economic, market, financial and other
conditions as they existed on, and on the information made available to DLJ as
of, the date of DLJ's opinion. It should be understood that, although subsequent
developments may affect DLJ's opinion, DLJ has no obligation to update, revise
or reaffirm its opinion.
DLJ, as part of its investment banking services, is regularly engaged in
the valuation of businesses and securities in connection with mergers,
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. DLJ has performed investment banking and other services for the
Company in the past and has been compensated for such services. In October 1993,
DLJ co-managed the initial public offering of 4,125,000 shares of the Common
Stock. In the ordinary course of its business, DLJ may actively trade the equity
securities of the Company for DLJ's own account or for the account of customers
and, accordingly, may at any time hold a long or short position in such
securities. See Item 5 for a description of DLJ's engagement as the Company's
financial advisor in connection with the Offer and Merger.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
DLJ is acting as the Company's financial advisor in connection with the
Offer and the Merger. Pursuant to its agreement with the Company, DLJ is
entitled to a transaction fee of $1,000,000 (less amounts previously paid by the
Company in connection with the Company's retention of DLJ, including $400,000
which became payable at the time the opinion of DLJ referred to in Item 4 was
delivered), which shall become payable in cash upon the earlier of (i)
acquisition by the Purchaser of at least 50.1% of the Shares on a fully diluted
basis, (ii) the Merger, or (iii) the consummation of another sale, merger,
consolidation or other business combination of the Company with Clark. In
addition, whether or not the Offer or the Merger is completed, the Company has
agreed to reimburse DLJ periodically for its reasonable out-of-pocket expenses,
including the fees and disbursements of its counsel, and to indemnify DLJ
against certain expenses and liabilities incurred in connection with its
engagement, including liabilities under Federal securities laws.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or agreed to compensate any person to make
solicitations or recommendations to shareholders of the Company concerning the
Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, during the past sixty days
no transaction in the Shares has been effected by the Company or any
subsidiary or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company except that (i)
A. Montague Miller made a bona fide gift of 500 Shares on December 28,
1994, (ii) T. Mark McClure made a bona fide gift of 5,685 Shares on
December 26, 1994, and (iii) Thomas R. Wall, IV made a bona fide gift of 50
Shares on January 19, 1995.
(b) To the best knowledge of the Company, all of its executive
officers, directors, affiliates and subsidiaries currently intend to tender
pursuant to the Offer all Shares held of record or beneficially
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owned by them (other than Shares issuable upon exercise of Options and
Shares, if any, which if tendered could cause such persons to incur
liability under the provisions of Section 16(b) of the Exchange Act).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as described in Item 3, no negotiation is being undertaken
or is under way by the Company in response to the Offer which relates to or
would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company,
(ii) a purchase, sale or transfer of a material amount of assets by the
Company or any subsidiary of the Company, (iii) a tender offer for or other
acquisition of securities by or of the Company or (iv) any material change
in the present capitalization or dividend policy of the Company.
(b) Except as described under Items 3 and 4, 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 TO BE FURNISHED.
(a) Section 203.
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of Delaware Law. Section 203 would prevent an "Interested Stockholder"
(generally defined as a person beneficially owning 15% or more of a
corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) 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 for purposes of determining the number of
shares of outstanding stock held by directors who are also officers and by
employee stock ownership plans that do not allow plan participants to determine
confidentially whether to tender shares), 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 shareholders by the affirmative vote of the holders of at least
66 2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder. In accordance with the provisions of the Company's
Restated Certificate of Incorporation and Section 203, the Board of Directors of
the Company has approved the Merger Agreement, the Stock Tender Agreement, the
Purchaser's entering into the Stock Tender Agreement and the Purchaser's
acquisition of Shares pursuant to the Offer and the Merger and the transactions
contemplated thereby and, therefore, the restrictions of Section 203 are
inapplicable to the Offer, the Merger and the related transactions.
(b) Antitrust.
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 United States Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares by the Purchaser pursuant to the Offer is
subject to such requirements.
Pursuant to the requirements of the HSR Act, Clark and the Company intend
to file the required Notification and Report Forms (the "Forms") with the
Antitrust Division and the FTC as soon as practicable (and the Merger Agreement
requires that such filing be made within five business days of the date of the
Merger Agreement). The statutory waiting period applicable to the purchase of
Shares pursuant to the Offer is scheduled to expire at 11:59 P.M., New York City
time, on the fifteenth day after the Purchaser has filed its Form, unless early
termination of the waiting period is granted or Clark and the Company receive a
request for
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additional information of documentary material prior thereto. Pursuant to HSR
Act, Clark has requested early termination of the applicable waiting period.
However, prior to such date, the Antitrust Division or the FTC may extend the
waiting period by requesting additional information or documentary material
relevant to the acquisition. If such a request is made, the waiting period will
be extended until 11:59 P.M., New York City time, on the tenth day after
substantial compliance by the Purchaser with such request. Thereafter, such
waiting periods can be extended only by court order. There can be no assurance
that the waiting period will be terminated early.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could,
notwithstanding termination of the waiting period, take such action under the
antitrust laws 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 the Purchaser or the Company. Private parties may also bring legal
actions under the antitrust laws. 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.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
(a) The Company's Proxy Statement dated December 16, 1994
(b) Form of Indemnification Agreement
(c) Agreement and Plan of Merger dated as of February 3, 1995
(d) Stock Tender Agreement dated as of February 3, 1995
(e) Amendment to Rights Agreement dated as of February 3, 1995
(f) Opinion of Donaldson, Lufkin & Jenrette Securities Corporation
dated February 2, 1995*
(g) Press Release dated February 3, 1995, with respect to Merger
Agreement
(h) Letter dated February 8, 1995 from the Company's Chairman and
Chief Executive Officer to the Company's stockholders*
- ---------------
* Included in copies mailed to stockholders.
15
<PAGE> 17
SIGNATURE
After reasonable 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.
CLUB CAR, INC.
By: /s/ GEORGE H. INMAN
----------------------------------
Name: George H. Inman
Title: Chairman and Chief
Executive Officer
Date: February 8, 1995
16
<PAGE> 18
SCHEDULE I
CLUB CAR, INC.
4152 WASHINGTON ROAD
MARTINEZ, GEORGIA 30907
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about February 8, 1995 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") to holders of the common stock, par value $.01 per share
("Common Stock"), of Club Car, Inc. (the "Company"). Capitalized terms used and
not otherwise defined herein shall have the meaning set forth in the Schedule
14D-9. You are receiving this Information Statement in connection with the
possible election of persons designated by Clark Equipment Company ("Clark") to
a majority of the seats on the Board of Directors of the Company.
Pursuant to the Agreement and Plan of Merger, dated as of February 3, 1995,
among the Company, Clark and Clark Acquisition Sub, Inc. (the "Purchaser") (the
"Merger Agreement"), on February 8, 1995, the Purchaser commenced the Offer. The
Offer is scheduled to expire at 12:00 midnight (New York time) on March 8, 1995,
unless extended.
The information contained in this Information Statement (including
information incorporated by reference) concerning Clark and the Purchaser and
the Clark Designees (as defined below) has been furnished to the Company by
Clark and the Purchaser and the Company assumes no responsibility for the
accuracy or completeness of such information.
GENERAL INFORMATION REGARDING THE COMPANY
GENERAL
The Common Stock is the only class of voting securities of the Company
outstanding. Each share of Common Stock has one vote. As of February 2, 1995,
there were 9,090,006 shares of Common Stock outstanding (exclusive of treasury
shares) and 1,100,050 shares of Common Stock reserved for issuance upon the
exercise of options outstanding. The Board of Directors of the Company currently
consists of six members and there are currently no vacancies on the Board of
Directors. The Board of Directors is divided into three classes and each
director serves a term of two years and until his successor is duly elected and
qualified or until his earlier death, resignation or removal.
CLARK DESIGNEES
The Merger Agreement provides that if requested by Clark, the Company will,
subject to compliance with applicable law and promptly following the purchase by
the Purchaser of more than 50% of the outstanding Shares (on a fully diluted
basis) pursuant to the Offer, take all actions necessary to cause persons
designated by Clark (the "Clark Designees") to become directors of the Company
so that the total number of such persons equals that number of directors,
rounded up to the next whole number, which represents the product of (x) the
total number of directors on the Company's Board of Directors multiplied by (y)
the percentage that the number of Shares so accepted for payment plus any Shares
beneficially owned by the Purchaser or Clark bears to the number of Shares
outstanding. In furtherance thereof, the Company will increase the size of the
Company's Board of Directors, or use its reasonable efforts to secure the
resignation of directors, or both, as is necessary to permit Purchaser's
designees to be elected to the Company's Board of Directors; provided, however,
that neither the Purchaser, Clark nor the Company shall take any action to
remove or replace any member of the Special Committee of the Company's Board of
Directors (the "Special Committee") after consummation of the Offer and prior to
the Effective Time. If at any time prior to the Effective Time there are less
than two members of the Special Committee, as constituted on February 3, 1995,
on the Company's Board of Directors, the Purchaser, Clark and the Company shall
use their reasonable efforts
<PAGE> 19
to ensure that two members (the "Continuing Directors") of the Company's Board
of Directors are either (a) members of the Special Committee (as constituted on
February 3, 1995) or (b) persons who are neither (i) officers or employees of
the Company nor (ii) associated or affiliated with, or designated by, Clark.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE
NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of February 2, 1995, by
each shareholder known by the Company to be the beneficial owner of more than 5%
of its outstanding Common Stock, by each director, by each of the Named
Executive Officers (as defined below) and by all directors and executive
officers as a group:
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME OF BENEFICIAL OWNER COMMON STOCK CLASS
------------------------ ------------ ----------
<S> <C> <C>
KIA III-Club Car, L.P.(a)................................. 1,909,341(b) 21.0
Kelso Equity Partners II, L.P.(a)......................... 1,909,341(b) 21.0
Kelso Partners III, L.P.(a)............................... 1,909,341(b) 21.0
Joseph S. Schuchert(a).................................... 1,909,341(c) 21.0
Frank T. Nickell(a)....................................... 1,961,341(c) 21.6
George E. Matelich(a)..................................... 1,929,341(c) 21.2
Thomas R. Wall, IV(a)..................................... 1,940,139(c) 21.3
George H. Inman(d)........................................ 418,816(e) 4.5
A. Montague Miller(d)..................................... 269,870(f) 2.9
Cary H. Rivers(d)......................................... 189,382(g) 2.1
Michael W. Harris(d)...................................... 188,365(h) 2.1
Henry T. Sanders(d)....................................... 179,035(i) 2.0
James C. Alban, Jr.(d).................................... 34,000 (j)
Wellford L. Sanders, Jr.(d)............................... 11,300(k) (j)
All directors and executive officers as a group (14
persons)................................................ 3,820,142 38.8(l)
</TABLE>
- ---------------
(a) The business address for such persons is c/o Kelso & Company, Inc., 350
Park Avenue, 21st Floor, New York, New York 10022.
(b) KIA III-Club Car, L.P. ("KIA III") and Kelso Equity Partners II, L.P. may
be deemed to share beneficial ownership of the shares owned of record by
each other by virtue of common ownership. Kelso Partners III, L.P. is the
general partner of KIA III, and may be deemed to share beneficial ownership
of the shares owned of record by KIA III and Kelso Equity Partners II, L.P.
by virtue of common ownership.
(c) Messrs. Nickell and Wall, directors of the Company, and Messrs. Schuchert
and Matelich may be deemed to share beneficial ownership of the 1,909,341
shares owned of record by KIA III and Kelso Equity Partners II, L.P. by
virtue of their status as general partners of Kelso Equity Partners II,
L.P. and of Kelso Partners III, L.P., the general partner of KIA III.
Messrs. Nickell, Wall, Schuchert and Matelich share investment and voting
power with respect to securities owned by KIA III and Kelso Equity Partners
II, L.P. Messrs. Schuchert, Nickell, Matelich and Wall disclaim beneficial
ownership of such securities.
(d) The business address for such person is c/o Club Car, Inc., 4152 Washington
Road, Martinez, Georgia 30907.
2
<PAGE> 20
(e) Includes 200,000 shares subject to stock options that became exercisable on
April 18, 1994 and 9,480 shares held by the Company's Employee Stock
Ownership Plan (the "ESOP"). Does not include an aggregate of 10,498 shares
owned beneficially by Mr. Inman's wife, as to which Mr. Inman disclaims
beneficial ownership.
(f) Includes 16,800 shares subject to stock options that became exercisable on
December 6, 1991, 7,919 shares subject to stock options that became
exercisable on January 12, 1992, 8,400 shares subject to stock options that
became exercisable on December 6, 1992, 3,960 shares subject to stock
options that became exercisable on January 12, 1993, 24,734 shares subject
to stock options that became exercisable on October 18, 1993, 20,000 shares
subject to stock options that became exercisable on April 18, 1994, 70,000
shares subject to stock options that became exercisable on February 2, 1995
and 3,857 shares held by the Company's ESOP. Does not include an aggregate
of 10,000 shares owned beneficially by Mr. Miller's wife, as to which Mr.
Miller disclaims beneficial ownership.
(g) Includes 16,800 shares subject to stock options that became exercisable on
December 6, 1991, 8,400 shares subject to stock options that became
exercisable on December 6, 1992, 16,800 shares subject to stock options
that became exercisable on October 18, 1993, 5,000 shares subject to stock
options that became exercisable on April 18, 1994, 25,000 shares subject to
stock options that became exercisable on February 2, 1995 and 4,897 shares
held by the Company's ESOP. Does not include an aggregate of 2,001 shares
owned beneficially by Mr. Rivers' wife or 2,000 shares owned by Mr. Rivers'
children, as to which Mr. Rivers disclaims beneficial ownership.
(h) Includes 16,800 shares subject to stock options that became exercisable on
December 6, 1991, 8,400 shares subject to stock options that became
exercisable on December 6, 1992, 16,800 shares subject to stock options
that became exercisable on October 18, 1993, 5,000 shares subject to stock
options that became exercisable on April 18, 1994, 25,000 shares subject to
stock options that became exercisable on February 2, 1995 and 4,879 shares
held by the Company's ESOP.
(i) Includes 11,200 shares subject to stock options that became exercisable on
December 6, 1991, 5,600 shares subject to stock options that became
exercisable on December 6, 1992, 11,200 shares subject to stock options
that became exercisable on October 18, 1993, 5,000 shares subject to stock
options that became exercisable on April 18, 1994, 25,000 shares subject to
stock options that became exercisable on February 2, 1995 and 4,549 shares
held by the Company's ESOP.
(j) Less than 1%.
(k) Does not include an aggregate of 300 shares owned by Mr. Sanders' wife, as
to which Mr. Sanders disclaims beneficial ownership.
(l) Includes shares held by KIA III and Kelso Equity Partners II, L.P. that
may be deemed to be beneficially owned by Messrs. Nickell and Wall as
described in note (c) above. Includes 72,800 shares subject to stock
options that became exercisable on December 6, 1991, 7,919 shares subject
to stock options that became exercisable on January 12, 1992, 36,400 shares
subject to stock options that became exercisable on December 6, 1992, 3,960
shares subjective to stock options that became exercisable on January 12,
1993, 11,200 shares subject to stock options that became exercisable on
February 1, 1993, 119,934 shares subjective to stock options that became
exercisable on October 18, 1993, 245,000 shares subject to stock options
that became exercisable on April 18, 1994, 3,334 shares subject to stock
options that become exercisable on February 1, 1995, 250,266 shares subject
to stock options that became exercisable on February 2, 1995 and 40,061
shares held by the Company's ESOP. Does not include shares as to which
officers and directors have disclaimed beneficial ownership.
On February 2, 1995 there were 531 shareholders of record of the Company's
Common Stock.
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of the Company is divided into three classes serving
staggered three-year terms. The terms of office of Frank T. Nickell and Thomas
R. Wall, IV expire at the 1996 Annual Meeting, the terms of office of George H.
Inman and A. Montague Miller expire at the 1997 Annual Meeting and the terms
3
<PAGE> 21
of office of James C. Alban, Jr. and Wellford L. Sanders, Jr. expire at the 1998
Annual Meeting. All the directors, except Mr. Miller who was elected in 1990,
have served as directors since 1988.
The directors and executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
George H. Inman.......... 62 Chairman and Chief Executive Officer
A. Montague Miller....... 55 President, Chief Operating Officer, Secretary and
Director
Charles A. Fain.......... 43 Vice President-Design Engineering
Michael W. Harris........ 40 Vice President-Sales
T. Mark McClure.......... 50 Vice President-International Sales
Cary H. Rivers........... 45 Vice President-Marketing and National Accounts
Henry T. Sanders......... 50 Vice President-Manufacturing
Carl A. Swanson.......... 53 Vice President
Charles E. Twilley....... 43 Vice President-Human Resources
Eric L. Tyra............. 45 Vice President-Finance, Treasurer and Chief Financial
Officer
James C. Alban, Jr....... 77 Director
Frank T. Nickell......... 47 Director
Wellford L. Sanders,
Jr..................... 49 Director
Thomas R. Wall, IV....... 36 Director
</TABLE>
George H. Inman has been Chairman of the Board and Chief Executive Officer
since 1979. Mr. Inman was President of the Company from 1979 to 1990. He was
employed from 1961 until 1978 by E-Z-Go, as Plant Superintendent, Plant Manager,
Vice President-Manufacturing and Vice President-Operations. Mr. Inman has been
involved in the golf car industry since 1961.
A. Montague Miller has been Chief Operating Officer since April 1991,
President since September 1990 and Secretary since 1986. Mr. Miller joined the
Company in 1990 as Senior Vice President-Administration. From 1971 to 1990 Mr.
Miller was a partner in the law firm of Dye, Miller, Tucker & Everitt and
provided legal services to the Company from 1978 to 1990.
Charles A. Fain has been Vice President-Design Engineering since 1992. Mr.
Fain joined the Company in 1990 as Director of Design Engineering. Prior to
joining the Company in 1990, he was employed from 1987 by Bunton Company as Vice
President-Engineering. Mr. Fain has been involved in the golf car industry since
1990.
Michael W. Harris has been Vice President-Sales since 1990. Mr. Harris
joined the Company in 1979 as Senior Accountant and was Controller from 1982 to
1988 before being promoted to Vice President-Controller in 1988. Mr. Harris has
been involved in the golf car industry since 1973.
T. Mark McClure has been Vice President-International Sales since August
1993 and was Vice President-Marketing and International Sales from 1988 to 1993.
Mr. McClure joined the Company in 1978 as a Regional Sales Manager in charge of
the Mid-West Region and also served as Director of National Account Sales before
assuming his present position. Mr. McClure has been involved in the golf car
industry since 1978.
Cary H. Rivers has been Vice President-Marketing and National Accounts
since October 1994. Mr. Rivers joined the Company in 1978 as a Sales
Representative in the Company's East Florida branch and also served as National
Sales Manager-Direct Sales. From 1989 to October 1994, Mr. Rivers served as Vice
President-Sales and Marketing. Mr. Rivers has been involved in the golf car
industry since 1978.
Henry T. Sanders has been Vice President-Manufacturing since 1988. Mr.
Sanders joined the Company in 1983 as Manager of Manufacturing Engineering. In
1987, Mr. Sanders was promoted to Manager of Manufacturing. Mr. Sanders has been
involved in the golf car industry since 1983.
Carl A. Swanson has been a Vice President since November 1993. Mr. Swanson
served as Senior Vice President-Operations from 1988 to 1993, as Vice
President-Operations from 1987 to 1988 and as Manager of
4
<PAGE> 22
Operations from 1978 to 1987. Prior to joining the Company in 1978, he was
employed from 1969 by E-Z-Go, as Manufacturing Engineering Manager. Mr. Swanson
has been involved in the golf car industry since 1969.
Charles E. Twilley has been Vice President-Human Resources since 1992. Mr.
Twilley joined the Company in 1990 as Director of Human Resources. Prior to
joining the Company in 1990, he was employed from 1980 by Kraft General Foods
Corporation where he last served as Division Manager of Human Resources. Mr.
Twilley has been involved in the golf car industry since 1990.
Eric L. Tyra has been Vice President-Finance and Chief Financial Officer
since February 1994 and Treasurer since October 1994. Prior to joining the
Company in 1994, he was employed from 1991 to 1993 by First Financial Management
Corp. as a Senior Vice President. From 1984 to 1991, Mr. Tyra was a partner in
the accounting firm of Deloitte & Touche. Mr. Tyra has been involved in the golf
car industry since 1994.
James C. Alban, Jr. has been President and Chief Executive Officer of The
Alban Co. since 1987. From 1938 to 1987, Mr. Alban was the President and Chief
Executive Officer of Alban Tractor Co., Inc. Mr. Alban is a founder and Director
of Palm Beach National Bank and Trust Co.
Frank T. Nickell has been President of Kelso & Companies, Inc. since 1989
and prior thereto General Partner of Kelso & Company, L.P. ("Kelso") since 1984.
Prior to 1984, Kelso was a corporation and Mr. Nickell held the position of Vice
President. Mr. Nickell is also a director of American Standard Inc., The Bear
Stearns Companies Inc., CCA Holdings Corp., Earle M. Jorgensen Company, Harris
Specialty Chemicals, Inc., King Broadcasting Company and Tyler Refrigeration
Corporation.
Wellford L. Sanders, Jr. has been a partner of the law firm of McGuire,
Woods, Battle & Boothe since 1986. Mr. Sanders is also a director of Catherines
Stores Corporation, General Medical Corporation and Peebles Inc.
Thomas R. Wall, IV has been a Managing Director of Kelso since 1990 and
prior thereto General Partner of Kelso since 1989. From 1986 to 1989, Mr. Wall
was a Vice President of Kelso. Mr. Wall is also a director of CCA Holdings
Corp., Ellis Communications, Inc., General Medical Corporation, King
Broadcasting Company, Mitchell Supreme Fuel Company, Mosler Inc., Transdigm Inc.
and Tyler Refrigeration Corporation.
In November 1994, Mr. Inman announced his intention to name Mr. Miller as
the Company's chief executive officer at the end of fiscal 1995.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Company has an Audit Committee, presently consisting of Messrs.
Nickell, W. Sanders and Wall, which is charged with evaluating the accounting
and control procedures and practices of the Company and reporting on such to the
Board of Directors. The Audit Committee also serves as direct liaison with the
Company's independent public accountants and recommends the selection or
discharge of such accountants. The Audit Committee met two times during fiscal
year 1994.
The Company has a Compensation Committee, presently consisting of Messrs.
Alban, Nickell and W. Sanders, which makes recommendations concerning salaries
and incentive compensation for officers and employees of the Company. The
Compensation Committee also administers the Company's 1989 Incentive Stock
Option Plan and 1992 Stock Option Plan and has authority to grant options under
such plans to officers and key employees, as designated by the Compensation
Committee, and to determine the terms of such options in accordance with such
plans. The Compensation Committee met three times during fiscal year 1994.
The full Board of Directors met four times during fiscal year 1994. Each
incumbent director attended or acted upon at least 75% of the total fiscal year
1994 board meetings and committee meetings held during periods that he was a
member of the Board or such committees.
In fiscal 1994, Messrs. Alban and W. Sanders received $25,000 per year as
directors of the Company and Messrs. Inman and Miller received $20,000 per year.
Such amounts for Messrs. Inman and Miller are included in the Summary
Compensation Table. Directors do not receive additional compensation for
committee participation, but are entitled to receive reimbursement of
out-of-pocket expenses in connection
5
<PAGE> 23
with their service to the Company as directors. Messrs. Nickell and Wall are not
entitled to any compensation (other than reimbursement of out-of-pocket
expenses) in connection with their service to the Company as directors.
COMPENSATION OF EXECUTIVE OFFICERS
The following information relates to all plan and non-plan compensation
awarded to, earned by, or paid to the Company's Chief Executive Officer and its
four most highly compensated executive officers (the "Named Executive Officers")
during the fiscal year indicated.
The following information does not reflect any compensation awarded to,
earned by, or paid to the Named Executive Officers subsequent to September 25,
1994, except as may otherwise be indicated.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the fiscal years ended September 25,
1994, September 26, 1993 and September 27, 1992 the annual and long-term
compensation for services in all capacities to the Company of the Named
Executive Officers.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND POSITION FISCAL YEAR SALARY(2) BONUS COMPENSATION(3) COMPENSATION(4)
----------------- ----------- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
George H. Inman................ 1994 $372,000 $401,540 $89,221(5)
Chairman of the Board and 1993 $358,000 $775,000 $73,996(5) $8,444
Chief Executive Officer 1992 $345,000 $483,280
A. Montague Miller............. 1994 $291,000 $305,519 N/A
President, Chief Operating 1993 $279,965 $300,000 $8,444
Officer and Secretary 1992 $265,250 $227,120
Cary H. Rivers................. 1994 $147,450 $123,663 N/A
Vice President-Marketing and 1993 $141,107 $149,210 $8,444
National Accounts 1992 $135,680 $145,374
Michael W. Harris.............. 1994 $111,792 $130,937 N/A
Vice President-Sales 1993 $107,492 $149,210 $8,444
1992 $106,820 $145,374
Henry T. Sanders............... 1994 $109,161 $126,572 $28,046(6)
Vice President-Manufacturing 1993 $104,963 $149,210 $28,046(6) $8,444
1992 $100,280 $145,374
</TABLE>
- ---------------
(1) In accordance with the transitional provisions applicable to the revised
rules adopted by the Securities and Exchange Commission concerning executive
officer and director compensation disclosure, amounts of Other Annual
Compensation and All Other Compensation for fiscal year 1992 are excluded.
(2) Includes $20,000 for Messrs. Inman and Miller as compensation for service as
a director of the Company in each of the three years.
(3) Except as noted in footnotes (5) and (6) below, perquisites and other
personal benefits paid to the Named Executive Officers in fiscal years 1993
and 1994 did not exceed the lesser of either $50,000 or 10 percent of the
total of annual salary and bonus reported for the Named Executive Officer
and, therefore, have not been reported in the "Other Annual Compensation"
column.
(4) Amounts reported represent the Company's fiscal 1993 allocations to the
Named Executive Officers under the Company's ESOP. Such allocations were
made during fiscal 1994. The Company's fiscal 1994 allocations have not yet
been determined.
(5) In fiscal years 1993 and 1994, perquisites or other personal benefits
exceeding 25 percent of the total perquisites and other personal benefits
for Mr. Inman were the annual premiums paid by the Company
6
<PAGE> 24
for a life insurance policy purchased to fund benefits under a Deferred
Compensation Plan -- $46,357 (in each of fiscal years 1993 and 1994).
(6) In fiscal years 1993 and 1994, perquisites or other personal benefits
exceeding 25 percent of the total perquisites and other personal benefits
for Mr. H. Sanders were: the annual premium paid by the Company for a life
insurance policy purchased to fund benefits under a Deferred Compensation
Plan -- $11,642 (in each of fiscal years 1993 and 1994); and automobile
allowance -- $7,425 (in each of fiscal years 1993 and 1994).
OPTION GRANT TABLE
The following table sets forth information concerning individual grants of
stock options made during fiscal year 1994 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL RATES OF
------------------------------------------------------ STOCK
% OF TOTAL PRICE APPRECIATION
OPTIONS GRANTED EXERCISE FOR OPTION TERM
OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR SHARE DATE 5%($) 10%($)
---- ---------- --------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
George H. Inman................ 200,000(2) 33.7% $17.50 10/17/03 $2,201,140 $5,578,099
A. Montague Miller............. 60,000(3) $17.50 10/17/03 $ 660,342 $1,673,430
30,000(3) 15.2% $15.31 9/13/04 $ 288,851 $ 732,006
Cary H. Rivers................. 15,000(3) $17.50 10/17/03 $ 165,086 $ 418,357
15,000(3) 5.0% $15.31 9/13/04 $ 144,426 $ 366,003
Michael W. Harris.............. 15,000(3) $17.50 10/17/03 $ 165,086 $ 418,357
15,000(3) 5.0% $15.31 9/13/04 $ 144,426 $ 366,003
Henry T. Sanders............... 15,000(3) $17.50 10/17/03 $ 165,086 $ 418,357
15,000(3) 5.0% $15.31 9/13/04 $ 144,426 $ 366,003
</TABLE>
- ---------------
(1) All options granted under the Company's amended and restated 1992 Stock
Option Plan.
(2) Became exercisable on April 18, 1994.
(3) Became fully exercisable on February 2, 1995.
7
<PAGE> 25
OPTION VALUE TABLE
The following table sets forth information concerning the fiscal year end
number and value of unexercised options for each of the Named Executive
Officers.
1994 FISCAL YEAR END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL YEAR THE-MONEY OPTIONS AT
END (#) FISCAL YEAR END ($)(2)
NAME AND ------------------------- -------------------------
PRINCIPAL POSITION EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ ------------------------- -------------------------
<S> <C> <C>
George H. Inman.................................. 200,000/0 $0/$0
A. Montague Miller............................... 81,813/70,000 $742,992/$28,200
Cary H. Rivers................................... 47,000/25,000 $504,840/$14,100
Michael W. Harris................................ 47,000/25,000 $504,840/$14,100
Henry T. Sanders................................. 33,000/25,000 $336,560/$14,100
</TABLE>
- ---------------
(1) This table speaks as of the end of fiscal year 1994. All options became
immediately exercisable on February 2, 1995.
(2) In-the-Money Options are those where the 1994 fiscal year-end fair market
value of the underlying shares of Common Stock (the average of the bid and
asked prices on September 23, 1994, as reported by the Nasdaq National
Market) exceeds the exercise price of the option.
Following the consummation of the Offer and immediately prior to the
effective time of the Merger, each outstanding option shall no longer be
exercisable but shall entitle each holder thereof, in cancellation and
settlement therefor, to payments in cash, at the effective time of the Merger,
equal to the product of (x) the total number of shares of Common Stock subject
to such option times the excess of $25.00 over the exercise price per share of
Common Stock subject to such option.
INCENTIVE COMPENSATION PLANS. The 1994 Senior Management Cash Incentive
Compensation Program for fiscal 1994 (the "1994 Incentive Program") provided
that if a certain level of earnings before interest and taxes was achieved
during fiscal 1994 (the "1994 Bonus Target") the participants were entitled to
be paid an aggregate bonus of $1,074,000. An additional bonus equal to 15% of
the amount by which earnings before interest and taxes for fiscal 1994 exceeded
the 1994 Bonus Target was also payable under the 1994 Incentive Program. The
amount of the award to individual participants was determined by the Board of
Directors in its sole discretion, after receiving recommendations from the
Compensation Committee, the Chief Executive Officer and the President. Messrs.
Inman, Miller, Rivers, Harris and H. Sanders and three other executive officers
received awards under the 1994 Incentive Program. All of such awards were paid
in fiscal 1995 and are included in the Summary Compensation Table above.
The Management Cash Incentive Compensation Plan is intended to reward
eligible employees for efficient and successful management. Each fiscal year,
the Chief Executive Officer of the Company selects and the Board of Directors
approves key employees who are eligible to participate in the plan for that
year, and appoints such employees to Group A, B, C, or D. Employees in each
group receive incentive compensation in accordance with a formula based upon the
Company's earnings for the relevant fiscal year, up to a maximum percentage of
base salary. Group A employees receive awards of up to 100% of base salary,
Group B employees up to 70%, Group C employees up to 45%, and Group D employees
up to 25%. Eligible employees are required to be employed on the last day of the
fiscal year in order to receive incentive compensation, provided that employees
whose employment terminates during the fiscal year because of death, disability
or retirement under a Company retirement plan receive a prorated award that
reflects the number of months during which they were participants. Incentive
compensation is payable within 90 days of the expiration of the relevant fiscal
year. Messrs. Swanson and Tyra received awards under the Management Cash
Incentive Compensation Plan attributable to the 1994 fiscal year. Such award was
paid in fiscal 1995.
8
<PAGE> 26
EXECUTIVE OFFICER DEFERRED COMPENSATION PLANS. The Company has entered
into substantially similar individual Deferred Compensation Plans with Messrs.
Inman, Miller and Swanson. While the plans are unfunded arrangements, the
Company has purchased a life insurance policy for each participant in order to
provide, in whole or in part, for the benefits, and has established revocable
life insurance trusts in order to fund the benefits of each participant. The
plans provide for the payment of certain retirement, death and disability
benefits. A participant who retires on or after age 65 will have his benefit
paid in 120 equal monthly installments, commencing on the first day of the month
following his retirement. A participant who terminates employment prior to
attaining age 65 will have his benefit paid in equal monthly installments over
the period commencing on the later of the date of his termination or voluntary
retirement or the participant attaining age 60, and ending on the date the
participant attains age 75. Mr. Swanson's Deferred Compensation Plan was amended
on May 24, 1993 to provide for his benefit to be paid in 240 equal monthly
installments of $4,166.66 beginning on November 1, 1996. The Deferred
Compensation Plans of Messrs. Inman and Miller were amended on September 23,
1993 to increase the monthly retirement benefits of such participants to $20,000
and $12,500, respectively.
If a participant dies subsequent to the date his retirement benefit
payments commence, the participant's beneficiary will receive the remainder of
the monthly payments that are due. If a participant dies prior to the
commencement of the participant's retirement benefit, his beneficiary will
receive a monthly benefit (which in the case of Mr. Inman's beneficiary is
$7,380, in the case of Mr. Miller's beneficiary is $6,000 and in the case of Mr.
Swanson's beneficiary is $1,458) paid over a period of 120 months commencing on
the first day of the second month following the participant's death.
If a participant (other than Mr. Swanson) becomes disabled while employed
with the Company, the participant will receive a monthly disability benefit in
an amount which in the case of Mr. Inman is $9,910 and in the case of Mr. Miller
is $2,981. Such benefit will continue until age 65, or if earlier, the date the
participant is no longer classified as disabled. A participant's retirement
benefit becomes fully vested upon his termination for disability and commences
on the first day of the month following the month the participant is no longer
classified as disabled. If, however, the participant returns to the employ of
the Company, his retirement benefit will commence upon his subsequent
termination of employment. Mr. Swanson is not entitled to disability benefits
under the terms of his plan.
Except in the case of Mr. Miller, the plans provide for payment of medical
expenses for the participant, his spouse (except after certain events) and
dependents until the earlier of both the participant and his spouse attaining
age 65 or the death of both of them. Any payment of medical expenses will be
offset by payments of medical expenses received from certain other sources. The
plans also provide for, in the event of the participant's disability, continued
payment of the participant's base salary, incentive compensation in the amount
based on the previous year's incentive compensation payments, and other employee
benefits he was entitled to receive, until the participant receives payment
under the disability income insurance policy maintained by the Company. Messrs.
Inman's and Miller's plans also provide for (i) a lump sum payment equal to the
cash surrender value of the key man life insurance policy maintained by the
Company on their respective lives on the first day of the month in which any
payment is made to Messrs. Inman or Miller under their respective plan, and (ii)
maintenance of the Company's disability income policy for Messrs. Inman and
Miller until the earlier of the date they reach age 65 or death. In addition,
Mr. Inman's plan provides for the sale upon retirement or disability of the
Company-owned automobile that Mr. Inman is driving at such time to Mr. Inman for
$100.
As a condition to receiving benefits, the plans require the respective
participants to be available to perform consulting services during the period in
which benefits are paid under the plan. All benefits under a participant's plan
are forfeited if the participant either (i) engages in conduct which is
competitive with the Company in the manufacture or sale of products similar to
the Company's principal products or (ii) fails to comply with the terms of his
consulting arrangement.
Messrs. Inman Miller, and Swanson are fully vested under the plan. The
annual premiums paid by the Company for life insurance policies purchased to
fund the benefits are as follows: Mr. Inman, $46,357; Mr. Miller, $23,542; and
Mr. Swanson, $14,176.
9
<PAGE> 27
The Company has entered into identical Deferred Compensation Plans with
Messrs. Rivers, Harris, H. Sanders and four other executive officers. While the
plans are unfunded arrangements, the Company has purchased a life insurance
policy for each participant in order to provide, in whole or in part, for
benefits under the plans. A participant becomes fully vested in his retirement
benefit of $6,250 per month upon (i) attaining age 60 or (ii) completing 12
years of service with the Company. If a participant's employment is terminated
for reasons other than for cause or death (including disability), prior to
becoming fully vested under his plan, his benefit will be calculated based upon
a vesting schedule providing for 5% vesting after the completion of four years
of service subsequent to the effective date of the participant's plan, and
additional vesting in varying increments for each additional year of service
until the participant is 100% vested after the completion of 12 years of
service. If a participant is terminated for cause within 15 years of the
effective date of his plan, his benefit will be calculated under a vesting
schedule under which he will become vested in 25% of his benefit upon completion
of nine years of service subsequent to the effective date of the participant's
plan and 100% vested after the completion of 12 years of service. A
participant's retirement benefit will commence on the first day of the month
following his attainment of age 60, or, if later, the month of his termination
of employment, and will be paid in equal monthly installments until the
participant attains age 75.
If a participant dies prior to the commencement of his retirement benefit,
his beneficiary will receive 120 monthly payments in the amount of $3,000 each
commencing no later than the first day of the second month following the
participant's death. If a participant dies after he has begun to receive his
retirement benefit, the participant's beneficiary will receive the remainder of
the monthly payments that were due the participant.
As a condition to receiving benefits, the plans require the respective
participants to perform consulting duties for the Company during the period
benefits are being paid. All benefits under a participant's plan are forfeited
if the participant either (i) engages in conduct which is competitive with the
Company in the manufacture or sale of products similar to the Company's
principal products or (ii) fails to comply with the terms of his consulting
arrangement.
As of February 2, 1995, Messrs. Rivers, Harris and H. Sanders each had
completed seven years of service for vesting purposes. The annual premiums paid
by the Company during the fiscal year ended September 25, 1994 for life
insurance policies purchased to fund the benefits are as follows: Mr. Rivers,
$12,433; Mr. Harris, $10,385; Mr. H. Sanders, $11,642; for one other executive
officer, $17,818.
EMPLOYMENT AGREEMENTS. The Company has employment agreements with each of
its executive officers. The employment agreements prohibit the employee from
engaging in a business similar to the Company's within the United States for a
period of two years after termination of employment. The employment agreements
with Messrs. Inman and Miller expire on May 5, 1997 and September 27, 1998,
respectively. Each of the employment agreements with Messrs. Rivers, Harris and
H. Sanders expires on September 29, 1996.
Under the agreements, compensation is payable in the form of a base annual
salary with fringe benefits, as described below, and with continued employment
thereunder to be subject to termination for disability or cause. The fringe
benefits include a director and officer liability insurance policy, a travel
accident policy, a new demonstrator vehicle each year, 100% medical and dental
expense coverage up to an annual payment limit of $50,000 and individual
disability insurance. The monthly disability benefits under such individual
policies are $7,000 and $6,000 for Messrs. Inman and Miller, respectively, and
$3,000 for each of Messrs. Rivers, Harris and H. Sanders. In addition, Messrs.
Inman and Miller are entitled to limited use of the Company airplane,
reimbursement of country club dues and personal legal and tax preparation
expenses, the services of Company employees for certain maintenance and repair
jobs and use of Company cars. The Company purchases an automobile for Mr. Miller
every three years, and for Mr. Inman every two years. Mr. Miller is entitled to
buy the automobile at the end of the three-year period for an amount equal to
the depreciated book value of the automobile. If the price of the new automobile
for Mr. Miller is over $25,000 he must contribute the amount in excess of
$25,000 and the automobile is depreciated using $25,000 as the original purchase
price. Automobiles with a manufacturer's suggested price of $35,000 or less are
leased for a period not less than two years for Messrs. Rivers, Harris, Sanders
and one other executive officer. The Company is the owner of an equity
membership at Melrose in Beaufort County, South Carolina and
10
<PAGE> 28
Mr. Inman is the current designated member for such membership, and a membership
at the Tournament Players Club in Ponte Vedra, Florida where Mr. Rivers is the
current designated member. Consistent with the employment agreements, the Board
of Directors has decided the 1995 fiscal year base salaries for Messrs. Inman,
Miller, Rivers, Harris and H. Sanders will be $366,080, $281,840, $150,399,
$120,735 and $113,527, respectively. Adjustments in salaries for future years
will be determined in the sole discretion of the Board of Directors. Amounts
paid under the employment agreements in the 1994 fiscal year are included in the
Summary Compensation Table above.
EMPLOYEE STOCK OWNERSHIP PLAN. The Company established an Employee Stock
Ownership Plan (the "ESOP"), effective as of September 26, 1988, which is a
noncontributory defined contribution stock bonus plan. The ESOP primarily
invests in the Company's Common Stock. All employees not covered by a collective
bargaining agreement are eligible to participate after attaining age 21 and
completing one year of service. The Company's contributions are discretionary
and generally will not exceed 15% of the aggregate compensation of participating
employees. The Company's contributions may be in the form of Common Stock, cash,
or both. Contributions to the ESOP are allocated to individual accounts in
proportion to the participant's compensation.
The net value of Common Stock and cash contributions allocated to each of
Messrs. Inman, Miller, Rivers, Harris and H. Sanders for fiscal 1993 was $8,444.
Such amounts were allocated in fiscal 1994 and are included in the Summary
Compensation Table above. The net value of total contributions to the current
executive officers as a group for fiscal 1993 was $71,260. Allocations for
fiscal 1994 have not yet been determined.
Participants vest in the ESOP over a seven-year period and become fully
vested upon death, disability or reaching age 65 while employed by the Company.
For vesting, service with the Company includes service prior to September 26,
1988 with the Company or with its predecessors. Distributions are made to
participants after termination of employment or at the normal retirement age of
65. Distributions are made in Common Stock or cash.
Participants have the right to exercise voting rights on all Common Stock
allocated to their accounts in the ESOP. Voting rights for Common Stock that is
not allocated to participant accounts will be exercised as directed by the
Administrative Committee.
The Company intends to terminate the ESOP after the consummation of the
Offer and prior to the Merger.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's initial public offering of Common Stock
(the "Offering") completed in October 1993, affiliates of Kelso, an affiliate of
CS First Boston Corporation ("First Boston") and the Company entered into a
stockholders agreement (the "1993 Stockholders Agreement") that provides that
upon the request of the Kelso affiliates, the Company will register (the "Demand
Rights"), on up to two occasions, the sale of Common Stock owned by the Kelso
affiliates under the Securities Act of 1933, as amended, and applicable state
securities laws. The Company's obligation is subject to certain limitations
relating to the timing and size of registrations. The Company is also obligated
to offer the First Boston affiliate and the Kelso affiliates the right to
include shares of Common Stock owned by them in certain registration statements
filed by the Company (the "Incidental Rights"). The Company will indemnify the
Kelso affiliates and the First Boston affiliate and their officers, directors
and controlling persons for certain liabilities in connection with any such
offering, other than liabilities for information furnished in writing by the
Kelso affiliates or the First Boston affiliate. The Company is obligated to pay
all expenses incurred in connection with the registration of shares of Common
Stock pursuant to the exercise of the Demand Rights and the Incidental Rights,
excluding underwriting discounts and commissions.
In the past, Kelso received fees, plus reimbursement of out-of-pocket
expenses, from the Company for providing strategic planning and financial
advisory services (including the services of two of its officers, Messrs. Nickel
and Wall, as members of the Board of Directors of the Company) and advisory
services
11
<PAGE> 29
relating to the ESOP, the establishment of the Incentive Stock Option Plans and
to other aspects of the planning and financing of the Company including its
access to the capital markets. The agreement pursuant to which Kelso received
fees for planning and advisory services was terminated effective with the
closing of the Offering.
The Company paid Kelso a one-time fee of $300,000 in connection with the
termination of such agreement and for financial advisory services rendered in
connection with the Offering and the refinancing plan undertaken by the Company
in connection with the Offering. Such fee was paid by the Company in fiscal
1994.
The law firm of which Mr. Miller was a partner provides legal services to
the Company. The law firm of McGuire, Woods, Battle & Boothe, L.L.P., of which
Wellford L. Sanders, Jr. is a partner, also provides legal services to the
Company.
All transactions with officers, directors, and affiliates of the Company
have been on terms that were no less favorable to the Company than those that
could be obtained from an unaffiliated third party or negotiated in good faith
on an arm's-length basis.
COMPLIANCE WITH EXCHANGE ACT FILING REQUIREMENTS
The Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and any persons owning more than 10% of the Common
Stock, to file certain reports of ownership and changes in ownership with the
Securities and Exchange Commission. Based solely on its review of the copies of
the Forms 3, 4 and 5 received by it, and written representations from certain
reporting persons that no Forms 5 were required to be filed by those persons,
the Company believes that all executive officers, directors and 10% shareholders
complied with such filing requirements, except that Joseph S. Schuchert, an
individual who may be deemed to be the beneficial owner of more than 10% of the
Common Stock, inadvertently failed to report a transaction that occurred in June
1994. A corrective filing has been made.
INFORMATION WITH RESPECT TO CLARK DESIGNEES
As of the date of this Information Statement, Clark has not determined who
will be Clark Designees. Clark Designees shall be selected from among the
following persons.
The following table sets forth the name, business address, present
principal occupation and material positions and occupations within the past five
years of the persons who may be Clark Designees. Unless otherwise specified,
each person listed below is a citizen of the United States and has his or her
principal address at the offices of Clark, 100 North Michigan Street, P.O. Box
7008, South Bend, Indiana, 46634. Each such person is a citizen of the United
States. None of the persons listed below owns any Common Stock.
12
<PAGE> 30
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT,
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
- ----------------------------------- --------------------------------------------------------
<S> <C>
Leo J. McKernan.................... Chairman of the Board of Directors, President and Chief
Executive Officer of Clark
Frank M. Sims...................... Senior Vice President -- Administration and External
Relations of Clark
Paul R. Bowles..................... Vice President -- Corporate Development of Clark
Thomas L. Doepker.................. Vice President and Treasurer of Clark
William N. Harper.................. Vice President and Controller of Clark
Bernard D. Henely.................. Vice President, General Counsel and Secretary of Clark
David D. Hunter.................... Vice President of Clark -- President of Blaw-Knox
Blaw-Knox Construction Equipment Construction Equipment Corporation
Corporation
750 Broadway Ave. East
Mettoon, Illinois 61938-4600
James D. Kertz..................... Vice President of Clark -- President of Melroe Company
Melroe Company
112 North University Dr.
P.O. Box 6019
Fargo, ND 58102-6019
John J. Reynolds................... Vice President of Clark -- President of Clark-Hurth
Clark-Hurth Components Company Components Company
1293 Glenway Dr.
Statesville, NC 28677
</TABLE>
13
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------------------
<S> <C>
(a) The Company's Proxy Statement dated December 16, 1994
(b) Form of Indemnification Agreement
(c) Agreement and Plan of Merger dated as of February 3, 1995
(d) Stock Tender Agreement dated as of February 3, 1995
(e) Amendment to Rights Agreement dated as of February 3, 1995
(f) Opinion of Donaldson, Lufkin & Jenrette Securities Corporation dated February 2,
1995
(g) Press Release dated February 3, 1995, with respect to Merger Agreement
(h) Letter dated February 8, 1995 from the Company's Chairman and Chief Executive
Officer to the Company's stockholders
</TABLE>
<PAGE> 1
EXHIBIT (a)
CLUB CAR, INC.
4152 WASHINGTON ROAD
MARTINEZ, GEORGIA 30907
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MEETING DATE: FEBRUARY 1, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Club
Car, Inc. (the "Company") will be held at CS First Boston Corporation, Park
Avenue Plaza, 55 East 52nd Street, New York, New York 10055, on Wednesday,
February 1, 1995, at 10:00 A.M., for the following purposes:
(1) To elect two directors to serve on the Company's Board of
Directors;
(2) To ratify the selection of Arthur Andersen LLP as the
independent public accountants for the Company for fiscal year 1995;
and
(3) To transact such other business as may properly be
brought before the meeting or any adjournment thereof.
The shareholders of record at the close of business on December 5,
1994 are entitled to notice of and to vote at this Annual Meeting or any
adjournment thereof.
Even if you plan to attend the meeting in person, we request that you
mark, date, sign and return your proxy in the enclosed self-addressed envelope
as soon as possible so that your shares may be certain of being represented and
voted at the meeting. Any proxy given by a shareholder may be revoked by that
shareholder at any time prior to the voting of the proxy.
By Order of the Board of Directors,
/s/ A. MONTAGUE MILLER
A. Montague Miller
Secretary
December 16, 1994
<PAGE> 2
CLUB CAR, INC.
4152 WASHINGTON ROAD
MARTINEZ, GEORGIA 30907
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 1, 1995
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Club Car, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held on Wednesday, February 1, 1995, at 10:00 A.M., at CS
First Boston Corporation, Park Avenue Plaza, 55 East 52nd Street, New York, New
York and any adjournment thereof. The matters to be considered and acted upon
at such meeting are described in the foregoing notice of the meeting and this
proxy statement. This proxy statement and the related form of proxy are being
mailed on or about December 16, 1994 to all shareholders of record on December
5, 1994. Shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented in person or by proxy will be voted as hereinafter
described or as otherwise specified by the shareholder. Any proxy given by a
shareholder may be revoked by the shareholder at any time prior to the voting
of the proxy by delivering a written notice to the Secretary of the Company, by
executing and delivering a later-dated proxy or by attending the meeting and
voting in person.
The persons named as proxies are A. Montague Miller and Wellford L.
Sanders, Jr., each of whom is presently a director of the Company. The cost of
preparing, assembling and mailing the proxy, this proxy statement, and other
material enclosed, and all clerical and other expenses of solicitations will be
borne by the Company. In addition to the solicitation of proxies by use of the
mails, directors, officers and employees of the Company may solicit proxies by
telephone, telegram or personal interview. The Company also will request
brokerage houses and other custodians, nominees and fiduciaries to forward
soliciting material to the beneficial owners of Common Stock held of record by
such parties and will reimburse such parties for their expenses in forwarding
soliciting material.
VOTING RIGHTS
The holders of record of the 9,067,606 shares of Common Stock
outstanding on December 5, 1994 will be entitled to one vote for each share
held on all matters coming before the meeting. Voting rights of the Common
Stock are noncumulative, so that holders of a majority of the outstanding
shares represented at the meeting can elect all of the directors to be elected
at the meeting.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders for the fiscal year ended September
25, 1994, including consolidated financial statements, is being furnished
herewith to shareholders of record on December 5, 1994. The Annual Report to
Shareholders does not constitute a part of the proxy soliciting material.
<PAGE> 3
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of December 5, 1994, by
each shareholder known by the Company to be the beneficial owner of more than
5% of its outstanding Common Stock, by each director, by each of the Named
Executive Officers (as defined below) and by all directors and executive
officers as a group:
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME OF BENEFICIAL OWNER COMMON STOCK CLASS
- ------------------------ ------------ ----------
<S> <C> <C>
KIA III-Club Car, L.P.(a) . . . . . . . . . 1,909,341(b) 21.1
Kelso Equity Partners II, L.P.(a) . . . . . 1,909,341(b) 21.1
Kelso Partners III, L.P.(a). . . . . . . . 1,909,341(b) 21.1
Joseph S. Schuchert(a) . . . . . . . . . . 1,909,341(c) 21.1
Frank T. Nickell(a) . . . . . . . . . . . . 1,961,341(c) 21.6
George E. Matelich(a) . . . . . . . . . . . 1,929,341(c) 21.3
Thomas R. Wall, IV(a). . . . . . . . . . . 1,940,189(c) 21.4
George H. Inman(d) . . . . . . . . . . . . 418,816(e) 4.5
A. Montague Miller(d). . . . . . . . . . . 200,370(f) 2.2
Cary H. Rivers(d) . . . . . . . . . . . . . 164,382(g) 1.8
Michael W. Harris(d) . . . . . . . . . . . 163,365(h) 1.8
Henry T. Sanders(d) . . . . . . . . . . . . 154,035(i) 1.7
James C. Alban, Jr.(d) . . . . . . . . . . 34,000 (j)
Wellford L. Sanders, Jr.(d) . . . . . . . . 11,300(k) (j)
All directors and executive officers as
a group (14 persons) . . . . . . . . . 3,576,111(l) 37.3
- ------------------------
</TABLE>
(a) The business address for such persons is c/o Kelso & Company, Inc.,
350 Park Avenue, 21st Floor, New York, New York 10022.
(b) KIA III-Club Car, L.P. ("KIA III") and Kelso Equity Partners II, L.P.
may be deemed to share beneficial ownership of the shares owned of
record by each other by virtue of common ownership. Kelso Partners
III, L.P. is the general partner of KIA III, and may be deemed to
share beneficial ownership of the shares owned of record by KIA III
and Kelso Equity Partners II, L.P. by virtue of common ownership.
(c) Messrs. Nickell and Wall, directors of the Company, and Messrs.
Schuchert and Matelich may be deemed to share beneficial ownership of
the 1,909,341 shares owned of record by KIA III and Kelso Equity
Partners II, L.P. by virtue of their status as general partners of
Kelso Equity Partners II, L.P. and of Kelso Partners III, L.P., the
general partner of KIA III. Messrs. Nickell, Wall, Schuchert and
Matelich share investment and voting power with respect to securities
owned by KIA III and Kelso Equity Partners II, L.P. Messrs.
Schuchert, Nickell, Matelich and Wall disclaim beneficial ownership of
such securities.
(d) The business address for such person is c/o Club Car, Inc., 4152
Washington Road, Martinez, Georgia 30907.
(e) Includes 200,000 shares subject to stock options that became
exercisable on April 18, 1994 and 9,480 shares held by the Company's
ESOP. Does not include an aggregate of 10,498 shares owned
beneficially by Mr. Inman's wife, as to which Mr. Inman disclaims
beneficial ownership.
(f) Includes 16,800 shares subject to stock options that became
exercisable on December 6, 1991, 7,919 shares subject to stock options
that became exercisable on January 12, 1992,
2
<PAGE> 4
8,400 shares subject to stock options that became exercisable on
December 6, 1992, 3,960 shares subject to stock options that became
exercisable on January 12, 1993, 24,734 shares subject to stock
options that became exercisable on October 18, 1993, 20,000 shares
subject to stock options that became exercisable on April 18, 1994 and
3,857 shares held by the Company's ESOP. Does not include an
aggregate of 10,000 shares owned beneficially by Mr. Miller's wife, as
to which Mr. Miller disclaims beneficial ownership.
(g) Includes 16,800 shares subject to stock options that became
exercisable on December 6, 1991, 8,400 shares subject to stock options
that became exercisable on December 6, 1992, 16,800 shares subject to
stock options that became exercisable on October 18, 1993, 5,000
shares subject to stock options that became exercisable on April 18,
1994 and 4,897 shares held by the Company's ESOP. Does not include an
aggregate of 2,001 shares owned beneficially by Mr. Rivers' wife or
2,000 shares owned by Mr. Rivers' children, as to which Mr. Rivers
disclaims beneficial ownership.
(h) Includes 16,800 shares subject to stock options that became
exercisable on December 6, 1991, 8,400 shares subject to stock options
that became exercisable on December 6, 1992, 16,800 shares subject to
stock options that became exercisable on October 18, 1993, 5,000
shares subject to stock options that became exercisable on April 18,
1994 and 4,879 shares held by the Company's ESOP.
(i) Includes 11,200 shares subject to stock options that became
exercisable on December 6, 1991, 5,600 shares subject to stock options
that became exercisable on December 6, 1992, 11,200 shares subject to
stock options that became exercisable on October 18, 1993, 5,000
shares subject to stock options that became exercisable on April 18,
1994 and 4,549 shares held by the Company's ESOP.
(j) Less than 1%.
(k) Does not include an aggregate of 300 shares owned by Mr. Sanders'
wife, as to which Mr. Sanders disclaims beneficial ownership.
(l) Includes shares held by KIA III and Kelso Equity Partners II, L.P.
that may be deemed to be beneficially owned by Messrs. Nickell and
Wall as described in note (c) above. Includes 72,800 shares subject
to stock options that became exercisable on December 6, 1991, 7,919
shares subject to stock options that became exercisable on January 12,
1992, 36,400 shares subject to stock options that became exercisable
on December 6, 1992, 3,960 shares subjective to stock options that
became exercisable on January 12, 1993, 11,200 shares subject to stock
options that became exercisable on February 1, 1993, 119,934 shares
subjective to stock options that became exercisable on October 18,
1993, 245,000 shares subject to stock options that became exercisable
on April 18, 1994, 3,334 shares subject to stock options that become
exercisable on February 1, 1995 and 40,061 shares held by the
Company's ESOP. Does not include shares as to which officers and
directors have disclaimed beneficial ownership.
On December 5, 1994 there were 476 shareholders of record of the
Company's Common Stock.
PROPOSAL ONE: ELECTION OF DIRECTORS
At the Annual Meeting, two directors are to be elected to serve on the
Company's Board of Directors for three-year terms expiring at the Annual
Meeting of Shareholders to be held in 1998. The shares represented by proxies
will be voted as specified by the shareholder. If the shareholder does not
specify his choice, the shares will be voted in favor of the election of the
nominees listed on the proxy card, except that in the event any nominee should
not continue to be available for election, such proxies will be voted for the
election of such other persons as the Board of Directors may recommend. As of
the date of this Proxy Statement, the Board of Directors has no reason to
believe that either of the nominees named below will be unable or unwilling to
serve.
3
<PAGE> 5
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
The Board of Directors of the Company is divided into three classes
serving staggered three-year terms. The terms of office of James C. Alban, Jr.
and Wellford L. Sanders, Jr. expire at the 1995 Annual Meeting, to which this
proxy statement relates. The terms of office of Frank T. Nickell and Thomas R.
Wall, IV expire at the 1996 Annual Meeting, and the terms of office of George
H. Inman and A. Montague Miller expire at the 1997 Annual Meeting. All the
directors, except Mr. Miller who was elected in 1990, have served as directors
since 1988.
The following table sets forth certain information regarding the
nominees for the Board of Directors.
NOMINEES FOR ELECTION AT THE 1995 ANNUAL MEETING
<TABLE>
<CAPTION>
SERVED AS
NAME AGE DIRECTOR SINCE
---- --- --------------
<S> <C> <C>
James C. Alban, Jr. 77 1988
Wellford L. Sanders, Jr. 49 1988
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE POSITION
----- --- ---------
<S> <C> <C>
George H. Inman . . . . . . . . . . . . . 62 Chairman and Chief Executive Officer
A. Montague Miller . . . . . . . . . . . 54 President, Chief Operating Officer,
Secretary and Director
Charles A. Fain . . . . . . . . . . . . . 43 Vice President-Design Engineering
Michael W. Harris. . . . . . . . . . . . 40 Vice President-Sales
T. Mark McClure . . . . . . . . . . . . . 50 Vice President-International Sales
Cary H. Rivers . . . . . . . . . . . . . 45 Vice President-Marketing and National Accounts
Henry T. Sanders . . . . . . . . . . . . 49 Vice President-Manufacturing
Carl A. Swanson . . . . . . . . . . . . . 53 Vice President
Charles E. Twilley . . . . . . . . . . . 43 Vice President-Human Resources
Eric L. Tyra . . . . . . . . . . . . . . 45 Vice President-Finance, Treasurer and Chief Financial Officer
James C. Alban, Jr. . . . . . . . . . . . 77 Director
Frank T. Nickell . . . . . . . . . . . . 47 Director
Wellford L. Sanders, Jr. . . . . . . . . 49 Director
Thomas R. Wall, IV . . . . . . . . . . . 36 Director
</TABLE>
George H. Inman has been Chairman of the Board and Chief Executive
Officer since 1979. Mr. Inman was President of the Company from 1979 to 1990.
He was employed from 1961 until 1978 by E-Z-Go, as Plant Superintendent, Plant
Manager, Vice President-Manufacturing and Vice President-Operations. Mr. Inman
has been involved in the golf car industry since 1961.
4
<PAGE> 6
A. Montague Miller has been Chief Operating Officer since April 1991,
President since September 1990 and Secretary since 1986. Mr. Miller joined
the Company in 1990 as Senior Vice President-Administration. From 1971 to 1990
Mr. Miller was a partner in the law firm of Dye, Miller, Tucker & Everitt and
provided legal services to the Company from 1978 to 1990.
Charles A. Fain has been Vice President-Design Engineering since 1992.
Mr. Fain joined the Company in 1990 as Director of Design Engineering. Prior
to joining the Company in 1990, he was employed from 1987 by Bunton Company as
Vice President-Engineering. Mr. Fain has been involved in the golf car
industry since 1990.
Michael W. Harris has been Vice President-Sales since 1990. Mr.
Harris joined the Company in 1979 as Senior Accountant and was Controller from
1982 to 1988 before being promoted to Vice President-Controller in 1988. Mr.
Harris has been involved in the golf car industry since 1973.
T. Mark McClure has been Vice President-International Sales since
August 1993 and was Vice President-Marketing and International Sales from 1988
to 1993. Mr. McClure joined the Company in 1978 as a Regional Sales Manager in
charge of the Mid-West Region and also served as Director of National Account
Sales before assuming his present position. Mr. McClure has been involved in
the golf car industry since 1978.
Cary H. Rivers has been Vice President-Marketing and National Accounts
since October 1994. Mr. Rivers joined the Company in 1978 as a Sales
Representative in the Company's East Florida branch and also served as National
Sales Manager-Direct Sales. From 1989 to October 1994, Mr. Rivers served as
Vice President-Sales and Marketing. Mr. Rivers has been involved in the golf
car industry since 1978.
Henry T. Sanders has been Vice President-Manufacturing since 1988.
Mr. Sanders joined the Company in 1983 as Manager of Manufacturing Engineering.
In 1987, Mr. Sanders was promoted to Manager of Manufacturing. Mr. Sanders has
been involved in the golf car industry since 1983.
Carl A. Swanson has been a Vice President since November 1993. Mr.
Swanson served as Senior Vice President-Operations from 1988 to 1993, as Vice
President-Operations from 1987 to 1988 and as Manager of Operations from 1978
to 1987. Prior to joining the Company in 1978, he was employed from 1969 by
E-Z-Go, as Manufacturing Engineering Manager. Mr. Swanson has been involved in
the golf car industry since 1969.
Charles E. Twilley has been Vice President-Human Resources since 1992.
Mr. Twilley joined the Company in 1990 as Director of Human Resources. Prior
to joining the Company in 1990, he was employed from 1980 by Kraft General
Foods Corporation where he last served as Division Manager of Human Resources.
Mr. Twilley has been involved in the golf car industry since 1990.
Eric L. Tyra has been Vice President-Finance and Chief Financial
Officer since February 1994 and Treasurer since October 1994. Prior to joining
the Company in 1994, he was employed from 1991 to 1993 by First Financial
Management Corp. as a Senior Vice President. From 1984 to 1991, Mr. Tyra was a
partner in the accounting firm of Deloitte & Touche. Mr. Tyra has been
involved in the golf car industry since 1994.
James C. Alban, Jr. has been President and Chief Executive Officer of
The Alban Co. since 1987. From 1938 to 1987, Mr. Alban was the President and
Chief Executive Officer of Alban Tractor Co., Inc. Mr. Alban is a founder and
Director of Palm Beach National Bank and Trust Co.
5
<PAGE> 7
Frank T. Nickell has been President of Kelso & Companies, Inc. since
1989 and prior thereto General Partner of Kelso & Company, L.P. ("Kelso")
since 1984. Prior to 1984, Kelso was a corporation and Mr. Nickell held the
position of Vice President. Mr. Nickell is also a director of American
Standard Inc., The Bear Stearns Companies Inc., Earle M. Jorgensen Company,
Harris Specialty Chemicals, Inc., King Broadcasting Company and Tyler
Refrigeration Corporation.
Wellford L. Sanders, Jr. has been a partner of the law firm of
McGuire, Woods, Battle & Boothe since 1986. Mr. Sanders is also a director of
Catherines Stores Corporation, General Medical Corporation and Peebles Inc.
Thomas R. Wall, IV has been a Managing Director of Kelso since 1990
and prior thereto General Partner of Kelso since 1989. From 1986 to 1989, Mr.
Wall was a Vice President of Kelso. Mr. Wall is also a director of Ellis
Communications, Inc., General Medical Corporation, King Broadcasting Company,
Mitchell Supreme Fuel Company, Mosler Inc., Transdigm Inc. and Tyler
Refrigeration Corporation.
In November 1994, Mr. Inman announced his intention to name Mr. Miller
as the Company's chief executive officer at the end of fiscal 1995.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Company has an Audit Committee, presently consisting of Messrs.
Nickell, W. Sanders and Wall, which is charged with evaluating the accounting
and control procedures and practices of the Company and reporting on such to
the Board of Directors. The Audit Committee also serves as direct liaison with
the Company's independent public accountants and recommends the selection or
discharge of such accountants. The Audit Committee met two times during fiscal
year 1994.
The Company has a Compensation Committee, presently consisting of
Messrs. Alban, Nickell and W. Sanders, which makes recommendations concerning
salaries and incentive compensation for officers and employees of the Company.
The Compensation Committee also administers the Company's 1989 Incentive Stock
Option Plan and 1992 Stock Option Plan and has authority to grant options under
such plans to officers and key employees, as designated by the Compensation
Committee, and to determine the terms of such options in accordance with such
plans. The Compensation Committee met three times during fiscal year 1994.
The full Board of Directors met four times during fiscal year 1994.
Each incumbent director attended or acted upon at least 75% of the total fiscal
year 1994 board meetings and committee meetings held during periods that he was
a member of the Board or such committees.
In fiscal 1994, Messrs. Alban and W. Sanders received $25,000 per year
as directors of the Company and Messrs. Inman and Miller received $20,000 per
year. Such amounts for Messrs. Inman and Miller are included in the Summary
Compensation Table. Directors do not receive additional compensation for
committee participation, but are entitled to receive reimbursement of
out-of-pocket expenses in connection with their service to the Company as
directors. Messrs. Nickell and Wall are not entitled to any compensation
(other than reimbursement of out-of-pocket expenses) in connection with their
service to the Company as directors.
6
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
The following information relates to all plan and non-plan
compensation awarded to, earned by, or paid to the Company's Chief Executive
Officer and its four most highly compensated executive officers (the "Named
Executive Officers") during the fiscal year indicated.
The following information does not reflect any compensation awarded
to, earned by, or paid to the Named Executive Officers subsequent to September
25, 1994, except as may otherwise be indicated. Any compensation awarded to,
earned by, or paid to the Named Executive Officers during fiscal year 1995 will
be reported in the proxy statement for the Company's 1996 Annual Meeting of
Shareholders, unless such compensation has been previously reported.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the fiscal years ended September
25, 1994, September 26, 1993 and September 27, 1992 the annual and long-term
compensation for services in all capacities to the Company of the Named
Executive Officers.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------------
Other Annual All Other
Name and Position Fiscal Year Salary(2) Bonus Compensation(3) Compensation(4)
----------------- ----------- --------- ----- --------------- ---------------
<S> <C> <C> <C> <C> <C>
George H. Inman 1994 $372,000 $401,540 $89,221(5)
Chairman of the Board and 1993 $358,000 $775,000 $73,996(5) $8,444
Chief Executive Officer . . . 1992 $345,000 $483,280
A. Montague Miller 1994 $291,000 $305,519 N/A
President, Chief Operating 1993 $279,965 $300,000 $8,444
Officer and Secretary . . . . 1992 $265,250 $227,120
Cary H. Rivers 1994 $147,450 $123,663 N/A
Vice President-Marketing and 1993 $141,107 $149,210 $8,444
National Accounts . . . . . . 1992 $135,680 $145,374
1994 $111,792 $130,937 N/A
Michael W. Harris 1993 $107,492 $149,210 $8,444
Vice President-Sales . . . . . 1992 $106,820 $145,374
1994 $109,161 $126,572 $28,046(6)
Henry T. Sanders 1993 $104,963 $149,210 $28,046(6) $8,444
Vice President-Manufacturing . 1992 $100,280 $145,374
</TABLE>
- --------
(1) In accordance with the transitional provisions applicable to the
revised rules adopted by the Securities and Exchange Commission
concerning executive officer and director compensation disclosure,
amounts of Other Annual Compensation and All Other Compensation for
fiscal year 1992 are excluded.
(2) Includes $20,000 for Messrs. Inman and Miller as compensation for
service as a director of the Company in each of the three years.
(3) Except as noted in footnotes (5) and (6) below, perquisites and other
personal benefits paid to the Named Executive Officers in fiscal years
1993 and 1994 did not exceed the lesser of either $50,000
7
<PAGE> 9
or 10 percent of the total of annual salary and bonus reported for the
Named Executive Officer and, therefore, have not been reported in the
"Other Annual Compensation" column.
(4) Amounts reported represent the Company's fiscal 1993 allocations to
the Named Executive Officers under the Employee Stock Ownership Plan.
Such allocations were made during fiscal 1994. The Company's fiscal
1994 allocations have not yet been determined. Such compensation will
be reported in the fiscal 1995 Proxy Statement as All Other
Compensation for fiscal 1994.
(5) In fiscal years 1993 and 1994, perquisites or other personal benefits
exceeding 25 percent of the total perquisites and other personal
benefits for Mr. Inman were: the annual premium paid by the Company
for a life insurance policy purchased to fund benefits under a
Deferred Compensation Plan - $46,357 (in each of fiscal years 1993 and
1994).
(6) In fiscal years 1993 and 1994, perquisites or other personal benefits
exceeding 25 percent of the total perquisites and other personal
benefits for Mr. H. Sanders were: the annual premium paid by the
Company for a life insurance policy purchased to fund benefits under a
Deferred Compensation Plan - $11,642 (in each of fiscal years 1993 and
1994); and automobile allowance - $7,425 (in each of fiscal years 1993
and 1994).
OPTION GRANT TABLE
The following table sets forth information concerning individual
grants of stock options made during fiscal year 1994 to the Named Executive
Officers.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation
Individual Grants For Option Term
---------------------------------------------------------------- -----------------------------
% of Total
Options Granted Exercise
Options to Employees in Price per Expiration
Name Granted(1) Fiscal Year Share Date 5% ($) 10% ($)
---- ---------- ----------- ----- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
George H. Inman . . . 200,000(2) 33.7% $17.50 10/17/03 $2,201,140 $5,578,099
A. Montague Miller . 60,000(3) $17.50 10/17/03 $ 660,342 $1,673,430
30,000(4) 15.2% $15.31 9/13/04 $ 288,851 $ 732,006
Cary H. Rivers . . . 15,000(3) $17.50 10/17/03 $ 165,086 $ 418,357
15,000(4) 5.0% $15.31 9/13/04 $ 144,426 $ 366,003
Michael W. Harris . . 15,000(3) $17.50 10/17/03 $ 165,086 $ 418,357
15,000(4) 5.0% $15.31 9/13/04 $ 144,426 $ 366,003
Henry T. Sanders . . 15,000(3) $17.50 10/17/03 $ 165,086 $ 418,357
15,000(4) 5.0% $15.31 9/13/04 $ 144,426 $ 366,003
</TABLE>
- ---------
(1) All options granted under the Company's amended and restated 1992
Stock Option Plan.
(2) Became exercisable on April 18, 1994.
(3) Exercisable in 33-1/3% increments on April 18, 1994, April 18, 1995
and April 18, 1996.
(4) Exercisable in 33-1/3% increments on March 14, 1995, March 14, 1996
and March 14, 1997.
8
<PAGE> 10
OPTION VALUE TABLE
The following table sets forth information concerning the fiscal year
end number and value of unexercised options for each of the Named Executive
Officers.
1994 FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS
FISCAL YEAR AT FISCAL YEAR
END (#) END ($)(1)
------------- -------------
NAME AND EXERCISABLE/ EXERCISABLE/
PRINCIPAL POSITION UNEXERCISABLE UNEXERCISABLE
------------------ ------------- -------------
<S> <C> <C>
George H. Inman . . . . . . . . . . . . . . . . . . . . . . 200,000/0 $0/$0
A. Montague Miller . . . . . . . . . . . . . . . . . . . . 81,813/70,000 $742,992/$28,200
Cary H. Rivers. . . . . . . . . . . . . . . . . . . . . . . 47,000/25,000 $504,840/$14,100
Michael W. Harris. . . . . . . . . . . . . . . . . . . . . 47,000/25,000 $504,840/$14,100
Henry T. Sanders . . . . . . . . . . . . . . . . . . . . . 33,000/25,000 $336,560/$14,100
- -------------
</TABLE>
(1) In-the-Money Options are those where the 1994 fiscal year-end fair
market value of the underlying shares of Common Stock (the average of
the bid and asked prices on September 23, 1994, as reported by the
Nasdaq National Market) exceeds the exercise price of the option.
INCENTIVE COMPENSATION PLANS. The 1994 Senior Management Cash
Incentive Compensation Program for fiscal 1994 (the "1994 Incentive Program")
provided that if a certain level of earnings before interest and taxes was
achieved during fiscal 1994 (the "1994 Bonus Target") the participants were
entitled to be paid an aggregate bonus of $1,074,000. An additional bonus
equal to 15% of the amount by which earnings before interest and taxes for
fiscal 1994 exceeded the 1994 Bonus Target was also payable under the 1994
Incentive Program. The amount of the award to individual participants was
determined by the Board of Directors in its sole discretion, after receiving
recommendations from the Compensation Committee, the Chief Executive Officer
and the President. Messrs. Inman, Miller, Rivers, Harris and H. Sanders and
three other executive officers received awards under the 1994 Incentive
Program. All of such awards were paid in fiscal 1995 and are included in the
Summary Compensation Table above.
The Management Cash Incentive Compensation Plan is intended to reward
eligible employees for efficient and successful management. Each fiscal year,
the Chief Executive Officer of the Company selects and the Board of Directors
approves key employees who are eligible to participate in the plan for that
year, and appoints such employees to Group A, B, C, or D. Employees in each
group receive incentive compensation in accordance with a formula based upon
the Company's earnings for the relevant fiscal year, up to a maximum percentage
of base salary. Group A employees receive awards of up to 100% of base salary,
Group B employees up to 70%, Group C employees up to 45%, and Group D employees
up to 25%. Eligible employees are required to be employed on the last day of
the fiscal year in order to receive incentive compensation, provided that
employees whose employment terminates during the fiscal year because of death,
disability or retirement under a Company retirement plan receive a prorated
award that reflects the number of months during which they were participants.
Incentive compensation is payable within 90 days of the
9
<PAGE> 11
expiration of the relevant fiscal year. Messrs. Swanson and Tyra received
awards under the Management Cash Incentive Compensation Plan attributable to
the 1994 fiscal year. Such award was paid in fiscal 1995.
EXECUTIVE OFFICER DEFERRED COMPENSATION PLANS. The Company has
entered into substantially similar individual Deferred Compensation Plans with
Messrs. Inman, Miller and Swanson. While the plans are unfunded arrangements,
the Company has purchased a life insurance policy for each participant in order
to provide, in whole or in part, for the benefits, and has established
revocable life insurance trusts in order to fund the benefits of each
participant. The plans provide for the payment of certain retirement, death
and disability benefits. A participant who retires on or after age 65 will
have his benefit paid in 120 equal monthly installments, commencing on the
first day of the month following his retirement. A participant who terminates
employment prior to attaining age 65 will have his benefit paid in equal
monthly installments over the period commencing on the date of his termination
or voluntary retirement, or if after the date the participant attains age 60,
and ending on the date the participant attains age 75. Mr. Swanson's Deferred
Compensation Plan was amended on May 24, 1993 to provide for his benefit to be
paid in 240 equal monthly installments of $4,166.66 beginning on November 1,
1996. The Deferred Compensation Plans of Messrs. Inman and Miller were
amended on September 23, 1993 to increase the monthly retirement benefits of
such participants to $20,000 and $12,500, respectively.
If a participant dies subsequent to the date his retirement benefit
payments commence, the participant's beneficiary will receive the remainder of
the monthly payments that are due. If a participant dies prior to the
commencement of the participant's retirement benefit, his beneficiary will
receive a monthly benefit (which in the case of Mr. Inman's beneficiary is
$7,380, in the case of Mr. Miller's beneficiary is $6,000 and in the case of
Mr. Swanson's beneficiary is $1,458) paid over a period of 120 months
commencing on the first day of the second month following the participant's
death.
If a participant (other than Mr. Swanson) becomes disabled while
employed with the Company, the participant will receive a monthly disability
benefit in an amount which in the case of Mr. Inman is $9,910 and in the case
of Mr. Miller is $2,981. Such benefit will continue until age 65, or if
earlier, the date the participant is no longer classified as disabled. A
participant's retirement benefit becomes fully vested upon his termination for
disability and commences on the first day of the month following the month the
participant is no longer classified as disabled. If, however, the participant
returns to the employ of the Company, his retirement benefit will commence upon
his subsequent termination of employment. Mr. Swanson is not entitled to
disability benefits under the terms of his plan.
Except in the case of Mr. Miller, the plans provide for payment of
medical expenses for the participant, his spouse (except after certain events)
and dependents until the earlier of both the participant and his spouse
attaining age 65 or the death of both of them. Any payment of medical expenses
will be offset by payments of medical expenses received from certain other
sources. The plans also provide for, in the event of the participant's
disability, continued payment of the participant's base salary, incentive
compensation in the amount based on the previous year's incentive compensation
payments, and other employee benefits he was entitled to receive, until the
participant receives payment under the disability income insurance policy
maintained by the Company. Messrs. Inman's and Miller's plans also provide for
(i) a lump sum payment equal to the cash surrender value of the key man life
insurance policy maintained by the Company on their respective lives on the
first day of the month in which any payment is made to Messrs. Inman or Miller
under their respective plan, and (ii) maintenance of the Company's disability
income policy for Messrs. Inman and Miller until the earlier of the date they
reach age 65 or death. In addition, Mr. Inman's plan provides for the sale
upon retirement or disability of the Company-owned automobile that Mr. Inman is
driving at such time to Mr. Inman for $100.
10
<PAGE> 12
As a condition to receiving benefits, the plans require the respective
participants to be available to perform consulting services during the period
in which benefits are paid under the plan. All benefits under a participant's
plan are forfeited if the participant either (i) engages in conduct which is
competitive with the Company in the manufacture or sale of products similar to
the Company's principal products or (ii) fails to comply with the terms of his
consulting arrangement.
Messrs. Inman Miller, and Swanson are fully vested under the plan.
The annual premiums paid by the Company for life insurance policies purchased
to fund the benefits are as follows: Mr. Inman, $46,357; Mr. Miller, $23,542;
and Mr. Swanson, $14,176.
The Company has entered into identical Deferred Compensation Plans
with Messrs. Rivers, Harris, H. Sanders and one other executive officer. While
the plans are unfunded arrangements, the Company has purchased a life insurance
policy for each participant in order to provide, in whole or in part, for
benefits under the plans. A participant becomes fully vested in his retirement
benefit of $6,250 per month upon (i) attaining age 60 or (ii) completing 12
years of service with the Company. If a participant's employment is terminated
for reasons other than for cause or death (including disability), prior to
becoming fully vested under his plan, his benefit will be calculated based upon
a vesting schedule providing for 5% vesting after the completion of four years
of service subsequent to the effective date of the participant's plan, and
additional vesting in varying increments for each additional year of service
until the participant is 100% vested after the completion of 12 years of
service. If a participant is terminated for cause within 15 years of the
effective date of his plan, his benefit will be calculated under a vesting
schedule under which he will become vested in 25% of his benefit upon
completion of nine years of service subsequent to the effective date of the
participant's plan and 100% vested after the completion of 12 years of service.
A participant's retirement benefit will commence on the first day of the month
following his attainment of age 60, or, if later, the month of his termination
of employment, and will be paid in equal monthly installments until the
participant attains age 75.
If a participant dies prior to the commencement of his retirement
benefit, his beneficiary will receive 120 monthly payments in the amount of
$3,000 each commencing no later than the first day of the second month
following the participant's death. If a participant dies after he has begun to
receive his retirement benefit, the participant's beneficiary will receive the
remainder of the monthly payments that were due the participant.
As a condition to receiving benefits, the plans require the respective
participants to perform consulting duties for the Company during the period
benefits are being paid. All benefits under a participant's plan are forfeited
if the participant either (i) engages in conduct which is competitive with the
Company in the manufacture or sale of products similar to the Company's
principal products or (ii) fails to comply with the terms of his consulting
arrangement.
As of December 5, 1994, Messrs. Rivers, Harris and H. Sanders each had
completed seven years of service for vesting purposes. The annual premiums
paid by the Company for life insurance policies purchased to fund the benefits
are as follows: Mr. Rivers, $12,433; Mr. Harris, $10,385; Mr. H. Sanders,
$11,642; for the other executive officer, $17,818.
EMPLOYMENT AGREEMENTS. The Company has employment agreements with
each of its executive officers. The employment agreements prohibit the
employee from engaging in a business similar to the Company's within the United
States for a period of two years after termination of employment. The
employment agreements with Messrs. Inman and Miller expire on May 5, 1997 and
September 27, 1998, respectively. Each of the employment agreements with
Messrs. Rivers, Harris and H. Sanders expires on September 29, 1996.
Under the agreements, compensation is payable in the form of a base
annual salary with fringe benefits, as described below, and with continued
employment thereunder to be subject to
11
<PAGE> 13
termination for disability or cause. The fringe benefits include a director
and officer liability insurance policy, a travel accident policy, a new
demonstrator vehicle each year, 100% medical and dental expense coverage up to
an annual payment limit of $50,000 and individual disability insurance. The
monthly disability benefits under such individual policies are $7,000 and
$6,000 for Messrs. Inman and Miller, respectively, and $3,000 for each of
Messrs. Rivers, Harris and H. Sanders. In addition, Messrs. Inman and Miller
are entitled to limited use of the Company airplane, reimbursement of country
club dues and personal legal and tax preparation expenses, the services of
Company employees for certain maintenance and repair jobs and use of Company
cars. The Company purchases an automobile for Mr. Miller every three years,
and for Mr. Inman every two years. Mr. Miller is entitled to buy the
automobile at the end of the three-year period for an amount equal to the
depreciated book value of the automobile. If the price of the new automobile
for Mr. Miller is over $25,000 he must contribute the amount in excess of
$25,000 and the automobile is depreciated using $25,000 as the original
purchase price. Automobiles with a manufacturer's suggested price of $35,000
or less are leased for a period not less than two years for Messrs. Rivers,
Harris, Sanders and one other executive officer. The Company is the owner of
an equity membership at Melrose in Beaufort County, South Carolina and Mr.
Inman is the current designated member for such membership, and a membership at
the Tournament Players Club in Ponte Vedra, Florida where Mr. Rivers is the
current designated member. Consistent with the employment agreements, the
Board of Directors has decided the 1995 fiscal year base salaries for Messrs.
Inman, Miller, Rivers, Harris and H. Sanders will be $366,080, $281,840,
$150,399, $120,735 and $113,527, respectively. Adjustments in salaries for
future years will be determined in the sole discretion of the Board of
Directors. Amounts paid under the employment agreements in the 1994 fiscal
year are included in the Summary Compensation Table above.
EMPLOYEE STOCK OWNERSHIP PLAN. The Company established an Employee
Stock Ownership Plan (the "ESOP"), effective as of September 26, 1988, which is
a noncontributory defined contribution stock bonus plan. The ESOP primarily
invests in the Company's Common Stock. All employees not covered by a
collective bargaining agreement are eligible to participate after attaining age
21 and completing one year of service. The Company's contributions are
discretionary and generally will not exceed 15% of the aggregate compensation
of participating employees. The Company's contributions may be in the form of
Common Stock, cash, or both. Contributions to the ESOP are allocated to
individual accounts in proportion to the participant's compensation.
The net value of Common Stock and cash contributions allocated to each
of Messrs. Inman, Miller, Rivers, Harris and H. Sanders for fiscal 1993 was
$8,444. Such amounts were allocated in fiscal 1994 and are included in the
Summary Compensation Table above. The net value of total contributions to the
current executive officers as a group for fiscal 1993 was $71,260. Allocations
for fiscal 1994 have not yet been determined.
Participants vest in the ESOP over a seven-year period and become
fully vested upon death, disability or reaching age 65 while employed by the
Company. For vesting, service with the Company includes service prior to
September 26, 1988 with the Company or with its predecessors. Distributions
are made to participants after termination of employment or at the normal
retirement age of 65. Distributions are made in Common Stock or cash.
Participants have the right to exercise voting rights on all Common
Stock allocated to their accounts in the ESOP. Voting rights for Common Stock
that is not allocated to participant accounts will be exercised as directed by
the Administrative Committee.
12
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report of the Compensation Committee of the Board of Directors
(the "Committee") describes the Company's executive compensation policy and
programs as well as the basis on which the Committee made fiscal 1994
compensation recommendations to the Board of Directors concerning the officers
of the Company, including the Chief Executive Officer and the other officers
named in the Summary Compensation Table above.
COMPENSATION POLICY
In determining the amount and composition of executive compensation,
the Committee attempts to provide a compensation package that will enable the
Company to attract, retain and motivate talented executives, reward outstanding
performance and align the interests of the Company's management and
shareholders. The primary components of the Company's executive compensation
package are base salary, incentive compensation and stock options. The
Committee believes that this policy promotes the attainment of corporate
objectives.
COMPENSATION PROGRAMS
Base Salary
The Committee solicits recommendations from the Chief Executive
Officer respecting each officer's base salary. The Committee then reviews each
officer's responsibilities, performance, seniority, compensation package
relative to other Company officers, and the terms of his employment agreement,
if any. In making its recommendations to the Board of Directors, the Committee
exercises its discretion and judgment based on all of these factors and the
Company's actual and anticipated financial performance and condition. The
Committee does not attempt to deal with the factors separately or to adhere to
specific performance criteria. With the exception of Mr. Tyra, the Board of
Directors established the fiscal 1994 base salaries for the Company's officers
in September 1993 in accordance with the Committee's recommendations. Mr.
Tyra's fiscal 1994 base salary was established by the Board of Director's in
February 1994.
Incentive Compensation
The Board of Directors adopts incentive compensation plans pursuant to
which key employees are eligible to receive annual cash incentive compensation
payments. The plans typically provide for incentive compensation to be paid in
accordance with a formula based on the Company's earnings before interest and
taxes, up to a maximum percentage of base salary. The plans may vary from year
to year based on corporate objectives and individual and corporate performance.
In addition, the Board of Directors reserves the right to award discretionary
bonuses. Under the Company's 1994 Senior Management Cash Incentive
Compensation Program (the "1994 Incentive Program"), which was established by
the Board of Directors at the beginning of the fiscal year, certain officers
recommended by the Committee and selected by the Board of Directors were
eligible to be paid an aggregate bonus of $1,074,000 if the Company achieved a
certain level of earnings before interest and taxes during fiscal 1994 (the
"1994 Bonus Target"). The participants were also eligible to be paid an
additional bonus in an aggregate amount equal to 15% of the amount by which
earnings before interest and taxes for fiscal 1994 exceeded the 1994 Bonus
Target. The amount of the bonus to individual participants was determined at
the end of the fiscal year by the Board of Directors on a discretionary basis
after receiving recommendations from the Committee, the Chief Executive Officer
and the President.
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<PAGE> 15
Stock Options
The Company believes that significant ownership of stock by officers
of the Company is the best way to align the interests of management and
shareholders. The Committee administers the Company's 1989 Incentive Stock
Option Plan and 1992 Stock Option Plan, which were designed to help attain this
objective and to provide long-term incentive compensation directly related to
the value of the Company's common stock. There is no requirement that grants
under the Plans be made on a regular basis or in accordance with a prescribed
scheme of distribution. The Committee generally considers whether to grant
options on an annual basis in connection with its evaluation of officer
performance and its establishment of base salaries and incentive compensation
plans. At the end of fiscal 1994, the Committee granted stock options under
the 1992 Stock Option Plan with a ten-year term to certain officers and other
key employees. The exercise price of the options is equal to the fair market
value of the Company's common stock on September 14, 1994, the effective date
of the grant. The options are subject to certain vesting provisions to
encourage the recipients to remain employed with the Company. The number of
options granted to an officer at the end of fiscal 1994 was based on the number
of options granted to such officer in the past, such officer's base salary, and
the other factors previously described in this report.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee annually reviews and recommends to the Board of
Directors the compensation of George H. Inman, the Chief Executive Officer.
Prior to fiscal 1994 Mr. Inman had not received any stock options under the
1992 Stock Option Plan or its predecessor, the 1989 Incentive Stock Option
Plan. In September 1993 the Board of Directors established Mr. Inman's base
salary for fiscal 1994 at $352,000 in accordance with the Committee's
recommendation. Mr. Inman's base salary in fiscal 1993 was $338,000. The
increase was based on the Committee's evaluation of the factors previously
described in this report and represented essentially the same percentage
increase as that recommended by the Committee for other officers. The
Committee also granted Mr. Inman stock options covering 200,000 shares of the
Company's common stock. The exercise price of the options is equal to the fair
market value of the Company's common stock on October 18, 1993, the effective
date of the grant. The options expire ten years from the date of grant and
provide that Mr. Inman will forfeit two-thirds of the options in the event he
breaches the terms of his employment agreement before January 1, 1995, and
one-third of the options if he breaches the term of his employment agreement
after December 31, 1994 and before January 1, 1996. The grant was based on Mr.
Inman's willingness to enter into a new three-year employment agreement with
the Company, the fact that he was the only officer of the Company who had not
previously received options under the Company's 1992 Stock Option Plan or 1989
Incentive Stock Option Plan, and his special importance to the successful
completion of the Company's refinancing plan and to the direction and
management of the Company. The Committee did not grant Mr. Inman any
additional options at the end of fiscal 1994 and does not plan to grant Mr.
Inman additional options in the future. At the end of fiscal 1994 the
Committee recommended, and the Board of Directors approved, a bonus to Mr.
Inman under the 1994 Incentive Program of $401,540, representing 27.6% of the
aggregate amount available for distribution to individual participants, based
on its evaluation of the factors previously described in this report.
Respectfully submitted,
THE COMPENSATION COMMITTEE
Frank T. Nickell, Chairman
James C. Alban, Jr.
Wellford L. Sanders, Jr.
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<PAGE> 16
PERFORMANCE GRAPH
The following graph compares cumulative total shareholder return for
the Company with a broad performance indicator, the CRSP Total Return Index for
the Nasdaq Stock Market (US), and line-of-business index, the Nasdaq
Non-Financial Stock Index, for the period from October 18, 1993 to September
25, 1994. In the graph below, the Company's data point for October 18, 1993
reflects the public offering price of $17.50 per share. The Company's other
data points reflect the average of the bid and asked prices on the last
business day of the Company's first, second, third and fourth quarters, as
reported by the Nasdaq National Market.
Comparison of Cumulative Total Return (1)
Club Car, Inc., Nasdaq Non-Financial Stock Index, CRSP Total Index for the
Nasdaq Stock Market (US)
<TABLE>
<S> <C> <C> <C> <C> <C>
10/18/94 12/23/93 3/25/94 6/24/94 9/23/94
--------- --------- -------- -------- --------
Club Car 100.00 88.57 91.43 80.01 92.86
Nasdaq Non-Financial Stock Index (2) 100.00 96.22 99.66 85.11 94.43
CRSP Total Return Index for Nasdaq Stock Market (US)(3) 100.00 96.11 99.56 88.44 96.63
</TABLE>
(1) The graph shows the cumulative total return on $100 invested on
October 19, 1994 in Common Stock or specified index - including
reinvestment of dividends.
(2) Nasdaq Non-Financial Stock Index prepared for the Nasdaq Stock Market
by the Center for Research in Securities Prices at the University of
Chicago.
(3) CRSP Total Return Index for the Nasdaq Stock Market prepared for the
Nasdaq Stock Market by the Center for Research in Securities Prices at
the University of Chicago.
15
<PAGE> 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's initial public offering of Common
Stock (the "Offering") completed in October 1993, affiliates of Kelso, an
affiliate of CS First Boston Corporation and the Company entered into a
stockholders agreement (the "1993 Stockholders Agreement") that provides that
upon the request of the Kelso affiliates, the Company will register (the
"Demand Rights"), on up to two occasions, the sale of Common Stock owned by the
Kelso affiliates under the Securities Act of 1933, as amended, and applicable
state securities laws. The Company's obligation is subject to certain
limitations relating to the timing and size of registrations. The Company is
also obligated to offer the First Boston affiliate and the Kelso affiliates the
right to include shares of Common Stock owned by them in certain registration
statements filed by the Company (the "Incidental Rights"). The Company will
indemnify the Kelso affiliates and the First Boston affiliate and their
officers, directors and controlling persons for certain liabilities in
connection with any such offering, other than liabilities for information
furnished in writing by the Kelso affiliates or the First Boston affiliate.
The Company is obligated to pay all expenses incurred in connection with the
registration of shares of Common Stock pursuant to the exercise of the Demand
Rights and the Incidental Rights, excluding underwriting discounts and
commissions.
In the past, Kelso received fees, plus reimbursement of out-of-pocket
expenses, from the Company for providing strategic planning and financial
advisory services (including the services of two of its officers, Messrs.
Nickel and Wall, as members of the Board of Directors of the Company) and
advisory services relating to the ESOP, the establishment of the Incentive
Stock Option Plans and to other aspects of the planning and financing of the
Company including its access to the capital markets. The agreement pursuant to
which Kelso received fees for planning and advisory services was terminated
effective with the closing of the Offering.
The Company paid Kelso a one-time fee of $300,000 in connection with
the termination of such agreement and for financial advisory services rendered
in connection with the Offering and the refinancing plan undertaken by the
Company in connection with the Offering. Such fee was paid by the Company in
fiscal 1994.
The law firm of which Mr. Miller was a partner provides legal services
to the Company. The law firm of McGuire, Woods, Battle & Boothe, of which
Wellford L. Sanders, Jr. is a partner, also provides legal services to the
Company.
All transactions with officers, directors, and affiliates of the
Company have been on terms that were no less favorable to the Company than
those that could be obtained from an unaffiliated third party or negotiated in
good faith on an arm's-length basis.
COMPLIANCE WITH EXCHANGE ACT FILING REQUIREMENTS
The Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and any persons owning more than 10% of the Common
Stock, to file certain reports of ownership and changes in ownership with the
Securities and Exchange Commission. Based solely on its review of the copies
of the Forms 3, 4 and 5 received by it, and written representations from
certain reporting persons that no Forms 5 were required to be filed by those
persons, the Company believes that all executive officers, directors and 10%
shareholders complied with such filing requirements, except that Joseph S.
Schuchert, an individual who may be deemed to be the beneficial owner of more
than 10% of the Common Stock, inadvertently failed to report a transaction that
occurred in June 1994. A corrective filing has been made.
16
<PAGE> 18
PROPOSAL TWO: RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit
Committee, selected the firm of Arthur Andersen LLP as independent public
accountants for the Company for fiscal year 1995, subject to ratification by
the shareholders. Action by shareholders is not required by law in the
selection of independent public accountants, but their selection is submitted
by the Board in order to give the shareholders an opportunity to ratify the
Board's selection. If the shareholders do not ratify the selection of Arthur
Andersen LLP, the Board of Directors will reconsider the selection of
independent public accountants. Unless otherwise specified, shares represented
by proxies will be voted for the ratification of the selection of Arthur
Andersen LLP as independent public accountants for fiscal year 1995.
Representatives of Arthur Andersen LLP are expected to be present at
the Annual Meeting. Such representatives will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER BUSINESS
Management knows of no other business which will be presented for
consideration at the Annual Meeting, but should any other matters be brought
before the meeting, it is intended that the persons named in the accompanying
proxy will vote such proxy at their discretion.
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<PAGE> 19
ADDITIONAL INFORMATION
VOTING PROCEDURES
Votes will be tabulated by one or more Inspectors of Elections.
Except for the election of directors, approval of the matters to be considered
at the meeting will require the affirmative vote of the holders of at least a
majority of the shares of outstanding Common Stock represented at the meeting,
unless otherwise indicated. If a shareholder, present in person or by proxy,
abstains on any matter, the shareholder's shares will not be voted on such
matter. Thus an abstention from voting on a matter has the same legal effect
as a vote "against" the matter, even though the shareholder may interpret such
action differently. With respect to the election of directors, the two
nominees receiving the greatest number of votes cast for the election of
directors will be elected.
A majority of the shares entitled to vote, represented in person or by
proxy, will constitute a quorum for the transaction of business at the meeting.
Shares for which the holder has elected to abstain or to withhold the proxies'
authority to vote on a matter will count toward a quorum. "Broker non-votes"
will not count toward a quorum and will not be voted on any matter to be
considered at the meeting.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any shareholder desiring to present a proposal to the shareholders at
the 1995 Annual Meeting, which currently is expected to be scheduled on or
about February 1, 1996, and who desires that such proposal be included in the
Company's proxy statement and proxy card relating to that meeting, must
transmit such to the Secretary of the Company so that it is received at the
Company's principal executive offices on or before August 18, 1995. All such
proposals should be in compliance with applicable Securities and Exchange
Commission regulations.
By Order of the Board of Directors,
/s/ A. MONTAGUE MILLER
A. Montague Miller
Secretary
December 16, 1994
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<PAGE> 1
EXHIBIT (b)
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made and entered into as of
_________, 1993 by and between CLUB CAR, INC., a Delaware corporation ("Club
Car"), and _______________ (the "Indemnitee").
RECITALS
WHEREAS Club Car has determined that it is in its best interest
contractually to obligate itself to indemnify the directors and officers of
Club Car against inordinate risks of claims and actions against such directors
and officers arising out of their services to and activities on behalf of Club
Car; and
WHEREAS the Indemnitee, in his capacity as a director, officer,
employee and/or agent of Club Car, provides valuable services essential to the
business and operations of Club Car, and the Indemnitee is willing to serve or
continue to serve as a director, officer, employee and/or agent of Club Car on
the condition that he or she is so indemnified; and
WHEREAS Club Car's Certificate of Incorporation, as amended (the "Club
Car Certificate"), provides for the indemnification of the directors, officers,
employees and agents of Club Car to the maximum extent permitted by applicable
law and for the limitation of the liability to Club Car or its shareholders of
a director of Club Car for monetary damages for a breach of fiduciary duty; and
WHEREAS Club Car wishes to avail itself of opportunities under
applicable law to enter into such a contract of indemnification and
contribution; and
WHEREAS Club Car presently maintains a policy or policies of directors
and officers liability insurance covering certain liabilities which may be
incurred by the respective directors and officers of Club Car in the
performance of their duties; and
WHEREAS developments with respect to the terms and availability of
directors and officers liability insurance and with respect to the application,
amendment and enforcement of statutory and by-law indemnification provisions
generally have raised questions concerning the adequacy and reliability of the
protection afforded thereby to directors and officers; and
WHEREAS in order to resolve such questions and thereby induce the
Indemnitee to continue to serve as a director, officer, employee and/or agent,
as the case may be, of Club Car without undue concern for possible liabilities
that may be
<PAGE> 2
alleged to exist as a result of his acting as such, Club Car has determined and
agreed to enter into this Agreement with the Indemnitee.
NOW, THEREFORE, for and in consideration of the Indemnitee's continued
service as a director, officer, employee and/or agent, as the case may be, of
Club Car after the date hereof, and other good and valuable considerations, the
receipt and sufficiency of which have hereby been acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS FOR PURPOSES OF THIS AGREEMENT.
(a) "Legal Entity" shall mean a corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise.
(b) "Proceeding" shall mean any threatened, pending, or
completed action, suit, proceeding or appeal whether civil, criminal,
administrative or investigative and whether formal or informal.
2. INDEMNIFICATION BY CLUB CAR. Club Car hereby agrees to
indemnify the Indemnitee against and hold the Indemnitee harmless from any
claims, liabilities, damages, expenses (including without limitation attorneys'
fees and expert witnesses' fees), losses, costs, judgments, fines, penalties,
awards or amounts paid in settlement incurred by the Indemnitee and arising out
of his capacity as a director, officer, employee and/or agent of Club Car, to
the maximum extent authorized or permitted by applicable law. Furthermore,
Club Car shall advance expenses to the Indemnitee to the maximum extent
authorized or permitted by applicable law to meet the obligations set forth
herein, subject to Section 5 below. Club Car represents that the Club Car
Certificate and Club Car's bylaws provide for indemnification of its directors
and officers to the maximum extent authorized or permitted by applicable law.
3. LIMITATION ON LIABILITY OF CLUB CAR'S DIRECTORS. Club Car
hereby represents that the Club Car Certificate eliminates the personal
liability of a director to Club Car or its shareholders for breaches of
fiduciary duty as a director except under the circumstances described in
Section 102(b)(7) of the Delaware General Corporation Law.
4. NO AMENDMENT WITHOUT NOTICE. Except as otherwise directed by
the stockholders of Club Car, Club Car hereby agrees that it will not amend or
consent to the amendment of the Club Car Certificate to in any manner limit or
eliminate the provisions therein which provide for the indemnification of any
director, officer, employee or agent or which limit the personal liability of
directors of Club Car to Club Car or its stockholders for monetary damages
without first providing written notice to the Indemnitee.
<PAGE> 3
5. ADVANCEMENT OF EXPENSES. The obligations of Club Car to make
advances under Section 2 above shall in each case be contingent upon an
undertaking from the Indemnitee to repay the same if it is ultimately
determined that the Indemnitee is not entitled to indemnification.
6. DETERMINATION THAT INDEMNIFICATION IS NOT PERMISSIBLE. With
respect to Club Car's indemnification obligations under Section 2 above, a
determination that such indemnification is not permissible in the specific case
may be made, if the Indemnitee is a director, as provided by applicable law
(or, if applicable law does not otherwise provide, in the same manner as for a
person not a director, as set forth below), and if the Indemnitee is not a
director, by general or specific action of the Board of Directors of Club Car,
which action may be taken before or after a claim for indemnification is made,
or as otherwise provided by applicable law. No such determination may be made
later than 90 days after the Indemnitee's liability in a specific case has been
finally determined. If a majority of the directors of Club Car shall have
changed after the date of the alleged conduct giving rise to a claim for
indemnification, such determination may, at the option of the Indemnitee, be
made only by special legal counsel agreed upon by such Board of Directors and
the Indemnitee.
7. EFFECT OF TERMINATION OF PROCEEDING. Determination of a
Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not of itself create a presumption that
the Indemnitee acted in such a manner as to make the Indemnitee ineligible for
indemnification.
8. INSURANCE. Club Car hereby represents and warrants that it
has purchased and maintained in effect for the benefit and on behalf of the
Indemnitee, and covenants that it will purchase and maintain in effect for the
benefit and on behalf of the Indemnitee so long as the Indemnitee shall
continue to serve as a director, officer, employee and/or agent of Club Car (or
shall continue at the request of Club Car to serve as a director, officer,
employee and/or agent of another Legal Entity) and thereafter so long as the
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that the Indemnitee was a director, officer, employee
and/or agent of Club Car (or served in any other capacity), one or more valid,
binding and enforceable policies of insurance against all liabilities that may
be incurred by the Indemnitee in or arising out of his capacity as a director,
officer, employee and/or agent of Club Car, without regard to the power of Club
Car to indemnify the Indemnitee against any such liability under applicable
law. Such insurance shall specifically protect and insure the Indemnitee
against, without limitation, to the extent available, any liabilities arising
out of any act or omission to act by the Indemnitee in his capacity as a
director, officer, employee and/or agent of Club Car or
<PAGE> 4
otherwise on behalf of Club Car. Such insurance shall provide coverage in the
maximum amount that is commercially feasible as determined by the Board of
Directors of Club Car, but not less than $10,000,000, and shall be placed with
a reputable insurance company satisfactory to the Indemnitee. Evidence of such
insurance and the terms, provisions, restrictions and exclusions thereof shall
be provided to the Indemnitee on his request. In the event Club Car does not
purchase and maintain in effect any such policy or any of such policies, as the
case may be, of insurance pursuant to the provisions of this Agreement, Club
Car agrees to hold harmless and indemnify the Indemnitee to the full extent of
the coverage which would have otherwise been provided for the benefit of the
Indemnitee pursuant to such policy or policies, unless Club Car shall have used
its best efforts throughout in seeking to purchase and maintain in effect such
policy or policies.
9. CONTRIBUTION. In order to provide for just and equitable
contribution in any case in which the Indemnitee makes claim for
indemnification pursuant to this Agreement and in which it is judicially
determined (by entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case,
notwithstanding the fact that the provisions of this Agreement so provide for
indemnification in such case, then, and in each such case, (i) Club Car and
(ii) the Indemnitee and all other directors, officers, employees and agents of
Club Car seeking indemnification in such case, in the aggregate, shall
contribute to the aggregate losses, claims, damages, or liabilities to which
the Indemnitee and all other such persons seeking indemnification may be
subject (after contribution from all others) in such proportion so that Club
Car is responsible for the portion represented by the percentage that the
aggregate revenues of Club Car since September 28, 1992 bear to the sum of (y)
such aggregate revenues and (z) the aggregate compensation received since
September 28, 1992 by the Indemnitee and all other such persons seeking
indemnification, and the Indemnitee and such other persons shall be responsible
for the remaining portion; provided, however, that in no event shall the amount
to be contributed by the Indemnitee exceed the aggregate compensation received
by the Indemnitee from Club Car since September 28, 1992.
Only in the event that all of the above alternatives shall
fail, then the parties shall be responsible according to the relative fault of
Club Car and the Indemnitee in connection with the statements, actions or
omissions which resulted in such damages, and other relevant equitable
considerations shall also be considered. Club Car and the Indemnitee agree
that it would not be just and equitable if the respective obligations of Club
Car and the Indemnitee to contribute pursuant to this Section 9 were to be
determined by pro rata or per capita allocation of the aggregate damages (even
if the Indemnitee and the other
<PAGE> 5
directors, officers, employees and agents of Club Car were treated as one
entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in this Section 9.
For purposes of this Section 9, the term "damages" shall include, without
limitation, any legal or other expenses reasonably incurred by the indemnified
party in connection with investigating or defending against or appearing as a
third party witness in any action or claim that is the subject of the
contribution provisions of this Section 9.
10. FURTHER ACTION. Club Car hereby agrees to use its best
efforts to take all action necessary to modify the rights provided to the
Indemnitee under this Agreement to the extent that additional indemnification
or contribution rights or rights limiting or eliminating liability may be
obtained from time to time under applicable law.
11. RELEASE OF CLAIMS. Club Car hereby releases the Indemnitee
from any claim, and agrees and covenants that it will not make any claim,
against the Indemnitee for any act or omission to act, to the maximum extent
permitted by applicable law. Club Car hereby agrees to indemnify the
Indemnitee against and hold the Indemnitee harmless from any and all claims,
liabilities, damages, expenses, losses or costs, including without limitation
attorneys' fees and expert witnesses' fees, arising out of or in any way
relating to any claim that Club Car or any of its subsidiaries may have or
assert against the Indemnitee, to the maximum extent permitted by applicable
law.
12. CONTINUING EFFECT. All agreements for indemnification or
contribution by Club Car contained herein shall continue during the period the
Indemnitee is or was a director, officer, employee and/or agent of Club Car (or
is or was serving at the request of Club Car as a director, officer, employee
and/or agent of another Legal Entity) and continue thereafter so long as the
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that the Indemnitee was a director, officer, employee
and/or agent of Club Car or serving in any other capacity referred to herein.
13. ACKNOWLEDGEMENT OF RELIANCE BY INDEMNITEE; AUTHORITY. Club
Car expressly confirms and agrees that it has entered into this Agreement and
assumed the obligations imposed on it hereby in order to induce the Indemnitee
to continue to serve as a director, officer, employee and/or agent of Club Car
after the date hereof without undue concern for risks of claims and actions
against him arising out of his services to and activities on behalf of Club
Car. Club Car represents that it has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware; that it
has full power and authority to enter into this Agreement and to perform its
obligations hereunder; and that this Agreement has been duly
<PAGE> 6
authorized, executed and delivered and, assuming due execution and delivery by
the Indemnitee, constitutes the valid and legally binding obligation of Club
Car enforceable in accordance with its terms.
14. ENFORCEMENT EXPENSES. In the event the Indemnitee is required
to bring any action to enforce any right or collect any money due under this
Agreement and is successful in such action, Club Car agrees to reimburse the
Indemnitee for all of the Indemnitee's fees and expenses, including without
limitation attorneys' fees and expert witnesses' fees, in bringing or pursuing
such action. In the event the Indemnitee brings any such action but is not
successful, Club Car agrees to reimburse the Indemnitee for all of the
Indemnitee's reasonable fees and expenses, including without limitation
attorneys' fees and expert witnesses' fees, in bringing or pursuing such
action; provided, however, that Club Car shall not have any reimbursement
obligation under this sentence if, in connection with such action, a court of
competent jurisdiction determines that each of the material assertions made by
the Indemnitee as a basis for such action were not made in good faith or were
frivolous.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Indemnitee and upon Club Car and its subsidiaries, successors and assigns,
and shall inure to the benefit of the Indemnitee, his heirs, personal
representatives and assigns, and to the benefit of Club Car and its
subsidiaries, successors and assigns.
16. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof. In particular, if any
indemnification or contribution right provided to the Indemnitee hereunder
shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect other indemnification or contribution
required to be provided to the Indemnitee hereunder.
17. NON-EXCLUSIVITY. It is the intent of the parties to this
Agreement to provide the maximum possible indemnification and contribution
rights to the Indemnitee, and this Agreement shall be interpreted accordingly.
The indemnification and other rights provided to the Indemnitee hereunder are
in addition to, and not exclusive of, any other rights the Indemnitee may have.
18. APPLICABLE LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within the State of Delaware.
19. JURISDICTION AND VENUE. Each of Club Car and the Indemnitee
hereby irrevocably submits in any suit, action or
<PAGE> 7
proceeding arising out of or relating to this Agreement to the jurisdiction and
venue of the United States District Court for the Southern District of Georgia
or the jurisdiction and venue of the Superior Court of Columbia County, Georgia
and waives any and all objections to jurisdiction and review or to venue that
it or the Indemnitee, as the case may be, may have under the laws of the United
States or any state thereof.
20. NOTICE BY THE INDEMNITEE. The Indemnitee shall promptly
notify Club Car in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or any other matter which may be subject to indemnification,
contribution or the advancement of expenses covered hereunder; provided,
however, that the failure to give any such notice shall not result in a waiver
or forfeiture of any of the Indemnitee's rights hereunder.
21. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly received (1) on the date given if delivered personally or by cable,
telegram or telex or (2) on the date received if mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or such other address for a party as such party shall specify by
like notice):
If to Club Car: Club Car, Inc.
4152 Washington Road
Martinez, Georgia 30907
Attention: A. Montague Miller
If to the Indemnitee: _______________________________
___________________________________
_______________________________________
22. MODIFICATION AND WAIVER. This Agreement may be amended or
modified only by a written instrument duly executed by all of the parties
hereto and may be waived only by a written instrument duly executed by the
party against whom such waiver is to be enforced.
23. CAPTIONS. The captions used in this Agreement are for the
convenience of reference only and do not constitute a part of this Agreement.
24. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CLUB CAR, INC.
BY: ____________________________________
INDEMNITEE
<PAGE> 1
Exhibit (c)
[Execution Copy]
============================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CLARK EQUIPMENT COMPANY,
CLARK ACQUISITION SUB, INC.
AND
CLUB CAR, INC.
Dated as of February 3, 1995
============================================================
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.01 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Company Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.03 Composition of the Board of Directors . . . . . . . . . . . . . . . . . . 4
1.04 Action by Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II THE MERGER AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . 5
2.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.02 Conversion of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 Dissenting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.04 Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . 7
2.05 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.06 No Further Rights of Transfers . . . . . . . . . . . . . . . . . . . . . . 10
2.07 Stock Option and Other Plans . . . . . . . . . . . . . . . . . . . . . . . 10
2.08 Certificate of Incorporation of the Surviving Corporation . . . . . . . . 11
2.09 By-Laws of the Surviving Corporation . . . . . . . . . . . . . . . . . . . 11
2.10 Directors and Officers of the Surviving Corporation . . . . . . . . . . . 12
2.11 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . 12
3.01 Representations and Warranties of the Company . . . . . . . . . . . . . . . 12
(a) Due Organization, Good Standing and Corporate Power . . . . . . . . . 12
(b) Authorization and Validity of Agreement . . . . . . . . . . . . . . . 13
(c) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Consents and Approvals; No Violations . . . . . . . . . . . . . . . . 15
(e) Company Reports and Financial Statements . . . . . . . . . . . . . . . 16
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
(f) Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . 17
(g) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(h) Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . 17
(i) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . 18
(j) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(k) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 19
(l) Employment Relations and Agreements . . . . . . . . . . . . . . . . . 22
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(n) Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(o) Intellectual Properties . . . . . . . . . . . . . . . . . . . . . . . 24
(p) Proxy Statement, Schedule 14D-9 and Schedule 14D-1 . . . . . . . . . . 26
(q) Broker's or Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . 27
(r) Environmental Laws and Regulations . . . . . . . . . . . . . . . . . . 27
(s) State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . 28
(t) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 28
(u) Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(v) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . 29
3.02 Representations and Warranties of Parent and Sub . . . . . . . . . . . . . 29
(a) Due Organization; Good Standing and Corporate Power . . . . . . . . . 29
(b) Authorization and Validity of Agreement . . . . . . . . . . . . . . . 30
(c) Consents and Approvals; No Violations . . . . . . . . . . . . . . . . 30
(d) Offer Documents, Schedule 14D-9 and Proxy Statement . . . . . . . . . 31
(e) Broker's or Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . 32
(f) Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(g) Common Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IV TRANSACTIONS PRIOR TO CLOSING DATE . . . . . . . . . . . . . . . . . . . . 32
4.01 Access to Information Concerning Properties and Records . . . . . . . . . 32
4.02 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.03 Conduct of the Business of the Company Pending the Closing Date . . . . . 33
4.04 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.05 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.06 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.07 No Solicitation of Other Offers . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
4.08 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . 38
4.09 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.10 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.11 Directors' and Officers' Insurance; Indemnification . . . . . . . . . . . 39
4.12 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V CONDITIONS PRECEDENT TO MERGER . . . . . . . . . . . . . . . . . . . . . . 41
5.01 Conditions Precedent to Obligations of Parent, Sub and the Company . . . . 41
(a) Approval of Company's Stockholders . . . . . . . . . . . . . . . . . 41
(b) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(c) Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(d) Payment for Common Stock . . . . . . . . . . . . . . . . . . . . . . . 41
(e) Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.02 Conditions Precedent to Obligations of Parent and Sub . . . . . . . . . . . 42
(a) Employee Stock Ownership Plan . . . . . . . . . . . . . . . . . . . . 42
5.03 Conditions Precedent to Obligation of the Company . . . . . . . . . . . . 42
(a) Performance by Parent and Sub . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . . 42
6.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.02 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.01 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.02 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 45
7.03 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.04 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.06 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.07 Binding Effect; Benefit; Assignment . . . . . . . . . . . . . . . . . . . . 47
7.08 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . 47
7.09 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
7.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.12 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.14 "Person" Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ANNEX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
(iv)
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 3, 1995 (this
"Agreement"), by and among CLARK EQUIPMENT COMPANY, a Delaware corporation
("Parent"), CLARK ACQUISITION SUB, INC., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and CLUB CAR, INC., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company (in the case of the Company, based upon the recommendation of a
special committee of independent directors (the "Special Committee")) have
approved the acquisition of the Company by Parent;
WHEREAS, in contemplation thereof it is proposed that Sub will
make a tender offer (the "Offer") to purchase all the issued and outstanding
shares of common stock, $.01 par value, of the Company ("Common Stock"),
subject to the terms and conditions of this Agreement, at a price of $25 per
share net to the seller in cash (the "Offer Price");
WHEREAS, to complete such acquisition, the respective Boards of
Directors of Parent, Sub and the Company, have approved the merger of Sub into
the Company (the "Merger"), pursuant to and subject to the terms and conditions
of this Agreement; and
WHEREAS, the Directors of the Company have unanimously determined
that each of the Offer and the Merger are fair to, and in the best interests
of, the holders of Common Stock, approved the Offer and the Merger and
recommended the acceptance of the Offer and approval and adoption of this
Agreement by the stockholders of the Company; and
WHEREAS, Parent and Sub are unwilling to enter into this
Agreement unless certain stockholders of the Company immediately following the
execution and delivery of this Agreement, enter into a tender agreement (the
"Tender Agreement") among Parent, Sub and certain stockholders of the Company
providing for, among other things, the tender by such stockholders to Sub of
all shares of Common Stock owned by such persons, and the Board of Directors of
the Company has approved Parent and Sub entering into the Tender Agreement
which is to be executed following the execution hereof.
<PAGE> 7
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representations, warranties and agreements herein contained,
the parties hereto agree as follows:
ARTICLE I
THE OFFER
1.01 The Offer. Provided that this Agreement shall not have
been terminated in accordance with Article VI hereof and so long as none of the
events set forth in Annex A hereto (the "Tender Offer Conditions") shall have
occurred and are continuing, as promptly as practicable, but in no event later
than the fifth business day after the date of this Agreement, Sub shall
commence the Offer. The obligations of Sub to accept for payment and promptly
to pay for any shares of Common Stock tendered shall be subject only to the
Tender Offer Conditions any of which may be waived; provided, however, that,
without the consent of the Company, Sub shall not waive the condition that
there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer a number of shares of Common Stock which represent a
majority of the total voting power of all shares of capital stock of the
Company outstanding on a fully diluted basis. The Tender Offer Conditions are
for the sole benefit of Parent and Sub and may be asserted by Parent and Sub
regardless of the circumstances giving rise to any such Tender Offer Conditions
and, subject to the preceding sentence, may be waived by Parent and Sub in
whole or in part. Sub expressly reserves the right to modify the terms of the
Offer, including, without limitation, except as provided below, to extend the
Offer beyond any scheduled expiration date; provided, however, without the
consent of the Company, Sub shall not (i) reduce the number of shares of
Company Common Stock to be purchased in the Offer, (ii) reduce the Offer Price,
(iii) modify or add to the conditions set forth in Exhibit A or (iv) change the
form of consideration payable in the Offer. Notwithstanding the foregoing, the
Offer may not be extended beyond any scheduled expiration date unless (x) any
Person (as defined in Section 7.14 hereof) has made an Acquisition Proposal (as
defined in Section 4.07 hereof) or (y) any of the Tender Offer Conditions shall
not have been satisfied; provided, however, (I) even if the Tender Offer
Conditions have not been satisfied, unless an Acquisition Proposal has been
made, the Offer may not be extended beyond the four month anniversary of the
date of commencement of the
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<PAGE> 8
Offer and (II) if the Tender Offer Conditions have been satisfied, then the
Offer may be extended for an additional five business days so long as at the
time of such extension, all conditions to Parent's obligations to purchase
shares of Common Stock pursuant to the Offer are irrevocably waived.
1.02 Company Actions. The Company hereby consents to the
Offer and the Merger and represents that (a) its Board of Directors (at a
meeting duly called and held), based upon the recommendation of the Special
Committee, has (i) determined by the unanimous vote of the Directors that each
of the Offer and the Merger is fair to, and in the best interests of, the
holders of Common Stock, (ii) approved the Offer and the Merger, (iii)
recommended acceptance of the Offer and approval and adoption of this Agreement
by the stockholders of the Company, (iv) taken all other action necessary to
render (x) Section 203 of the Delaware General Corporation Law and other state
takeover statutes and (y) the Rights Agreement dated as of September 23, 1993
(the "Rights Agreement") inapplicable to the Offer, the Merger and the Tender
Agreement; and (b) Donaldson, Lufkin & Jenrette Securities Corporation has
delivered to the Board of Directors of the Company its opinion that the
consideration to be received by the holders of Common Stock pursuant to the
Offer and the Merger is fair to the holders of Common Stock from a financial
point of view, subject to the assumptions and qualifications contained in such
opinion. The Company shall file with the Securities and Exchange Commission
(the "Commission"), as soon as practicable on the date of the commencement of
the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") containing the recommendations referred to in clause (a) of
the preceding sentence; provided, however, that such recommendation may be
withdrawn, modified or amended at any time or from time-to-time to the extent
permitted by Section 4.07. Parent and Sub and their counsel shall be given the
opportunity to review the Schedule 14D-9 prior to its filing with the
Commission. The Company agrees to provide Parent and its counsel with any
comments the Company or its counsel may receive from the Commission or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments and shall provide Parent and its counsel an opportunity to
participate, including by way of discussions with the Commission or its staff,
in the response of the Company to such comments. In connection with the Offer,
the Company will promptly furnish Sub with mailing labels, security position
listings and any available listing or computer list containing the names and
addresses of the record holders of the
-3-
<PAGE> 9
Common Stock as of the most recent practicable date and shall furnish Sub with
such additional information (including, but not limited to, updated lists of
holders of Common Stock and their addresses, mailing labels and lists of
security positions) and such other assistance as Sub or its agents may
reasonably request in communicating the Offer to the Company's stockholders.
The Company has been advised that each of its directors and executive officers
intends to tender pursuant to the Offer all shares of Common Stock owned of
record and beneficially by him or her.
1.03 Composition of the Board of Directors. Promptly upon the
acceptance for payment of, and payment by Sub in accordance with the Offer for,
greater than 50% of the outstanding shares of Common Stock pursuant to the
Offer, Sub shall be entitled to designate such number of directors on the Board
of Directors of the Company, rounded up to the next whole number, as will give
Sub, subject to compliance with Section 14(f) of the Exchange Act,
representation on such Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the
Board of Directors (giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that such number of shares of Common
Stock so accepted for payment and paid for or otherwise acquired or owned by
Sub or Parent bears to the number of shares of Common Stock outstanding and the
Company and its Board of Directors shall, at such time, take any and all such
action needed to cause Sub's designees to be appointed to the Company's Board
of Directors (including to cause directors to resign). Notwithstanding the
foregoing, neither Parent, Sub nor the Company shall take any action to remove
or replace any member of the Special Committee after consummation of the Offer
and prior to the Effective Time. If at any time prior to the Effective Time
there are less than two members of the Special Committee, as constituted on the
date hereof, on the Company's Board of Directors, Parent, Sub and the Company
shall use their reasonable efforts to ensure that two members (the "Continuing
Directors") of the Company's Board of Directors are either (a) members of the
Special Committee (as constituted on the date hereof) or (b) persons who are
neither (i) officers or employees of the Company nor (ii) associated or
affiliated with, or designated by, Parent. In the event that one or both
Continuing Directors resign from the Special Committee, Parent, Sub and the
Company shall permit the remaining, or in the case of the resignation of both
Continuing Directors, the resigning, Continuing Director or Continuing
Directors to appoint his or their successors in his or their
-4-
<PAGE> 10
reasonable discretion. Subject to applicable law, the Company shall take all
action requested by Parent which is reasonably necessary to effect any such
election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 so long as Sub shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees. In furtherance thereof,
the Company will increase the size of the Company's Board of Directors, or use
its reasonable efforts to secure the resignation of directors, or both, as is
necessary to permit Sub's designees to be elected to the Company's Board of
Directors. At the Effective Time (as defined in Section 2.01(a) hereof), the
Company, if so requested, will use its reasonable efforts to cause persons
designated by Sub to constitute the same percentage of each committee of such
board, each board of directors of each subsidiary of the Company and each
committee of each such board (in each case to the extent of the Company's
ability to elect such persons).
1.04 Action by Directors. Following the election or
appointment of the Parent's designees pursuant to Section 1.03 and prior to the
Effective Time, and, so long as there shall be at least one Continuing
Director, if requested by a majority of the Continuing Directors, such
designees shall abstain from acting upon, and the approval of a majority of the
Continuing Directors shall be required to authorize, any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors of the Company, any extension of time for the
performance of any of the obligations or other acts of Parent or Sub under this
Agreement and any waiver of compliance with any of the covenants, agreements or
conditions under this Agreement for the benefit of the Company.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.01 The Merger. (a) Subject to the terms and conditions of
this Agreement, at the time of the Closing (as defined in Section 2.11 hereof),
a certificate of merger (the "Certificate of Merger") shall be duly prepared,
executed and acknowledged by Sub and the Company in accordance with
-5-
<PAGE> 11
Delaware General Corporation Law and shall be filed on the Closing Date (as
defined in Section 2.11 hereof). The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the provisions and requirements of the Delaware
General Corporation Law. The date and time when the Merger shall become
effective is hereinafter referred to as the "Effective Time."
(b) At the Effective Time, Sub shall be merged with and into
the Company and the separate corporate existence of Sub shall cease, and the
Company shall continue as the surviving corporation under the laws of the State
of Delaware under the name of "Club Car, Inc." (the "Surviving Corporation").
(c) From and after the Effective Time, the Merger shall have
the effects set forth in Section 259 of the Delaware General Corporation Law.
2.02 Conversion of Stock. At the Effective Time:
(a) Each share of Common Stock then issued and outstanding
(other than (i) any shares of Common Stock which are held by any
subsidiary of the Company or in the treasury of the Company, or which are
held, directly or indirectly, by Parent or any direct or indirect
subsidiary of Parent (including Sub), all of which shall be cancelled and
none of which shall receive any payment with respect thereto and (ii)
shares of Common Stock held by Dissenting Stockholders (as defined in
Section 2.03 hereof)) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and represent
the right to receive an amount in cash, without interest, equal to the
price paid for each share of Common Stock pursuant to the Offer (the
"Merger Consideration"); and
(b) Except as otherwise provided in the next succeeding
sentence, each share of common stock, par value $.01 per share, of Sub
then issued and outstanding shall, by virtue of the Merger and without any
action on the part of the holder thereof, become one fully paid and
nonassessable share of common stock, $.01 par value, of the Surviving
Corporation.
2.03 Dissenting Stock. Notwithstanding anything in this
Agreement to the contrary but only to the extent re-
-6-
<PAGE> 12
quired by Delaware General Corporation Law, shares of Common Stock that are
issued and outstanding immediately prior to the Effective Time and are held by
holders of Common Stock who comply with all the provisions of Delaware law
concerning the right of holders of Common Stock to dissent from the Merger and
require appraisal of their shares of Common Stock ("Dissenting Stockholders")
shall not be converted into the right to receive the Merger Consideration but
shall become the right to receive such consideration as may be determined to be
due such Dissenting Stockholder pursuant to the law of the State of Delaware;
provided, however, that (i) if any Dissenting Stockholder shall subsequently
deliver a written withdrawal of his or her demand for appraisal (with the
written approval of the Surviving Corporation, if such withdrawal is not
tendered within 60 days after the Effective Time), or (ii) if any Dissenting
Stockholder fails to establish and perfect his or her entitlement to appraisal
rights as provided by applicable law, or (iii) if within 120 days of the
Effective Time neither any Dissenting Stockholder nor the Surviving Corporation
has filed a petition demanding a determination of the value of all shares of
Common Stock outstanding at the Effective Time and held by Dissenting
Stockholders in accordance with applicable law, then such Dissenting
Stockholder or Stockholders, as the case may be, shall forfeit the right to
appraisal of such shares and such shares shall thereupon be deemed to have been
converted into the right to receive, as of the Effective Time, the Merger
Consideration, without interest. The Company shall give Parent and Sub (A)
prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other related instruments received by the Company, and (B)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal. The Company will not voluntarily make any payment with
respect to any demands for appraisal and will not, except with the prior
written consent of Parent, settle or offer to settle any demand.
2.04 Surrender of Certificates. (a) Concurrently with or
prior to the Effective Time, Parent shall designate a bank or trust company
located in the United States to act as paying agent (the "Paying Agent") for
purposes of making the cash payments contemplated hereby. As soon as
practicable after the Effective Time, Parent shall cause the Paying Agent to
mail and/or make available to each holder of a certificate theretofore
evidencing shares of Common Stock (other than those which are held by any
subsidiary of the Company or in the treasury of the Company or which are held
directly or indirectly by Parent or any direct or indirect
-7-
<PAGE> 13
subsidiary of Parent (including Sub)) a notice and letter of transmittal
advising such holder of the effectiveness of the Merger and the procedure for
surrendering to the Paying Agent such certificate or certificates which
immediately prior to the Effective Time represented outstanding Common Stock
(the "Certificates") in exchange for the Merger Consideration deliverable in
respect thereof pursuant to this Article II. Upon the surrender for
cancellation to the Paying Agent of such Certificates, together with a letter
of transmittal, duly executed and completed in accordance with the instructions
thereon, and any other items specified by the letter of transmittal, the Paying
Agent shall promptly pay to the Person entitled thereto the Merger
Consideration deliverable in respect thereof. Until so surrendered, each
Certificate shall be deemed, for all corporate purposes, to evidence only the
right to receive upon such surrender the Merger Consideration deliverable in
respect thereof to which such Person is entitled pursuant to this Article II.
No interest shall be paid or accrued in respect of such cash payments.
(b) If the Merger Consideration (or any portion thereof) is to
be delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise
in proper form for transfer, that such transfer otherwise be proper and that
the Person requesting such transfer pay to the Paying Agent any transfer or
other taxes payable by reason of the foregoing or establish to the satisfaction
of the Paying Agent that such taxes have been paid or are not required to be
paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article II, provided that, the Person to whom the Merger Consideration is
paid shall, as a condition precedent to the payment thereof, give the Surviving
Corporation a bond in such sum as it may direct or otherwise indemnify the
Surviving Corporation in a manner satisfactory to it against any claim that may
be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
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<PAGE> 14
2.05 Payment. Concurrently with or immediately prior to the
Effective Time, Parent or Sub shall deposit in trust with the Paying Agent cash
in United States dollars in an aggregate amount equal to the product of (i) the
number of shares of Common Stock outstanding immediately prior to the Effective
Time (other than shares of Common Stock which are held by any subsidiary of the
Company or in the treasury of the Company or which are held directly or
indirectly by Parent or any direct or indirect subsidiary of Parent (including
Sub) or a Person known at the time of such deposit to be a Dissenting
Stockholder) and (ii) the Merger Consideration (such amount being hereinafter
referred to as the "Payment Fund"). The Payment Fund shall be invested by the
Paying Agent as directed by Parent in direct obligations of the United States,
obligations for which the full faith and credit of the United States is pledged
to provide for the payment of principal and interest, commercial paper rated of
the highest quality by Moody's Investors Services, Inc. or Standard & Poor's
Ratings Group or certificates of deposit, bank repurchase agreements or
bankers' acceptances of a commercial bank having at least $100,000,000 in
assets (collectively, "Permitted Investments") or in money market funds which
are invested in Permitted Investments, and any net earnings with respect
thereto shall be paid to Parent as and when requested by Parent. The Paying
Agent shall, pursuant to irrevocable instructions, make the payments referred
to in Section 2.02(a) hereof out of the Payment Fund. The Payment Fund shall
not be used for any other purpose except as otherwise agreed to by Parent.
Promptly following the date which is three months after the Effective Time, the
Paying Agent shall return to Parent all cash, certificates and other
instruments in its possession that constitute any portion of the Payment Fund
(other than net earnings on the Payment Fund which shall be paid to Parent),
and the Paying Agent's duties shall terminate. Thereafter, each holder of a
Certificate may surrender such Certificate to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Merger Consideration, without interest, but shall have no
greater rights against the Surviving Corporation or Parent than may be accorded
to general creditors of the Surviving Corporation or Parent under applicable
law. Notwithstanding the foregoing, neither the Paying Agent nor any party
hereto shall be liable to a holder of shares of Common Stock for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
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<PAGE> 15
2.06 No Further Rights of Transfers. At and after the
Effective Time, each holder of a Certificate shall cease to have any rights as
a stockholder of the Company, except for, in the case of a holder of a
Certificate (other than shares to be cancelled pursuant to Section 2.02(a)
hereof and other than shares held by Dissenting Stockholders), the right to
surrender his or her Certificate in exchange for payment of the Merger
Consideration or, in the case of a Dissenting Stockholder, to perfect his or
her right to receive payment for his or her shares pursuant to Delaware law if
such holder has validly perfected and not withdrawn his or her right to receive
payment for his or her shares, and no transfer of shares of Common Stock shall
be made on the stock transfer books of the Surviving Corporation. Certificates
presented to the Surviving Corporation after the Effective Time shall be
cancelled and exchanged for cash as provided in this Article II. At the close
of business on the day of the Effective Time the stock ledger of the Company
with respect to Common Stock shall be closed.
2.07 Stock Option and Other Plans. (a) Prior to the
Effective Time, the Board of Directors of the Company (or, if appropriate, any
Committee thereof) shall adopt appropriate resolutions and take all other
actions necessary to provide for the cancellation, effective at the Effective
Time, of all the outstanding stock options to purchase Common Stock (the
"Options") heretofore granted under any stock option plan of the Company (the
"Stock Plans"). Immediately prior to the Effective Time, (i) each Option,
whether or not then vested or exercisable, shall no longer be exercisable for
the purchase of shares of Common Stock but shall entitle each holder thereof,
in cancellation and settlement therefor, to payments in cash (subject to any
applicable withholding taxes, the "Cash Payment"), at the Effective Time, equal
to the product of (x) the total number of shares of Common Stock subject to
such Option, whether or not then vested or exercisable, and (y) the excess of
the Merger Consideration over the exercise price per share of Common Stock
subject to such Option, each such Cash Payment to be paid to each holder of an
outstanding Option at the Effective Time; provided, however, that with respect
to any Person subject to Section 16 of the Exchange Act, any such amount shall
be paid as soon as practicable after the first date payment can be made without
liability to such Person under Section 16(b) of the Exchange Act, and (ii) each
share of Common Stock previously issued in the form of grants of restricted
stock or grants of contingent shares shall fully vest in accordance with their
respective terms. Any then outstanding stock appreciation rights
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<PAGE> 16
or limited stock appreciation rights shall be cancelled as of immediately prior
to the Effective Time without any payment therefor. As provided herein, the
Stock Plans and any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary (collectively with the Stock Plans, referred to as
the "Stock Incentive Plans") shall terminate as of the Effective Time. The
Company will take all steps to ensure that neither the Company nor any of its
subsidiaries is or will be bound by any Options, other options, warrants,
rights or agreements which would entitle any Person, other than Parent or its
affiliates, to own any capital stock of the Surviving Corporation or any of its
subsidiaries or to receive any payment in respect thereof. The Company will
use its best efforts to obtain all necessary consents to ensure that after the
Effective Time, the only rights of the holders of Options to purchase shares of
Common Stock in respect of such Options will be to receive the Cash Payment in
cancellation and settlement thereof.
(b) All Stock Plans shall terminate as of the Effective Time
and the provisions in any other Employee Plan (as defined in Section 3.01(k))
providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
deleted as of the Effective Time, and the Company shall ensure that following
the Effective Time no holder of an Option or any participant in any Stock Plans
shall have any right thereunder to acquire any capital stock of the Company,
Parent or the Surviving Corporation, except as provided in Section 2.07(a).
2.08 Certificate of Incorporation of the Surviving
Corporation. The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation and shall be amended so that Article
IV paragraph A thereof reads in its entirety as follows: "The total number of
shares of stock of all classes which the Corporation has authority to issue is
1,000 shares of Common Stock, par value one cent ($.01) per share."
2.09 By-Laws of the Surviving Corporation. The By-Laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
By-Laws of the Surviving Corporation.
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<PAGE> 17
2.10 Directors and Officers of the Surviving Corporation. At
the Effective Time, the directors of Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, each of such
directors to hold office, subject to the applicable provisions of the
Certificate of Incorporation and By-Laws of the Surviving Corporation, until
the next annual stockholders' meeting of the Surviving Corporation and until
their respective successors shall be duly elected or appointed and qualified.
At the Effective Time, the officers of the Company immediately prior to the
Effective Time shall, subject to the applicable provisions of the Certificate
of Incorporation and By-Laws of the Surviving Corporation, be the officers of
the Surviving Corporation until their respective successors shall be duly
elected or appointed and qualified.
2.11 Closing. The closing of the Merger (the "Closing") shall
take place at the offices of White & Case, 1155 Avenue of the Americas, New
York, New York, as soon as practicable after the last of the conditions set
forth in Article V hereof is fulfilled or waived (subject to applicable law)
but in no event later than the fifth business day thereafter, or at such other
time and place and on such other date as Parent and the Company shall mutually
agree (the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company. The
Company hereby represents and warrants to Parent and Sub as follows:
(a) Due Organization, Good Standing and Corporate Power. Each
of the Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation and each such corporation has all requisite corporate
power and authority to own, lease and operate its properties and to carry
on its business as now being conducted. Each of the Company and its
subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except in such jurisdictions where the failure to
be so
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<PAGE> 18
qualified or licensed and in good standing would not have a material
adverse effect on the business, properties, assets, liabilities,
operations, results of operations, condition (financial or otherwise) or
prospects (the "Condition") of the Company and its subsidiaries. The
Company has made available to Parent and Sub complete and correct copies
of the Restated Articles of Incorporation and By-Laws of the Company and
its subsidiaries, in each case as amended to the date of this Agreement.
The respective certificates of incorporation and by-laws or other
organizational documents of the subsidiaries of the Company do not contain
any provision limiting or otherwise restricting the ability of the Company
to control such subsidiaries.
(b) Authorization and Validity of Agreement. The Company has
full corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by the Company, and the consummation by it of the transactions
contemplated hereby, have been duly authorized and approved by its Board
of Directors and no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby (other than the approval of this Agreement by the
holders of a majority of the shares of Common Stock). This Agreement has
been duly executed and delivered by the Company and is a valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles.
(c) Capitalization. (i) The authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock and 1,000,000 shares
of preferred stock, $1.00 par value (the "Preferred Stock"). As of
February 1, 1995, (1) 9,090,006 shares of Common Stock are issued and
outstanding, (2) 1,101,480 shares of Common Stock are reserved for
issuance pursuant to outstanding Options granted under the Stock Incentive
Plans, (3) no shares of Preferred Stock are issued and outstanding and (4)
100,151 shares of Common Stock are held in the
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<PAGE> 19
Company's treasury. All issued and outstanding shares of Common Stock
have been validly issued and are fully paid and nonassessable, and are not
subject to, nor were they issued in violation of, any preemptive rights.
Except as set forth in this Section 3.01(c) or on Schedule 3.01(c) of the
disclosure letter to be prepared by the Company for the benefit of Parent
and Sub in connection with the transactions contemplated by this Agreement
(the "Disclosure Letter"), (i) there are no shares of capital stock of the
Company authorized, issued or outstanding and (ii) there are not as of the
date hereof, and at the Effective Time there will not be, any outstanding
or authorized options, warrants, rights, subscriptions, claims of any
character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to
Common Stock or any other shares of capital stock of the Company, pursuant
to which the Company is or may become obligated to issue shares of Common
Stock, any other shares of its capital stock or any securities convertible
into, exchangeable for, or evidencing the right to subscribe for, any
shares of the capital stock of the Company. The Disclosure Letter sets
forth the number of Options held by each Person and the exercise price
therefor. The Company has no authorized or outstanding bonds, debentures,
notes or other indebtedness the holders of which have the right to vote
(or convertible or exchangeable into or exercisable for securities having
the right to vote) with the stockholders of the Company or any of its
subsidiaries on any matter ("Voting Debt"). After the Effective Time, the
Surviving Corporation will have no obligation to issue, transfer or sell
any shares of Common Stock of the Surviving Corporation pursuant to any
Employee Plan.
(ii) Schedule 3.01(c)(ii) of the Disclosure Letter lists all of the
Company's subsidiaries. All of the outstanding shares of capital stock of
each of the Company's subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, are not subject to, nor were
they issued in violation of, any preemptive rights, and are owned, of
record and beneficially, by the Company, free and clear of all liens,
encumbrances, options or claims whatsoever. No shares of capital stock of
any of the Company's subsidiaries are reserved for issuance and there are
no outstanding or authorized options, warrants, rights, subscriptions,
claims of any character, agreements,
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<PAGE> 20
obligations, convertible or exchangeable securities, or other commitments,
contingent or otherwise, relating to the capital stock of any subsidiary
of the Company, pursuant to which such subsidiary is or may become
obligated to issue any shares of capital stock of such subsidiary or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of such subsidiary. There are no restrictions
of any kind which prevent the payment of dividends by any of the Company's
subsidiaries. Except for the subsidiaries listed on Schedule 3.01(c)(ii)
of the Disclosure Letter, the Company does not own, directly or
indirectly, any capital stock or other equity interest in any Person or
have any direct or indirect equity or ownership interest in any Person and
neither the Company nor any of its subsidiaries is subject to any
obligation or requirement to provide funds for or to make any investment
(in the form of a loan, capital contribution or otherwise) to or in any
Person. The Company's subsidiaries have no Voting Debt.
(d) Consents and Approvals; No Violations. Assuming (i) the
filings required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), are made and the waiting period
thereunder has been terminated or has expired, (ii) the requirements of
the Exchange Act relating to the Proxy Statement and the Offer are met,
(iii) the filing of the Certificate of Merger and other appropriate merger
documents, if any, as required by Delaware General Corporation Law, is
made and (iv) approval of the Merger by a majority of the holders of
Common Stock, if required by Delaware General Corporation Law, is received
and except as disclosed in Schedule 3.01(d) of the Disclosure Letter, the
execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will
not: (1) violate any provision of the Restated Certificate of
Incorporation, as amended, or By-Laws of the Company or any of its
subsidiaries; (2) violate any statute, ordinance, rule, regulation, order
or decree of any court or of any governmental or regulatory body, agency
or authority applicable to the Company or any of its subsidiaries or by
which any of their respective properties or assets may be bound; (3)
require any filing with, or permit, consent or approval of, or the giving
of any notice to, any governmental or regulatory body, agency or
authority; or (4) result in a violation or breach of, conflict with,
constitute
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<PAGE> 21
(with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation, payment or acceleration)
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any of
its subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement,
lease, franchise agreement or other instrument or obligation to which the
Company or any of its subsidiaries is a party, or by which it or any of
their respective properties or assets except in the case of clauses (2),
(3) and (4) above for such filing, permit, consent, approval or violation,
which could not reasonably be expected to have a material adverse effect
on the Condition of the Company and its subsidiaries, taken as a whole, or
could be reasonably likely to prevent or materially delay consummation of
the transactions contemplated by this Agreement.
(e) Company Reports and Financial Statements. (i)Since
October 25, 1993, the Company has filed all forms, reports and documents
with the Commission required to be filed by it pursuant to the federal
securities laws and the Commission rules and regulations thereunder, and
all forms, reports and documents filed with the Commission have complied
in all material respects with all applicable requirements of the federal
securities laws and the Commission rules and regulations promulgated
thereunder. The Company has, prior to the date of this Agreement, made
available to Parent true and complete copies of all forms, reports,
registration statements and other filings filed by the Company with the
Commission since October 25, 1993 (such forms, reports, registration
statements and other filings, together with any exhibits, any amendments
thereto and information incorporated by reference therein, are sometimes
collectively referred to as the "Commission Filings"). As of their
respective dates, the Commission Filings did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets as of the end of the fiscal years ended
September 25, 1994, September 26, 1993 and September 27, 1992 and the
consolidated statements of operations, consolidated statements of
stockholders' equity and consolidated
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<PAGE> 22
statements of changes in financial position for the fiscal years ended
September 25, 1994, September 26, 1993 and September 27, 1992 included in
the Commission Filings, were prepared in accordance with generally
accepted accounting principles (as in effect from time to time) applied on
a consistent basis (except as may be indicated therein or in the notes or
schedules thereto) and fairly present the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof
and the results of their operations and changes in financial position for
the periods then ended.
(f) Absence of Certain Changes. Except as previously
disclosed in the Commission Filings or as otherwise disclosed in Schedule
3.01(f) of the Disclosure Letter or as otherwise contemplated by this
Agreement since September 25, 1994 (i) there has not been any material
adverse change in the Condition of the Company and its subsidiaries taken
as a whole; (ii) the businesses of the Company and each of its
subsidiaries have been conducted only in the ordinary course; (iii)
neither the Company nor any of its subsidiaries has incurred any material
liabilities (direct, contingent or otherwise) or engaged in any material
transaction or entered into any material agreement outside the ordinary
course of business; (iv) the Company and its subsidiaries have not
increased the compensation of any officer or granted any general salary or
benefits increase to their employees other than in the ordinary course of
business; (v) neither the Company nor any of its subsidiaries has taken
any action referred to in Section 4.03 hereof except as permitted thereby;
(vi) there has been no declaration, setting aside or payment of any
dividend or other distribution with respect to the capital stock of the
Company; and (vii) there has been no change by the Company in accounting
principles, practices or methods.
(g) Insurance. The Company and its subsidiaries have obtained
and maintained in full force and effect insurance (including director's and
officer's insurance) with insurance companies or associations in such
amounts, on such terms and covering such risks as disclosed in Schedule
3.01(g) of the Disclosure Letter.
(h) Title to Properties; Encumbrances. The Company and each of
its subsidiaries has good, valid and
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<PAGE> 23
marketable title to (i) all its material tangible properties and assets
(real and personal), including, without limitation, all material
properties and assets reflected in the consolidated balance sheet as of
September 25, 1994 except as indicated in the notes thereto and except for
properties and assets reflected in the consolidated balance sheet as of
September 25, 1994 which have been sold or otherwise disposed of in the
ordinary course of business, and (ii) all material tangible properties and
assets purchased by the Company and any of its subsidiaries since
September 25, 1994 except for such properties and assets which have been
sold or otherwise disposed of in the ordinary course of business; in each
case subject to no encumbrance, lien, charge or other restriction of any
kind or character, except for (1) liens reflected in the consolidated
balance sheet as of September 25, 1994, (2) liens consisting of zoning or
planning restrictions, easements, permits and other restrictions or
limitations on the use of real property or irregularities in title thereto
which do not materially detract from the value of, or impair the use of,
such property by the Company or any of its subsidiaries in the operation
of its respective business, (3) liens for current taxes, assessments or
governmental charges or levies on such property not yet due and delinquent
and (4) mechanics, materialmen's and other similar liens imposed by law
and incurred in the ordinary course of business.
(i) Compliance with Laws. The Company and its subsidiaries
are in compliance with all applicable laws, regulations, orders, judgments
and decrees except where the failure to so comply would not have a
material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole or could be reasonably likely to prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
(j) Litigation. Except as disclosed in the Commission
Filings, there is no action, suit, proceeding at law or in equity, or any
arbitration or any administrative or other proceeding by or before (or to
the best knowledge of the Company any investigation by) any governmental
or other instrumentality or agency, pending, or, to the best knowledge of
the Company, threatened, against or affecting the Company or any of its
subsidiaries, or any of their properties or rights which could have a
material adverse effect on the Condition of
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<PAGE> 24
the Company and its subsidiaries taken as a whole. Except as disclosed in
the Commission Filings, neither the Company nor any of its subsidiaries is
subject to any judgment, order or decree entered in any lawsuit or
proceeding which could have a material adverse effect on the Condition of
the Company and its subsidiaries taken as a whole or on the ability of the
Company or any subsidiary to conduct its business as presently conducted.
(k) Employee Benefit Plans.
(i) Schedule 3.01(k) of the Disclosure Letter lists all "employee
benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder ("ERISA"), including, without limitation, all
retirement, savings and other pension plans, all health, severance,
insurance, disability and other employee welfare plans and all incentive,
vacation, accrued leave, sick pay, sick leave and other similar plans, all
bonus, stock option, stock purchase, restricted stock, incentive,
profit-sharing, deferred compensation, supplemental retirement,
unemployment benefit, severance and other employee benefit plans, programs
or arrangements (whether or not insured) and all material employment,
consulting, termination, or compensation agreements, in each case for the
benefit of, or relating to current employees and former employees or
directors of the Company, whether or not any such items are in writing or
are exempt from the provisions of ERISA, that have been established,
maintained or contributed to or with respect to which any potential
material liability is borne by the Company or any of its subsidiaries
(including, for this purpose and for the purpose of all of the
representations in this Section 3.01(k), any predecessors to the Company or
to any of its subsidiaries and all employers (whether or not incorporated)
that are or were by reason of common control treated together with the
Company or any of its subsidiaries as a single employer within the meaning
of Section 414 of the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder (the "Code")), since January 1, 1988
("Employee Plans").
(ii) Neither the Company nor any of its subsidiaries has at any
time maintained, contributed to, had an obligation to contribute to, or
otherwise sponsored a "defined benefit plan," as defined in ERISA Section
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<PAGE> 25
3(35), a plan subject to Section 412 of the Code, or a "multiemployer
plan," as defined in ERISA Section 4001(a)(3).
Neither the Company nor any of its subsidiaries maintains any
Employee Plan which is a "group health plan" (as such term is defined in
Section 5000(b)(1) of the Code) that has not been administered and
operated in all material respects in compliance with the applicable
requirements of Section 601 of ERISA and Section 4980B(f) of the Code and
neither the Company nor any of its subsidiaries is subject to any material
liability as a result of such administration and operation. Except as set
forth in Schedule 3.01(k) of the Disclosure Letter, neither the Company
nor any of its subsidiaries maintains any Employee Plan (whether qualified
or nonqualified within the meaning of Section 401(a) of the Code)
providing for retiree health and/or life benefits and having material
unfunded liabilities.
Except as set forth in Schedule 3.01(k) of the Disclosure Letter
neither the Company nor any of its subsidiaries has any material unfunded
liabilities pursuant to any Employee Plan that is not intended to be
qualified under Section 401(a) of the Code.
(iii) All Employee Plans have at all times been maintained and
operated in all material respects in compliance with their terms and the
requirements prescribed by all applicable statutes, orders or governmental
rules or regulations with respect thereto, and the Company has performed
all material obligations required to be performed by it under, and is not
in any material respect in default under or in violation of, any of the
Employee Plans. No condition or circumstance exists that would prevent
the amendment or termination of any Employee Plan.
(iv) Except as set forth in Schedule 3.01(k) of the Disclosure
Letter, each Employee Plan intended to be qualified under Section 401(a)
of the Code has heretofore been determined by the Internal Revenue Service
to so qualify, and each trust created thereunder has heretofore been
determined by the Internal Revenue Service to so qualify, and each trust
created thereunder has heretofore been determined by the Internal Revenue
Service to be exempt from tax under the provisions of Section 501(a) of
the Code and, to the best knowledge of
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<PAGE> 26
the Company nothing has occurred since the date of the most recent
determination that would be reasonably likely to cause any such Employee
Plan or trust to fail to qualify under Section 401(a) or 501(a) of the
Code.
(v) The Company has not incurred any material liability to the
Pension Benefit Guaranty Corporation ("PBGC") under Section 4001 et seq.
of ERISA, and no condition exists that could reasonably be expected to
result in the Company incurring material liability under Title IV of
ERISA, either singly or as a member of any trade or business, whether or
not incorporated, under common control of or affiliated with the Company,
within the meaning of Section 414(b), (c), (m) or (o) of the Code. All
premiums payable to the PBGC have been paid when due.
(vi) The Company has made available to Parent, copies of all
material documents in connection with each Employee Plan including,
without limitation (where applicable), (a) all Employee Plans as in effect
on the date hereof, together with all amendments thereto, including, in
the case of any Employee Plan not set forth in writing, a written
description thereof; (b) all current summary plan descriptions, summaries
of material modifications and material communications; (c) all current
trust agreements, declarations of trust and other documents establishing
other funding arrangements (and all amendments thereto and the latest
financial statements thereof); (d) the most recent Internal Revenue
Service determination letter, if applicable; (e) annual reports required
to be filed within the last year pursuant to ERISA or the Code with
respect to the Employee Plans; (f) the most recently prepared financial
statements; and (g) all material contracts relating to each Employee Plan,
including, without limitation, service provider agreements, insurance
contracts, annuity contracts, investment management agreements,
subscription agreements, participation agreements, and recordkeeping
agreements.
(vii) Neither the Company nor any of its subsidiaries nor, to
the best knowledge of the Company, any of their respective directors,
officers, employees or other persons who participate in the operation of
any Employee Plan or related trust or funding vehicle, has engaged in any
transaction with respect to any Employee Plan or breached any applicable
fiduciary responsibilities or
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<PAGE> 27
obligations under Title I of ERISA that would subject any of them to a
material tax, penalty or liability for prohibited transactions under ERISA
or the Code or would result in any material claim being made under, by or
on behalf of any such Employee Plan by any party with standing to make
such claim.
(viii) Full payment has been made of all amounts which the
Company or any of its subsidiaries is required, under applicable law or
under any Employee Plan or any agreement relating to any Employee Plan to
which the Company or any of its subsidiaries is a party, to have paid as
contributions thereto as of the last day of the most recent fiscal year of
such Employee Plan ended prior to the date hereof. Benefits under all
Employee Plans are as represented and have not been increased subsequent
to the date as of which documents have been provided.
(ix) There are no actions, suits or claims pending, or to the
best knowledge of the Company, threatened or anticipated (other than
routine claims for benefits) with respect to any Employee Plan.
(x) Except as set forth on Schedule 3.01(k) of the Disclosure
Letter, no Employee Plan provides for the payment of severance benefits
upon the termination of an employee's employment. No compensation or
benefit that is or will be payable in connection with the transactions
contemplated by this Agreement will be characterized as an "excess
parachute payment" within the meaning of Section 280G of the Code.
(xi) The Company has not made any commitment to establish any new
Employee Plan, to modify any Employee Plan or to increase benefits or
compensation of employees or former employees of the Company (except for
normal increases in compensation consistent with past practices or as
disclosed in Schedule 3.01(k) of the Disclosure Letter), nor has any
intention to do so been communicated to employees or former employees of
the Company.
(l) Employment Relations and Agreements. (i) There is no
labor strike, dispute, slowdown or stoppage actually pending or, to the
best knowledge of the Company, threatened against or involving the Company
or any of its subsidiaries; (ii) no representation question exists
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respecting the employees of the Company or any of its subsidiaries and
(iii) no collective bargaining agreement is currently being negotiated by
the Company or any of its subsidiaries and neither the Company nor any of
its subsidiaries is a party to a collective bargaining agreement. Except
as disclosed in Schedule 3.01(1) of the Disclosure Letter, there exist no
employment, consulting, severance, indemnification agreements or deferred
compensation agreements between the Company and any director, officer or
employee of the Company or any agreement that would give any Person the
right to receive any payment from the Company as a result of the Offer or
the Merger.
(m) Taxes. The Company has filed or caused to be filed, within
the times and in the manner prescribed by law, all United States federal,
state, local and foreign tax returns and tax reports which are required to
be filed by, or with respect to, and are material to, the Company or any of
its subsidiaries. Such returns and reports reflect accurately all material
liability for taxes of the Company and its subsidiaries for the periods
covered thereby. All material federal, state, local and foreign income,
profits, franchise, sales, use, occupancy and excise taxes and other
material taxes, assessments, duties, fees, levies, imports or other
governmental charges (including any interest and penalties thereon) and any
liability for such amounts as a result either of being a member of a
combined, consolidated, unitary or affiliated group or of a contractual
obligation to indemnify any Person ("Taxes") payable by, or due from, the
Company or any of its subsidiaries have been fully paid or adequately
disclosed and fully provided for on the financial statements of the Company
and its subsidiaries in accordance with generally accepted accounting
principles. The United States federal income Tax liability of the Company
and its subsidiaries has been finally determined for all fiscal years to
and including the fiscal year ended September 26, 1993. No audit or other
examination, pending or, to the best knowledge of the Company, threatened
litigation or appeal of any Tax return or Tax liability of the Company or
any of its subsidiaries is currently in progress (or to the best knowledge
of the Company scheduled as of the date hereof to be conducted). There are
no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax return of the Company or any of its
subsidiaries. Except as provided in
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Schedule 3.01(m) of the Disclosure Letter, neither the Company nor any of
its subsidiaries has been included in any "consolidated," "unitary" or
"combined" return provided for under the law of the United States, any
foreign jurisdiction or any state or locality with respect to Taxes for
any taxable period for which the statute of limitations has not expired.
All material Taxes relating to the income, properties or operations of the
Company and its subsidiaries which the Company or any of its subsidiaries
were required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable. There are no tax sharing, allocation,
indemnification or similar agreements in effect as between the Company or
any predecessor or affiliate thereof and any other party (including any of
their predecessors or affiliates) under which Parent, Sub, the Company or
any of the Company's subsidiaries, are liable or could be liable for any
Taxes or other claims of any party. The Company is not a "United States
real property holding corporation" within the meaning of Section 897(c)(2)
of the Code.
(n) Liabilities. Except as set forth in the Commission Filings
or as disclosed in Schedule 3.01(n) of the Disclosure Letter or as
otherwise contemplated by this Agreement, neither the Company nor any of
its subsidiaries has any material outstanding claims, liabilities or
indebtedness, contingent or otherwise, that would be required to be
disclosed in the Company's consolidated financial statements prepared in
accordance with generally accepted accounting principles applied on a
consistent basis, other than liabilities incurred subsequent to September
25, 1994 in the ordinary course of business not involving borrowings by the
Company. Neither the Company nor any of its subsidiaries is in default in
respect of the material terms and conditions of any indebtedness or other
agreement.
(o) Intellectual Properties. In the operation of its business
the Company and its subsidiaries have used, and currently use, domestic and
foreign patents, patent applications, patent licenses, software licenses,
know-how licenses, trade names, trademarks, copyrights, service marks,
trademark registrations and applications, service mark registrations and
applications, copyright registrations and applications, (collectively, the
"Intellectual Property") and unpatented inventions,
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trade secrets and other confidential proprietary information (collectively,
the "Know-How"). Schedule 3.01(o) of the Disclosure Letter attached hereto
contains an accurate and complete list of all Intellectual Property which,
to the best knowledge of the Company, is of material importance to the
operation of the business of the Company or any of its subsidiaries. Unless
otherwise indicated in Schedule 3.01(o) of the Disclosure Letter the
Company (or the subsidiary indicated) owns the entire right, title and
interest in and to the Intellectual Property listed on Schedule 3.01(o) of
the Disclosure Letter used in the operation of its business (including,
without limitation, the exclusive right to use and license the same) and
each item constituting part of the Intellectual Property which is owned by
the Company or a subsidiary and listed on Schedule 3.01(o) of the
Disclosure Letter has been, to the extent indicated in Schedule 3.01(o) of
the Disclosure Letter, duly registered with, filed in or issued by, as the
case may be, the United States Patent and Trademark Office or such other
government entities, domestic or foreign, as are indicated in Schedule
3.01(o) of the Disclosure Letter and such registrations, filings and
issuances remain in full force and effect. Except as stated in such
Schedule 3.01(o) of the Disclosure Letter, there are no pending or to the
best knowledge of the Company, threatened proceedings or litigation which
would have a material adverse effect on the Company's use of such
Intellectual Property or other material adverse claims affecting or with
respect to the Intellectual Property or the Know-How. Schedule 3.01(o) of
the Disclosure Letter lists all notices or claims currently pending or
received by the Company or any of its subsidiaries during the past two
years which claim infringement, contributory infringement, inducement to
infringe, misappropriation or breach by the Company or any of its
subsidiaries of any domestic or foreign patents, patent applications,
patent licenses and know-how licenses, trade names, trademark registrations
and applications, service marks, copyrights, copyright registrations or
applications, trade secrets or other confidential proprietary information.
Except as set forth in any Schedule hereto, there is, to the best knowledge
of the Company, no reasonable basis upon which a claim may be asserted
against the Company or any of its subsidiaries, for infringement,
contributory infringement, inducement to infringe, misappropriation or
breach of any domestic or foreign patents, patent applications, patent
licenses,
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know-how licenses, trade names, trademark registrations and applications,
common law trademarks, service marks, copyrights, copyright registrations
or applications, trade secrets or other confidential proprietary
information. To the best knowledge of the Company, except as indicated on
Schedule 3.01(o) of the Disclosure Letter, no Person is infringing the
Intellectual Property or the Know-How.
(p) Proxy Statement, Schedule 14D-9 and Schedule 14D-1. The
definitive proxy statement and related materials, if required, to be
furnished to the holders of Common Stock in connection with the Merger
pursuant to Section 4.04 hereof (the "Proxy Statement"), insofar as they
relate to the Company or its subsidiaries or information supplied by the
Company for inclusion therein, will comply in all material respects with
the Exchange Act and the rules and regulations thereunder and any other
applicable laws. If at any time prior to the Effective Time any event
with respect to the Company or any of its subsidiaries, or with respect to
information supplied by the Company for inclusion in the Proxy Statement,
occurs which should be described in an amendment or supplement to the
Proxy Statement, the Company will file and disseminate, as required, an
amendment or supplement which complies in all material respects with the
Exchange Act and the rules and regulations thereunder and any other
applicable laws. Prior to its filing with the Commission, the amendment
or supplement shall be delivered to Parent and Sub and their counsel.
None of the information supplied by the Company for inclusion or
incorporation by reference in (i) the documents pursuant to which the
Offer will be made, including a Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1"), and Offer to Purchase and related letter of
transmittal (the "Offer Documents") or (ii) the Proxy Statement, will, in
the case of the Offer Documents, at the respective times the Offer
Documents are filed with the Commission, or in the case of the Proxy
Statement at the date such information is supplied and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made, in light of
the circumstance under which they are made, not misleading. None of the
information in the Schedule 14D-9, at the respective times the Schedule
14D-9 is filed with the Commission, will contain any untrue statement of a
material fact or omit to state a material fact necessary
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to make the statements made, in light of the circumstances under which
they are made, not misleading. Notwithstanding the foregoing, no
representation or warranty is made with respect to any information with
respect to Parent of Sub or its officers, directors or affiliates provided
to the Company by Parent or Sub in writing for inclusion in the Schedule
14D-9. The Schedule 14D-9 will comply in all material respects with the
Exchange Act and the rules and regulations thereunder and any other
applicable laws. If at any time prior to the expiration or termination of
the Offer any event occurs which should be described in an amendment or
supplement to the Schedule 14D-9 or any amendment or supplement thereto,
the Company will file and disseminate, as required, an amendment or
supplement which complies in all material respects with the Exchange Act
and the rules and regulations thereunder and any other applicable laws.
Prior to its filing with the Commission, the amendment or supplement shall
be delivered to Parent and Sub and their counsel.
(q) Broker's or Finder's Fee. Except for Donaldson, Lufkin &
Jenrette Securities Corporation (whose fees and expenses will be paid by
the Company in accordance with the Company's agreement with such firm, a
true and correct copy of which has been previously delivered to Parent by
the Company), no agent, broker, Person or firm acting on behalf of the
Company is, or will be, entitled to any fee, commission or broker's or
finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the
transactions contemplated hereby.
(r) Environmental Laws and Regulations. Except as disclosed in
the Commission Filings or in Schedule 3.01(r) of the Disclosure Letter or
as would not, individually or in the aggregate, have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a
whole, (i) the Company and its subsidiaries are in compliance with all
Environmental Laws; (ii) Hazardous Substances requiring remediation under
any Environmental Law have not been released or disposed of on any real
property owned or operated by the Company or any subsidiary of the Company;
(iii) the Company and its subsidiaries are not subject to liability for any
off-site disposal or contamination; (iv) the Company and
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its subsidiaries have not received any Environmental Claims under any
Environmental Law; and (v) there are no facts, conditions, occurrences or
circumstances regarding the Company, its subsidiaries or any property
owned or operated by the Company or its subsidiaries that could reasonably
be expected (a) to form the basis of any Environmental Claim against the
Company, its subsidiaries or any property owned or operated by the Company
or its subsidiaries, or (b) to cause such property to be subject to any
restrictions on the ownership, use, or transferability of any such
property under any Environmental Law. "Environmental Law" means any
applicable law, regulation, order or decree relating to air, water, land,
noise, odor, Hazardous Substances or the protection of human health or the
environment. "Hazardous Substance" means any hazardous or toxic material,
substance, waste, pollutant or contaminant as defined under any
Environmental Law, in any concentration, including, without limitation,
any petroleum or petroleum products, friable asbestos or polychlorinated
biphenyls. "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings
relating in any way to any Environmental Law (hereinafter "Claims"),
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable
Environmental Law and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Substances or arising from
alleged injury or threat of injury to human health, safety or the
environment.
(s) State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger, this Agreement and the entering
into, and performance, by Parent and Sub of the Tender Agreement and such
approval is sufficient to render inapplicable to the Offer, the Merger,
this Agreement and the entering into, and performance, by Parent and Sub of
the Tender Agreement and the other transactions contemplated by this
Agreement and the Tender Agreement, the provisions of Section 203 of the
Delaware General Corporation Law.
(t) Voting Requirements. Unless the Merger is consummated in
accordance with the provisions of Section
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253 of the Delaware General Corporation Law, the affirmative vote of the
holders of a majority of all the shares of Company Common Stock entitled
to be cast approving this Agreement is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement.
(u) Rights Agreement. (i) The Company and the Board of
Directors of the Company have taken and will, until the termination, if
any, of this Agreement pursuant to Section 6.01, maintain in effect all
necessary action to (i) render the Rights Agreement inapplicable with
respect to the Offer, the Merger, the entering into, and performance, by
Parent and Sub of the Tender Agreement and the other transactions
contemplated by this Agreement and (ii) ensure that (y) neither Parent nor
Sub nor any of their Affiliates (as defined in the Rights Agreement) or
Associates (as defined in the Rights Agreement) is considered to be an
Acquiring Person (as defined in the Rights Agreement) and (z) the
provisions of the Rights Agreement, including the occurrence of a
Distribution Date (as defined in the Rights Agreement), are not and shall
not be triggered by reason of the announcement or consummation of the
Offer, the Merger, the Tender Agreement or the consummation of any of the
other transactions contemplated by this Agreement. The Company has
delivered to Parent a complete and correct copy of the Rights Agreement as
amended and supplemented to the date of this Agreement.
(v) Opinion of Financial Advisor. The Company has received the
opinion of Donaldson, Lufkin & Jenrette Securities Corporation, to the
effect that, as of the date of this Agreement, the consideration to be
received in the Offer and the Merger by the Company's stockholders is fair
to the Company's stockholders from a financial point of view, and a
complete and correct signed copy of such opinion has been, or promptly upon
receipt thereof will be, delivered to Parent.
3.02 Representations and Warranties of Parent and Sub. Each of
Parent and Sub represents and warrants to the Company as follows:
(a) Due Organization; Good Standing and Corporate Power.
Each of Parent and Sub is a corporation duly
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organized, validly existing and in good standing under the laws of the
State of Delaware.
(b) Authorization and Validity of Agreement. Each of Parent
and Sub has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by Parent and Sub, and the consummation by each of them
of the transactions contemplated hereby, have been duly authorized by the
Boards of Directors of Parent and Sub. No other corporate action on the
part of either of Parent or Sub is necessary to authorize the execution,
delivery and performance of this Agreement by each of Parent and Sub and
the consummation of the transactions contemplated hereby (other than the
approval of this Agreement by the sole stockholder of Sub, if required by
Delaware General Corporation Law). This Agreement has been duly executed
and delivered by each of Parent and Sub and is a valid and binding
obligation of each of Parent and Sub, enforceable against each of Parent
and Sub in accordance with its terms, except that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, and general
equitable principles.
(c) Consents and Approvals; No Violations. Assuming (i) the
filings required under the HSR Act are made and the waiting period
thereunder has been terminated or has expired, (ii) the requirements of
the Exchange Act relating to the Proxy Statement and the Offer are met,
(iii) the filing of the Certificate of Merger and other appropriate merger
documents, if any, as required by the laws of the State of Delaware is
made and (iv) approval of this Agreement by the sole stockholder of Sub if
required by the laws of the State of Delaware the execution and delivery
of this Agreement by Parent and Sub and the consummation by Parent and Sub
of the transactions contemplated hereby will not: (1) violate any
provision of the Certificate of Incorporation or By-Laws of Parent or
Sub; (2) violate any statute, ordinance, rule, regulation, order or decree
of any court or of any governmental or regulatory body, agency or
authority applicable to Parent or Sub or by which either of their
respective properties or assets may be bound; (3) require any filing with,
or permit, consent or approval
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of, or the giving of any notice to any governmental or regulatory body,
agency or authority; or (4) result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
the Parent, Sub or any of their subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease or other instrument or obligation to
which Parent or Sub or any of their subsidiaries is a party, or by which
they or their respective properties or assets may be bound except in the
case of clauses (2), (3) and (4) above for such filings, permits,
consents, approvals or violations, which could not reasonably be expected
to have a material adverse effect on the Condition of the Parent and Sub,
taken as a whole, or could not be reasonably likely to prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
(d) Offer Documents, Schedule 14D-9 and Proxy Statement. The
Offer Documents will comply in all material respects with the Exchange Act
and the rules and regulations thereunder and any other applicable laws.
If at any time prior to the expiration or termination of the Offer any
event occurs which should be described in an amendment or supplement to
the Schedule 14D-1 or any amendment or supplement thereto, Sub will file
and disseminate, as required, an amendment or supplement which complies in
all material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws. Prior to its filing with the
Commission, the amendment or supplement shall be delivered to the Company
and its counsel. The written information supplied or to be supplied by
Parent and Sub for inclusion in the Proxy Statement and the Schedule 14D-9
of the Company will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
made, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, no representation or warranty
is made with respect to any information with respect to the Company or its
officers, directors and affiliates provided to Parent or Sub by
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the Company in writing for inclusion in the Offer Documents or amendments
or supplements thereto.
(e) Broker's or Finder's Fee. Except for CS First Boston (whose
fees and expenses as financial advisor to Parent and Sub will be paid by
Parent or Sub in accordance with the Parent's agreement with such firm, a
true and correct copy of which has been previously delivered to the Company
by Parent), no agent, broker, Person or firm acting on behalf of Parent or
Sub is, or will be, entitled to any fee, commission or broker's or finder's
fees from any of the parties hereto, or from any Person controlling,
controlled by, or under common control with any of the parties hereto, in
connection with this Agreement or any of the transactions contemplated
hereby.
(f) Financing. Parent has available to it, and shall provide Sub
with, the funds necessary to consummate the Offer and the Merger and the
transactions contemplated thereby in accordance with the terms hereof and
thereof.
(g) Common Stock Ownership. As of the date hereof, none of
Parent or its subsidiaries beneficially owns (within the meaning of Rule
13d-3 under the Exchange Act) any shares of Common Stock.
ARTICLE IV
TRANSACTIONS PRIOR TO CLOSING DATE
4.01 Access to Information Concerning Properties and Records.
During the period commencing on the date hereof and ending on the Closing Date,
the Company shall, and shall cause each of its subsidiaries to, upon reasonable
notice, afford Parent and Sub, and their respective counsel, accountants,
consultants and other authorized representatives, reasonable access during
normal business hours to the employees, properties, books and records of the
Company and its subsidiaries in order that they may have the opportunity to
make such investigations as they shall desire of the affairs of the Company and
its subsidiaries; such investigation shall not, however, affect the
representations and warranties made by the Company in this Agreement. The
Company shall furnish promptly to Parent and Sub (a) a copy of each report,
schedule, registration statement and other document filed by it or its
subsidiaries during such period pursuant to the require-
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ments of Federal or state securities laws and (b) all other information
concerning its or its subsidiaries' business, properties and personnel as
Parent and Sub may reasonably request. The Company agrees to cause its
officers and employees to furnish such additional financial and operating data
and other information and respond to such inquiries as Parent and Sub shall
from time to time request.
4.02 Confidentiality. Information obtained by Parent and Sub
pursuant to Section 4.01 hereof shall be subject to the provisions of the
Confidentiality Agreement between the Company and Parent dated January 23, 1995
(the "Parent Confidentiality Agreement").
4.03 Conduct of the Business of the Company Pending the
Closing Date. The Company agrees that, except as permitted, required or
specifically contemplated by, or otherwise described in, this Agreement or
otherwise consented to or approved in writing by Parent, during the period
commencing on the date hereof and ending on the Closing Date:
(a) The Company and each of its subsidiaries will conduct
their respective operations only according to their ordinary and usual
course of business consistent with past practice and will use their
reasonable best efforts to preserve intact their respective business
organization, keep available the services of their officers and employees
and maintain satisfactory relationships with licensors, suppliers,
distributors, clients and others having business relationships with them;
(b) Neither the Company nor any of its subsidiaries shall (i)
make any change in or amendment to its Restated Certificate of
Incorporation or By-Laws (or comparable governing documents); (ii) issue
or sell any shares of its capital stock (other than in connection with the
exercise of Options outstanding on the date hereof) or any of its other
securities, or issue any securities convertible into, or options, warrants
or rights to purchase or subscribe to, or enter into any arrangement or
contract with respect to the issuance or sale of, any shares of its
capital stock or any of its other securities, or make any other changes in
its capital structure; (iii) sell or pledge or agree to sell or pledge any
stock owned by it in any of its subsidiaries; (iv) declare, pay, set aside
or make any dividend or other distribution or payment with respect to, or
split, combine, redeem or reclassify, any shares of its capital
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stock; (v) enter into any contract or commitment with respect to capital
expenditures in excess of $200,000 for items or projects which were not
included in the Company's 1995 capital plan previously approved by the
Company's Board of Directors without first informing and consulting with
Parent's Chief Executive Officer or enter into any other material contract
except contracts in the ordinary course of business, (vi) acquire a
material amount of assets (other than inventory) or securities or release
or relinquish any material contract rights; (vii) adopt or amend any
Employee Plan or non-employee benefit plan or program, employment
agreement, license agreement or retirement agreement, or, except in the
ordinary course of business consistent with past practice, pay any bonus
or contingent or other extraordinary compensation; (viii) other than in
the ordinary course of business consistent with past practice, transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of, encumber or
subject to any lien, any assets or incur or modify any indebtedness or
other liability or issue any debt securities or assume, guarantee or
endorse or otherwise as an accommodation become responsible for the
obligations of any person; (ix) agree to the settlement of any material
claim or litigation; (x) make any material tax election or settle or
compromise any material tax liability; (xi) permit any insurance policy
naming it as beneficiary or a loss payable payee to be cancelled without
notice to Parent; (xii) make any material change in its method of
accounting or (xiii) agree, in writing or otherwise, to take any of the
foregoing actions; and
(c) The Company shall not, and shall not permit any of its
subsidiaries to, (i) take any action, engage in any transaction or enter
into any agreement which would cause any of the representations or
warranties set forth in Section 3.01 hereof to be untrue as of the Closing
Date, or (ii) purchase or acquire, or offer to purchase or acquire, any
shares of capital stock of the Company.
4.04 Proxy Statement. If stockholder approval of the Merger
is required by law, as promptly as practicable, the Company will prepare and
file a preliminary Proxy Statement with the Commission and will use its best
efforts to respond to the comments of the Commission in connection therewith
and to furnish all information required to prepare the definitive Proxy
Statement (including, without limit-
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ation, financial statements and supporting schedules and certificates and
reports of independent public accountants). Promptly after the expiration or
termination of the Offer, if required by the Delaware General Corporation Law
in order to consummate the Merger, the Company will cause the definitive Proxy
Statement to be mailed to the stockholders of the Company and, if necessary,
after the definitive Proxy Statement shall have been so mailed, promptly
circulate amended, supplemental or supplemented proxy material and, if required
in connection therewith, resolicit proxies. The Company will not use any proxy
material in connection with the meeting of its stockholders without Parent's
prior approval.
4.05 Stockholder Approval. Promptly after the expiration or
termination of the Offer, if required by Delaware General Corporation Law in
order to consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with applicable law, call a special meeting of
the holders of Common Stock for the purpose of voting upon this Agreement and
the Merger and the Company agrees that this Agreement and the Merger shall be
submitted at such special meeting. The Company shall use its reasonable
efforts to solicit from its stockholders proxies, and shall take all other
action necessary and advisable, to secure the vote of stockholders required by
applicable law to obtain the approval for this Agreement. Subject to Section
4.07 of this Agreement, the Company agrees that it will include in the Proxy
Statement the recommendation of its Board of Directors that holders of Common
Stock approve and adopt this Agreement and approve the Merger. Parent will
cause all shares of Common Stock owned by Parent and its subsidiaries to be
voted in favor of the Merger.
4.06 Reasonable Best Efforts. Subject to the terms and
conditions provided herein, each of the Company, Parent and Sub shall, and the
Company shall cause each of its subsidiaries to, cooperate and use their
respective reasonable best efforts to take, or cause to be taken, all
appropriate action, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, their respective reasonable best efforts to obtain, prior
to the Closing Date, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company and its subsidiaries as are necessary for
consummation of the transactions contemplated by this Agreement and to fulfill
the
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conditions to the Offer and the Merger; provided, however, that no loan
agreement or contract for borrowed money shall be repaid except as currently
required by its terms, in whole or in part, and no material contract shall be
amended to increase the amount payable thereunder or otherwise to be materially
more burdensome to the Company or any of its subsidiaries in order to obtain
any such consent, approval or authorization without first obtaining the written
approval of Parent and Sub.
4.07 No Solicitation of Other Offers. (a) Neither the
Company nor any of its subsidiaries, shall, directly or indirectly, take (and
the Company shall not authorize or permit its or its subsidiaries, officers,
directors, employees, representatives, consultants, investment bankers,
attorneys, accountants or other agents or affiliates, to so take) any action to
(i) solicit or initiate the submission of any Acquisition Proposal, (ii) enter
into an agreement for the sale or other disposition by the Company or any of
its subsidiaries of a material amount of assets or a sale of shares of capital
stock whether by merger or other business combination or tender or exchange
offer or (iii) participate in any way in discussions or negotiations with, or,
furnish any information to, any Person (other than Parent or Sub) in connection
with, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the Company may participate in
discussions or negotiations with or furnish information to any third party
which proposes a transaction which the Board of Directors of the Company
reasonably believes will result in an Acquisition Proposal, if the Board of
Directors believes (and has been advised by counsel) that failing to take such
action would constitute a breach of its fiduciary duties. In addition, neither
the Board of Directors of the Company nor any Committee thereof shall withdraw
or modify in a manner adverse to Parent the approval and recommendation of the
Offer and this Agreement or approve or recommend any Acquisition Proposal,
provided that the Company may recommend to its shareholders an Acquisition
Proposal and in connection therewith withdraw or modify its approval or
recommendation of the Offer or the Merger if (i) the Board of Directors of the
Company has determined that the Acquisition Proposal is a Superior Proposal,
(ii) all the conditions to the Company's right to terminate this Agreement in
accordance with Section 6.01(e) have been satisfied (including the payment of
the amount required by Section 7.01), (iii) simultaneously with such
withdrawal, modification or recommendation, this
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Agreement is terminated in accordance with Section 6.01(e) and (iv) the
Acquisition Proposal does not provide for any breakup fee or other inducement
to the acquiror other than reimbursement of documented out-of-pocket expenses
incurred in connection with such Acquisition Proposal. Any actions permitted
under, and taken in compliance with, this Section 4.07 shall not be deemed a
breach of any other covenant or agreement of such party contained in this
Agreement.
"Acquisition Proposal" shall mean any proposed merger or other
business combination, sale or other disposition of any material amount of
assets, sale of shares of capital stock, tender offer or exchange offer or
similar transactions involving the Company or any of its subsidiaries.
"Superior Proposal" shall mean a bona fide proposal made by a third party to
acquire all of the outstanding shares of the Company pursuant to a tender offer
or a merger, or to purchase all or substantially all of the assets of the
Company on terms which a majority of the members of the Board of Directors of
the Company determines in its good faith reasonable judgment (based on the
advice of its financial and legal advisors) to be more favorable to the Company
and its shareholders than the transactions contemplated hereby, and which does
not provide for any breakup fee or other inducement to the acquiror other than
reimbursement of documented out-of-pocket expenses incurred in connection with
the Superior Proposal .
(b) In addition to the obligations of the Company set forth
in paragraph (a), the Company shall promptly advise Parent of any request for
information or of any Acquisition Proposal, or any proposal with respect to any
Acquisition Proposal, the material terms and conditions of such request or
takeover proposal, and the identity of the person making any such takeover
proposal or inquiry. The Company will use its reasonable best efforts to keep
Parent informed of the status and details (including amendments or proposed
amendments) of any such request, takeover proposal or inquiry.
(c) Immediately following the purchase of Shares pursuant to
the Offer, the Company will request each person which has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring the
Company or any portion thereof (the "Confidentiality Agreements") to return all
confidential information heretofore furnished to such person by or on behalf of
the Company.
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4.08 Notification of Certain Matters. The Company shall give
prompt notice to Parent of: (a) any notice of, or other communication relating
to, a material default or event that, with notice or lapse of time or both,
would become a material default, received by the Company or any of its
subsidiaries subsequent to the date of this Agreement and prior to the
Effective Time, under any material contract to which the Company or any of its
subsidiaries is a party or is subject; and (b) any material adverse change in
the Condition, of the Company and its subsidiaries taken as a whole or the
occurrence of any event which is reasonably likely to result in any such
change. Each of the Company and Parent shall give prompt notice to the other
party of any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
4.09 HSR Act. The Company and Parent shall, within five
business days from the date of this Agreement, file Notification and Report
Forms under the HSR Act with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
shall use their best efforts to respond as promptly as practicable to all
inquiries received from the FTC or the Antitrust Division for additional
information or documentation.
4.10 Employee Benefits. Parent agrees that, during the period
commencing at the Effective Time and ending on the second anniversary thereof,
the employees of the Company and its subsidiaries will continue to be provided
with employee benefit plans (other than stock option, employee stock ownership
or other plans involving the potential issuance of securities of the Company or
of Parent) which in the aggregate are substantially comparable to those
currently provided by the Company and its subsidiaries to such employees.
Parent will, and will cause the Surviving Corporation to, honor employee (or
former employee) benefit obligations and contractual rights existing as of the
Effective Time and all employment, incentive and deferred compensation or
severance agreements, plans or policies adopted by the Board of Directors of
the Company (or any committee thereof) prior to the date hereof in accordance
with their terms other than stock option, employee stock ownership or other
plans involving the potential issuance of securities of the Company or of
Parent.
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4.11 Directors' and Officers' Insurance; Indemnification. (a)
The certificate of incorporation and the by-laws of the Surviving Corporation
shall contain the provisions with respect to indemnification and exculpation
from liability set forth in the Company's certificate of incorporation and
by-laws on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who on or prior to the Effective Time were directors, officers,
employees or agents of the Company, unless such modification is required by
law.
(b) For five years from the Effective Time, the Surviving
Corporation shall either (x) maintain in effect the Company's current
directors' and officers' liability insurance covering those persons who are
currently covered on the date of this Agreement by the Company's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Parent) (the "Indemnified Parties"); provided, however, that in no
event shall Parent be required to expend in any one year an amount in excess of
200% of the annual premiums currently paid by the Company for such insurance
which the Company represents to be $336,000 for the twelve month period ended
October 1, 1995; and; provided further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount; provided further, that the Surviving Corporation may
substitute for such Company policies, policies with at least the same coverage
containing terms and conditions which are no less advantageous and provided
that said substitution does not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time or (y) cause the
Parent's, directors' and officers' liability insurance then in effect to cover
those persons who are covered on the date of this Agreement by the Company's
directors' and officers' liability insurance policy with respect to those
matters covered by the Company's directors' and officers' liability policy.
(c) Parent agrees, from and after the date of purchase of
shares of Common Stock pursuant to the Offer, to indemnify all Indemnified
Parties to the fullest extent permitted by applicable law with respect to all
acts and omissions arising out of such individuals' services as officers,
directors, employees or agents of the Company or
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<PAGE> 45
any of its subsidiaries, occurring prior to the Effective Time including,
without limitation, the transactions contemplated by this Agreement. Without
limitation of the foregoing, in the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter, including without limitation, the transactions
contemplated by this Agreement, occurring prior to, and including, the
Effective Time, Parent, from and after the date of purchase of shares of Common
Stock pursuant to the Offer, will pay as incurred such Indemnified Party's
reasonable legal and other expenses (including the cost of any investigation
and preparation) incurred in connection therewith. Subject to Section 4.11(d)
below, Parent shall pay all reasonable expenses, including attorneys' fees,
that may be incurred by any Indemnified Party in enforcing this Section 4.11 or
any action involving an Indemnified Party resulting from the transactions
contemplated by this Agreement. If the indemnity provided for in this Section
4.11 is not available with respect to any Indemnified Party, then the Surviving
Corporation and the Indemnified Party shall contribute to the amount payable in
such proportion as is appropriate to reflect relative faults and benefits.
(d) Any Indemnified Party wishing to claim indemnification
under paragraph (a) or (c) of this Section, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Parent
thereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
or the Surviving Corporation shall have the right, from and after the purchase
of shares of Common Stock pursuant to the Offer, to assume the defense thereof
and Parent shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, (ii) the
Indemnified Parties will cooperate in the defense of any such matter and (iii)
Parent shall not be liable for any settlement effected without its prior
written consent; and provided further that Parent shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
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4.12 Financing. Parent shall provide Sub with the funds
necessary to consummate the Offer and the Merger and the transactions
contemplated hereby in accordance with the terms hereof.
ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.01 Conditions Precedent to Obligations of Parent, Sub and the
Company. The respective obligations of Parent and Sub, on the one hand, and
the Company, on the other hand, to effect the Merger are subject to the
satisfaction or waiver (subject to applicable law) at or prior to the Effective
Time of each of the following conditions:
(a) Approval of Company's Stockholders. To the extent required
by applicable law, this Agreement and the Merger shall have been approved
and adopted by holders of a majority of the Common Stock of the Company in
accordance with applicable law (if required by applicable law) and the
Company's Certificate of Incorporation and By-Laws;
(b) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall have expired or been
terminated;
(c) Injunction. No preliminary or permanent injunction or other
order shall have been issued by any court or by any governmental or
regulatory agency, body or authority which prohibits the consummation of
the Offer or the Merger and the transactions contemplated by this
Agreement and which is in effect at the Effective Time, provided, however,
that, in the case of a decree, injunction or other order, each of the
parties shall have used reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any
decree, injunction or other order that may be entered;
(d) Payment for Common Stock. Sub shall have accepted for
payment and paid for the shares of Common Stock tendered pursuant to the
Offer; and
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<PAGE> 47
(e) Statutes. No statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered, promulgated
or enforced by any court or governmental authority which prohibits the
consummation of the Offer or the Merger or has the effect of making the
purchase of the Common Stock illegal.
5.02 Conditions Precedent to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are also subject to the
satisfaction or waiver, at or prior to the Effective Time, of the following
condition:
(a) Employee Stock Ownership Plan. The Company shall have
terminated the Club Car, Inc. Employee Stock Ownership Plan.
5.03 Conditions Precedent to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver, at or prior to the Effective Time, of the following
condition:
(a) Performance by Parent and Sub. Each of the Parent and Sub
shall have performed in all material respects all obligations and
agreements, and complied in all material respects with all covenants and
conditions, contained in Sections 1.03 and 1.04 of this Agreement to be
performed or complied with by it prior to the Closing Date.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger by the Company's
stockholders:
(a) subject to the provisions of Section 1.04 hereof, by mutual
consent of the Company, on the one hand, and of Parent and Sub, on the
other hand;
(b) by either Parent, on the one hand, or the Company, on the
other hand, if any governmental or regulatory agency shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
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<PAGE> 48
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, shares of Common Stock pursuant to the Offer or the Merger
and such order, decree or ruling or other action shall have become final
and nonappealable;
(c) by Parent, on the one hand, or the Company, on the other
hand, if the Effective Time shall not have occurred within eight months
after commencement of the Offer unless the Effective Time shall not have
occurred because of a material breach of any representation, warranty,
obligation, covenant, agreement or condition set forth in this Agreement
on the part of the party seeking to terminate this Agreement;
(d) by Parent, on the one hand, or the Company, on the other
hand, if the Offer is terminated or expires in accordance with its terms
without Sub having purchased any Common Stock thereunder due to a failure
of any of the conditions set forth in Annex A hereto to be satisfied,
unless such termination or expiration has been caused by or results from
the failure of the party seeking to terminate this Agreement to perform in
any material respect any of its respective covenants or agreements
contained in this Agreement;
(e) by either Parent, on the one hand, or the Company, on the
other hand, if the Board of Directors of the Company determines that an
Acquisition Proposal is a Superior Proposal and the Board believes (and
has been advised by counsel) that a failure to terminate this Agreement
and enter into an agreement to effect the Superior Proposal would
constitute a breach of its fiduciary duties; provided, however, the
Company may not terminate this Agreement pursuant to this Section 6.01(e)
unless (i) the Company has notified Parent and Sub in writing promptly
after receipt thereof, of the receipt of any Acquisition Proposal and
following notification by the Company of Parent and Sub of receipt of the
Acquisition Proposal the Company has fully cooperated with Parent,
including, without limitation, informing Parent of the terms and
conditions of such Acquisition Proposal (and any modification thereto),
and the identity of the Person making such Proposal, with the intent of
enabling the parties hereto to agree to a modification of the terms and
conditions of this Agreement so that the transactions contemplated hereby
may be effected and (ii) prior to such termination
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<PAGE> 49
Parent has received the amount set forth in Section 7.01 by wire transfer
in same day funds; and
(f) prior to the consummation of the Offer, by the Company,
if (i) any of the representations and warranties of Parent or Sub
contained in this Agreement were untrue or incorrect in any material
respect when made or have since become, and at the time of termination
remain, incorrect in any material respect, or (ii) Parent or Sub shall
have breached or failed to comply in any material respect with any of
their respective obligations under this Agreement, including, without
limitation, their obligation to commence the Offer within the time period
required by Section 1.01 of this Agreement.
6.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 6.01 hereof by Parent or Sub, on the one
hand, or the Company, on the other hand, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall become void and
have no effect, and there shall be no liability hereunder on the part of
Parent, Sub or the Company, except that Sections 3.01(q), 4.02, 7.01 and this
Section 6.02 hereof shall survive any termination of this Agreement. Nothing
in this Section 6.02 shall relieve any party to this Agreement of liability for
breach of this Agreement.
ARTICLE VII
MISCELLANEOUS
7.01 Fees and Expenses. Except as provided in paragraph (b)
below, all costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
(b) If this Agreement is terminated by Parent in accordance
with Section 6.01(d) because of the occurrence of any of the events set forth
in clause (iii)(g) or (h) of Annex A or if this Agreement is terminated by the
Company in accordance with Section 6.01(e), then the Company shall, within two
business days of such termination (except as required to be earlier paid in
accordance with Section 6.01(e)), pay to Parent in same day funds $7,250,000.
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<PAGE> 50
7.02 Representations and Warranties. The respective
representations and warranties of the Company, on the one hand, and Parent and
Sub, on the other hand, contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party. Each and every such
representation and warranty shall expire with, and be terminated and
extinguished by, the Closing and thereafter none of the Company, Parent or Sub
shall be under any liability whatsoever with respect to any such representation
or warranty. This Section 7.02 shall have no effect upon any other obligation
of the parties hereto, whether to be performed before or after the Effective
Time.
7.03 Extension; Waiver. Subject to the provisions of Sections
1.01 or 1.03 hereof, at any time prior to the Effective Time, the parties
hereto, by action taken by or on behalf of the respective Boards of Directors
of the Company, Parent or Sub, may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties contained herein by any
other applicable party or in any document, certificate or writing delivered
pursuant hereto by any other applicable party or (iii) waive compliance with
any of the agreements or conditions contained herein. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
7.04 Public Announcements. The Company, on the one hand, and
Parent and Sub, on the other hand, agree to consult promptly with each other
prior to issuing any press release or otherwise making any public statement
with respect to the transactions contemplated hereby, and shall not issue any
such press release or make any such public statement prior to such consultation
and review by the other party of a copy of such release or statement, unless
required by applicable law.
7.05 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person
or mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
(a) if to the Company, to it at:
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<PAGE> 51
Club Car, Inc.
4152 Washington Road
P.O. Box 204658
Augusta, Georgia 30907
Attention: A. Montague Miller
with a copy to:
McGuire Woods Battle & Boothe
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Wellford L. Sanders, Jr., Esq.
with a copy to:
Kelso & Company
350 Park Avenue
21st Floor
New York, New York 10022
Attention: James J. Connors II, Esq.
(b) if to either Parent or Sub, to it at:
Clark Acquisition Sub, Inc.
c/o Clark Equipment Company
100 North Michigan Street
P.O. Box 7008
South Bend, Indiana 46634
Attention: Bernard D. Henely, Esq.
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery
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<PAGE> 52
unless if mailed, in which case on the third business day after the mailing
thereof except for a notice of a change of address, which shall be effective
only upon receipt thereof.
7.06 Entire Agreement. This Agreement, the Disclosure Letter,
the Parent Confidentiality Agreement and the annex and other documents referred
to herein or delivered pursuant hereto, collectively contain the entire
understanding of the parties hereto with respect to the subject matter
contained herein and supersede all prior agreements and understandings, oral
and written, with respect thereto.
7.07 Binding Effect; Benefit; Assignment. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties.
Nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except for Section 4.11, which is intended to be for
the benefit of the persons referred to therein, and may be enforced by such
persons.
7.08 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in writing by the
parties hereto in any and all respects before the Effective Time
(notwithstanding any stockholder approval), by action taken by the respective
Boards of Directors of Parent, Sub and the Company or by the respective
officers authorized by such Boards of Directors, provided, however, that after
any such stockholder approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval.
7.09 Further Actions. Each of the parties hereto agrees that,
subject to its legal obligations, it will use its reasonable best efforts to
fulfill all conditions precedent specified herein, to the extent that such
conditions are within its control, and to do all things reasonably necessary to
consummate the transactions contemplated hereby.
7.10 Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted
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<PAGE> 53
for convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement.
7.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
7.12 Applicable Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflict of laws
rules thereof.
7.13 Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
7.14 "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department or
agency thereof.
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<PAGE> 54
f
IN WITNESS WHEREOF, each of Parent, Sub and the Company have
caused this Agreement to be executed by their respective officers thereunto
duly authorized, all as of the date first above written.
CLARK EQUIPMENT COMPANY
By /s/ Bernard D. Henely
-------------------------
Name: Bernard D. Henely
Title: Vice President
CLARK ACQUISITION SUB, INC.
By /s/ Paul R. Bowles
-------------------------
Name: Paul R. Bowles
Title: President
CLUB CAR, INC.
By /s/ G.H. Inman
-------------------------
Name: G.H. Inman
Title: Chairman and Chief
Executive Officer
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<PAGE> 55
ANNEX A
to
Agreement and
Plan of Merger
The capitalized terms used in this Annex A shall have the
meanings set forth in the Agreement to which it is annexed, except that the
term "Merger Agreement" shall be deemed to refer to the Agreement to which this
Annex A is appended and "Purchaser" shall be deemed to refer to Sub.
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment or subject to any applicable rules
and regulations of the SEC, including Rule 14e-1c under the Exchange Act, pay
for any shares of Common Stock tendered and may terminate or amend the Offer in
accordance with the Merger Agreement and may postpone the acceptance of, and
payment for, shares of Common Stock, if (i) there shall not have been validly
tendered and not withdrawn prior to the expiration of the Offer a number of
shares of Common Stock which represent a majority of the total voting power of
all shares of capital stock of the Company outstanding on a fully diluted
basis, (ii) any applicable waiting period under the HSR Act shall not have
expired or been terminated or (iii) at any time on or after the date of the
Merger Agreement and at or before the time of payment for any such shares of
Common Stock (whether or not any shares of Common Stock have theretofore been
accepted for
<PAGE> 56
ANNEX A
Page 2
payment or paid for pursuant to the Offer) any of the following shall occur:
(a) (x) there shall be threatened, instituted or pending any
action or proceeding by any government or governmental authority or
agency (i) challenging or seeking to, or which could reasonably be
expected to make illegal, impede, delay or otherwise directly or
indirectly restrain, prohibit or make materially more costly the Offer
or the Merger or seeking to obtain material damages, (ii) seeking to
prohibit or materially limit the ownership or operation by Parent or
Purchaser of all or any material portion of the business or assets of
the Company or any of its subsidiaries taken as a whole or to compel
Parent or Purchaser to dispose of or hold separately all or any
material portion of the business or assets of Parent or Purchaser or
the Company or any of its subsidiaries taken as a whole, or seeking to
impose any material limitation on the ability of Parent or Purchaser
to conduct its business or own such assets, (iii) seeking to impose
material limitations on the ability of Parent or Purchaser effectively
to exercise full rights of ownership of the shares of Common Stock,
including, without limitation, the right to vote any shares of Common
Stock acquired or owned by Purchaser or Parent on all matters properly
presented to the Company's stockholders, (iv) seeking to require
divestiture by Parent or Purchaser of any shares of Common Stock, or
(v) otherwise materially adversely affecting the Condition of the
Company and its subsidiaries taken as a whole; or (y) any court shall
have entered an order which is in effect and which (i) makes illegal,
impedes, delays or otherwise directly or indirectly restrains,
prohibits or makes materially more costly the Offer or the Merger,
(ii) prohibits or materially limits the ownership or operation by
Parent or Purchaser of all or any material portion of the business or
assets of the Company or any of its subsidiaries taken as a whole or
compels Parent or Purchaser to dispose of or hold separately all or
any material portion of the business or assets of Parent or Purchaser
or the Company or any of its subsidiaries taken as a whole, or imposes
any material limitation on the ability of Parent or Purchaser to
conduct
<PAGE> 57
ANNEX A
Page 3
its business or own such assets, (iii) imposes material limitations on
the ability of Parent or Purchaser effectively to exercise full rights
of ownership of the shares of Common Stock, including, without
limitation, the right to vote any shares of Common Stock acquired or
owned by Purchaser or Parent on all matters properly presented to the
Company's stockholders, (iv) requires divestiture by Parent or
Purchaser of any shares of Common Stock, or (v) otherwise materially
adversely affects the Condition of the Company and its subsidiaries
taken as a whole; provided, however, that in the case of a preliminary
injunction to the effect described in this subparagraph (y), the
provisions of this subparagraph (y) shall not be deemed to have been
triggered until the earlier of (X) the date on which such injunction
becomes final or (Y) the Company ceases its efforts to have such
preliminary injunction dissolved;
(b) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, enforced, promulgated, amended, issued or deemed applicable
to (i) Parent, Purchaser, the Company or any subsidiary of the Company
or (ii) the Offer or the Merger, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer or to the
Merger, which could reasonably be expected to directly or indirectly,
result in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) (x) above;
(c) any change shall have occurred or been threatened (or any
condition, event or development shall have occurred or been threatened
involving a prospective change), that is reasonably likely to have a
material adverse effect on the business, properties, assets,
liabilities, operations, results of operations, conditions (financial
or otherwise) or prospects of the Company and its subsidiaries;
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-
<PAGE> 58
ANNEX A
Page 4
the-counter market, (ii) any decline in either the Dow Jones
Industrial Average or the Standard & Poor's Index of 400 Industrial
Companies or in the New York Stock Exchange Composite Index in excess
of 20% measured from the close of business on the trading day next
preceding the date of the Merger Agreement, (iii) any material change
in United States or any other currency exchange rates or a suspension
of, or limitation on, the markets therefor, (iv) a declaration of a
banking moratorium or any suspension of payments in respect of banks
in the United States, or (v) a commencement or escalation of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States;
(e) all consents, registrations, approvals, permits,
authorizations, notices, reports or other filings required to be
obtained or made by the Company, Parent or Purchaser with or from any
governmental or regulatory entity in connection with the execution,
delivery and performance of the Merger Agreement, the Offer and the
consummation of the transactions contemplated by the Merger Agreement
shall not have been made or obtained and such failure could reasonably
be expected to have a material adverse effect on the Condition of the
Company and any of its subsidiaries, taken as a whole or could be
reasonably likely to prevent or materially delay consummation of the
transactions contemplated by the Merger Agreement;
(f) any representation or warranty made by the Company in the
Merger Agreement shall be untrue or incorrect in any material respect;
(g) there shall have been a breach by the Company of any of
its covenants or agreements in any material respect contained in the
Merger Agreement;
(h) the Company's Board of Directors shall have withdrawn,
modified or amended in any respect adverse to Parent or Purchaser its
recommendation of the Offer or the Merger, or shall have resolved to
do so; or
<PAGE> 59
ANNEX A
Page 5
(i) the Merger Agreement shall have been terminated in
accordance with its terms; which, in the reasonable judgment of Purchaser, in
any such case and regardless of the circumstances giving rise to any such
condition, makes it inadvisable to proceed with such acceptance for payment or
payment.
The foregoing conditions (including those set forth in clauses
(i)-(iii) above) are for the sole benefit of Purchaser and may be asserted by
Purchaser, or may be waived by Purchaser, in whole or in part at any time and
from time to time in its sole discretion; provided, however, that without the
consent of the Company, Purchaser shall not waive the condition described in
clause (i) above. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by Purchaser concerning the events
described in this Annex A will be final and binding upon all parties.
<PAGE> 1
Exhibit (d)
[Execution Copy]
STOCK TENDER AGREEMENT
AGREEMENT dated as of February 3, 1995, among Clark Equipment
Company, a Delaware corporation ("Parent"), Clark Acquisition Sub, Inc., a
Delaware corporation and a direct wholly-owned subsidiary of Parent ("Sub"),
and the other parties signatory hereto (each a "Stockholder," and collectively,
the "Stockholders").
W I T N E S S E T H :
WHEREAS, Parent, Sub and Club Car, Inc., a Delaware
corporation (the "Company"), have previously entered into an Agreement and Plan
of Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"; capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement), pursuant to
which Sub will be merged with and into the Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days)
after the execution and delivery of the Merger Agreement, Sub commence a cash
tender offer to purchase all outstanding shares of Company Common Stock (as
defined in Section 1) including all of the Shares (as defined in Section 2)
owned beneficially by the Stockholders; and
WHEREAS, in connection with the Merger Agreement, Parent has
required that the Stockholders agree, and the Stockholders hereby agree, to
enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Company Common Stock" shall mean at any time the
common stock, $.01 par value, of the Company.
<PAGE> 2
(b) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
2. Tender of Shares. So long as the Board of Directors
of the Company has not withdrawn its recommendation of the Offer (as defined in
the Merger Agreement) in accordance with Section 4.07 of the Merger Agreement,
each Stockholder hereby agrees validly to tender (and not to withdraw) pursuant
to and in accordance with the terms of the Offer, not later than the earlier of
(x) the fifth business day after commencement of the Offer pursuant to Section
1.01 of the Merger Agreement and Rule 14d-2 under the Exchange Act and (y) the
next succeeding business day after acquisition thereof, all shares of Company
Common Stock owned by such Stockholder on the date hereof and all shares of
Company Common Stock acquired after the date hereof and prior to the
termination of this Agreement (the Shares of Company Common Stock owned by such
Stockholder on the date hereof, such Stockholder's "Existing Shares," and
together with any shares of Company Common Stock acquired by such Stockholder
after the date hereof and prior to the termination of this Agreement whether
upon the exercise of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of purchase, dividend,
distribution or otherwise, the "Shares"). Each Stockholder hereby acknowledges
and agrees that the Sub's obligation to accept for payment and pay for Shares
in the Offer, including the Shares owned by such Stockholder, is subject to the
terms and conditions of the Offer.
3. Restriction on Transfer, Proxies and
Non-Interference. Except as applicable in connection with the transactions
contemplated by Section 2 hereof and so long as the Board of Directors of the
Company has not withdrawn its recommendation of the Offer in accordance with
Section 4.07 of the Merger Agreement, no Stockholder shall, directly or
indirectly: (i) offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition
of, any or all of such Stockholder's Shares or any interest therein; or (ii)
except as contemplated by this Agreement, grant any proxies or powers of
attorney, deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares.
-2-
<PAGE> 3
4. Other Covenants, Representations and Warranties.
Each Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Ownership of Shares. On the date hereof, such
Stockholder is the owner of the number of Existing Shares set forth opposite
such Stockholder's name on Schedule I hereto. On the date hereof, the Existing
Shares set forth opposite such Stockholder's name on Schedule I hereto
constitute all of the Shares owned by such Stockholder.
(b) Power; Binding Agreement. Such Stockholder has the
legal capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, stockholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such Stockholder is Trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby. If such Stockholder is married and such
Stockholder's Shares constitute community property, this Agreement has been
duly authorized, executed and delivered by, and constitutes a valid and binding
agreement of, such Stockholder's spouse, enforceable against such person in
accordance with its terms. Each of the Stockholders waives any rights he or it
may have under that certain Stockholders' Agreement, dated as of September 24,
1993, to the extent the terms thereof are inconsistent with the provisions of
this Agreement, including, without limitation, any notice provisions.
(c) No Encumbrances. Except as applicable in connection
with the transactions contemplated by Section 2 hereof such Stockholder's
Shares and the certificates representing such Shares are, and at all times
during the term hereof will be, held by such Stockholder, or by a nominee or
custodian for the benefit of such Stockholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever, except for
any such encumbrances or proxies arising hereunder.
-3-
<PAGE> 4
5. Stockholder Capacity. No person executing this
Agreement who is or becomes during the term hereof a director of the Company
makes any agreement or understanding herein in his or her capacity as such
director. Each Stockholder signs solely in his or her capacity as the owner
of, or the trustee of a trust whose beneficiaries are the owners of, such
Stockholder's Shares.
6. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
(b) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party, provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
(c) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
with respect to any one or more Stockholders, except upon the execution and
delivery of a written agreement executed by the relevant parties hereto;
provided that Schedule I hereto may be supplemented by Parent by adding the
name and other relevant information concerning any stockholder of the Company
who agrees to be bound by the terms of this Agreement without the agreement of
any other party hereto, and thereafter such added stockholder shall be treated
as a "Stockholder" for all purposes of this Agreement.
(d) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given) by hand delivery,
telegram, telex or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:
-4-
<PAGE> 5
If to Stockholder: At the addresses set forth on Schedule I hereto
copy to: Kelso & Company
350 Park Avenue
21st Floor
New York, New York 10022
Attention:
James J. Connors II, Esq.
copy to: McGuire Woods Battle & Boothe
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention:
Wellford L. Sanders, Jr., Esq.
If to Parent: Clark Equipment Company
100 North Michigan Street
P.O. Box 7008
South Bend, Indiana 46634
Attention:
Bernard D. Henely, Esq.
copy to: White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention:
William F. Wynne, Jr., Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(e) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
-5-
<PAGE> 6
(f) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or
in equity.
(g) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(h) No Waiver. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance
by any other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.
(i) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(j) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(k) Jurisdiction. Each party hereby irrevocably submits
to the exclusive jurisdiction of the Court of Chancery in the State of Delaware
or the United States District Court for the Southern District of New York or
any court of the State of New York located in the City of New York in any
action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such
-6-
<PAGE> 7
consent to jurisdiction is solely for the purpose referred to in this paragraph
(l) and shall not be deemed to be a general submission to the jurisdiction of
said Courts or in the States of Delaware or New York other than for such
purposes. Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
(l) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
(m) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same Agreement.
(n) Expenses. Each party will pay its own expenses
incurred in connection with this Agreement.
(o) This Agreement shall terminate on the earlier of the
termination of the Merger Agreement or the date on which Sub accepts for
payment shares of Company Common Stock pursuant to the Offer.
IN WITNESS WHEREOF, each of Parent, Sub and the Company have
caused this Agreement to be executed by their respective officers thereunto
duly authorized, all as of the date first above written.
CLARK EQUIPMENT COMPANY
By /s/ Bernard D. Henely
-------------------------
Name: Bernard D. Henely
Title: Vice President
CLARK ACQUISITION SUB, INC.
By /s/ Paul R. Bowles
-------------------------
Name: Paul R. Bowles
Title: President
-7-
<PAGE> 8
KIA III-CLUB CAR, L.P.
By /s/ Frank T. Nickell
----------------------------
Name: Frank T. Nickell
Title: General Partner
KELSO EQUITY PARTNERS II, L.P.
By /s/ Frank T. Nickell
----------------------------
Name: Frank T. Nickell
Title: General Partner
<PAGE> 9
STOCKHOLDER
By /s/ George H. Inman
---------------------
Name: George H. Inman
<PAGE> 10
STOCKHOLDER
By /s/ A. Montague Miller
------------------------
Name: A. Montague Miller
<PAGE> 11
STOCKHOLDER
By /s/ Cary H. Rivers
--------------------
Name: Cary H. Rivers
<PAGE> 12
STOCKHOLDER
By /s/ Michael W. Harris
-----------------------
Name: Michael W. Harris
<PAGE> 13
STOCKHOLDER
By /s/ Henry T. Sanders
----------------------
Name: Henry T. Sanders
<PAGE> 14
MERCHANT INVESTMENTS, INC.
By /s/ Agnes Reicke
------------------
Name: Agnes Reicke
Title: Vice President and Secretary
<PAGE> 15
SCHEDULE I
<TABLE>
<CAPTION>
Name and Address of Stockholder Number of Shares Owned
- ------------------------------- ----------------------
<S> <C>
KIA III-Club Car, L.P. 797,868
Kelso Equity Partners II L.P. 111,473
George H. Inman 209,376
A. Montague Miller 114,200
Cary H. Rivers 112,485
Michael W. Harris 111,486
Henry T. Sanders 116,486
Merchant Investments, Inc. 342,995
</TABLE>
<PAGE> 1
EXHIBIT (e)
FIRST AMENDMENT TO RIGHTS AGREEMENT
This AMENDMENT (this "Amendment"), dated as of February 2, 1995, among
Club Car, Inc., a Delaware corporation (the "Company"), and Trust Company Bank
(the "Rights Agent").
RECITALS
A. The Company and the Rights Agent are parties to a Rights
Agreement (the "Rights Agreement") dated as of September 24, 1993.
B. The Company desires to enter into an Agreement and Plan of
Merger (the "Merger Agreement") by and among the Company, Clark Equipment
Company, a Delaware corporation ("Clark"), and Clark Acquisition Sub, Inc., a
Delaware corporation ("Sub"), pursuant to which Sub will be merged into the
Company (the "Merger") and the shares of outstanding common stock of the
Company will be converted into the right to receive $25 per share in cash.
C. Terms used herein and not otherwise defined shall have the
meaning given to them in the Rights Agreement.
NOW, THEREFORE, for and in consideration of the premises and covenants
set forth herein, the parties hereto agree as follows:
1. Exemption of Transactions. Neither the (i) execution,
delivery and performance of the Merger Agreement and the Tender Agreement (as
defined in the Merger Agreement), (ii) commencement of the Offer (as defined in
the Merger Agreement) nor (iii) acceptance of and payment for Common Shares by
Clark or Sub or any of its subsidiaries in accordance with the terms of the
Merger Agreement shall (A) trigger the exercisability of the Rights, (B) cause
the separation of the Rights from the certificates representing Common Shares
to which they are attached, (C) cause the occurrence of a Distribution Date or
a Shares Acquisition Date or (D) cause Clark, Sub or any of Clark's
subsidiaries or affiliates to be deemed an Acquiring Person.
2. No Further Amendment. Except as hereby amended, the Rights
Agreement shall remain in full force and effect.
3. Counterparts. This Amendment may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers.
CLUB CAR, INC.
By: /s/ A. Montague Miller
------------------------------------
Title: President, Chief Operating
Officer and Secretary
--------------------------
TRUST COMPANY BANK
By: /s/ Thomas J. Donaldson
------------------------------------
Title: Group Vice President
-----------------------------
<PAGE> 1
[Donaldson, Lufkin & Jenrette Letterhead]
EXHIBIT (f)
February 2, 1995
Special Committee of the Board of Directors
Club Car, Inc.
4152 Washington Road
Martinez, Georgia 30907
Dear Sirs:
You have requested our opinion as to the fairness from a financial
point of view to the shareholders of Club Car, Inc. (the "Company") of the
consideration to be received by such shareholders pursuant to the terms of the
proposed Agreement and Plan of Merger to be dated as of February 2, 1995, to be
entered into by and among Clark Equipment Company ("Parent"), Clark Acquisition
Sub, Inc., a wholly-owned subsidiary of Parent ("Sub"), and the Company (the
"Agreement").
Pursuant to the Agreement, Sub will commence a tender offer for any
and all outstanding shares of the Company's common stock at a price of $25.00
per share in cash. The tender offer is to be followed by a merger in which the
shares of all shareholders who did not tender (other than dissenters, Sub and
subsidiaries) would be converted into the right to receive $25.00 per share in
cash.
In arriving at our opinion, we have reviewed the Agreement. We also
have reviewed financial and other information that was publicly available or
furnished to us by the Company, including information provided during
discussions with the Company's management, which included certain financial
projections of the Company for the period beginning October 2, 1994 and ending
September 30, 1999 prepared by the management of the Company. In addition, we
have compared certain financial and securities data of the Company with various
other companies whose securities are traded in public markets, reviewed the
historical stock prices and trading volumes of the common stock, reviewed
prices and premiums paid in other business combinations and conducted such
other financial studies, analyses and investigations as we deemed appropriate
for purposes of this opinion. We were not requested to, nor did we, solicit the
interest of any other party in acquiring the Company.
In rendering our opinion, we have relied upon and assumed without
independent verification, the accuracy, completeness and fairness of all of the
financial and other information that was available to us from public sources,
that was provided to us by the Company or its representatives, or that was
otherwise reviewed by us. With respect to the financial projections supplied to
us by the Company, we have assumed that they have been reasonably prepared on a
basis reflecting the best currently available estimates and judgments of the
management of the Company as to the future operating and financial performance
of the Company. We have not assumed any responsibility for making an
independent evaluation of the Company's assets or liabilities or for making any
independent verification of any of the information reviewed by us. We have
relied as to all legal matters on advice of counsel to the Company.
<PAGE> 2
Our opinion is necessarily based on economic, market, financial and
other considerations as they exist on, and on the information made available to
us as of, the date of this letter. It should be understood that, although
subsequent developments may affect this opinion, we do not have any obligation
to update, revise or reaffirm this opinion. Our opinion does not constitute a
recommendation to any stockholder as to whether such stockholder should tender
his shares.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part
of its investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. DLJ
has performed investment banking and other services for the Company in the past
and has been compensated for such services. In October 1993, DLJ managed the
initial public offering of 4,125,000 shares of the Company's common stock. In
the ordinary course of its business, DLJ may actively trade the equity
securities of the Company for DLJ's own account or for the account of customers
and, accordingly, may at any time hold a long or short position in such
securities.
Based upon the foregoing and such other factors as we deem relevant,
we are of the opinion that the consideration to be received pursuant to the
Agreement by the shareholders of the Company is fair to such shareholders from
a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ PATRICK J. FALLON
------------------------------------
Patrick J. Fallon
Senior Vice President
<PAGE> 1
[CLARK LOGO] CLARK
EQUIPMENT
COMPANY
100 North Michigan St.
P.O. Box 7008
South Bend, Indiana 46634
NEWS RELEASE
Contact: Release Date:
Joe Fimbianti IMMEDIATE
219/239-0176
CLARK EQUIPMENT AGREES TO PURCHASE CLUB CAR, INC.
SOUTH BEND, INDIANA, February 3, 1995 -- Clark Equipment Company (NYSE: CKL) and
Club Car, Inc. (NASDAQ: CLBC) of Augusta, Georgia, today jointly announced that
they had signed a merger agreement providing for Clark to acquire all of the
outstanding shares of Club Car for a cash price of $25.00 per share, or a
purchase price of approximately $237 million.
Club Car is currently one of the largest manufacturers of golf cars and light
utility vehicles in the world. The company maintains a worldwide distribution
network of more than 300 distributors, dealers, direct sales offices and
branches. Club Car has enjoyed substantial sales growth in recent years due to
the increased popularity of golf, its ability to produce high quality innovative
vehicles, and its expansion into overseas markets. Club Car's sales in fiscal
1994 were $186 million, and it has approximately 775 employees.
In announcing the agreement, Leo J. McKernan, Clark chairman, president and
chief executive officer, said, "Club Car is a strong, successful company with a
new-golf-car market share of approximately 35 percent in North America. Its
combination of high quality products and technological market leadership has
driven sales growth at a compound annual rate of nearly 18 percent for the past
15 years."
- more -
<PAGE> 2
-2-
George Inman, Club Car's chief executive officer, said, "We believe that Clark
and Club Car are an excellent fit. We expect to benefit from Clark's
considerable expertise in manufacturing, distribution and overseas marketing."
Under the terms of the merger agreement, a subsidiary of Clark will promptly
commence a cash tender offer for all outstanding common shares of Club Car at a
price of $25.00 per share, net in cash. Shares not purchased in the tender
offer will be acquired in a subsequent merger at $25.00 per share as soon as
practicable after the completion of the tender offer. Clark also entered into an
agreement with holders of approximately 28 percent of Club Car's common stock,
including certain investment funds which are affiliates of Kelso & Company,
Inc., who have agreed to tender their shares to Clark.
In closing, Mr. McKernan said, "Club Car meets our stringent strategic
acquisition criteria. While we do not expect the acquisition to have a material
effect on Clark's 1995 earnings, we believe it will improve our 1996 results and
add significant shareholder value in the years to come."
Clark Equipment Company's core businesses design, manufacture and sell
skid-steer loaders, highway paving and construction equipment, and axles and
transmissions for off-highway equipment.
# # # # #
<PAGE> 1
EXHIBIT (h)
February 8, 1995
Dear Stockholder:
I am pleased to report that on February 3, 1995, Club Car,
Inc. entered into a merger agreement with Clark Equipment Company and one of
its subsidiaries that provides for the acquisition of Club Car by Clark at a
price of $25.00 per share in cash. Under the terms of the proposed
transaction, a Clark subsidiary is today commencing a tender offer for all
outstanding shares of Club Car common stock at $25.00 per share.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE CLARK
OFFER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND
IN THE BEST INTERESTS OF CLUB CAR STOCKHOLDERS. ACCORDINGLY, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL CLUB CAR STOCKHOLDERS ACCEPT THE
CLARK OFFER AND TENDER THEIR SHARES TO CLARK.
Following the successful completion of the tender offer, upon
approval by the required stockholder vote, the Clark subsidiary will be merged
with Club Car and all shares not purchased in the tender offer will be
converted into the right to receive $25.00 per share in cash in the merger.
In arriving at its recommendations, the Board of Directors
gave careful consideration to a number of factors. These factors included the
opinion of Donaldson, Lufkin & Jenrette Securities Corporation, financial
advisor to Club Car, that the consideration of $25.00 per share to be received
by the stockholders pursuant to the Clark offer and the merger is fair to Club
Car stockholders from a financial point of view.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is
Clark's Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering shares. We urge you to read the enclosed
materials carefully. The management and directors of Club Car thank you for
the support you have given the Company.
On behalf of the Board of Directors,
Sincerely,
/s/ George H. Inman
George H. Inman
Chairman and
Chief Executive Officer
