As filed with the Securities and Exchange Commission on August 18, 2005
Registration No. 333-
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
__________________
KAMAN CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Connecticut 5080 06-0613548
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Identification No.)
Organization) Code Number)
__________________
1332 Blue Hills Avenue
Bloomfield, CT 06002
(860) 243-7100
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Candace A. Clark, Esq.
Senior Vice President,
Chief Legal Officer and
Secretary
Kaman Corporation
1332 Blue Hills Avenue
Bloomfield, CT 06002
(860) 243-7100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
__________________
copies to:
Randall H. Doud, Esq.
Skadden, Arps, Slate,
Meagher &
Flom LLP
Four Times Square
New York, NY 10036
(212) 735-3000
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement becomes
effective.
__________________
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed Proposed
Maximum Maximum
Amount To be Amount To be Offering Offering
Registered in Registered Price Price
Respect of in Respect Per Share Per Share Proposed
Class A of Class B (Class A (Class B Maximum
Title of Each Class of Nonvoting Voting Nonvoting Voting Aggregate Amount of
Securities to be Common Stock Common Stock Common Stock) Common Offering Registration
Registered (1) (1) (1) (2) Stock) (3) Price (4) Fee (5)
------------------------------------------------------------------------------------------------------------------------
Common Stock, 23,034,644 1,491,656 $19.97 12.58 $464,763,354.66 $54,702.65
par value $1.00
per share
(1) This Registration Statement relates to the Common Stock, par value $1.00
per share, of the Registrant ("Common Stock") to be issued in the
recapitalization described herein to the holders, immediately prior to the
recapitalization, of the Registrant's Class A Nonvoting Common Stock, par
value $1.00 per share, and Class B Voting Common Stock, par value $1.00
per share, based upon the 22,220,691 shares of Class A Nonvoting Common
Stock, 813,953 vested options to purchase shares of Class A Nonvoting
Common Stock and 667,814 shares of Class B Voting Common Stock outstanding
on the close of business on August 17, 2005. In the recapitalization, each
share of Class A Nonvoting Common Stock will be amended to become one
share of Common Stock and each share of Class B Voting Common Stock will
be reclassified into 3.58 shares of Common Stock or, at the election of
the holder of Class B Voting Common Stock, 1.84 shares of Common Stock and
an amount in cash equal to $27.10. For purposes of this calculation, the
Registrant has assumed that the Kaman family will make the part stock/part
cash election for not less than 516,735 shares of its Class B Voting
Common Stock.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)(1) and 457(c) of the Securities Act of 1933, as amended
(the "Securities Act"), based on the average of the high and low prices of
Class A Nonvoting Common Stock on August 11, 2005, as reported on The
Nasdaq National Market, at a ratio of one share of Common Stock per share
of Class A Nonvoting Common Stock.
(3) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)(2) and 457(f)(3) of the Securities Act, based on the book
value of the Class B Voting Common Stock on July 1, 2005, the most recent
practicable date prior to the filing of this Registration Statement, at a
ratio of 3.58 shares of Common Stock per share of Class B voting Common
Stock.
(4) Estimated solely for purposes of calculating the registration fee pursuant
to Rules 457(f)(1), 457(f)(2) and 457(f)(3) of the Securities Act, based
on the sum of: (A) the product of the estimated maximum number of shares
of Common Stock to be registered in the recapitalization in respect of
shares of Class A Nonvoting Common Stock multiplied by the proposed
maximum offering price per share calculated as described in (2) above PLUS
(B) the product of the estimated maximum number of shares of Common Stock
to be registered in the recapitalization in respect of shares of Class B
Voting Common Stock multiplied by the proposed maximum offering price per
share calculated as described in (3) above less the cash to be paid by the
Registrant with respect to those shares of Class B Voting Common Stock for
which the Registrant has requested the Kaman family to make the part
stock/part cash election.
(5) Calculated by multiplying .00011770 by the proposed maximum aggregate
offering price.
__________________
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
________________________________________________________________
The information in this proxy statement/prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary proxy statement/prospectus is not an offer to sell and it is not
soliciting an offer to buy thses securities in any jurisdiction where the offer
or sale is not permitted.
Preliminary Proxy Statement/Prospectus
Dated August 18, 2005, Subject to Completion
PROXY STATEMENT FOR
KAMAN CORPORATION
SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD [ ], 2005
________________________________________________________________
PROSPECTUS FOR
KAMAN CORPORATION
[ ] SHARES
COMMON STOCK, PAR VALUE $1.00 PER SHARE
________________________________________________________________
[Date], 2005
To the Holders of Class A Nonvoting Common Stock and Class B Voting Common
Stock of Kaman Corporation:
I am pleased to invite you to attend a special meeting of shareholders
on [ ], 2005 to approve the recapitalization of the company's two existing
classes of common stock into one class of voting common stock, as well as other
proposed certificate of incorporation amendments intended to enhance the
ability of the board of directors to take actions in the longer term interests
of the company. The meeting for the holders of Class B Voting Common Stock will
begin promptly at [ ], local time, and will be held at [ ] and a separate
meeting for the holders of Class A Nonvoting Common Stock will begin promptly
at [ ], local time, and will be held at [ ].
The accompanying notice of meeting and proxy statement/prospectus
describe the matters to be considered and voted upon at the special meetings.
Please read the entire proxy statement/prospectus and annexes carefully.
The company is asking you to approve a recapitalization transaction by
means of an amendment to the company's certificate of incorporation whereby:
o each share of Class A Nonvoting Common Stock will be
redesignated as one share of "Common Stock", entitled to one
vote per share; and
o each share of Class B Voting Common Stock will be
reclassified into 3.58 shares of Common Stock, entitled to
one vote per share, or, at the election of the holder of
Class B Voting Common Stock, 1.84 shares of Common Stock and
an amount in cash equal to $27.10.
This proxy statement/prospectus provides detailed information about
the recapitalization. Please read the entire proxy statement/prospectus and
annexes thereto carefully.
THE TRANSACTIONS CONTEMPLATED IN THIS PROXY STATEMENT/PROSPECTUS
INVOLVE RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 1.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROXY STATEMENT/ PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated [ ], 2005 and it and the
enclosed proxy cards and/or election form are first being mailed to
shareholders on or about [ ], 2005.
Holders of record of both the company's Class A Nonvoting Common Stock
and Class B Voting Common Stock are entitled to attend and vote on the
recapitalization at the special meeting for the class of stock that they own.
Holders of Class B Voting Common Stock desiring to make the part stock/part
cash election must comply with the election procedures, including submission of
the election form to Mellon Investor Services LLC, the election agent, not
later than the close of business on [ ], 2005.
In the recapitalization agreement, the Kaman family has agreed to
elect to take the part cash/part stock alternative to the extent requested to
do so by the company, following the advice of counsel, to avoid application of
the higher vote requirement of Section 33-841 of the Connecticut Business
Corporation Act, to the recapitalization proposal. The company has so requested
that the Kaman family make this election as to not less than 516,735 shares of
their Class B Voting Common Stock. The Kaman family has advised the company
that the Kaman family believes that an election as to a smaller number of
shares would be sufficient to avoid the application of the higher vote
requirement and the company expects that there will be further discussions
between the company and the Kaman family representatives concerning the minimum
amount of the Kaman family election.
If the recapitalization is implemented, certain other amendments to
the certificate of incorporation and the bylaws will be made. These amendments
are intended to enhance the ability of the board of directors to take actions
in the longer term interests of the company and include the following:
o the board of directors will be divided into three classes
serving staggered terms;
o the certificate of incorporation will provide for a minimum
of three and a maximum of 15 directors, with the actual
number of directors established by the board of directors in
accordance with the bylaws;
o the ability of shareholders to remove directors will be
limited to removal for cause and upon the affirmative vote of
a majority of the shares entitled to vote;
o shareholders holding at least 35% of the shares eligible to
be voted will be needed to call a special meeting of
shareholders;
o advance notice will be required for nominations for directors
and for actions to be taken at shareholder meetings; and
o a supermajority vote of the voting stock will be required to
amend, repeal or modify certain provisions of the certificate
of incorporation and bylaws.
Only holders of the company's Class B Voting Common Stock are entitled
to vote on the other certificate of incorporation amendment proposal.
Members of the Kaman family and certain entities that they control
have agreed to vote and executed proxies for approximately 82.6% of the
outstanding shares of Class B Voting Common Stock and approximately 3.2% of the
outstanding shares of Class A Nonvoting Common Stock in favor of the
recapitalization proposal and, in the case of their outstanding shares of Class
B Voting Common Stock, in favor of the other certificate of incorporation
amendment proposal. In addition, other directors and executive officers of the
company are expected to vote the shares of Class A Nonvoting Common Stock and
Class B Voting Common Stock held by them, representing approximately 1.62% of
the outstanding shares of Class A Nonvoting Common Stock and 4.43% of the
outstanding shares of Class B Voting Common Stock, in favor of the
recapitalization proposal and, in the case of their outstanding shares of Class
B Voting Common Stock, in favor of the other certificate of incorporation
amendment proposal.
A special committee of the Kaman board of directors consisting of
independent directors was appointed to review, negotiate and recommend the
terms of the recapitalization to the board of directors. In evaluating the
recapitalization, the special committee received an opinion from its financial
advisor, Evercore Group Inc., with respect to the fairness, from a financial
point of view, of the recapitalization to holders of Class A Nonvoting Common
Stock and a separate opinion from its financial advisor, Houlihan Lokey Howard
& Zukin Financial Advisors, Inc., with respect to the fairness, from a
financial point of view, of the recapitalization to holders of Class B Voting
Common Stock. See "Evercore Opinion" beginning on page 27 and
"Houlihan Lokey Opinion" beginning on page 37, respectively. Based on
these opinions, as well as each member of the special committee's independent
evaluation of the recapitalization, the special committee recommended to the
entire board of directors that it recommend the recapitalization to the
company's shareholders.
Based on the recommendation of the special committee as well as each
board member's independent evaluation of the recapitalization, the board of
directors believes (with C. William Kaman II abstaining) that the
recapitalization offers several benefits:
o an alignment of the economic and voting rights of all of the
company's shareholders, with each shareholder having one vote
per share;
o a reduction of the Kaman family's combined voting power from
approximately 82.6% to not more than approximately 7.5% and
an elimination of the Kaman family's ability to sell control
of the company in an isolated transaction in which other
shareholders do not participate;
o an elimination of potential investor confusion,
administrative expense, and perceived negative impact on the
market price of Class A Nonvoting Common Stock that results
from having a dual, voting and non-voting class structure for
the capital stock; and
o a potential increase in the liquidity, trading volume and
trading efficiencies of the listed capital stock and a
potential increase in the company's investor base.
In the event that the holders of the Class A Nonvoting Common Stock
fail to approve the recapitalization or the recapitalization is otherwise not
completed other than by reason of a breach of the recapitalization agreement by
the Kaman family, the Kaman family would be free to sell its Class B Voting
Common Stock to one or more third parties. In that regard, the company
understands that the Kaman family is a party to an agreement with Mason Capital
Management under which the Kaman family can cause an affiliate of Mason to
purchase such shares for $55.00 per share in cash and, upon the closing of the
purchase from the Kaman family, offer to purchase all remaining shares of Class
B Voting Common Stock at $55.00 per share in cash.
The shares of Class A Nonvoting Common Stock are currently listed and
traded on The Nasdaq National Market and shares of Class B Voting Common Stock
are not listed or traded on any exchange or market system. The company expects
that the shares of Common Stock that shareholders will own following the
recapitalization will be listed on The Nasdaq National Market and that the
shares of Common Stock will be traded under the symbol "[KAMN]."
It is important that your shares be represented at the special meeting
for the class of stock that you own, whether or not you plan to attend the
special meeting personally. THE BOARD OF DIRECTORS STRONGLY RECOMMENDS (WITH C.
WILLIAM KAMAN II ABSTAINING) THAT YOU VOTE FOR APPROVAL OF EACH OF THE
PROPOSALS SET FORTH IN THE PROXY STATEMENT/ PROSPECTUS FOR WHICH THE CLASS OF
STOCK YOU OWN IS ENTITLED TO VOTE. To ensure that your vote will be received
and counted, please promptly complete, date, and return your proxy in the
enclosed return envelope, whether or not you plan to attend the meeting in
person. If you do attend and wish to vote in person, your proxy will be
automatically revoked. If you prefer, you may cast your vote toll-free by
telephone or online over the Internet. Simply follow the instructions on the
enclosed proxy card.
Sincerely,
/s/ Paul R. Kuhn
------------------------------------------
Paul R. Kuhn
Chairman, President and Chief Executive
Officer
KAMAN CORPORATION
__________________________
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD [ ], 2005
__________________________
A special meeting of the holders of Class B Voting Common Stock of
Kaman Corporation will be held at [ ] at [ ], local time, on [ ], 2005 for the
following purposes:
1. To approve the "recapitalization proposal" providing for an amendment
to the certificate of incorporation whereby each share of Class A
Nonvoting Common Stock will be redesignated as one share of "Common
Stock", entitled to one vote per share, and each share of Class B
Voting Common Stock will be reclassified into 3.58 shares of Common
Stock or, at the election of the holder of Class B Voting Common
Stock, 1.84 shares of Common Stock and an amount in cash equal to
$27.10.
2. To approve the "other certificate of incorporation amendment proposal"
providing for an amendment and restatement of the company's
certificate of incorporation that will implement the following: (a)
the board of directors will be divided into three classes serving
staggered terms; (b) there will be a minimum of three and a maximum of
15 directors, with the actual number of directors established by the
board of directors in accordance with the bylaws; (c) the ability of
shareholders to remove directors will be limited to removal for cause
and upon the affirmative vote of a majority of the shares entitled to
vote thereon; (d) a supermajority vote of the voting stock will be
required to amend, repeal or modify certain provisions of the
certificate of incorporation or the bylaws; and (e) certain other
changes of an updating nature.
A separate special meeting of the holders of Class A Nonvoting Common
Stock of Kaman Corporation will be held at [ ] at [ ], local time, on [ ], 2005
for the purpose of approving the "recapitalization proposal" providing for an
amendment to the certificate of incorporation whereby each share of Class A
Nonvoting Common Stock will be redesignated as one share of "Common Stock",
entitled to one vote per share, and each share of Class B Voting Common Stock
will be reclassified into 3.58 shares of Common Stock or, at the election of
the holder of Class B Voting Common Stock, 1.84 shares of Common Stock and an
amount in cash equal to $27.10. The other certificate of incorporation
amendment proposal is not subject to approval by the holders of Class A
Nonvoting Common Stock.
Holders of record of Class A Nonvoting Common Stock and Class B Voting
Common Stock at the close of business on September 1, 2005, the record date for
the special meetings, are entitled to notice of and to vote at the special
meeting for the class of stock that they own. A list of the shareholders
entitled to vote at each special meeting will be available for examination,
during normal business hours, two days after this proxy statement/prospectus is
mailed to shareholders at the company's principal place of business, 1332 Blue
Hills Avenue, Bloomfield, Connecticut 06002.
Only holders of record on the record date of shares of Class B Voting
Common Stock or Class A Nonvoting Common Stock will be entitled to attend the
special meeting for such class of stock.
Neither the other certificate of incorporation amendment proposal nor
the proposed amendments to the company's bylaws described in this proxy
statement/prospectus will be implemented unless the recapitalization occurs.
A form of proxy card and a proxy statement/prospectus containing more
detailed information with respect to the matters to be considered at the
relevant special meeting are included with this notice. An election form is
also included for holders of Class B Voting Common Stock.
By Order of the Board of Directors,
/s/ Candace A. Clark
------------------------------------------
Candace A. Clark
Senior Vice President, Chief Legal Officer
and Secretary
Bloomfield, Connecticut
[ ], 2005
Important: The board of directors invites you to attend the special
meeting for the class of stock you own in person, but please date, sign and
return the enclosed proxy immediately, whether or not you plan to attend the
meeting in person. The giving of such proxy will not affect your right to vote
in person, should you decide to attend the meeting, or otherwise revoke a
proxy. No postage is required if the proxy is returned in the enclosed envelope
and mailed in the United States. If you prefer, you may cast your vote
toll-free by telephone or online over the Internet. Simply follow the
instructions contained on the enclosed proxy card.
PLEASE DO NOT SEND IN YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD.
THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT KAMAN THAT IS NOT INCLUDED IN OR DELIVERED WITH
THIS DOCUMENT. SHAREHOLDERS MAY OBTAIN DOCUMENTS INCORPORATED BY REFERENCE IN
THIS DOCUMENT FREE OF CHARGE BY REQUESTING THEM ORALLY OR IN WRITING FROM KAMAN
AT THE FOLLOWING ADDRESS AND TELEPHONE NUMBER:
Kaman Corporation
1332 Blue Hills Avenue
Bloomfield, CT 06002
Attn: Candace A. Clark, Corporate Secretary
Telephone: (860) 243-7100
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM THE COMPANY, PLEASE DO SO BY [ ],
2005 TO RECEIVE THEM BEFORE THE SPECIAL MEETINGS.
In this proxy statement/prospectus, the terms "Kaman," the "company",
"we," "our" and "us" refer to Kaman Corporation and its consolidated
subsidiaries unless the context suggests otherwise. The terms Class A Nonvoting
Common Stock and Class B Voting Common Stock mean the company's Class A common
stock, par value $1.00 per share, and Class B common stock, par value $1.00 per
share, respectively. The term "you" refers to a holder of Class A Nonvoting
Common Stock and/or Class B Voting Common Stock. Throughout this proxy
statement/prospectus, the agreement with members of the Kaman family and
related entities that contains their agreement to vote in favor of the
recapitalization proposal and the other certificate of incorporation amendment
proposal and various other provisions is referred to as the "recapitalization
agreement" and those members of the Kaman family and related entities who are
parties to the recapitalization agreement are referred to as the "Kaman
family."
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus to vote on the matters presented
to you for your approval. The company has not authorized anyone to provide you
with information that is different from what is contained in this proxy
statement/prospectus. This proxy statement/prospectus is dated [ ], 2005. You
should not assume that the information contained in this proxy
statement/prospectus is accurate as of any date other than such date, and
neither the mailing of the proxy statement/prospectus nor the issuance of
Common Stock in the recapitalization shall create any implication to the
contrary.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This proxy statement/prospectus contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. The
company makes forward-looking statements in this proxy statement/prospectus and
in other documents filed with the Securities and Exchange Commission ("SEC") to
which the company refers you. These statements may include statements regarding
the period following completion of the recapitalization. For each of these
"forward-looking statements" the company claims the protection of the safe
harbor for "forward-looking statements" contained in the Private Securities
Litigation Reform Act of 1995.
This proxy statement/prospectus may contain forward-looking
information relating to the company's business and prospects, including the
aerospace, industrial distribution and music businesses, operating cash flow,
the benefits of the recapitalization transaction, and other matters that
involve a number of uncertainties that may cause actual results to differ
materially from expectations. Those uncertainties
include, but are not limited to: 1) the successful conclusion of competitions
for government programs and thereafter contract negotiations with government
authorities, both foreign and domestic; 2) political conditions in countries
where the company does or intends to do business; 3) standard government
contract provisions permitting renegotiation of terms and termination for the
convenience of the government; 4) economic and competitive conditions in
markets served by the company, particularly defense, commercial aviation,
industrial production and consumer market for music products, as well as global
economic conditions; 5) satisfactory completion of the Australian
SH-2G(A)program, including successful completion and integration of the full
ITAS software; 6) receipt and successful execution of production orders for the
JPF U.S. government contract including the exercise of all contract options and
receipt of orders from allied militaries, as both have been assumed in
connection with goodwill impairment evaluations; 7) satisfactory resolution of
the EODC/University of Arizona litigation; 8) achievement of enhanced business
base in the Aerospace segment in order to better absorb overhead and general
and administrative expenses, including successful execution of the contract
with Sikorsky for the BLACK HAWK Helicopter program; 9) satisfactory results of
negotiations with NAVAIR concerning the company's leased facility in
Bloomfield, Conn.; 10) profitable integration of acquired businesses into the
company 's operations; 11) changes in supplier sales or vendor incentive
policies; 12) the effect of price increases or decreases; 13) pension plan
assumptions and future contributions; 14) continued availability of raw
materials in adequate supplies; 15) satisfactory resolution of the supplier
switch and incorrect part issues at Dayron and the DCIS investigation; 16) cost
growth in connection with potential environmental remediation activities
related to the Bloomfield and Moosup facilities; 17) whether the proposed
recapitalization is completed; 18) risks associated with the course of
litigation; 19) changes in laws and regulations, taxes, interest rates,
inflation rates, general business conditions and other factors; 20) the effects
of currency exchange rates and foreign competition on future operations; and
21) other risks and uncertainties set forth in the company 's annual, quarterly
and current reports, and proxy statements. Any forward-looking information
provided in this proxy statement/prospectus should be considered with these
factors in mind. The company assumes no obligation to update any
forward-looking statements contained in this proxy statement/prospectus
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETINGS..............................i
RISK FACTORS..................................................................1
SUMMARY.......................................................................2
The Company...................................................................2
The Recapitalization..........................................................3
Recapitalization Proposal.....................................................3
Other Certificate of Incorporation Amendment Proposal.........................3
Proposed Amendments to Bylaws.................................................3
Shareholder Approval..........................................................4
Appraisal Rights..............................................................4
United States Federal Income Tax Consequences.................................4
Recommendation to Shareholders................................................5
Opinions of Financial Advisors................................................5
Interests of Certain Persons in the Recapitalization..........................6
Conditions to the Recapitalization............................................6
Regulatory Matters............................................................6
Accounting Treatment..........................................................6
NASDAQ Listing................................................................6
Selected Historical Consolidated Financial Information........................7
Comparative Per Share Operating and Book Value Information....................8
Comparative Per Share Market Price and Dividend Information...................9
RECENT DEVELOPMENTS..........................................................10
THE SPECIAL MEETINGS.........................................................11
General ....................................................................11
Date, Time and Place of the Special Meetings; Record Date....................11
What Will be Voted Upon......................................................11
Quorum.......................................................................12
Vote Required for Approval...................................................12
Proxies; Revocability of Proxies; Cost of Solicitation.......................13
Voting Shares of Class A Nonvoting Common Stock Held Through
Kaman Corporation Employee Plans....................................14
Meeting Admittance Procedures................................................14
Recommendation of the Board of Directors.....................................14
THE RECAPITALIZATION.........................................................15
The Company..................................................................15
Structure of the Recapitalization............................................15
Amendments to The Certificate of Incorporation...............................15
Background of the Recapitalization...........................................16
Reasons for the Recapitalization.............................................25
Recommendation of the Special Committee and Board of Directors...............25
Evercore Opinion.............................................................27
Houlihan Lokey Opinion.......................................................37
Conditions to the Recapitalization...........................................43
The Recapitalization Agreement...............................................43
Indemnification Agreements...................................................45
NASDAQ Listing...............................................................46
Accounting Treatment.........................................................46
United States Federal Income Tax Consequences of the Recapitalization........46
Appraisal Rights.............................................................48
Federal Securities Law Consequences..........................................48
Regulatory Matters...........................................................48
Alternative Election by the Holders of Class B Voting Common Stock...........48
Share Certificates and Cash for Fractional Shares............................49
INTERESTS OF CERTAIN PERSONS IN THE RECAPITALIZATION.........................50
OTHER CERTIFICATE OF INCORPORATION AMENDMENT PROPOSAL AND PROPOSED BYLAW
AMENDMENTS..........................................................51
The Other Certificate of Incorporation Amendment Proposal....................51
Proposed Amendments to Bylaws................................................54
DESCRIPTION OF COMMON STOCK..................................................55
Authorized Capital Stock.....................................................55
Common Stock.................................................................55
Anti-Takeover Considerations.................................................56
COMPARISON OF SHAREHOLDER RIGHTS.............................................58
LEGAL MATTERS................................................................61
EXPERTS......................................................................61
SUBMISSION OF SHAREHOLDER PROPOSALS..........................................61
WHERE YOU CAN FIND MORE INFORMATION..........................................61
ANNEX A Recapitalization Agreement (without schedules or exhibits)..........A-1
ANNEX B Proposed Amended and Restated Certificate of Incorporation of
Kaman Corporation...................................................B-1
ANNEX C Proposed Amended and Restated Bylaws of Kaman Corporation...........C-1
ANNEX D Opinion of Evercore Group, dated July, 28 2005......................D-1
ANNEX E Opinion of Houlihan, Lokey, Howard, & Zukin Financial Advisors,
dated July 28, 2005.................................................E-1
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETINGS
Q: WHY IS KAMAN PROPOSING THE RECAPITALIZATION?
A: The company has proposed the recapitalization for a number of reasons:
o Alignment of Economic Interests and Voting Rights. Currently,
holders of Class B Voting Common Stock, representing
approximately 3% of the economic interest in the company,
control 100% of the company's voting power in the election of
directors and certain other matters for which shareholder
approval is required, while holders of Class A Nonvoting
Common Stock, representing approximately 97% of the economic
interest in the company, have no voting power in the election
of directors and those other matters. The recapitalization
will align shareholders' voting rights with their economic
interests in the company by establishing a simplified one
share/one vote capital structure.
o Reduce the Kaman Family's Voting Influence. The
recapitalization will reduce the combined voting power of
members of the Kaman family from approximately 82.6% to
approximately 7.5%, assuming that the part stock /part cash
election is made with respect to only those shares of Class B
Voting Common Stock for which the Kaman family has been
requested to make such election. As a result of their reduced
voting interest, the Kaman family will no longer effectively
control the outcome of matters submitted to a vote of
shareholders.
o Elimination of Control Block. Following the recapitalization,
members of the Kaman family will not have the ability to sell
effective voting control of the company in an isolated
transaction in which other shareholders do not participate.
In addition, the elimination of dual class, voting and
non-voting common stock will limit the possibility that a
person could acquire voting control of Kaman without
purchasing a majority of shares.
o Enhance the Company's Strategic Flexibility. The company
believes that the simplified capital structure will likely
improve the company's ability to structure equity financings
and acquisitions by permitting it to offer listed, voting
common stock.
o Improved Liquidity, Trading Efficiencies, and Expanded
Investor Base. The company believes that the recapitalization
could result in improved liquidity, trading efficiencies and
an expanded investor base.
Q: IF THE RECAPITALIZATION IS NOT COMPLETED, WILL THE KAMAN FAMILY REMAIN IN
CONTROL OF THE COMPANY?
A: In the event that the holders of the Class A Nonvoting Common Stock fail to
approve the recapitalization or the recapitalization is otherwise not completed
other than by reason of a breach of the recapitalization agreement by the Kaman
family, the Kaman family would be free to sell its Class B Voting Common Stock
to one or more third parties. In that regard, the company understands that the
Kaman family is a party to an agreement with Mason Capital Management under
which the Kaman family can cause an affiliate of Mason to purchase such shares
for $55.00 per share in cash and, upon the closing of the purchase from the
Kaman family, offer to purchase all remaining shares of Class B Voting Common
Stock at $55.00 per share in cash.
Q: WHAT ARE THE PROPOSED CERTIFICATE OF INCORPORATION AND BYLAW AMENDMENTS AND
WHY ARE THEY BEING PROPOSED?
A: Since the Kaman family has controlled a substantial majority of the
company's voting stock for many years, the company's certificate of
incorporation and bylaws do not contain some provisions common to many other
publicly traded companies which are believed by the company to enhance the
ability of boards of directors to take actions in the longer term interests of
such companies' shareholders. The other certificate of incorporation amendment
proposal and the company's proposed bylaw changes, which would only be
implemented if the recapitalization is completed, would include some of these
provisions, including a classified board of directors, no removal of directors
other than for cause, limitations on calling special
i
shareholders' meetings and on changing the size of the board of directors,
advance notification requirements for nominations of directors and actions to
be taken at shareholders' meetings and supermajority shareholder voting
requirements for the shareholders to amend certain provisions of the
certificate of incorporation or bylaws.
Q: WHAT WILL HAPPEN TO MY SHARES OF CLASS A NONVOTING COMMON STOCK IN THE
RECAPITALIZATION?
A: Each share of Class A Nonvoting Common Stock will be redesignated as one
share of "Common Stock", entitled to one vote per share.
Q: WHAT WILL HAPPEN TO MY SHARES OF CLASS B VOTING COMMON STOCK IN THE
RECAPITALIZATION?
A: Each share of Class B Voting Common Stock will be reclassified into 3.58
shares of Common Stock, entitled to one vote per share, or, at the election of
the holder of Class B Voting Common Stock, 1.84 shares of Common Stock and an
amount in cash equal to $27.10. Holders of Class B Voting Common Stock will
receive cash in lieu of any fractional shares of Common Stock that they would
otherwise be entitled to receive and any cash amounts they receive will be
rounded down to the nearest cent. Elections to receive the part stock/part cash
alternative can be made as to some or all of the holder's shares of Class B
Voting Common Stock but must be received by Mellon Investor Services LLC, the
election agent, not later than the close of business on [ ], 2005. Holders of
Class B Voting Common Stock who do not validly make the election by this date
will only be eligible to receive the all stock alternative. See "The
Recapitalization--Alternative Election by the Holders of Class B Voting Common
Stock" and the election form provided to the holders of Class B Voting Common
Stock.
In the recapitalization agreement, the Kaman family has agreed to elect
to take the part cash/part stock alternative to the extent requested to do so
by the company, following the advice of its counsel, to avoid application of
the higher vote requirement of Section 33-841 of the Connecticut Business
Corporation Act to the recapitalization proposal. The company has so requested
that the Kaman family make this election as to not less than 516,735 shares of
their Class B Voting Common Stock. The Kaman family has advised the company
that the Kaman family believes that an election as to a smaller number of
shares would be sufficient to avoid application of the higher vote requirement
and the company expects that there will be further discussions between the
company and the Kaman family's representatives concerning the minimum amount of
the Kaman family election.
Q: WHAT DO I NEED TO DO WITH MY STOCK CERTIFICATES?
A: Unless you are a holder of Class B Voting Common Stock who will be making
the part stock/part cash election, you do not need to do anything at this time.
Following completion of the recapitalization:
o each share certificate representing shares of Class A
Nonvoting Common Stock will represent the same number of
shares of Common Stock; and
o each share certificate representing shares of Class B Voting
Common Stock for which the part stock/part cash election was
not validly made will represent the number of whole shares of
Common Stock obtained by multiplying the number of shares of
Class B Voting Common Stock shown on the certificate by 3.58,
rounded down to the nearest whole share.
Soon after the completion of the recapitalization, such shareholders will be
sent a letter of transmittal with which they can submit to Mellon Investor
Services, the company's transfer agent, the shareholders' share certificates in
exchange for Common Stock share certificates. Even if this exchange is not made
by a shareholder, the shareholder will be entitled to receive the same
dividends and voting rights as if the shareholder had exchanged their share
certificates, however, a holder of shares of Class B Voting Common Stock must
exchange such shareholder's share certificates to receive the cash payment to
be made in lieu of any fractional share. The amount of the cash payment to be
paid to a shareholder will be equal to the fractional share, calculated after
aggregating all shares of Class B Voting Common Stock owned by such
shareholder, times the closing price per share of Class A Nonvoting Common
Stock on the last trading day occurring prior to the date on which the
recapitalization is completed.
Soon after the completion of the recapitalization, Mellon Investor Services,
the company's transfer agent, will send to shareholders who validly made the
part stock/part cash election the share certificates representing the Common
Stock and a check for the cash payment to which the electing shareholders are
entitled.
ii
EXCEPT AS DESCRIBED ABOVE FOR ELECTING HOLDERS OF CLASS B VOTING COMMON STOCK,
PLEASE DO NOT SEND IN YOUR STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD AND
DO NOT SURRENDER ANY CERTIFICATES REPRESENTING EITHER CLASS A NON-VOTING COMMON
STOCK OR CLASS B VOTING COMMON STOCK UNTIL YOU HAVE RECEIVED A LETTER OF
TRANSMITTAL FROM THE TRANSFER AGENT FOLLOWING COMPLETION OF THE
RECAPITALIZATION.
Q: WHAT WILL BE THE U.S. FEDERAL INCOME TAX TREATMENT OF THE RECAPITALIZATION?
A: The recapitalization will not result in the recognition of any gain or loss
for United States federal income tax purposes, except as described herein with
respect to any cash received by holders of Class B Voting Common Stock. See
"The Recapitalization -- United States Federal Income Tax Consequences
of the Recapitalization" beginning on page 46.
Q: WHEN DOES KAMAN EXPECT TO COMPLETE THE RECAPITALIZATION?
A: If the recapitalization is approved at the special meetings, it is expected
to be completed immediately thereafter, upon filing of an amended and restated
certificate of incorporation with the Secretary of the State of the State of
Connecticut.
Q: WHAT SHAREHOLDER VOTES ARE REQUIRED TO APPROVE THE RECAPITALIZATION AND THE
OTHER AMENDMENTS TO THE COMPANY'S CERTIFICATE OF INCORPORATION?
A: The recapitalization will be accomplished by amending the certificate of
incorporation. Holders of both Class A Nonvoting Common Stock and Class B
Voting Common Stock are entitled to vote on the recapitalization proposal,
notwithstanding that the certificate of incorporation currently designates
Class A Nonvoting Common Stock as nonvoting. Separate class votes of Class A
Nonvoting Common Stock and Class B Voting Common Stock are required for
approval of the recapitalization proposal. In each class, a majority of the
votes entitled to be cast must be voted in order to constitute a quorum, and
the number of votes cast within each group in favor of the recapitalization
proposal must exceed the votes cast opposing such proposal within such group.
The Kaman family and certain entities they control have agreed to vote their
shares of Class B Voting Common Stock and Class A Nonvoting Common Stock,
representing approximately 82.6% of the outstanding shares of Class B Voting
Common Stock and approximately 3.2% of the outstanding shares of Class A
Nonvoting Common Stock, in favor of the recapitalization proposal.
Only holders of Class B Voting Common Stock are entitled to vote on the other
proposed amendments to the certificate of incorporation. The affirmative vote
by the holders of at least 66 2/3% of the shares of Class B Voting Common Stock
outstanding is required to approve these proposed amendments. The Kaman family
and certain entities they control have agreed to vote their shares of Class B
Voting Common Stock, representing approximately 82.6% of the outstanding shares
of Class B Voting Common Stock, in favor of the other certificate of
incorporation amendment proposal.
Q: WHO IS ENTITLED TO VOTE ON THE RECAPITALIZATION AND OTHER CERTIFICATE OF
AMENDMENT PROPOSALS?
A: Only holders of record of shares of Class A Nonvoting Common Stock and Class
B Voting Common Stock at the close of business on September 1, 2005, the record
date for the special meetings, are entitled to attend and vote at the special
meeting for the class of stock that they own. If you own shares of either class
of stock on the record date through a bank, broker or other record holder, you
may vote in person at the special meeting only if you present a letter signed
by the record holder indicating the number of shares you are entitled to vote.
Q: WHEN AND WHERE ARE THE SPECIAL MEETINGS?
A: The special meeting for the holders of Class B Voting Common Stock will be
held on [ ], 2005 at [ ], local time, at [ ] and a separate special
meeting for the holders of Class A Nonvoting Common Stock will be held on
[ ], 2005 at [ ], local time, at [ ].
Q: IF I AM A HOLDER OF SHARES OF CLASS A NONVOTING COMMON STOCK OR CLASS B
VOTING COMMON STOCK, WHAT DO I NEED TO DO NOW?
iii
A: After carefully reading and considering the information contained in this
proxy statement/prospectus, please respond by signing, and dating the enclosed
proxy card and returning it in the enclosed postage paid envelope or cast your
vote toll-free by telephone or online over the Internet in the manner described
on the proxy card. Please return your proxy card or otherwise cast your vote as
soon as possible so that the company may vote your shares at the special
meeting for the class of stock that you own.
If you are a holder of Class B Voting Common Stock who wishes to make the part
stock/part cash election, you should complete the enclosed election card and
return it to the election agent no later than the close of business on [ ],
2005.
Q: WHAT HAPPENS IF I DO NOT RESPOND OR IF I RESPOND AND FAIL TO INDICATE MY
VOTING PREFERENCE OR IF I ABSTAIN FROM VOTING?
A: If you respond and do not indicate your voting preference, the company will
count your proxy as a vote in favor of the recapitalization proposal and, if
you are a holder of Class B Voting Common Stock, in favor of the other proposed
certificate of incorporation amendment. If you fail to respond or you respond
and abstain from voting, it could have an effect on satisfaction of the quorum
requirement but, assuming that there is a quorum, will have no effect on the
outcome of the voting to approve the recapitalization as approval requires only
more votes to be cast in favor of the action than against it. If you are a
Class B Voting Common Stock holder and you fail to respond or you respond and
abstain from voting as to the other proposed amendments to the certificate of
incorporation, the effect will be a vote against those proposed amendments as
approval requires the affirmative vote of the holders of at least 66 2/3% of
the shares of Class B Voting Common Stock outstanding. However, the Kaman
family has agreed to vote in excess of 80% of the shares of Class B Voting
Common Stock in favor of both the recapitalization proposal and the other
proposed certificate of incorporation amendments, so approval by the holders of
Class B Voting Common Stock is assured, subject to the terms of the
recapitalization agreement. See "The Recapitalization - The Recapitalization
Agreement."
Q: CAN I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY?
A: Yes. You can change your vote at any time before the company votes your
proxy at the special meeting for the class of stock that you own. You can do
this in one of three ways. First, you can revoke your proxy. Second, you can
submit a new proxy. If you choose either of these two methods, you must submit
your notice of revocation or your new proxy to the corporate secretary before
the special meeting for the class of stock that you own. If you hold your
shares through an account at a brokerage firm or bank, you should contact your
brokerage firm or bank to change your vote. Third, if you are a holder of
record, you can attend the special meeting for the class of stock that you own
and vote in person.
Q: CAN I CHANGE MY VOTE AFTER I HAVE CAST IT BY TELEPHONE OR OVER THE INTERNET?
A. Yes. If you submit your proxy or voting instructions electronically through
the Internet or by telephone, you can change your vote by submitting a proxy at
a later date, following the easy instructions on your proxy card, in which case
your later submitted proxy will be recorded and your earlier proxy revoked.
Q: IF I HOLD SHARES OF CLASS A NONVOTING COMMON STOCK THROUGH KAMAN CORPORATION
EMPLOYEE PLANS, HOW DO I VOTE THESE SHARES?
A: As a participant in the Kaman Corporation Employees' Stock Purchase Plan,
you are entitled to vote your shares directly by completing, signing and dating
your proxy card and returning it in the enclosed postage-paid envelope or by
submitting your proxy by telephone or through the Internet. For those
shareholders who participate in the company's automatic dividend reinvestment
plan, the enclosed proxy includes all full shares of common stock held in your
dividend reinvestment plan account on the record date for the special meeting,
as well as your shares held of record. If you have received shares of
restricted stock pursuant to Kaman Corporation's Stock Incentive Plan, you are
entitled to vote shares of Class A Nonvoting Common Stock that are still
subject to restrictions.
Q: AM I ENTITLED TO APPRAISAL RIGHTS?
iv
A: Holders of shares of Class A Nonvoting Common Stock and Class B Voting
Common Stock are not entitled to appraisal rights under Connecticut law in
connection with the recapitalization or the other proposed amendments to the
certificate of incorporation.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
A: If you have questions about the recapitalization or how to submit your proxy
card, or if you need additional copies of this proxy statement/prospectus or
the enclosed proxy card, you should contact:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders call toll-free (888) 750-5934
Banks and Brokers call collect at (212) 750-5834
or
Kaman Corporation
1332 Blue Hills Avenue
Bloomfield, CT 06002
Attention: Russell H. Jones
Telephone: (860) 243-6307.
v
RISK FACTORS
The recapitalization involves certain risks. In addition to reviewing
other information in this proxy statement/prospectus, you should carefully
consider the following factors before deciding how to vote on the
recapitalization proposal and the other certificate of incorporation amendment
proposal.
The recapitalization may not benefit Kaman or its shareholders.
The recapitalization of Class A Nonvoting Common Stock and Class B
Voting Common Stock into a single class of new voting Common Stock may prove
not to enhance shareholder value or improve the liquidity and marketability of
the Common Stock. As of August 17, 2005, there were 22,220,691 shares of Class A
Nonvoting Common Stock and 667,814 shares of Class B Voting Common Stock
outstanding. The Class A Nonvoting Common Stock is listed on The Nasdaq
National Market and Class B Voting Common Stock is not publicly traded or
listed on any exchange or market system. After the recapitalization, the
company anticipates that there will be up to approximately 23,712,183 shares
of Common Stock outstanding and listed on the Nasdaq National Market, with the
actual number depending on the elections to be made by the holders of Class B
Voting Common Stock. This increase in the number of publicly traded shares of
the common stock may result in an immediate decrease in the market value of the
Common Stock compared to the Class A Nonvoting Common Stock. In addition,
factors unrelated to the company's stock or its business, such as the general
perception of the recapitalization by the investment community, may cause a
decrease in the value of the Common Stock and impair its liquidity and
marketability. Furthermore, securities markets worldwide have recently
experienced significant price and volume fluctuations. This market volatility,
as well as general economic, market or political conditions, could cause a
reduction in the market price and liquidity of the Common Stock following the
recapitalization, particularly if the recapitalization is not viewed favorably
by the investment community.
Certain officers and directors of the company have interests that are different
from, or in addition to, the interests of other shareholders of the company.
Certain members of the company's management and board of directors
have interests in the recapitalization that may be different from, or in
addition to, the interests of holders of Class A Nonvoting Common Stock and
Class B Voting Common Stock. Please see "Interests of Certain Persons in the
Recapitalization" on page 48.
Failure to consummate the recapitalization could adversely affect the Class A
Nonvoting Common Stock price.
The closing of the recapitalization is conditioned on:
o approval of the recapitalization proposal by separate class
votes of the Class A Nonvoting Common Stock and Class B
Voting Common Stock; and
o the absence of any law or injunction preventing the
recapitalization.
The company cannot be certain that the closing conditions will be
satisfied. If the transaction was terminated for failure to satisfy a condition
or for any other reason, or if it appeared reasonably likely to be terminated,
this could have a significant adverse effect on the Class A Nonvoting Common
Stock price. Moreover, if the recapitalization agreement were to be terminated
because the board of directors had exercised its "fiduciary out" without
submitting the recapitalization proposal to shareholders, the company would be
obligated to reimburse certain expenses of the Kaman family. See "The
Recapitalization--The Recapitalization Agreement."
Failure to consummate the recapitalization could lead to a party other than the
Kaman family acquiring control of the company.
In the event that the holders of the Class A Nonvoting Common Stock
fail to approve the recapitalization or the recapitalization is otherwise not
completed other than by reason of a breach of the recapitalization agreement by
the Kaman family, the Kaman family would be free to sell its Class B Voting
Common Stock to one or more third parties. In that regard, the company
understands that the Kaman family is a party to an agreement with Mason Capital
Management under which the Kaman family can
1
cause an affiliate of Mason to purchase such shares for $55.00 per share in
cash and, upon the closing of the purchase from the Kaman family, offer to
purchase all remaining shares of Class B Voting Common Stock at $55.00 per
share in cash.
Following the recapitalization, certain anti-takeover provisions in the
company's amended and restated certificate of incorporation and bylaws may
delay or prevent a future change in control.
Following the recapitalization, certain anti-takeover provisions in
the company's amended and restated certificate of incorporation and bylaws
could discourage potential acquisition proposals and delay or prevent a future
change in control of the company that does not have the support of the board of
directors. These provisions provide for, among other things:
o a classified board of directors;
o a limitation on the shareholders' ability to change the size
of the board of directors;
o no removal of directors by shareholders other than for cause;
o a limitation on the shareholders' ability to call a special
meeting of shareholders;
o advance notification requirements for nomination of directors
and actions to be taken at shareholders' meetings; and
o a supermajority shareholder vote required to amend, repeal or
modify certain provisions of the company's certificate of
incorporation and bylaws.
The provisions of the company's certificate of incorporation and
bylaws discussed above may prevent a change of control of the company that a
majority of the shareholders may consider favorable.
For a complete description of the relevant provisions of the company's
certificate of incorporation and bylaws before and after the recapitalization,
see "Comparison of Shareholder Rights" on page 58.
If the recapitalization does not occur, the company will not benefit from the
expenses it has incurred in preparation for the recapitalization.
If the recapitalization is not consummated, the company will have
incurred substantial expenses for which no ultimate benefit will have been
received by it. The company currently expects to incur significant
out-of-pocket expenses for services in connection with the recapitalization,
consisting of financial advisor, legal and accounting fees and financial
printing and other related charges, much of which has been or may be incurred
even if the recapitalization is not consummated.
SUMMARY
This summary highlights selected information contained in this
document, but may not include all of the information that you, as a
shareholder, would like to know. To fully understand the recapitalization
proposals and other certificate of incorporation amendment proposal and for a
more complete description of the legal terms of the recapitalization, you
should carefully read this entire document and the other documents that are
referred to in this document. See "Where You Can Find More Information"
beginning on page 61.
The Company
The company was founded in 1945 as a pioneering company in the
helicopter industry. Today, the company provides products and services through
three business segments: Aerospace representing approximately 25% of 2004
annual sales, Industrial Distribution, representing approximately 59% of 2004
annual sales and Music representing approximately 16% of 2004 annual sales. The
Aerospace segment produces aircraft structures and components for commercial
and military aircraft, produces missile and bomb fuzing products for U.S. and
allied militaries, markets and supports the SII-2G Super Seasprite maritime
helicopter and K-MAX medium-to-heavy lift helicopter, and produces widely used
proprietary aircraft bearings and components for commercial and military
programs. The Industrial Distribution segment serves over 50,000 customers
representing a highly diversified cross-section of North American industry, and
is one of the nation's larger distributors of power transmission, motion
control, material handling and electrical components and a wide range of
bearings. The Music segment is the largest
2
independent distributor of musical instruments and accessories, offering large
chain and smaller local retailers more than 17,500 products for amateurs and
professionals.
The company's principal executive offices are located at 1332 Blue
Hills Avenue, Bloomfield, CT 06002. The telephone number at the company's
principal executive offices is (860) 243-7100.
For additional information about the company and its businesses, see
"The Recapitalization -- The Company" and "Where You Can Find More
Information."
The Recapitalization
The company's board of directors has proposed a recapitalization of
the two existing classes of common stock, Class A Nonvoting Common Stock and
Class B Voting Common Stock, into one class of voting Common Stock, entitled to
one vote per share. Throughout this proxy statement/prospectus, these matters
are referred to as the "recapitalization."
Recapitalization Proposal
o Each share of Class A Nonvoting Common Stock will be
redesignated as one share of "Common Stock", entitled to one
vote per share; and
o each share of Class B Voting Common Stock will be
reclassified into 3.58 shares of Common Stock, entitled to
one vote per share, or, at the election of the holder of
Class B Voting Common Stock, 1.84 shares of Common Stock and
an amount in cash equal to $27.10.
Upon completion of the recapitalization, the company will have a
single class of Common Stock, with each share entitled to one vote. Throughout
this proxy statement/prospectus, the matters described above that the company
is asking holders of Class A Nonvoting Common Stock and Class B Voting Common
Stock to approve are referred to as the "recapitalization proposal."
Other Certificate of Incorporation Amendment Proposal
In connection with the recapitalization, the company is also asking
shareholders to approve the following proposed amendments to its certificate of
incorporation intended to enhance the ability of the board of directors to take
actions in the longer term interests of the company:
o the company's board of directors will be divided into three
classes serving staggered terms;
o the certificate of incorporation will provide for a minimum
of three and a maximum of 15 directors, with the actual
number of directors established by the board of directors in
accordance with the bylaws;
o the ability of shareholders to remove directors will be
limited to removal for cause and upon the affirmative vote of
a majority of the shares entitled to vote thereon; and
o a supermajority vote of the voting stock will be required to
amend, repeal or modify certain provisions of the certificate
of incorporation and bylaws.
Throughout this proxy statement/prospectus, the matters described
above that the company is asking holders of Class B Voting Common Stock to
approve are referred to as the "other certificate of incorporation amendment
proposal." The other certificate of incorporation amendment proposal will not
be implemented unless the recapitalization is consummated.
Proposed Amendments to Bylaws
In connection with the recapitalization, the company will amend its
bylaws to provide that:
o the ability to call a special meeting of shareholders will be
limited such that a special meeting of shareholders may only
be called by (1) the president or by majority vote of the
board of directors and (2) one or more shareholders holding
in the aggregate at least 35% of the total number of shares
entitled to vote on any issue proposed to be considered at
such meeting; and
3
o a shareholder's notice of board nominations or other business
to be brought before an annual meeting of shareholders
generally must be delivered not less than 75 days nor more
than 90 days prior to the first anniversary of the preceding
year's annual meeting and must contain certain required
information.
Throughout this proxy statement/prospectus, the proposed amendment and
restatement of the company's bylaws is referred to as the "proposed bylaw
amendment." The proposed bylaw amendment will not be implemented unless the
recapitalization is consummated.
Shareholder Approval
Recapitalization Proposal
Holders of both Class A Nonvoting Common Stock and Class B Voting
Common Stock are entitled to vote on the recapitalization proposal,
notwithstanding that the certificate of incorporation currently designates
Class A Nonvoting Common Stock as nonvoting. Separate class votes of Class A
Nonvoting Common Stock and Class B Voting Common Stock are required for
approval of the recapitalization proposal. In each class, a majority of the
votes entitled to be cast must be voted in order to constitute a quorum, and
the number of votes cast within each class in favor of the action must exceed
the votes cast in such class opposing the action for approval of the
recapitalization proposal.
The Kaman family and certain entities they control have agreed to vote
their shares of Class B Voting Common Stock and Class A Nonvoting Common Stock,
representing approximately 82.6% of the outstanding shares of Class B Voting
Common Stock and approximately 3.2% of the outstanding shares of Class A
Nonvoting Common Stock, in favor of the recapitalization proposal. In addition,
other directors and executive officers of the company are expected to vote the
shares of Class A Nonvoting Common Stock and Class B Voting Common Stock held
by them, representing approximately 1.62% of the outstanding shares of Class A
Nonvoting Common Stock and 4.43% of the outstanding shares of Class B Voting
Common Stock, in favor of the recapitalization proposal.
Other Certificate of Incorporation Amendment Proposal
Only holders of Class B Voting Common Stock are entitled to vote on
the other certificate of incorporation amendment proposal. The affirmative vote
by the holders of at least 66 2/3% of the shares of Class B Voting Common Stock
outstanding is required to approve the other certificate of incorporation
amendment proposal.
The Kaman family and certain entities they control have agreed to vote
their shares of Class B Voting Common Stock, representing approximately 82.6%
of the outstanding shares of Class B Voting Common Stock, in favor of the other
certificate of incorporation amendment proposal. In addition, other directors
and executive officers of the company are expected to vote the shares of Class
B Voting Common Stock held by them, representing approximately 4.43% of the
outstanding shares of Class B Voting Common Stock, in favor of the other
certificate of incorporation amendment proposal.
Appraisal Rights
Appraisal rights will not be available to holders of Class A Nonvoting
Common Stock or Class B Voting Common Stock under Connecticut law as a result
of the recapitalization or the other certificate of incorporation amendment
proposal. See "The Recapitalization - Appraisal Rights" beginning on page 48.
United States Federal Income Tax Consequences
The company expects the recapitalization will not result in the
recognition of any gain or loss for U.S. federal income tax purpose to holders
of Class A Nonvoting Common Stock and holders of Class B Voting Common Stock
who receive solely shares of Common Stock pursuant to the recapitalization.
Those holders of Class B Voting Common Stock who receive both Common
Stock and cash for their Class B Voting Common Stock will generally recognize
gain (but not loss) in an amount equal to the lesser of (i) the excess of the
sum of the amount of cash and the fair market value of the Common Stock
received pursuant to the recapitalization over that holder's adjusted tax basis
in its shares of Class B Voting Common Stock surrendered and (ii) the amount of
cash received pursuant to the recapitalization.
4
You should read "The Recapitalization - United States Federal Income
Tax Consequences of the Recapitalization" beginning on page 46 for a more
complete discussion of the federal income tax consequences of the
recapitalization. You should also consult your own tax advisor with respect to
other tax consequences of the recapitalization or any special circumstances
that may affect the tax treatment for you in the recapitalization.
Recommendation to Shareholders
The company's board of directors recommends (with C. William Kaman II
abstaining) that holders of both Class A Nonvoting Common Stock and Class B
Voting Common Stock vote FOR the recapitalization proposal and that holders of
Class B Voting Common Stock vote FOR the other certificate of incorporation
amendment proposal.
Opinions of Financial Advisors
A special committee of the board of directors (referred to in this
proxy statement/prospectus as the "special committee") was appointed to review,
negotiate and recommend the terms of the recapitalization to the board of
directors. In deciding to recommend the terms of the recapitalization to the
board of directors, the special committee considered the opinions described
below.
The full texts of these opinions describe the bases and assumptions on
which they were rendered and are attached to this proxy statement/prospectus as
Annexes D and E, respectively. The company encourages you to read these
opinions carefully.
Evercore
Evercore Group Inc. ("Evercore") has delivered a written opinion to
the special committee that, as of the date of the opinion, based upon and
subject to the factors and assumptions set forth therein, the recapitalization
is fair, from a financial point of view, to the holders of Class A Nonvoting
Common Stock (solely with respect to such Class A Nonvoting Common Stock).
THE FULL TEXT OF THE WRITTEN OPINION OF EVERCORE, DATED JULY 28, 2005,
WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED
AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS SET
FORTH IN ANNEX D TO THIS PROXY STATEMENT/PROSPECTUS. THE ADVISORY SERVICES AND
OPINION OF EVERCORE WERE PROVIDED FOR THE INFORMATION AND ASSISTANCE OF THE
SPECIAL COMMITTEE IN CONNECTION WITH ITS CONSIDERATION OF THE RECAPITALIZATION
PROPOSAL AND DO NOT CONSTITUTE A RECOMMENDATION AS TO HOW ANY HOLDER OF CLASS A
NONVOTING COMMON STOCK OR CLASS B VOTING COMMON STOCK SHOULD VOTE WITH RESPECT
TO THE RECAPITALIZATION PROPOSAL. THE COMPANY URGES YOU TO READ THE OPINION IN
ITS ENTIRETY.
Houlihan Lokey Howard & Zukin Financial Advisors
Houlihan Lokey Howard & Zukin Financial Advisors, Inc. ("Houlihan
Lokey") has delivered a written opinion to the special committee that, as of
the date of the opinion, based upon and subject to the factors and assumptions
set forth therein, the consideration to be received by the holders of Class B
Voting Common Stock in the recapitalization is fair, from a financial point of
view, to the holders of Class B Voting Common Stock (solely with respect to
such Class B Voting Common Stock).
THE FULL TEXT OF THE WRITTEN OPINION OF HOULIHAN LOKEY, DATED JULY 28,
2005, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH THE
OPINION, IS SET FORTH IN ANNEX E TO THIS PROXY STATEMENT/PROSPECTUS. THE
ADVISORY SERVICES AND OPINION OF HOULIHAN LOKEY WERE PROVIDED FOR THE
INFORMATION AND ASSISTANCE OF THE SPECIAL COMMITTEE IN CONNECTION WITH ITS
CONSIDERATION OF THE RECAPITALIZATION PROPOSAL AND DO NOT CONSTITUTE A
RECOMMENDATION AS TO HOW ANY HOLDER OF CLASS A NONVOTING COMMON STOCK OR CLASS
B VOTING COMMON STOCK SHOULD VOTE WITH RESPECT TO THE
5
RECAPITALIZATION PROPOSAL. THE COMPANY URGES YOU TO READ THE OPINION IN ITS
ENTIRETY.
Interests of Certain Persons in the Recapitalization
Certain members of the board of directors have interests in the
recapitalization that are different from, or in addition to, the interests of
the company's shareholders. C. William Kaman II, one of the company's
directors, and Charles H. Kaman, chairman emeritus, each owns directly or
indirectly a significant percentage of the outstanding shares of Class B Voting
Common Stock and is a party to the recapitalization agreement, which provides
certain indemnification, expenses reimbursement, registration rights and other
benefits to the members of the Kaman family and related entities that are
parties to the recapitalization agreement. Certain other officers or directors
of the company also own shares of Class B Voting Common Stock and certain
officers, directors or former directors are parties to indemnification
agreements entered into connection with the recapitalization agreement. See
"Interests of Certain Persons in the Recapitalization" on page 50 and "The
Recapitalization - Indemnification Agreements" on page 45.
Conditions to the Recapitalization
Completion of the recapitalization requires, among other things:
o approval of the recapitalization proposal by separate class
votes of Class A Nonvoting Common Stock and Class B Voting
Common Stock; and
o the absence of any law or injunction preventing the
recapitalization.
Regulatory Matters
To the extent that a Kaman shareholder will own shares of Common Stock
valued at $53 million or more following the recapitalization, that shareholder
may have a pre-merger notification filing obligation under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, unless the
shareholder qualifies for an exemption to the filing requirements under such
Act.
Accounting Treatment
The company will account for the recapitalization by adjusting the
company's capital stock account based on the aggregate par value of the shares
outstanding immediately following completion of the recapitalization. The
change in capital stock will be offset by a decrease in paid-in capital. See
"The Recapitalization -- Accounting Treatment."
NASDAQ Listing
Shares of Class A Nonvoting Common Stock are currently listed and
traded on The Nasdaq National Market and shares of Class B Voting Common Stock
are not listed or traded on any exchange or market system. The company expects
that the shares of Common Stock that shareholders will own following the
recapitalization will be listed on The Nasdaq National Market and that the
shares of Common Stock will be traded under the symbol "[KAMN]."
6
Selected Historical Consolidated Financial Information
The following table sets forth selected historical financial data for
the company. The following data at and for the years ended December 31, 2004,
2003, 2002, 2001 and 2000 have been derived from the company's audited
consolidated financial statements. The following data at and for the six months
ended July 1, 2005 are unaudited, have been derived from the company's internal
records, have been prepared on the same basis as the audited consolidated
financial statements, and, in the opinion of management, present fairly the
financial data at and for the six months ended July 1, 2005. You should read
the following information together with Kaman's consolidated financial
statements, the notes related thereto and the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in the company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 and its Quarterly Reports on Form 10-Q for the fiscal
quarters ended April 1, 2005 and July 1, 2005, which are incorporated into this
proxy statement/prospectus by reference. See "Where You Can Find Additional
Information" on page 61.
For the six
months ended
July 1,
2005 2004 (1) 2003 (2,3) 2002 (2,3) 2001(3) 2000
------------------------------------------------------------------------------------------------------------
(in thousands except per share amounts, shareholders and employees)
OPERATIONS
Net sales..............$ 534,569 $ 995,192 $ 894,499 $ 880,776 $ 875,869(5)$ 1,031,234
Cost of sales.......... 392,984 770,285 671,591 723,176(4) 673,004 773,562
Selling, general and
administrative expense 126,201 239,368 206,416 199,520 189,530 203,021
Net gain on sale of
product lines and
other assets.......... (93) (199) (18,163) (2,299) (2,637) --
Restructuring costs.... -- -- -- 8,290 -- (1,680)
Other operating
income................ (983) (1,731) (1,448) (1,302) (1,076) (1,092)
Operating income
(loss)................ 16,460 (12,531) 36,103 (46,609) 17,048 57,423
Interest expense
(income), net......... 1,350 3,580 3,008 2,486 623 (1,660)
Other expense, net..... 708 1,053 1,265 1,831 761 1,363
Earnings (loss)
before income taxes... 14,402 (17,164) 31,830 (50,926) 15,664 57,720
Income tax benefit
(expense)............. (6,940) 5,342 (12,425) 17,325 (3,950) (20,800)
Net earnings (loss).... 7,462 (11,822) 19,405 (33,601) 11,714 36,920
FINANCIAL POSITION
Current assets.........$ 450,227 $ 450,335 $ 418,851 $ 414,245 $ 442,651 $ 482,000
Current liabilities.... 224,459 226,105 160,555 157,094 141,260 173,342
Working capital........ 225,768 224,230 258,296 257,151 301,391 308,658
Property, plant and
equipment, net........ 48,955 48,958 51,049 61,635 60,769 63,705
Total assets........... 563,629 562,331 528,311 535,540 521,946 553,830
Long-term debt......... 16,873 18,522 36,624 60,132 23,226 24,886
Shareholders' equity... 287,290 284,170 303,183 291,947 333,581 332,046
PER SHARE AMOUNTS
Net earnings (loss)
per share - basic.....$ 0.33 $ (.52) $ .86 $ (1.50) $ .52 $ 1.61
Net earnings (loss)
per share - diluted... 0.33 (.52) .86 (1.50) .52 1.57
Dividends declared..... .235 .44 .44 .44 .44 .44
Shareholders' equity... 12.58 12.48 13.40 13.00 14.97 14.92
Market price range..... 18.17 15.49 14.91 18.81 19.50 17.75
10.95 10.71 9.40 9.42 10.90 8.77
7
AVERAGE SHARES
OUTSTANDING
Basic.................. 22,797 22,700 22,561 22,408 22,364 22,936
Diluted................ 23,671 22,700 23,542 22,408 23,649 24,168
GENERAL STATISTICS
Registered
shareholders.......... 5,071 5,192 5,509 5,634 5,869 6,136
Employees.............. 3,627 3,581 3,499 3,615 3,780 3,825
============================================================================================================
1 The 2004 results net of non-cash adjustments, of approximately $41,600 for
certain programs with MD Helicopters, Inc., Royal Australian Navy, Boeing
Harbour Pointe and the University of Arizona, are further described in the
Accrued Contract Losses and Accounts Receivable, Net Note in the Financial
Statements.
2 The corporation sold its Electromagnetics Development Center during first
quarter 2003 and its microwave product lines during second quarter 2002 as
further described in the Divestitures Note in the Financial Statements.
3 Includes the activity of certain significant entities from date of
acquisition as further described in the Acquisitions Note in the Financial
Statements including: Industrial Supplies, Inc-2003; Latin Percussion,
Inc., RWG Frankenjura-Industrie Flugwerklager GmbH, Dayron, equity
interest in Delamac de Mexico S.A. de C.V.-2002; Plastic Fabricating
Company, Inc. and A-C Supply, Inc.-2001.
4 Costs of sales for 2002 includes the write-off of K-MAX inventories and
fixed assets and Moosup facility assets of $50,000 and $2,679,
respectively and $18,495 of accrued contract loss for the Australia
SH-2G(A) helicopter program, all of which are associated with the
Aerospace segment.
5 Results for 2001 were adversely impacted by a second quarter sales and
pre-tax earnings adjustment of $31,181 attributable to the Aerospace
segment and the Australia SH-2G(A) helicopter program.
Comparative Per Share Operating and Book Value Information
The following table presents selected unaudited pro forma per share
amounts for shares of Class A Nonvoting Common Stock, shares of Class B Voting
Common Stock, and shares of Common Stock that will be outstanding after the
consummation of the recapitalization. The pro forma amounts have been prepared
in accordance with GAAP.
You should read this information in conjunction with, and the
information is qualified in its entirety by, the consolidated financial
statements and accompanying notes of the company incorporated into this proxy
statement/prospectus by reference. See "Where You Can Find More Information"
beginning on page 61. The pro forma amounts in the table below are presented
for informational purposes only and have been prepared on alternatives bases,
namely that holders of Class B Voting Common Stock either fully exercise their
part stock/part cash election (i.e., 1.84 shares of Common Stock and $27.10 in
cash for each share of Class B Voting Common Stock) or receive only stock
(i.e., 3.58 shares of Common Stock for each share of Class B Voting Common
Stock) for those shares of Class B Voting Common Stock for which an all stock
election may be made. For purposes of these calculations, the company has
assumed that the Kaman family has will make the part stock/part cash election
for not less than 516,735 shares of its Class B Voting Common Stock. You
should not rely on the pro forma amounts as being indicative of the financial
position or results of operations of the company that would have actually
occurred had the recapitalization been effective during the period presented
or of the future financial position or future results of operations of the
company. The combined financial information as at and for the period presented
may have been different had the recapitalization been effective during that
period.
Comparative Unaudited Pro Forma Per Share Information
As at and for As at and for
the year ended the six months
December 31, ended July 1,
2004 2005
Basic earnings per share, historical
Class A Nonvoting Common Stock* $ (.52) $ .33
Class B Voting Common Stock* (.52) .33
Pro Forma Common Stock (part stock/part cash election) (.53) .31
Pro Forma Common Stock (only stock) (.48) .30
Diluted earnings per share, historical
Class A Nonvoting Common Stock* $ (.52) $ .33
Class B Voting Common Stock* (.52) .33
8
Pro Forma Common Stock (part stock/part cash election) (.53) .31
Pro Forma Common Stock (only stock) (.48) .30
Book value per share
Class A Nonvoting Common Stock* $ 12.48 $ 12.58
Class B Voting Common Stock* 12.48 12.58
Pro Forma Common Stock (part stock/part cash election) 11.41 11.51
Pro Forma Common Stock (only stock) 11.61 11.70
* Basic and diluted earnings per share along with book value per share
are calculated based upon the aggregate of Class A and Class B Common
Stock.
Comparative Per Share Market Price and Dividend Information
Shares of Class A Nonvoting Common Stock trade on The Nasdaq National
Market under the symbol "KAMNA." Shares of Class B Voting Common Stock are not
publicly traded.
The following table shows the high and low sales prices of Class A
Nonvoting Common Stock as furnished by The Nasdaq Stock Market as well as the
per share cash dividends declared on Class A Nonvoting Common Stock, in each
case for the indicated periods. The same amount of per share cash dividends
were declared in each of the relevant periods for Class B Voting Common Stock.
Class A Nonvoting Common Stock
Closing Price Cash Dividends
Per Share Declared
------------- --------------
Calendar Year High Low
2002
----
First Quarter.............................. $17.61 $13.46 $0.11
Second Quarter............................. 18.81 14.82 0.11
Third Quarter.............................. 17.50 11.00 0.11
Fourth Quarter............................. 13.75 9.42 0.11
2003
----
First Quarter.............................. $13.24 $9.40 $0.11
Second Quarter............................. 11.80 9.42 0.11
Third Quarter.............................. 14.91 10.72 0.11
Fourth Quarter............................. 14.29 11.67 0.11
2004
----
First Quarter.............................. $15.23 12.57 $0.11
Second Quarter............................. 15.49 10.91 0.11
Third Quarter.............................. 13.96 10.92 0.11
Fourth Quarter............................. 12.93 10.71 0.11
2005
----
First Quarter.............................. $13.38 $10.95 $0.11
Second Quarter............................. 18.17 11.54 0.125
Third Quarter (through August 17, 2005).... 20.75 17.47
On June 6, 2005, the last trading day before the company announced the
execution of the recapitalization agreement, the closing price of Class A
Nonvoting Common Stock was $15.48. On August 17, 2005, the most recent
practicable date before the filing of this proxy statement/prospectus, the
closing price of Class A Nonvoting Common Stock was $20.43.
9
The company has historically paid an annual dividend of $0.44 at a
quarterly rate of $0.11 per share on both Class A Nonvoting Common Stock and
Class B Voting Common Stock. The company recently announced an increase in its
annual dividend to $0.50 per share and declared a dividend of $0.125, which was
paid on July 11, 2005 to holders of record of Class A Nonvoting Common Stock
and Class B Voting Common Stock on June 27, 2005. Actual dividends payable on
the Common Stock are subject to future approval and declaration by the board of
directors, based on conditions prevailing at the time of declaration.
RECENT DEVELOPMENTS
On August 5, 2005, the company replaced its then existing senior
credit facility with a $150 million five year revolving credit facility, which
includes sublimits for the issuance of standby letters of credit, swingline
loans, and multicurrency borrowings in currencies freely tradable and
convertible into U.S. dollars. The company may also, from time to time,
increase the aggregate amount of the credit facility by up to $50 million with
additional commitments from the banks party thereto, as they may agree, or new
commitments from financial institutions acceptable to the banks and the
company. The credit facility also contains covenants comparable to those in
place under the replaced credit facility, including various financial
covenants. While completion of the recapitalization would not constitute a
"change of control" under the credit facility, a sale by the Kaman family of
its Class B Voting Common Stock under the Mason Capital agreement would
constitute a "change of control" for such purposes.
As a separate matter, on August 5, 2005 Kaman Music Corporation, a
subsidiary of the company, entered into, and consummated the transaction
contemplated by, an asset purchase agreement with MBT Holding Corp. and its
subsidiary companies. The agreement provides for the acquisition principally of
inventory, accounts receivable, contracts, intellectual property, and certain
real estate leases, an employment and non-competition agreement with J. Daniel
Mahoney, president of MBT Holding Corp. and the assumption of certain
liabilities for a purchase price of approximately $30 million, subject to a
post-closing working capital adjustment. MBT is a wholesale distributor of
musical instruments and accessories with sales of approximately $30 million for
the first half of 2005. Immediately following closing, Kaman Music Corporation
transferred all of its rights and obligations pursuant to the acquisition to
Kaman MBT, Inc., a subsidiary of Kaman Music Corporation.
10
THE SPECIAL MEETINGS
General
This solicitation is being made on behalf of Kaman Corporation. The
company is mailing this proxy statement/prospectus and the accompanying proxy
card beginning on [ ], 2005 to holders of Class A Nonvoting Common Stock and
Class B Voting Common Stock in connection with the solicitation of proxies by
the company's board of directors for use at the special meetings.
Notwithstanding that the certificate of incorporation designates Class A
Nonvoting Common Stock as nonvoting, holders of Class A Nonvoting Common Stock
are entitled to vote on the recapitalization proposal at the special meeting
for the class of stock that you own.
The company solicits proxies to give all holders of Class A Nonvoting
Common Stock and Class B Voting Common Stock on the record date an opportunity
to vote on matters that will come before the special meeting for the class of
stock that they own, which is entitled to vote. This procedure is necessary
because shareholders live in all states and abroad and may not be able to
attend the special meetings. Holders of shares of Class A Nonvoting Common
Stock and Class B Voting Common Stock can vote or let the company vote their
shares only if they are present in person or represented by proxy. The company
is providing to holders of shares of Class A Nonvoting Common Stock and Class B
Voting Common Stock a form of proxy with this proxy statement/prospectus.
Information with respect to the execution and revocation of proxies is provided
under "--Proxies; Revocability of Proxies; Cost of Solicitation."
At the special meetings, holders of Class A Nonvoting Common Stock and
Class B Voting Common Stock eligible to vote will be asked to consider and vote
upon the approval of the recapitalization proposal. In addition, holders of
Class B Voting Common Stock eligible to vote will be asked to consider and vote
upon the approval of the other certificate of incorporation amendment proposal.
For more information, see "-- What Will Be Voted Upon."
Date, Time and Place of the Special Meetings; Record Date
The special meeting for the holders of Class B Voting Common Stock is
scheduled to be held at [ ], local time, on [ ], 2005, at [ ] and the separate
special meeting for the holders of Class A Nonvoting Common Stock is scheduled
to be held at [ ], local time, on [ ], 2005, at [ ]. The company's board of
directors has fixed the close of business on September 1, 2005 as the record
date for determination of holders of Class A Nonvoting Common Stock and Class B
Voting Common Stock entitled to notice of and to vote at the special meetings.
As of the date of this proxy statement/prospectus, there were outstanding
22,220,691 shares of Class A Nonvoting Common Stock and 667,814 shares of Class
B Voting Common Stock.
What Will be Voted Upon
At the special meetings, the company will ask holders of Class A
Nonvoting Common Stock and Class B Voting Common Stock to consider and vote
upon the adoption of certain amendments to the certificate of incorporation
providing for a recapitalization of the company whereby:
o each share of Class A Nonvoting Common Stock will be
redesignated as one share of "Common Stock", entitled to one
vote per share; and
o each share of Class B Voting Common Stock will be
reclassified into 3.58 shares of Common Stock, entitled to
one vote per share, or, at the election of the holder of
Class B Voting Common Stock, 1.84 shares of Common Stock and
an amount in cash equal to $27.10.
In addition, the company will ask holders of Class B Voting Common
Stock to consider and vote upon the following proposed amendments to its
certificate of incorporation intended to enhance the ability of the board of
directors to take actions in the longer term interests of the company, whereby:
o the company's board of directors will be divided into three
classes serving staggered terms;
11
o the certificate of incorporation will provide for a minimum
of three and a maximum of 15 directors, with the actual
number of directors established by the board of directors in
accordance with the bylaws;
o the ability of shareholders to remove directors will be
limited to removal for cause and upon the affirmative vote of
a majority of the shares entitled to vote thereon; and
o a supermajority vote of the voting stock will be required to
amend, repeal or modify certain provisions of the certificate
of incorporation and bylaws.
At the special meetings, the company will also transact any other
business as may properly come before the meeting or any adjournment or
postponement thereof. Neither the other certificate of incorporation amendment
proposal nor the proposed bylaw amendment will be implemented unless the
recapitalization is implemented.
Quorum
The presence, either in person or by proxy, of holders of a majority
of the shares of Class A Nonvoting Common Stock is necessary to constitute a
quorum at the special meeting for that class of stock and a majority of the
shares of Class B Voting Common Stock entitled to vote on the proposals to be
presented at the special meeting is necessary to constitute a quorum at the
special meeting for that class of stock. Shares of Class A Nonvoting Common
Stock and Class B Voting Common Stock represented by a properly completed proxy
will be treated as present at the relevant special meeting for purposes of
determining a quorum, without regard to whether the proxy is marked as casting
a vote or abstaining. See "-- Proxies; Revocability of Proxies; Cost of
Solicitation" for more information.
Vote Required for Approval
In order to approve the recapitalization proposal, the number of votes
cast in favor of the proposal by holders of Class A Nonvoting Common Stock and
Class B Voting Common Stock within each class must exceed the number of votes
cast within such class opposing the proposal. Each share of Class A Nonvoting
Common Stock and Class B Voting Common Stock is entitled to one vote on the
recapitalization proposal.
The Kaman family and certain entities that they control have agreed to
vote their shares of Class B Voting Common Stock and Class A Nonvoting Common
Stock, representing approximately 82.6% of the outstanding shares of Class B
Voting Common Stock and approximately 3.2% of the outstanding shares of Class A
Nonvoting Common Stock, in favor of the recapitalization proposal. In addition,
other directors and executive officers of the company are expected to vote the
shares of Class A Nonvoting Common Stock and Class B Voting Common Stock held
by them, representing approximately 1.62% of the outstanding shares of Class A
Nonvoting Common Stock and 4.43% of the outstanding shares of Class B Voting
Common Stock, in favor of the recapitalization proposal.
Only holders of Class B Voting Common Stock are entitled to vote on
the other certificate of incorporation amendment proposal. The affirmative vote
by the holders of at least 66 2/3% of the shares of Class B Voting Common Stock
outstanding is required to approve the other certificate of incorporation
amendment proposal. Each share of Class B Voting Common Stock is entitled to
one vote on the other certificate of incorporation amendment proposal.
The Kaman family and certain entities that they control have agreed to
vote their shares of Class B Voting Common Stock, representing 82.6% of the
outstanding shares of Class B Voting Common Stock in favor of the other
certificate of incorporation amendment proposal. In addition, other directors
and executive officers of the company are expected to vote the shares of Class
B Voting Common Stock held by them, representing approximately 4.43% of the
outstanding shares of Class B Voting Common Stock, in favor of the other
certificate of incorporation amendment proposal.
The other certificate of incorporation amendment proposal and the
bylaw amendment will not be implemented unless the recapitalization is
consummated.
12
Proxies; Revocability of Proxies; Cost of Solicitation
If a holder of Class A Nonvoting Common Stock or Class B Voting Common
Stock attends a special meeting, he or she may vote by ballot. However, many
shareholders may be unable to attend a special meeting. Therefore, the
company's board of directors is soliciting proxies so that each holder of
shares of Class A Nonvoting Common Stock and Class B Voting Common Stock at the
close of business on the record date has the opportunity to vote on the
recapitalization proposal and that each holder of shares of Class B Voting
Common Stock at the close of business on the record date has the opportunity to
vote on the other certificate of incorporation amendment proposal.
You may vote your shares of Class A Nonvoting Common Stock and Class B
Voting Common Stock by proxy by marking your votes on the proxy card, signing
and dating it, and mailing it in the envelope provided. You can specify your
choices by marking the appropriate boxes on your proxy card.
In addition, you may submit your proxy or voting instructions by
accessing the Internet website specified on the enclosed proxy card or by
calling the toll-free number specified on the enclosed proxy card. If you
submit a proxy through the Internet or by telephone, please do not return the
proxy card. You should be aware that in submitting a proxy through the
Internet, you may incur costs, such as telephone and Internet access charges
for which you will be responsible.
If you sign and return your proxy card without specifying a choice,
the company will vote the shares as recommended (with C. William Kaman II
abstaining) by the company's board of directors. Abstentions marked on your
proxy card are voted neither FOR nor AGAINST, but these shares are counted in
determining a quorum. Because approval of the recapitalization proposal
requires only that more votes within each class entitled to vote thereon be in
favor of the proposal than opposed, an abstention has no effect on the outcome
of the voting. However, because the other certificate of incorporation
amendment proposal requires the affirmative vote of the holders of at least 66
2/3% of the outstanding shares of Class B Voting Common Stock, an abstention
will count as a vote against the other certificate of incorporation amendment
proposal.
The proxy card also confers discretionary authority on the individuals
appointed by the company's board of directors and named on the proxy card to
vote the shares represented by the proxy card on any other matter that is
properly presented for action at the relevant special meeting. You may revoke
your proxy at any time before it is voted at the special meeting for the class
of stock that you own by executing a later-dated proxy by mail, voting by
ballot at the special meeting for the class of stock that you own, or filing an
instrument of revocation with the inspectors of election in care of the
corporate secretary of the company.
IF YOU HOLD YOUR SHARES OF CLASS A NONVOTING COMMON STOCK OR CLASS B
VOTING COMMON STOCK THROUGH A BANK OR BROKER, FOLLOW THE VOTING INSTRUCTIONS ON
THE FORM YOU RECEIVE. BROKERS DO NOT HAVE DISCRETIONARY AUTHORITY TO VOTE ON
THE RECAPITALIZATION PROPOSAL OR OTHER CERTIFICATE OF INCORPORATION AMENDMENT
PROPOSAL.
THE COMPANY URGES ALL HOLDERS OF SHARES OF CLASS A NONVOTING COMMON
STOCK AND CLASS B VOTING COMMON STOCK TO VOTE BY SIGNING AND RETURNING THE
ACCOMPANYING PROXY CARD OR BY TELEPHONE OR ONLINE OVER THE INTERNET, WHETHER OR
NOT YOU PLAN TO ATTEND THE SPECIAL MEETING FOR THE CLASS OF STOCK THAT YOU OWN.
If you do attend the special meeting for the class of stock that you own, you
may vote by ballot, thereby canceling any proxy previously given.
The company is furnishing this proxy statement/prospectus to you in
connection with the solicitation by the company's board of directors of the
enclosed form of proxy for the special meeting for the class of stock that you
own. The company will bear the cost of the solicitation of proxies through use
of this proxy statement/prospectus, including reimbursement of brokers and
other persons holding stock in their names, or in the names of nominees, at
approved rates, for their expenses for sending proxy material to principals and
obtaining their proxies. The company has retained Innisfree M&A Incorporated to
solicit proxies on behalf of management for an estimated fee of $20,000, plus
reimbursement of reasonable out-of-pocket expenses. In addition, the company's
regular employees may solicit proxies personally, or by mail, telephone, or
electronic transmission, without additional compensation.
13
Voting Shares of Class A Nonvoting Common Stock Held Through Kaman Corporation
Employee Plans
As a participant in the Kaman Corporation Employees' Stock Purchase
Plan, you are entitled to vote your shares directly by completing, signing and
dating your proxy card and returning it in the enclosed postage-paid envelope
or by submitting your proxy by telephone or through the Internet. For those
shareholders who participate in the company's automatic dividend reinvestment
plan, the enclosed proxy includes all full shares of common stock held in your
dividend reinvestment plan account on the record date for the special meeting,
as well as your shares held of record. If you have received shares of
restricted stock pursuant to the Kaman Corporation's Stock Incentive Plan, you
are entitled to vote shares of Class A Nonvoting Common Stock that are still
subject to restrictions.
Meeting Admittance Procedures
Only shareholders of record on September 1, 2005, the record date, or
their duly appointed proxy holders (not to exceed one per shareholder), may
attend the special meeting for the class of stock that you own. Please bring a
government issued form of identification and, if you hold your shares of Class
A Nonvoting Common Stock or Class B Voting Common Stock in street name, proof
of ownership of such shares, such as your brokerage statement.
If you plan to attend the special meeting for the class of stock that
you own and vote your shares in person, but your shares are held in the name of
a broker, trust, bank, or other nominee, you should also bring with you a proxy
or letter from the broker, trustee, bank, or nominee confirming that you
beneficially own the shares.
Recommendation of the Board of Directors
The company's board of directors has approved (with C. William Kaman
II abstaining) the recapitalization proposal and the other certificate of
incorporation amendment proposal and recommends (with C. William Kaman II
abstaining) that holders of both Class A Nonvoting Common Stock and Class B
Voting Common Stock vote FOR the recapitalization proposal and that the holders
of shares of Class B Voting Common Stock vote FOR the other certificate of
incorporation amendment proposal.
14
THE RECAPITALIZATION
The descriptions of the material terms of the recapitalization and the
recapitalization agreement set forth below are not intended to be a complete
description of the recapitalization or the recapitalization agreement. This
description is qualified by reference to (i) the recapitalization agreement
attached to this proxy statement/prospectus as Annex A, (ii) the proposed
amended and restated certificate of incorporation attached to this proxy
statement/prospectus as Annex B and (iii) the proposed amended and restated
bylaws attached to this proxy statement/prospectus as Annex C. The company
urges all shareholders to read these documents in their entirety.
The Company
The company was founded in 1945 as a pioneering company in the
helicopter industry. Today, the company provides products and services through
three business segments: Aerospace representing approximately 25% of 2004
annual sales, Industrial Distribution, representing approximately 59% of 2004
annual sales and Music representing approximately 16% of 2004 annual sales. The
Aerospace segment produces aircraft structures and components for commercial
and military aircraft, produces missile and bomb fuzing products for U.S. and
allied militaries, markets and supports the SII-2G Super Seasprite maritime
helicopter and K-MAX medium-to-heavy lift helicopter, and produces widely used
proprietary aircraft bearings and components for commercial and military
programs. The Industrial Distribution segment serves over 50,000 customers
representing a highly diversified cross-section of North American industry, and
is one of the nation's larger distributors of power transmission, motion
control, material handling and electrical components and a wide range of
bearings. The Music segment is the largest independent distributor of musical
instruments and accessories, offering large chain and smaller local retailers
more than 17,500 products for amateurs and professionals.
The company's principal executive offices are located at 1332 Blue
Hills Avenue, Bloomfield, CT 06002. The telephone number at the principal
executive offices is (860) 243-7100.
Structure of the Recapitalization
The recapitalization will be effected through an amendment to the
certificate of incorporation. The proposed amended and restated certificate of
incorporation is included in this proxy statement/prospectus as Annex B and is
incorporated by reference herein. Following the recapitalization, the company
will have a single class of Common Stock, with each share entitled to one vote.
Amendments to The Certificate of Incorporation
Assuming that the recapitalization proposal is approved, the
certificate of incorporation will be amended such that:
o each share of Class A Nonvoting Common Stock will be
redesignated as one share of "Common Stock", entitled to one
vote per share; and
o each share of Class B Voting Common Stock will be
reclassified into 3.58 shares of Common Stock, entitled to
one vote per share, or, at the election of the holder of
Class B Voting Common Stock, 1.84 shares of Common Stock and
an amount in cash equal to $27.10.
Holders of record of both the company's Class A Nonvoting Common Stock
and Class B Voting Common Stock are entitled to attend and vote on the
recapitalization proposal at the special meeting for the class of stock that
you own. Holders of Class B Voting Common Stock desiring to make the part
stock/part cash election must comply with the election procedures, including
submission of the election form to The Depository Trust Company, the election
agent, not later than the close of business on [ ], 2005.
In the recapitalization agreement, the Kaman family has agreed to
elect to take the part cash/part stock alternative to the extent requested to
do so by the company, following the advice of its counsel, to avoid application
of the higher vote requirement of Section 33-841 of the Connecticut Business
Corporation Act to the recapitalization proposal. The company has so requested
that the Kaman family make this election as to not less than 516,735 shares of
their Class B Voting Common Stock. The Kaman family has advised the company
that the Kaman family believes that an election as to a smaller number of
shares would be sufficient to avoid application of the higher vote requirement
and the company expects that there will be further discussions between the
company and the Kaman family's representatives concerning the minimum amount of
the Kaman family election.
15
If the recapitalization is implemented, certain other amendments to
the certificate of incorporation and the bylaws will be made. These amendments
are intended to enhance the ability of the board of directors to take actions
in the longer term interests of the company and include the following:
o the company's board of directors will be divided into three
classes serving staggered terms;
o the certificate of incorporation will provide for a minimum
of three and a maximum of 15 directors, with the actual
number of directors established by the board of directors in
accordance with the bylaws;
o the ability of shareholders to remove directors will be
limited to removal for cause and upon the affirmative vote of
a majority of the shares entitled to vote;
o shareholders holding at least 35% of the shares eligible to
be voted will be needed to call a special meeting of
shareholders;
o advance notice will be required for nominations for directors
and for actions to be taken at shareholder meetings; and
o a supermajority vote of the voting stock will be required to
amend, repeal or modify certain provisions of the certificate
of incorporation and bylaws.
Only holders of the company's Class B Voting Common Stock are entitled
to vote on the other certificate of incorporation amendment proposal.
The Kaman family has agreed to vote approximately 82.6% of the
outstanding shares of Class B Voting Common Stock and approximately 3.2% of the
outstanding shares of Class A Nonvoting Common Stock in favor of the
recapitalization proposal and, in the case of their shares of Class B Voting
Common Stock, in favor of the other certificate of incorporation amendment
proposal. In addition, other directors and executive officers of the company
are expected to vote the shares of Class B Voting Common Stock held by them,
representing approximately 4.43% of the outstanding shares of Class B Voting
Common Stock, in favor of the other certificate of incorporation amendment
proposal.
Background of the Recapitalization
On April 15, 2003, a special committee was appointed by the company's
board of directors to consider alternatives to the current capital structure of
the company, including a recapitalization of Class A Nonvoting Common Stock and
Class B Voting Common Stock into a single class of common stock having one vote
per share. This action was taken following intermittent discussions, over a
period of several years, between members of Kaman's management and
representatives of the Kaman family concerning the desire by the Kaman family
to diversify their assets.
The special committee held its first meeting on April 15, 2003, at
which the purposes of the special committee, including the consideration of
and, if appropriate, recommendation to the board of directors of, a
recapitalization transaction and related matters, were discussed. The special
committee concluded that it would be advisable to obtain separate fairness
opinions as to Class A Nonvoting Common Stock and Class B Voting Common Stock
and determined that it would interview several financial advisory firms. The
special committee also decided to retain the firm of Skadden, Arps, Slate,
Meagher & Flom LLP ("Skadden") as its primary legal advisor in connection with
a potential recapitalization, with assistance on Connecticut law matters from
the company's traditional counsel, Murtha Cullina LLP ("Murtha Cullina"). In
connection with retaining Murtha Cullina, the special committee was aware of
the fact that Murtha Cullina attorneys had long been involved in the personal
affairs of the Kaman family and that one of its counsel and a former partner,
John C. Yavis, Jr., holds a general power of attorney for Charles H. Kaman, the
chairman emeritus and a significant holder of Class B Voting Common Stock, and
was advised by Murtha Cullina that an internal screening mechanism would be
implemented between the attorneys that would advise the special committee on
Connecticut law matters and the attorneys involved in Charles Kaman's personal
affairs.
On May 8, 2003, the special committee and the company's senior
management met with the committee's legal advisor to discuss the functions and
role of the special committee with respect to the consideration of a potential
recapitalization, as well as recommended practices to ensure the effectiveness
16
of the special committee in its role. At this meeting, Evercore and Houlihan
Lokey and two other potential financial advisors being considered for
engagement in connection with the potential recapitalization made separate
presentations to and were interviewed by the special committee.
On May 15, 2003, the special committee approved the engagement of
Evercore and Houlihan Lokey to assist in analyzing, structuring, negotiating
and effecting a potential recapitalization. The services agreed to be provided
by the financial advisors included analyzing and recommending to the special
committee appropriate ratios for the conversion or exchange of Class A
Nonvoting Common Stock and Class B Voting Common Stock into shares of Common
Stock in connection with a proposed recapitalization, assisting the special
committee in its determination of and recommendation concerning such ratios,
advising the special committee as to strategy and tactics for negotiating with
the company's significant shareholders and, if requested by the special
committee, participating in such discussions and negotiations and rendering
fairness opinions. Specifically, Evercore agreed to render, upon request of the
special committee, an opinion as to the fairness, from a financial point of
view, of a proposed recapitalization to the holders of Class A Nonvoting Common
Stock and Houlihan Lokey agreed to render, upon request of the special
committee, an opinion as to the fairness, from a financial point of view, of a
proposed recapitalization to the holders of Class B Voting Common Stock. The
retention arrangements for each of Evercore and Houlihan Lokey each initially
contemplated that their work would be concluded within six months. These
arrangements were modified on several occasions to extend the engagement terms
through June 15, 2005.
On June 5, 2003, Houlihan Lokey met with Mr. Yavis and other lawyers
representing members of the Kaman Family. During this meeting, Houlihan Lokey
shared the results of its preliminary analysis of a possible recapitalization
from the perspective of the holders of Class B Voting Common Stock.
On June 9, 2003, the special committee met with its legal and
financial advisors to continue its review of a potential recapitalization. At
the meeting, the special committee considered, among other matters, the
preliminary views of Evercore and Houlihan Lokey regarding their evaluation of
a potential recapitalization from the perspective of Class A Nonvoting Common
Stock and Class B Voting Common Stock, respectively. At the meeting,
representatives of Evercore and Houlihan Lokey separately presented their
respective preliminary written reports, reviewed and discussed the due
diligence and other research that each financial advisor had conducted to date,
the analyses that each financial advisor had performed to date, including an
explanation of underlying assumptions, and their preliminary views as to an
acceptable range of exchange ratios from the perspective of a holder of Class A
Nonvoting Common Stock and a holder of Class B Voting Common Stock,
respectively. In addition, the possible certificate of incorporation and bylaw
amendments that might accompany a recapitalization proposal were discussed.
There was also discussion concerning the fact that the Kaman family
had retained its own counsel and might retain its own investment advisor in
connection with its consideration of a potential recapitalization and related
matters, and how this might affect the process of arriving at an acceptable
exchange ratio. It was agreed that the representatives of the Kaman family
should be contacted by mid-July 2003 to express the special committee's desire
to understand the initial position of the Kaman family concerning a possible
recapitalization and in particular whether there was an exchange ratio that
could be agreed upon by the Kaman family. After discussion, it was also agreed
that the management should interview and retain a proxy solicitor to assist in
evaluating various aspects of a potential recapitalization and the related
proxy solicitation prior to any shareholder meeting. Furthermore, it was agreed
that an appropriate set of proposed certificate of incorporation and bylaw
amendments to accompany the recapitalization proposal be developed, with the
board of directors' corporate governance committee being the appropriate
initial forum for consideration of such measures.
In late June 2003, the company entered into separate confidentiality
agreements with members of the Kaman family relating to material, non-public
information about the company and any possible recapitalization. The special
committee was also advised by the Kaman family that they had retained Compass
Advisors LLP as their financial advisor in connection with the potential
recapitalization. In connection with that retention, the special committee had
declined to support the Kaman family's request that the company pay the fees of
Compass.
In early August 2003, Skadden circulated to Mr. Yavis and the other
lawyers for the Kaman family an initial draft of what would ultimately become
the recapitalization agreement.
17
On August 12, 2003, Compass made a presentation at a meeting of the
special committee, attended by all special committee members, Evercore,
Houlihan Lokey, Skadden and certain members of the company's management. The
special committee, after discussing Compass' presentation with its financial
and legal advisors, concluded that Compass' methodologies and its resulting
valuation were unduly favorable to the holders of Class B Voting Common Stock.
The special committee expressed its desire that the Kaman family put forward an
exchange ratio proposal for the special committee's consideration. Also at the
August 12 meeting, the special committee discussed possible certificate of
incorporation and bylaw amendments and a possible shareholder rights plan that
could accompany any proposed recapitalization.
On September 9, 2003, Compass, on behalf of the Kaman family,
submitted to the special committee an exchange ratio proposal of 6.25 shares of
Class A Nonvoting Common Stock for each share of Class B Voting Common Stock.
On September 12, 2003, the special committee met to review Compass'
proposal. After consultation with Houlihan Lokey and Evercore, the special
committee concluded that Compass' proposed exchange ratio was unacceptably high
and inconsistent with the premiums offered to voting shareholders in comparable
recapitalization transactions in which there was no third party offer. That
same day, Compass was informed of the special committee's determination and was
invited by the special committee to submit a revised recapitalization proposal
at a significantly reduced exchange ratio.
On September 23, 2003, the special committee met upon learning earlier
that day from Mr. Yavis that a third party had very recently expressed an
interest in acquiring Charles Kaman's shares of Class B Voting Common Stock.
Though Mr. Yavis provided no detailed information regarding the indication of
interest, he did state that the Kaman family would prefer to work with the
special committee to accomplish a recapitalization.
On September 26, 2003, at the request of the special committee,
Evercore and Compass met to discuss their respective approaches to determining
an appropriate exchange ratio. At this meeting, Evercore reviewed its own
analytical approach to the valuation and stressed the need for the Kaman family
either to provide specifics as to the proposed Class B Voting Common Stock
purchase or a revised recapitalization proposal that the Kaman family would
support. However, at the meeting, Compass neither provided any new perspective
as to the proposed recapitalization's fairness nor provided any information
concerning the proposed Class B Voting Common Stock purchase.
On October 1, 2003, special committee chairperson, Eileen S. Kraus,
Skadden, Evercore, and Houlihan Lokey met with Compass and several members of
the Kaman family and their counsel. The special committee refused the Kaman
family counsel's request for the special committee to recommend a
recapitalization proposal without seeking a fairness opinion. The special
committee noted that the Kaman family's proposed exchange ratio was so far
above a level that the special committee would find acceptable that providing a
counteroffer would not be productive. Instead, the special committee repeated
its request for Compass to submit a revised proposal.
On November 11, 2003, the special committee met to discuss logistical
issues regarding the proposed recapitalization, including the possibility of
the company adopting a shareholder rights plan, and directed the company's
management and Skadden to further explore that issue.
On November 13, 2003, the Kaman family presented the special committee
with a revised exchange offer ratio of 3.9 shares of Class A Nonvoting Common
Stock for each share of Class B Voting Common Stock. Several days later, on
November 17, 2003, representatives from Evercore and Compass discussed the
Kaman family's revised exchange offer, during which, Evercore conveyed the
special committee's rejection of the proposed ratio and countered with a
proposed exchange ratio of 1.5.
On February 3, 2004, Evercore and Compass met again to discuss the
proposed recapitalization. At this meeting, Compass offered an exchange ratio
of 3.25 shares of Class A Nonvoting Common Stock for each share of Class B
Voting Common Stock.
Early in the week of February 9, 2004, Ms. Kraus, Mr. Yavis and Paul
Kuhn, the company's president, chairman and chief executive officer, discussed
the proposed recapitalization, during which Mr.
18
Yavis indicated that the Kaman family would be prepared to proceed with an
exchange ratio of 2.5 shares of Class A Nonvoting Common Stock for each share
of Class B Voting Common Stock.
On February 16, 2004, the special committee held a meeting. The
special committee determined not to accept the revised exchange ratio of 2.5
and to refrain from providing a counteroffer for the time being.
On February 19, 2004, Evercore, Houlihan Lokey, Skadden, and Compass
met to review and discuss their current positions and underlying rationale. At
this meeting, Evercore outlined its rationale for why the special committee
would not accept 2.5 as the exchange ratio. Compass expressed frustration that
the special committee and the Kaman family were not directly negotiating the
exchange ratio with one another.
On February 25, 2004, C. William Kaman II, a director of the company
and a member of the Kaman family, wrote to Ms. Kraus asking for a response,
including any counter proposals, to its 2.5 exchange ratio offer within nine
days. Mr. Kaman's letter prompted a meeting of the special committee on March
4, 2004, at which the special committee instructed Ms. Kraus to reiterate the
special committee's position that it could not support the current 2.5 exchange
ratio offer.
On March 19, 2004, during a meeting between Evercore, Skadden,
Compass, Mr. Yavis, and counsel for the Kaman family, such counsel advised that
the Kaman family would be prepared to consider an exchange ratio of 1.95,
subject to agreement being reached on all other issues.
On March 30, 2004, Evercore recommended that discussions with the
Kaman family be held only after the company's preliminary first quarter results
were publicly released in late April.
On April 20, 2004, the company's first quarter results were released
and the special committee met and discussed the logistics of its counteroffer
to the Kaman family. Among the topics discussed at the meeting was the Kaman
family's request of certain contractual commitments from the company, including
an agreement to register the shares issued to Kaman family members and their
affiliates, indemnify the Kaman family from the defense costs of any
recapitalization-related litigation and permit the Kaman family to accept a
better offer if one became available to them. The special committee, after some
discussion with its financial and legal advisors, resolved to pursue
discussions with the Kaman family regarding share registration while declining
to discuss the indemnification and "alternative transaction" provisions. In
addition, the special committee discussed a potential increase in the company's
annual dividend, which they agreed should not be conditioned upon completion of
the proposed recapitalization.
On April 28, 2004, the special committee met to gauge reaction to the
company's first quarter earnings release, to discuss with Evercore a
counteroffer to the Kaman family's 1.95 share exchange ratio, and to discuss
negotiation strategy. Evercore recommended that the special committee make a
counteroffer of an exchange ratio of 1.65. The special committee decided that
Evercore and Compass should discuss directly the different positions concerning
a proposed exchange ratio.
On April 30, 2004, Skadden sent a revised recapitalization agreement
to counsel for the Kaman family that did not include the Kaman family's request
for the "alternative transaction" and indemnification for defense costs
provisions.
In early May, 2004, the company and the Kaman family, through their
advisors, held discussions regarding the revised recapitalization agreement.
On May 27, 2004, C. William Kaman II spoke with Ms. Kraus to discuss
the status of the negotiation of the recapitalization agreement. He told her
that he was uncomfortable with the special committee's position that there be
no indemnification for defense costs given that any proposed recapitalization
that the board of directors ultimately approved would benefit all shareholders,
not just the Kaman family. Ms. Kraus asked Skadden to consider possible
limitations to an indemnification for defense costs provision that the special
committee might accept.
19
On June 7, 2004, the special committee met to discuss the submission
of the draft recapitalization agreement to the Kaman family and the benefits
and risks associated with the Kaman family's request for indemnification. The
special committee concluded that it would be appropriate to include a
reimbursement provision in its latest offer requiring both parties to share in
the responsibility for defense costs and provide a cap of $250,000 on the
company's liability for covering the Kaman family's aggregate defense costs.
On June 16, 2004, Skadden sent the Kaman family's counsel notice that
the special committee remained unprepared to support an indemnification
agreement but was willing to support the inclusion of a "reimbursement
provision" in the recapitalization agreement up to a certain amount.
On June 25, 2004, the Kaman family's counsel informed the special
committee that the proposed reimbursement provision was inadequate and
terminated negotiations, citing continual, substantial differences in the
positions of the Kaman family and the special committee.
On June 30, 2004, the special committee met to discuss the Kaman
family's termination of negotiations and the benefits and detriments of an
indemnification provision as well as a termination right that would permit the
Kaman family to terminate the recapitalization agreement in the event that
another offer meeting certain timing, financial and other terms was received.
On July 7, 2004, after the Kaman family's counsel reiterated that the
negotiations should cease, Ms. Kraus announced to the special committee that
the proposed recapitalization appeared no longer to be viable.
On July 20, 2004, the special committee met to discuss possible
revisions to the recapitalization agreement intended to address the perceived
objections of the Kaman family. After extensive discussion, the special
committee achieved consensus that the proposed terms were acceptable.
On July 21, 2004, Ms. Kraus sent a letter to C. William Kaman II
asking the Kaman family to reconsider another recapitalization proposal that
would provide for (i) a share exchange ratio of 1.95 shares of Class A
Nonvoting Common Stock per share of Class B Voting Common Stock, (ii) the right
of the Kaman family members and Mr. Yavis to withdraw their support for and
terminate the recapitalization agreement at any time prior to the mailing of
the proxy statement/prospectus to the company's shareholders in the event that
a competing offer to purchase Class B Voting Common Stock was received and was
at least the greater of $50 per share or the then-current value of three shares
of Class A Nonvoting Common Stock, and (iii) indemnification by the company of
up to the first $1 million in any shareholder litigation defense costs incurred
by the Kaman family or Mr. Yavis. Ms. Kraus suggested that, unless the Kaman
family were to provide some prompt and favorable feedback regarding the special
committee's new offer, the special committee would shortly thereafter terminate
its advisors' roles and disband itself.
On September 2, 2004, Ms. Kraus spoke with Mr. Yavis regarding the
special committee's latest offer for the proposed recapitalization. During this
conversation, Mr. Yavis stated that the Kaman family was interested in
restarting negotiations. Mr. Yavis also informed Ms. Kraus that over the summer
the Kaman family had held discussions with potential purchasers of the Kaman
family's shares of Class B Voting Common Stock. In addition, Mr. Yavis outlined
his main concerns with the revised offer: (i) the 1.95 exchange ratio was too
low; (ii) an all-cash payout might be preferable; (iii) the recapitalization
agreement should grant full indemnification with no exposure to the Kaman
family; and (iv) three times the value of one share of Class A Nonvoting Common
Stock at the time of executing a recapitalization agreement should be the sole
trigger of the Kaman family's termination right, which should be exercisable up
until the shareholders' meeting.
On September 10, 2004, the special committee held a meeting to
determine its response to the Kaman family's requested changes. At this
meeting, the special committee resolved to stick closely to the terms of its
latest offer. The special committee opted to retain the proposed exchange ratio
at 1.95 and noted that the Kaman family had suggested it as an appropriate rate
in the first place. Moreover, the special committee refused to extend the
duration of the Kaman family's termination right beyond the point when the
proxy statement/prospectus was mailed to shareholders. However, the special
committee decided to revise its indemnification proposal to allow for an
uncapped reimbursement for the Kaman family's defense costs, but that such
indemnification would terminate, and all previously-reimbursed expenses would
need to be repaid to the company, in the event that the Kaman family were to
accept a competing proposal or
20
breach the recapitalization agreement. In addition, the special committee
agreed to drop the $50 per share minimum prong to the Kaman family's right to
terminate their support of the recapitalization.
On September 14, 2004, Ms. Kraus communicated to Mr. Yavis the special
committee's latest position. Mr. Yavis responded that the Kaman family
preferred an all-cash transaction, preferably including their shares of Class A
Nonvoting Common Stock, and a definite time period during which the Kaman
family could terminate the recapitalization agreement. Mr. Yavis also noted
that the Kaman family had neither accepted nor rejected the special committee's
proposed 1.95 exchange ratio.
On September 21, 2004, the special committee met and discussed the
viability of an all-cash transaction and extending any recapitalization
proposal to the Kaman family's shares of Class A Nonvoting Common Stock. In
particular, the special committee discussed the amount of funds required for an
all-cash transaction and the advisability at the time of pursuing an all-cash
share repurchase. After discussion, a consensus was reached that the
recapitalization agreement should not provide for a purchase of the Kaman
family's shares of Class A Nonvoting Common Stock and that a transaction
involving one share of "new" stock for each share of Class B Voting Common
Stock plus the choice of either cash or stock for the remaining ."95" element
of the proposed exchange ratio was acceptable, whereas an all-cash proposal was
not. Furthermore, the special committee agreed that the Kaman family could be
granted a period of five weeks after the announcement of the recapitalization
transaction (or until the mailing of the proxy statement/prospectus, if later)
during which they could terminate the recapitalization agreement to accept a
qualifying alternative transaction.
On September 30, 2004, Ms. Kraus wrote a letter to Mr. Yavis setting
forth such proposal. Mr. Yavis then contacted Ms. Kraus and indicated that the
Kaman family still wished to pursue an all-cash transaction for their Class B
Voting Common Stock as well as for possibly for their Class A Nonvoting Common
Stock. Mr. Yavis also noted again that the Kaman family was still considering
the 1.95 exchange offer but hadn't accepted it.
On October 12, 2004, the special committee met and discussed Mr.
Yavis' latest thoughts regarding the terms of the recapitalization agreement.
The special committee unanimously supported the position that the company
should not pursue an all-cash share repurchase of Class B Voting Common Stock
or Class A Nonvoting Common Stock of the Kaman family. The special committee
instructed Ms. Kraus to contact Mr. Yavis to convey the importance of
expediting closure as to the recapitalization agreement's final terms, given
the prolonged nature of the negotiations between the special committee and the
Kaman family and given the compromises made to date by the special committee.
On November 9, 2004, the special committee held a meeting to discuss
the status of the negotiations and the proposed certificate of incorporation
and bylaw amendments under consideration.
On November 11, 2004, Mr. Yavis sent Ms. Kraus a markup of the
recapitalization agreement and on November 30, 2004, Ms. Kraus, Candace A.
Clark, the company's chief legal officer, Evercore, Skadden, Mr. Yavis, and
counsel to the Kaman family met to discuss the outstanding high-level issues
regarding the recapitalization agreement. The parties reached agreement on many
of the outstanding issues, particularly with regard to the shareholder voting
process, the board of directors' modification process for the proposed
certificate of incorporation and bylaw amendments and the requirements that a
proposed alternative transaction must meet in order to be deemed a "qualifying
alternative transaction" for the purposes of triggering the Kaman family's
termination right.
On November 16, 2004, the special committee held a meeting to discuss
the principal issues raised by the Kaman family concerning the recapitalization
agreement. The special committee agreed that the proposed corporate governance
measures should be voted upon by the holders of Class B Voting Common Stock
alone, these being the only shares legally required to vote thereon. It was
also decided that several special committee representatives would attend an
upcoming meeting with Kaman family representatives to resolve the remaining
open issues with respect to the recapitalization agreement.
On December 6, 2004, Ms. Kraus, Ms. Clark, Evercore, Skadden, Mr.
Yavis, and other counsel for the Kaman family had a follow-up discussion
regarding remaining open issues relating to the recapitalization agreement.
After this discussion, a few critical issues remained unresolved, chief among
them whether the company would be granted the right for some specified period
of time to "match" through
21
an improvement to the terms of the proposed recapitalization, and thereby
replace, a qualifying alternative transaction. Other details still requiring
resolution included the logistics of setting the cash option price, the process
by which the company would reimburse the Kaman family's expenses in the event
that the company were to terminate the recapitalization agreement, and the
limitations upon the rights to indemnification for defense costs.
On December 9, 2004, the special committee confirmed its earlier
positions that the corporation should retain the ability to replace an
alternate transaction brought forward by the Kaman family, and that the
recapitalization agreement should represent the sole remedy for indemnification
for an individual who might also have statutory or common law indemnification
rights or be covered by the company's liability insurance. In addition, the
special committee resolved that the company should not provide reimbursement of
the Kaman family's "lost opportunity" costs should the company's board of
directors elect to terminate the recapitalization agreement.
On January 18, 2005, Ms. Kraus sent Mr. Yavis a memo offering the
special committee's comments and in some cases proposed solutions to the few
remaining points of contention in the recapitalization agreement negotiations.
The special committee refused to agree that the company should pay a break-up
fee in the event that the company were to decide to match and replace a
qualifying alternative transaction. In addition, the special committee
disapproved of the Kaman family's proposal that the non-Kaman family voting
trustees either resign or agree to vote in favor of any Kaman family-supported
qualifying alternative transaction, and suggested instead that the non-Kaman
family voting trustees would remain in place but would in effect abstain from
matters relating to the recapitalization or a qualifying alternative
transaction. Also, the special committee proposed that in the event the company
were to terminate the recapitalization agreement through its "fiduciary out",
any expense reimbursement obligation of the company to the Kaman family must be
limited to their actual out-of-pocket expenses, be subject to an agreed-upon
cap and be subject to possible repayment to the company for a specified time
period following the termination if the Kaman family were to sell shares of
Class B Voting Common Stock at a premium to then market prices for Class A
Nonvoting Common Stock. The special committee also made suggestions as to how
to address the interplay between the Kaman family's indemnification rights
under the recapitalization agreement, which would be terminated were the Kaman
family to complete a qualifying alternative transaction, and C. William Kaman
II's indemnification rights as a director.
Throughout the following month, representatives of the special
committee and the Kaman family continued discussions and developed resolutions
to these and several other remaining issues.
On February 22, 2005, the special committee held a status update
meeting. It was reported that the special committee had achieved significant
progress in negotiating basic terms of the potential recapitalization
transaction, although issues still remained as to certain issues relating to
the arbitration provision and to the Kaman family's proposed right to expense
reimbursement in the event of a termination of the recapitalization agreement.
Following this special committee meeting, representatives of the
special committee and the Kaman family held frequent discussions regarding the
proposed recapitalization agreement.
On March 17, 2005, a revised draft of the recapitalization agreement
was circulated among the special committee's and the Kaman family's
representatives. The agreement was updated to take into account the parties'
conclusions regarding the language of specific provisions as well as those
members of the Kaman family judged to be necessary parties by the special
committee.
On April 19, 2005, the special committee met to discuss the latest
open issues in the negotiation of the recapitalization agreement and determine
its negotiating positions on these issues, as it appeared to the special
committee that negotiations with the Kaman family were nearing completion.
On April 22, 2005, representatives of the special committee and the
Kaman family resolved in principle various issues that had been under
discussion for some time, including an arbitration procedure to resolve
possible disagreements between the parties concerning whether an alternative
transaction was
22
"qualifying" for purposes of the Kaman family's termination right and that the
Kaman family would be eligible for expense reimbursement in the event that the
board of directors were to exercise its "fiduciary out", subject to certain
caps and an obligation to repay previously reimbursed amounts if in the near
term the Kaman family were to sell any of their shares of Class B Voting Common
Stock at prices exceeding the then current market prices for Class A Nonvoting
Common Stock.
On May 18, 2005, the special committee retained Shipman & Goodwin LLP
("Shipman") to serve as additional Connecticut counsel during the finalization
of the recapitalization agreement and the related shareholder vote.
In late May 2005, an amendment to the voting trust agreement was
drafted, whereby the Kaman family voting trustees would be able to direct the
voting of the shares of Class B Voting Common Stock held in the voting trust in
the event of any shareholder vote on the proposed recapitalization as well as
on any substitute recapitalization proposal or qualifying alternative
transaction.
On May 31, 2005, the special committee met to discuss the meetings of
the special committee and the company's board of directors scheduled for the
following week to review and consider the proposed recapitalization agreement,
certificate of incorporation and bylaw amendments and voting trust agreement
amendment. In addition, the special committee approved in principle several
items under the proposed recapitalization that had not previously been
resolved.
On June 2, 2005, Mr. Yavis informed Skadden that both he and C.
William Kaman II had been contacted by a potential buyer for the Kaman family's
Class B Voting Common Stock. Mr. Yavis asked if the special committee would
consider raising the exchange offer ratio to approximately 2.5 shares of Class
A Nonvoting Common Stock for each share of Class B Voting Common Stock, if, in
return, the Kaman family would forego any termination right in the event of a
third party offer.
On June 3, 2005, the special committee rejected this proposal after
consultation with Skadden and Evercore.
On June 6, 2005, this proposal was raised again by C. William Kaman II
in a conversation with Ms. Kraus and was rejected again.
On June 7, 2005, the special committee reviewed in detail the terms of
the recapitalization proposal, the proposed recapitalization agreement, the
proposed certificate of incorporation and bylaw amendments, the proposed voting
trust agreement and the proposed indemnification agreements to be provided to
the non-Kaman family power of attorney holders and voting trustees under
arrangements established by Charles Kaman. The recapitalization agreement
provided that each share of Class B Voting Common Stock would be reclassified
into 1.95 shares of Common Stock, or at the election of the holder of Class B
Voting Common Stock, one share of Common Stock and an amount in cash equal to
$14.76. The special committee also reviewed with Skadden and Shipman various
legal considerations, including the duties of the members of the special
committee under Connecticut law. Having also received separate presentations
from Evercore and Houlihan Lokey, including fairness opinions with respect to
the 1.95 exchange ratio recapitalization proposal, the special committee
recommended that the board approve and adopt the 1.95 exchange ratio
recapitalization proposal and the recapitalization agreement, the proposed
certificate of incorporation and bylaw amendments, the proposed amendment of
the voting trust agreement and the proposed indemnification agreements.
On June 7, 2005, the board of directors held a meeting at which it
reviewed the special committee's recommendations, received separate
presentations from Evercore and Houlihan Lokey and reviewed with Skadden and
Shipman the terms of the proposed agreements and the relevant legal
considerations. At that meeting, the board of directors approved and adopted
(with C. William Kaman II abstaining) the 1.95 exchange ratio recapitalization
proposal, the recapitalization agreement, the proposed certificate of
incorporation and bylaw amendments and the proposed indemnification agreements,
consented to the amendment of the voting trust agreement, and adopted various
other implementing resolutions. The board of directors also approved an
increase in the company's annual dividend to $0.50 per share from $0.44 per
share and an initial quarterly dividend reflecting the higher rate, subject to
the board of directors' periodic review of its dividend policy.
23
On June 24, 2005, the company announced that it had received a letter
from Kaman family representatives on June 23, 2005, indicating that the family
was in discussions concerning a possible "qualifying alternative transaction"
and that the family had reached a stage that they reasonably believed would
likely result in a "qualifying alternative transaction," as defined in the
recapitalization agreement.
On June 28, 2005, the company received a letter from Kaman family
representatives indicating that the Kaman family intended to terminate the
recapitalization agreement in order to complete what they represented as a
"qualifying alternative transaction" contemplating a purchase of all of the
667,814 outstanding shares of the Company's Class B Voting Common Stock for
$55.00 per share in cash.
As permitted under the recapitalization agreement, on July 6, 2005 the
company submitted questions to arbitration as to whether or not the proposed
alternative transaction constituted a "qualifying alternative transaction"
under the recapitalization agreement and whether specified conditions to the
Kaman family's ability to terminate the recapitalization agreement had been
met. On July 22, 2005, the arbiter confirmed that the alternative transaction
was a "qualifying alternative transaction" and that the conditions to the Kaman
family's ability to terminate the recapitalization agreement had been met.
Under the recapitalization agreement, the company had a period of five
business days following the receipt of the arbiter's determination within which
to approve a "substitute recapitalization proposal" with a minimum value per
Class B Voting Common Stock of at least the value per share of the "qualifying
alternative transaction" plus $.65, with both all stock and part stock/part
cash alternatives and subject to customary closing conditions, including the
vote of more shares of Class A Nonvoting Common Stock in favor than against the
recapitalization and the vote of more shares of Class B Voting Common Stock in
favor than against the recapitalization, each such class voting separately.
On July 28, 2005, the special committee reviewed in detail the terms
of the "substitute recapitalization proposal", which is referred to in this
proxy statement/prospectus as the recapitalization proposal or
recapitalization. They also reviewed with Skadden and Shipman various legal
considerations, including the minimum number of shares of Class B Voting Common
Stock for which the part stock/part cash election would have to be made in
order to avoid application of the higher voting requirement of Section 33-841
of the Connecticut Business Corporation Act. Having also received separate
presentations from Evercore and Houlihan Lokey, including the fairness opinions
described elsewhere in this proxy statement/prospectus, the special committee
recommended that the board approve and adopt the proposed recapitalization.
On July 28, 2005, the board of directors held a meeting at which it
reviewed the special committee's recommendations, received separate
presentations from Evercore and Houlihan Lokey and reviewed with Skadden and
Shipman the terms of the "substitute recapitalization proposal" and the
relevant legal considerations. At that meeting, the board of directors approved
and adopted (with C. William Kaman II abstaining) the proposed recapitalization
with the equivalent value of $55.65 per share that increases the number of
voting common shares into which each share of Class B Voting Common Stock would
be reclassified. For this purpose and as contemplated by the recapitalization
agreement, one share of the voting stock was valued at $15.54, which was the
average closing price for the Class A Nonvoting Common Stock over the ten
trading day period prior to the recapitalization agreement being signed.
Accordingly, the substitute recapitalization proposal, which is the
recapitalization proposal that the company's shareholders are being asked to
approve, has an exchange ratio of 3.58 voting common shares for each share of
Class B Voting Common Stock and a part stock/part cash alternative under which
holders would have the right to elect instead to receive for each of their
shares of Class B Voting Common Stock 1.84 voting common shares and $27.10 in
cash.
In the recapitalization agreement, the Kaman family has agreed to
elect to take the part cash/part stock alternative to the extent requested to
do so by the company, following the advice of its counsel, to avoid application
of the higher vote requirement of Section 33-841 of the Connecticut Business
Corporation Act to the recapitalization proposal. The company has so requested
that the Kaman family make this election as to not less than 516,735 shares of
their Class B Voting Common Stock. The Kaman family has advised the company
that the Kaman family believes that an election as to a smaller number of
shares would be sufficient to avoid application of the higher vote requirement
and the company expects that there will be further discussions between the
company and the Kaman family's representatives concerning the minimum amount of
the Kaman family election.
In the event that the holders of the Class A Nonvoting Common Stock
fail to approve the recapitalization or the recapitalization is otherwise not
completed other than by reason of a breach of the recapitalization agreement by
the Kaman family, the Kaman family would be free to sell its Class B Voting
Common Stock to one or more third parties. In that regard, the company
understands that the Kaman family is a party to an agreement with Mason Capital
Management under which the Kaman family can cause an affiliate of Mason to
purchase such shares for $55.00 per share in cash and, upon the closing of
24
the purchase from the Kaman family, offer to purchase all remaining shares of
Class B Voting Common Stock at $55.00 per share in cash.
Reasons for the Recapitalization
This discussion of the information and factors that the special
committee and board of directors considered in making their decisions is not
intended to be exhaustive but includes all material factors considered by the
special committee and board of directors, as applicable. In view of the wide
variety of factors considered in connection with the evaluation of the
recapitalization and the complexity of these matters, the special committee and
board of directors did not find it useful to, and did not attempt to, quantify,
rank, or otherwise assign relative weights to these factors. In addition, the
individual members of the special committee and board of directors may have
assigned different weight to different factors.
Special Committee
In reaching its decision to recommend that the board of directors
approve and adopt the recapitalization proposal and other certificate of
incorporation amendment proposal, the special committee consulted with the
company's management and with its legal and financial advisors and carefully
considered the following material factors:
o Alignment of Economic Interests and Voting Rights. Currently,
holders of Class B Voting Common Stock, represent
approximately 3% of the economic interest in the company,
control 100% of the company's voting power in the election of
directors and certain other matters for which shareholder
approval is required, while holders of Class A Nonvoting
Common Stock, represent approximately 97% of the economic
interest in the company but have no voting power in the
election of directors and those other matters. The
recapitalization will align shareholders' voting rights with
their economic interests in the company by establishing a
simplified one share/one vote capital structure.
o Reduce the Kaman Family's Voting Influence. Members of the
Kaman family currently hold approximately 82.6% of the voting
power of the company and can effectively control the outcome
of any matter submitted to a vote of the company's
shareholders. The recapitalization will reduce the combined
voting power of members of the Kaman family to approximately
7.5%, assuming that the part stock/part cash election is made
with respect to only those shares of Class B Voting Common
Stock for which the Kaman family has been requested to make
such election. As a result of their reduced voting interest,
the Kaman family will no longer effectively control the
outcome of matters submitted to a vote of the company's
shareholders.
o Elimination of Control Block. Following the recapitalization,
members of the Kaman family will not have the ability to sell
effective voting control of the company in an isolated
transaction in which other shareholders do not participate.
In addition, the elimination of dual class, voting and
non-voting common stock will limit the possibility that a
person could acquire voting control of the company without
purchasing a majority of the company's shares.
o Possible Sale of Control Block if Recapitalization is not
Completed. In the event that the holders of the Class A
Nonvoting Common Stock fail to approve the recapitalization
or the recapitalization is otherwise not completed other than
by reason of a breach of the recapitalization agreement by
the Kaman family, the Kaman family would be free to sell its
Class B Voting Common Stock to one or more third parties. In
that regard, the company understands that the Kaman family is
a party to an agreement with Mason Capital Management under
which the Kaman family can cause an affiliate of Mason to
purchase such shares for $55.00 per share in cash and, upon
the closing of the purchase from the Kaman family, offer to
purchase all remaining shares of Class B Voting Common Stock
at $55.00 per share in cash.
25
o Enhance the Company's Strategic Flexibility. The simplified
capital structure will likely improve the company's ability
to structure equity financings and acquisitions by permitting
it to offer listed, voting common stock.
o Improved Liquidity, Trading Efficiencies and Expanded
Investor Base. The recapitalization will simplify and
streamline the company's capital structure by replacing the
dual class, voting and nonvoting common stock with a single
class of voting Common Stock. The company believes that the
recapitalization could result in improved liquidity, trading
efficiencies and an expanded investor base for the company.
o Evercore Fairness Opinion. Evercore provided an oral opinion,
subsequently confirmed in writing, to the effect that, as of
July 28, 2005, based upon and subject to the factors and
assumptions set forth therein, the recapitalization is fair,
from a financial point of view, to the holders of Class A
Nonvoting Common Stock (solely with respect to such Class A
Nonvoting Common Stock).
o Houlihan Lokey Fairness Opinion. Houlihan Lokey provided an
oral opinion, subsequently confirmed in writing, to the
effect that, as of July 28, 2005, based upon and subject to
the factors and assumptions set forth therein, the
consideration to be received by the holders of Class B Voting
Common Stock in the recapitalization is fair, from a
financial point of view, to the holders of Class B Voting
Common Stock (solely with respect to such Class B Voting
Common Stock).
o Dilution to the Class A Nonvoting Common Stock. The special
committee recognized that, pursuant to the recapitalization
proposal, the recapitalization will be somewhat dilutive to
holders of Class A Nonvoting Common Stock on an earnings per
share and discounted cash flow basis.
o Impact of Other Certificate of Incorporation Amendment
Proposal. The implementation of the other certificate of
incorporation amendment proposal will have certain effects
that the special committee considered desirable for the
shareholders, including:
- promoting the continuity and stability of the board
of directors so as to ensure that the benefits of
the years of experience of its members are available
to the company; and
- making it more difficult for an opportunistic
acquiror to gain control of the company without
negotiating with the board of directors.
At the same time, the implementation of the other certificate of
incorporation amendment proposal may have effects that some shareholders may
consider to be adverse, such as delaying or impeding a change in control of the
company or the approval of other shareholder proposals, even if the holders of
a majority of the Common Stock believe such action would be in their best
interests.
Board of Directors
In reaching its decision to recommend that the holders of shares of
Class A Nonvoting Common Stock and Class B Voting Common Stock approve the
recapitalization proposal and other certificate of incorporation amendment
proposal, the board of directors consulted with the company's management as
well as its legal and financial advisors and carefully considered the following
material factors.
o the conclusions and recommendation of the special committee;
and
o the factors referred to above as having been taken into
account by the special committee.
Recommendation of the Special Committee and Board of Directors
Special Committee
On June 7, 2005, the special committee recommended the original
recapitalization proposal and other certificate of incorporation amendment
proposal to the board of directors.
26
On July 28, 2005, the special committee recommended the "substitute
recapitalization proposal," which is referred to herein as the recapitalization
proposal or recapitalization.
Board of Directors
On June 7, 2005, upon the recommendation of the special committee, the
board of directors (with C. William Kaman II abstaining):
o adopted and approved the recapitalization agreement and the
1.95 exchange ratio and other certificate of incorporation
amendment proposal and, if approved by the company's
shareholders, the filing of the amended and restated
certificate of incorporation;
o directed that the recapitalization proposal be submitted to a
vote of the holders of Class A Nonvoting Common Stock and
Class B Voting Common Stock at a special meeting of the
company's shareholders and recommended that the holders of
shares of Class A Nonvoting Common Stock and Class B Voting
Common Stock vote to approve the recapitalization proposal;
o directed that the other certificate of incorporation
amendment proposal be submitted to a vote of the holders of
Class B Voting Common Stock at a special meeting of the
company's shareholders and recommended that the holders of
shares of Class B Voting Common Stock vote to approve the
other certificate of incorporation amendment proposal;
o approved an amendment to the Voting Trust Agreement, dated
August 14, 2000; and
o approved indemnification agreements for the benefit of those
officers and directors, including a former director, who
serve at the request of the company as voting trustees under
the Voting Trust Agreement, dated August 14, 2000 and/or
attorneys-in-fact under the Durable Power of Attorney, dated
May 7, 1996, given by Charles H. Kaman.
On July 28, 2005, upon the recommendation of the special committee,
the board of directors, with C. William Kaman II abstaining, approved the
"substitute recapitalization proposal", which is referred to herein as the
recapitalization proposal or recapitalization.
Evercore Opinion
On July 28, 2005, Evercore delivered its oral opinion to the special
committee, which opinion was subsequently confirmed in writing, that, as of
such date and based upon and subject to the factors and assumptions set forth
therein, the proposed recapitalization was fair, from a financial point of
view, to the holders of Class A Nonvoting Common Stock (solely with respect to
such Class A Nonvoting Common Stock).
The full text of the written opinion of Evercore, dated July 28, 2005,
which sets forth assumptions made, procedures followed, matters considered and
limitations on the review undertaken in connection with the opinion, is
contained in Annex D to this proxy statement/prospectus. The advisory services
and opinion of Evercore were provided for the information and assistance of the
special committee in connection with its consideration of the transactions
contemplated by the recapitalization agreement and do not constitute a
recommendation to any company shareholder as to how such holder should respond
to the proposed recapitalization. Evercore expressed no view as to the price at
which the company's common stock may trade following completion of the
transactions contemplated by the recapitalization agreement. You are urged you
to read the opinion in its entirety.
In connection with rendering its opinion, Evercore, among other
things:
1. discussed the past and current operations and financial
condition and the prospects of the company with the
management of the company;
2. analyzed certain publicly available financial statements
and other information relating to the company;
27
3. analyzed certain internal financial statements and other
financial and operating data concerning the company
prepared by and furnished to Evercore by the management
of the company;
4. analyzed certain financial projections concerning the
company prepared by and furnished to Evercore by the
management of the company;
5. reviewed the financial terms, to the extent available,
of certain comparable transactions;
6. reviewed the reported prices and trading activity of
Class A Nonvoting Common Stock;
7. compared the financial performance of the company and
the prices and trading activity of Class A Nonvoting
Common Stock with that of certain other publicly-traded
companies and their securities;
8. reviewed the recapitalization agreement; and
9. performed such other analyses and examinations and
considered such other factors as Evercore in its sole
judgment deemed appropriate.
For purposes of its analysis and opinion, Evercore did not assume any
responsibility for independently verifying the accuracy and completeness of the
information reviewed by Evercore or reviewed for Evercore. With respect to the
financial projections of the company which were furnished to Evercore, Evercore
assumed that such financial projections had been reasonably prepared by the
company, on bases reflecting the best currently available estimates and good
faith judgments of the future competitive, operating and regulatory
environments and related financial performance of the company. Evercore noted
that the securities purchase agreement among MK Investments LLC, Mason Capital
Management LLC and the Kaman family, dated as of June 28, 2005, was determined
by the arbiter in connection with the arbitration pursuant to the
recapitalization agreement to be a Qualifying Alternative Transaction, as such
term is defined in the recapitalization agreement. Evercore did not make, nor
assume any responsibility for making any independent valuation or appraisal of
the assets or liabilities of the company, nor was Evercore furnished with any
such appraisals. Evercore's opinion was necessarily based on economic, market
and other conditions as in effect on, and the information, including the
recapitalization agreement and related exhibits and schedules thereto made
available to Evercore as of, the date of its opinion. Evercore's opinion did
not address the company's underlying business decision to effect the proposed
recapitalization.
The following is a summary of the material financial analyses used by
Evercore in connection with providing its opinion. The following summary,
however, does not purport to be a complete description of the analyses
performed by Evercore. The order of the analyses described and the results of
these analyses do not represent relative importance or weight given to those
analyses by Evercore. Except as otherwise noted, the following quantitative
information, to the extent that it is based on market data, is based on market
data as it existed on or before July 27, 2005, and is not necessarily
indicative of current market conditions.
The following summary of financial analyses includes information
presented in tabular format. You should read these tables together with the
text of each summary. The tables alone do not constitute a complete description
of the financial analyses.
No Election (All Stock) Case Pro Forma Class A Nonvoting Common Stock
Value. Evercore calculated the pro forma value for each share of Class A
Nonvoting Common Stock implied by the case, referred to herein as the no
election (all stock) case, in which no holder of shares of Class B Voting
Common Stock elects to make the part stock/part cash election, by: (1)
multiplying the $15.48 closing market price of Class A Nonvoting Common Stock
on June 6, 2005 by the combined number of shares of Class A Nonvoting Common
Stock and Class B Voting Common Stock outstanding and (2) dividing such number
by the pro forma total number of shares outstanding following the proposed
recapitalization assuming each share of Class B Voting Common Stock is
reclassified into 3.58 shares of Common Stock. This analysis yielded a no
election (all stock) case pro forma Class A Nonvoting Common Stock value of
$14.40. Applying the same calculation to the $18.99 closing market price of
Class A Nonvoting Common Stock on July 27, 2005 yielded a no election (all
stock) case pro forma Class A Nonvoting Common Stock value of $17.67.
28
Part Stock/Part Cash Election Case Pro Forma Class A Nonvoting Common
Stock Value. Evercore calculated the pro forma value for each share of Class A
Nonvoting Common Stock implied by the case, referred to herein as the part
stock/part cash election case, in which each holder of shares of Class B Voting
Common Stock elects to receive, for each share of such holder's Class B Voting
Common Stock, 1.84 shares of Common Stock and an amount in cash equal to
$27.10, by: (1) multiplying $27.10 by the number of shares of Class B Voting
Common Stock outstanding, (2) subtracting (1) from the total equity market
capitalization of the company as of June 6, 2005, and (3) dividing (2) by the
pro forma total number of shares of Class A Nonvoting Common Stock outstanding
following the proposed recapitalization assuming each share of Class B Voting
Common Stock is reclassified into 1.84 shares of Common Stock. This analysis
yielded a part stock/part cash election case pro forma Class A Nonvoting Common
Stock value of $14.34. Applying the same calculation to the $18.99 closing
market price of Class A Nonvoting Common Stock on July 27, 2005 yielded a part
stock/part cash election case pro forma Class A Nonvoting Common Stock value of
$17.77.
Recent Trading History. Evercore reviewed the historical closing
prices of Class A Nonvoting Common Stock on July 27, 2005 and over the one year
period prior to and including June 6, 2005 and calculated the average daily
closing prices of Class A Nonvoting Common Stock over the ten days, one month,
two months, three months, six months and one year prior to and including June
6, 2005.
Evercore then calculated the fully-diluted value received per share of
Class B Voting Common Stock implied by the no election (all stock) case by
multiplying the pro forma Class A Nonvoting Common Stock value of $14.40 by
3.58. This analysis yielded a fully-diluted value received per share of Class B
Voting Common Stock of $51.54.
Evercore then calculated the fully-diluted value received per share of
Class B Voting Common Stock implied by the part stock/part cash election case
by: (1) multiplying the pro forma Class A Nonvoting Common Stock value of
$14.34 by 1.84, and (2) adding the result of (1) to $27.10. This analysis
yielded a fully-diluted value received per share of Class B Voting Common Stock
of $53.48.
Evercore then calculated and compared the premiums that the $51.54 and
$53.48 fully-diluted values received per share of Class B Voting Common Stock
represented relative to the average daily closing prices of the shares of Class
A Nonvoting Common Stock for the selected periods. The results of these
calculations are summarized below:
Premium at Average Historical Prices
-------------------------------------------------
Pro Forma under
-------------------------------
No Election
(All Part Stock/
Stock) Part Cash
Status Quo Case Election Case
------------- ------------- -------------
Fully-Diluted Value Received per share of Class B
Voting Common Stock $15.48 $51.54 $53.48
Share Price
Current (July 27, 2005) $18.99 (18.5%) 171.4% 181.6%
Unaffected (June 6, 2005) 15.48 0.0% 232.9% 245.5%
Ten Day Average (a) 15.54 (0.4%) 231.7% 244.2%
One Month Average (b) 15.17 2.1% 239.8% 252.7%
Two Month Average (c) 14.06 10.1% 266.5% 280.3%
Three Month Average (d) 13.50 14.7% 281.8% 296.2%
Six Month Average (e) 12.69 22.0% 306.0% 321.3%
One Year High (f) 15.82 (2.1%) 225.8% 238.1%
One Year Low (g) 10.71 44.5% 381.2% 399.4%
One Year Average (h) 12.32 25.7% 318.5% 334.3%
29
(a) Ten Day Average incorporates trading days from May 23, 2005 through
June 6, 2005.
(b) One Month Average incorporates trading days from May 9, 2005 through
June 6, 2005.
(c) Two Month Average incorporates trading days from April 7, 2005 through
June 6, 2005.
(d) Three Month Average incorporates trading days from March 7, 2005
through June 6, 2005.
(e) Six Month Average incorporates trading days from December 7, 2004
through June 6, 2005.
(f) One Year High on June 1, 2005.
(g) One Year Low on November 2, 2004.
(h) One Year Average incorporates trading days from June 4, 2004 through
June 6, 2005.
Evercore also analyzed the historical trading range for the shares of
Class A Nonvoting Common Stock over the last year by reviewing the volume of
shares of Class A Nonvoting Common Stock traded within specified share price
ranges, allocating the total number of shares traded per day according to the
average of high and low prices on the respective day. Evercore then compared
these ranges to the $51.54 and $53.48 fully-diluted values received per share
of Class B Voting Common Stock under the no election (all stock) case and the
part stock/part cash election case, respectively. The results of these
calculations are as follows:
Average Daily
Class A
Nonvoting Percent of Shares
Common Stock Price Traded within Range
------------------ -------------------
$11.00-$12.00 49%
$12.00-$13.00 33%
$13.00-$14.00 10%
$14.00-$15.00 2%
$15.00-$16.00 5%
Premiums Paid in Selected Dual-Class Recapitalizations. Evercore
identified and analyzed a group of 13 transactions announced between 1993 and
2005 in which public companies having two or more classes of common stock with
different voting rights created one class of stock with the same voting rights
for all stockholders, and in so doing, effected a change-in-control of the
respective company. The certificates of incorporation or similar constituent
documents of the companies involved in each of the thirteen transactions
examined did not prohibit a premium being paid to the high vote shares.
Evercore noted that each of the thirteen transactions has unique circumstances
that complicate a direct comparison to other recapitalizations or to the
transactions contemplated by the recapitalization agreement.
Evercore examined transactions involving the following companies:
o Robert Mondavi Corp.
o Methode Electronics
o Commonwealth Telephone
o Reader's Digest Association
o SAP AG (SAP Corporation Systems, Applications and
Products in Data Processing)
o Continental Airlines, Inc.
o Dairy Mart Convenience Stores
o Remington Oil and Gas Corporation
o Forcenergy AB
o Laidlaw Inc.
o Vermont Pure Holdings
o Fischer & Porter Company
o Forest Oil
Evercore examined the exchange ratio of high vote stock to low or no
vote stock in the 13 dual-class stock transactions. The exchange ratio of high
vote stock to low or no vote stock ranged from 1.00 to
30
2.71 in these 13 transactions with a mean of 1.33 and a median of 1.16 for the
12 transactions (excluding Fischer & Porter). Evercore compared these ratios to
the exchange ratios under the no election (all stock) case and the part
stock/part cash election case.
For each of the transactions, Evercore examined the aggregate premium
paid to high vote shareholders, taken as a percentage of the total equity
market capitalization of the company and as a percentage of market
capitalization of the low or no vote equity, based on the closing stock prices
of the low or no vote equity and the high vote equity (if publicly traded) of
each precedent company one day prior to the announcement of the transaction. In
the thirteen transactions reviewed, premiums to high vote shareholders ranged
from 0.0% to 8.5% of total equity value and from 0.0% to 11.5% of low vote or
no vote equity value. Evercore then compared the mean and median premiums of
3.1% and 2.9%, respectively, of total equity value, and 3.9% and 3.5%,
respectively, of low vote or no vote equity value for the 12 transactions
(excluding Fischer & Porter) to the premium received by holders of Class B
Voting Common Stock in the proposed recapitalization, determined as follows:
Evercore determined the aggregate premium paid to holders of Class B
Voting Common Stock implied by the no election (all stock) case by: (1)
dividing the number of shares of Class B Voting Common Stock by the total
combined number of shares of Class B Voting Common Stock and Class A Nonvoting
Common Stock outstanding, (2) dividing the number of shares of Common Stock to
be received by holders of Class B Voting Common Stock under the no election
(all stock) case by the pro forma total number of shares of Common Stock
outstanding following the proposed recapitalization, (3) subtracting (1) from
(2), and (4) multiplying (3) by the total equity market capitalization of the
company as of June 6, 2005. This analysis yielded a premium of $24.1 million to
be received by holders of Class B Voting Common Stock. The $24.1 million
premium represented 6.8% of the total equity market capitalization of the
company and 7.0% of the market capitalization of Class A Nonvoting Common
Stock.
Evercore calculated the aggregate premium paid to holders of Class B
Voting Common Stock implied by the part stock/part cash election case by: (1)
multiplying $27.10 by the number of shares of Class B Voting Common Stock
outstanding, (2) subtracting (1) from the company's total equity market
capitalization as of June 6, 2005, (3) dividing the number of shares of Class B
Voting Common Stock outstanding by the pro forma total number of shares of
Common Stock outstanding following the proposed recapitalization, (4)
multiplying (2) by (3), (5) adding (4) to (1), and (6) subtracting Class B
Voting Common Stock market capitalization based upon the total number of shares
of Class B Voting Common Stock outstanding and the closing market price of
shares of Class A Nonvoting Common Stock as of June 6, 2005 from (5). This
analysis yielded a premium of $25.4 million received by holders of Class B
Voting Common Stock. The $25.4 million premium represented 7.2% of the total
equity market capitalization of the company and 7.4% of the market
capitalization of Class A Nonvoting Common Stock.
For each of the precedent transactions, Evercore additionally examined
the fully-diluted premium paid to high vote shareholders as compared to the
closing stock price of the low or no vote shares of each precedent company one
day prior to announcement of the transaction. The fully-diluted premiums ranged
from 0.0% to 152.5% in the 13 transactions. Evercore compared the mean of 27.5%
and median of 11.5% for the 12 transactions (excluding Fischer & Porter) to the
fully-diluted premium of 232.9% and 245.5% received by the holders of Class B
Voting Common Stock under the no election (all stock) case and the part
stock/part cash election case, respectively, relative to the closing price of
shares of Class A Nonvoting Common Stock on June 6, 2005.
Evercore additionally analyzed the use of cash in the context of each
of the precedent transactions. Cash was used in three of the 13 transactions
and constituted 55% to 100% of the premium paid to high vote shareholders.
Evercore noted that no cash would be paid to holders of Class B Voting Common
Stock shareholders under the no election (all stock) case. Under the part
stock/part cash election case, however, cash would represent 48.7% of the total
value attributed to Class B Voting Common Stock in the proposed
recapitalization.
Evercore additionally examined the change in voting rights of the
significant high vote shareholders in the context of each precedent
transaction. Prior to each transaction, holders of high vote
31
equity represented 23.6% (combined with control of 75% of the board of
directors) to 100.0% voting control of the respective company. Following each
transaction, pro forma voting control attributed to high vote shareholders
ranged from 0.0% to 41.9%. In the proposed recapitalization, Evercore noted
that the 100.0% voting control of the Class B Voting Common Stock would
decrease to 9.7% under the no election (all stock) case and would decrease to
5.2% under the part stock/part cash election case.
Relative Trading Levels of Dual-Class Companies. Evercore identified
and analyzed a group of 49 public companies that had two or more classes of
publicly-traded common stock with different voting rights. Evercore calculated
the premium or discount implied by the trading levels of these companies' high
vote shares relative to their corresponding low or no vote shares as of July
27, 2005. Trading levels of these companies' two classes of stock had a median
premium of 0.1% attributable to the high vote shares implied by the closing
price of the high vote shares relative to that of the corresponding low or no
vote shares. Of these 49 companies, 16 companies had high vote stock with one
vote per share and low vote stock with no votes per share. Among this group of
16 companies, trading levels had a median premium of 0.5% attributable to high
vote shares implied by the closing price of the high vote shares relative to
that of the corresponding low vote shares.
Premiums Paid in Acquisitions of Dual-Class Companies. Evercore
identified and analyzed a group of 22 acquisition transactions that were
announced between 1995 and 2005 involving public companies that, at the time of
the transaction, had two or more classes of common stock with different voting
rights and did not, by certificates of incorporation or similar constituent
documents of the company involved, prohibit an incremental premium to be paid
to the high vote shares relative to the consideration received by vote or no
vote shares. Evercore calculated the premium indicated by the consideration
paid per share to the high vote shareholders divided by the consideration paid
per share to the low or no vote shareholders. The analysis indicated that an
incremental premium was paid to the holders of the high vote stock in seven of
the 22 transactions. In these seven transactions, the incremental premiums
ranged from 7.5% to 66.7% and the mean incremental premium for these seven
transactions was 22.9%. The mean incremental premium paid of all 22
transactions (i.e., including those transactions in which no incremental
premium was paid) was 7.3%.
Evercore additionally analyzed the incremental premiums paid as a
percentage of the total equity market capitalization of the acquired company.
In the seven transactions in which an incremental premium was paid, these
incremental premiums ranged as a percentage of total equity value from 1.3% to
6.2% with a mean of 4.1%. The mean incremental premium paid of all 22
transactions (i.e., including those transactions in which no incremental
premium was paid) was 1.3%.
Evercore additionally analyzed the incremental premiums paid as a
percentage of the market capitalization of the low or no vote equity of the
acquired company. In the seven transactions in which an incremental premium was
paid, these incremental premiums ranged as a percentage of low or no vote
equity value from 1.4% to 13.5% with a mean of 6.1%. The mean incremental
premium paid of all 22 transactions (i.e., including those transactions in
which no incremental premium was paid) was 1.9%.
Peer Group Trading Analysis. Evercore calculated and compared
valuation multiples of the last twelve months, or LTM, and 2005 and 2006
calendarized estimates for the company and for selected companies in the
aerospace, industrial distribution and music distribution industries using
closing stock prices as of July 27, 2005. Valuation multiples that were
evaluated included: enterprise value as a multiple of sales; enterprise value
as a multiple of earnings before interest, taxes, depreciation and
amortization, or EBITDA; enterprise value as a multiple of earnings before
interest and taxes, or EBIT; and share price as a multiple of earnings per
share. Evercore then calculated these valuation multiples for the company on
both June 6, 2005 and July 27, 2005 (i) prior to giving effect to the proposed
recapitalization, (ii) under the no election (all stock) case, and (iii) under
the part stock/part cash election case. Evercore then compared these multiples
of the company to the mean and median multiples derived for the selected
companies. Although none of the selected companies is directly comparable to
the company, the companies included were chosen because they are publicly
traded companies with operations that for purposes of this analysis may be
considered similar to certain operations of the company. The range of implied
valuation multiples that Evercore calculated is summarized below:
32
Kaman Corporation
-----------------------------------------------------
Unaffected Current Aerospace (a) Distribution (b) Distribution (c)
-------------------------- ------------------------- -------------- ---------------- ----------------
Part Part
No Stock / No Stock /
Election Part Election Part
(All Cash (All Cash
Status Stock) Election Status Stock) Election
Quo Case Case Quo Case Case Mean Median Mean Median Mean Median
------ -------- -------- ------ -------- -------- ----- ------ ----- ------ ----- ------
Enterprise 0.4x 0.4x 0.4x 0.5x 0.5x 0.5x 1.3x 1.3x 1.1x 0.9x 1.2x 1.2x
Value /
LTM Sales
Enterprise 0.4 0.4 0.4 0.5 0.5 0.4 1.2 1.2 1.1 0.9 NM NM
Value /
2005E Sales
Enterprise 0.4 0.4 0.3 0.4 0.4 0.4 1.1 1.0 1.0 0.8 NM NM
Value /
2006E Sales
Enterprise 9.3 9.3 8.8 11.1 11.1 10.7 11.9 10.9 10.9 10.8 11.5 11.5
Value /
LTM EBITDA
Enterprise 10.7 10.7 10.2 12.9 12.9 12.4 10.2 9.7 9.5 9.5 NM NM
Value /
2005E
EBITDA
Enterprise 8.1 8.1 7.8 9.8 9.8 9.4 8.8 8.7 8.5 8.4 NM NM
Value /
2006E
EBITDA
Enterprise 11.6 11.6 11.1 14.0 14.0 13.5 19.0 16.8 12.7 12.6 14.6 14.6
Value /
LTM EBIT
Enterprise 14.7 14.7 14.0 17.7 17.7 17.0 14.3 12.9 11.0 11.0 NM NM
Value /
2005E EBIT
Enterprise 10.8 10.8 10.4 13.0 13.0 12.6 12.0 11.4 9.6 10.1 NM NM
Value /
2006E EBIT
Price / 20.1 18.7 18.6 24.7 22.9 23.1 25.8 24.4 20.4 19.8 21.2 21.2
LTM
Earnings
Price / 25.3 23.5 23.5 31.1 28.9 29.1 24.3 20.7 18.1 18.7 17.9 17.9
2005E
Earnings
Price / 16.6 15.4 15.4 20.3 18.9 19.0 16.8 16.5 15.6 16.5 15.2 15.2
2006E
Earnings
(a) Aerospace companies include: Boeing, Honeywell International, Goodrich,
Hexcel, Esterline Technologies, Barnes Group, Triumph Group and Ducommun.
(b) Industrial Distribution companies include: Genuine Parts, Precision
Castparts, W.W. Grainger, Hughes Supply, WESCO International, MSC Industrial
Direct, Applied Industrial Technologies and Lawson Products.
(c) Music Distribution companies include: Guitar Center and Steinway Musical
Instruments.
Selected Precedent Aerospace Transactions. Evercore identified and
analyzed a group of 22 acquisition transactions in the aerospace industry that
were announced between 1996 and 2005:
33
Target Acquirer
------------------------------------------------ ------------------------------------------------
Air Industries Corp. Precision Castparts Corp.
Dynamic Gunver Technologies Smiths Group PLC
TransDigm Inc. Warburg Pincus and Management
Fairchild Corporation's Fastener Lane Alcoa Inc.
TRW Aeronautical Systems Goodrich Corporation
Advanced Technical Products, Inc. General Dynamics Corporation
Spar Aerospace Limited L-3 Communications Corporation
Howmet International Inc. Alcoa Inc.
Cordant Technologies Inc. Alcoa Inc.
Invensys plc (Aerospace Division) Smiths Industries plc
Cade Industries, Inc. United Technologies Corp.
Whittaker Corp. Meggitt PLC
Western Sky Industries McKechnie plc
Wyman-Gordon Company Precision Castparts Corp.
Sundstrand Corp. United Technologies Corp.
Howmet International Inc. Cordant Technologies Inc.
Kaynar Technologies Inc. Fairchild Corporation
TransDigm Inc. Odyssey Investment Partners
DeCrane Aircraft Holdings, Inc. Donaldson, Lufkin & Jenrette, Inc.
Whitehall Corporation Aviation Sales Company
Rohr Inc. B.F. Goodrich Co.
Rockwell International Corp.'s Aerospace Boeing Company
and Defense Businesses
Evercore calculated valuation multiples implied by these transactions
including: enterprise value as a multiple of LTM sales; enterprise value as a
multiple of LTM EBITDA; enterprise value as a multiple of LTM earnings before
interest and taxes, or EBIT; and offer price as a multiple of LTM earnings per
share. Evercore then calculated these valuation multiples for the company as of
June 6, 2005 and as of July 27, 2005 (i) prior to giving effect to the proposed
recapitalization, (ii) under the no election (all stock) case, and (iii) under
the part stock/part cash election case. Evercore then compared these multiples
of the company to the multiples derived for the selected acquisition
transactions in the aerospace industry. Although none of the selected
transactions is directly comparable to the transactions contemplated by the
recapitalization agreement, the transactions included were chosen because they
involve the operations of companies that for purposes of this analysis may be
considered similar to certain operations of the company. The range of implied
valuation multiples that Evercore calculated are summarized below:
Kaman Corporation
----------------------------------------------
Unaffected Current
---------------------- ---------------------
Part Part
No Stock/ No Stock/
Election Part Election Part Aerospace
(All Cash (All Cash Industry
Status Stock) Election Status Stock) Election -----------------
Quo Case Case Quo Case Case Mean Median
-------- -------- -------- -------- -------- -------- -------- --------
Enterprise Value / LTM 0.4x 0.4x 0.4x 0.5x 0.5x 0.5x 1.8x 1.4x
Sales
Enterprise Value / LTM 9.3 9.3 8.8 11.1 11.1 10.7 9.1 9.0
EBITDA
Enterprise Value / LTM EBIT 11.6 11.6 11.1 14.0 14.0 13.5 11.6 11.1
Offer Price / LTM EPS 20.1 18.7 18.6 24.7 22.9 23.1 16.5 17.0
34
Present Value of Future Stock Price Analysis. Evercore performed a
present value of future stock price analysis for the company prior to giving
effect to the transactions contemplated by the recapitalization agreement.
These analyses were based upon projections provided by the company's
management.
Evercore calculated a range of implied per share values for Class A
Nonvoting Common Stock prior to the proposed recapitalization determined by:
(1) calculating a terminal value by multiplying the EBITDA estimated for fiscal
year 2006 by a range of multiples of 7.5x to 9.5x, less net debt outstanding at
fiscal year end 2006, (2) calculating the implied price per share by dividing
(1) by the total number of shares of Class A Nonvoting Common Stock and Class B
Voting Common Stock outstanding, and (3) calculating the present value of the
implied share price by discounting (2) over a one and three quarter-year period
using an assumed equity cost of capital of between 11.0% and 13.0%. This
analysis yielded implied per share present values of Class A Nonvoting Common
Stock ranging from $13.20 to $17.26. Evercore then compared the results of
these analyses to the no election (all stock) case pro forma Class A Nonvoting
Common Stock value of $14.40 and the part stock/part cash election case pro
forma Class A Nonvoting Common Stock value of $14.34 based on the closing price
of Class A Nonvoting Common Stock as of June 6, 2005. Evercore additionally
compared the results of these analyses to the no election (all stock) case pro
forma Class A Nonvoting Common Stock value of $17.67 and the part stock/part
cash election case pro forma Class A Nonvoting Common Stock value of $17.77
based on the closing price of Class A Nonvoting Common Stock as of July 27,
2005.
Evercore also calculated a range of implied per share values for Class
A Nonvoting Common Stock determined by: (1) calculating the implied terminal
value per share by multiplying the earnings per share estimated for fiscal year
2006 by a range of multiples of 18.0x to 22.0x, and (2) calculating the present
value of the implied share price by discounting (1) over a one and three
quarter-year period using an assumed equity cost of capital of between 11.0%
and 13.0%. This analysis yielded implied per share present values of Class A
Nonvoting Common Stock ranging from $13.57 to $17.11. Evercore then compared
the results of these analyses to the no election (all stock) case pro forma
Class A Nonvoting Common Stock value of $14.40 and the part stock/part cash
election case pro forma Class A Nonvoting Common Stock value of $14.34 based on
the closing price of Class A Nonvoting Common Stock as of June 6, 2005.
Evercore additionally compared the results of these analyses to the no election
(all stock) case pro forma Class A Nonvoting Common Stock value of $17.67 and
the part stock/part cash election case pro forma Class A Nonvoting Common Stock
value of $17.77 based on the closing price of Class A Nonvoting Common Stock as
of July 27, 2005.
Discounted Cash Flow Analysis. Evercore performed a discounted cash
flow, or DCF, analysis of the company prior to giving effect to the
transactions contemplated by the recapitalization agreement. These analyses
were based upon projections provided by the company's management.
Evercore calculated a range of implied per share values for Class A
Nonvoting Common Stock prior to the proposed recapitalization determined by:
(1) calculating the implied present value of the unlevered free cash flows
(operating income less income taxes, plus depreciation and amortization, less
increases in working capital and less capital expenditures) projected to be
generated by the company over a four and three quarter-year period from March
31, 2005 through December 31, 2009, using a weighted average cost of capital
range of between 9.5% and 11.5%, (2) adding (1) to the implied present value of
the terminal value of the company's future cash flows as of December 31, 2009,
calculated by multiplying the EBITDA estimated for fiscal year 2009 by a range
of multiples of 7.0x to 9.0x and discounting the result over a four and three
quarter-year period using a weighted average cost of capital range of between
9.5% and 11.5%, (3) subtracting net debt as of March 31, 2005 from (2), and (4)
dividing (3) by the total number of shares of Class A Nonvoting Common Stock
and Class B Voting Common Stock outstanding. This analysis yielded implied per
share present values of Class A Nonvoting Common Stock ranging from $14.50 to
$19.44. Evercore then compared the results of these analyses to the no election
(all stock) case pro forma Class A Nonvoting Common Stock value of $14.40 and
the part stock/part cash election case pro forma Class A Nonvoting Common Stock
value of $14.34 based on the closing price of Class A Nonvoting Common Stock as
of June 6, 2005. Evercore additionally compared the results of these analyses
to the no election (all stock) case pro forma Class A Nonvoting Common Stock
value of $17.67 and the part
35
stock/part cash election case pro forma Class A Nonvoting Common Stock value of
$17.77 based on the closing price of Class A Nonvoting Common Stock as of July
27, 2005.
Research Analyst Views. Evercore also analyzed Wall Street research
analyst estimates of potential future value for Class A Nonvoting Common Stock
(commonly referred to as price targets) based on publicly available equity
research published regarding the company. As of June 6, 2005, there was one
equity research firm that published a stock price target for Class A Nonvoting
Common Stock. The stock price target published by this firm was $18.00.
Evercore then compared the results of this analysis to the no election (all
stock) case pro forma Class A Nonvoting Common Stock value of $14.40 and the
part stock/part cash election case pro forma Class A Nonvoting Common Stock
value of $14.34 based on the closing price of Class A Nonvoting Common Stock as
of June 6, 2005. Evercore additionally compared the results of this analysis to
the no election (all stock) case pro forma Class A Nonvoting Common Stock value
of $17.67 and the part stock/part cash election case pro forma Class A
Nonvoting Common Stock value of $17.77 based on the closing price of Class A
Nonvoting Common Stock as of July 27, 2005.
Pro Forma Earnings Impact. Using projections for the company that were
prepared by the company's management, Evercore performed an analysis of the pro
forma impact of the proposed recapitalization on the projected earnings per
share for fiscal years 2006 and 2007 under the no election (all stock) case and
the part stock/part cash election case. Evercore's analysis indicated that the
proposed recapitalization would have a dilutive effect on the projected
earnings per share of (6.9%) in both 2006 and 2007 under the no election (all
stock) case. Evercore's analysis also indicated that the proposed
recapitalization would have a dilutive effect on the projected earnings per
share of (4.6%) and (4.2%) in 2006 and 2007, respectively, under the part
stock/part cash election case.
Pro Forma Credit Impact. Evercore analyzed the implications of the
proposed recapitalization on the credit position of the company by calculating
certain credit ratios for the company both prior to and after giving effect to
the transactions contemplated by the recapitalization agreement. Evercore
calculated the following credit ratios (1) debt to total book capitalization,
(2) LTM EBITDA to interest expense, and (3) debt to LTM EBITDA. Evercore's
analysis indicated that, under the part stock/part cash election case, the
proposed recapitalization would increase the debt to total book capitalization
from 24.05% to 28.84%, increase debt to LTM EBITDA from 4.1x to 5.0x, and
decrease EBITDA to interest expense from 6.3x to 5.1x. The proposed
recapitalization under the no election (all stock) case would have no impact on
these credit ratios of the company.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary described above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Evercore's opinion. In arriving at its fairness determination,
Evercore considered the results of all the analyses and did not attribute any
particular weight to any factor or analysis considered by it. Rather, Evercore
made its determination as to fairness on the basis of its experience and
professional judgment after considering the results of all the analyses. No
company used in the above analyses as a comparison is directly comparable to
the company, and no transaction used is directly comparable to the transactions
contemplated by the recapitalization agreement.
Evercore prepared these analyses for the purpose of providing an
opinion, as of July 28, 2005, to the special committee as to the fairness of
the proposed recapitalization, from a financial point of view, to the holders
of Class A Nonvoting Common Stock (solely with respect to such Class A
Nonvoting Common Stock). These analyses do not purport to be appraisals or to
necessarily reflect the prices at which the business or securities actually may
be sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by these analyses. Because these analyses are
inherently subject to uncertainty and are based upon numerous factors or events
beyond the control of the company and Evercore, neither the company nor
Evercore assumes responsibility if future results are materially different from
those forecast.
As described above, the opinion of Evercore was one of many factors
taken into consideration by the special committee in making the determination
to approve the recapitalization agreement.
36
Evercore is a nationally recognized investment banking firm that is
regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions and similar transactions. The special
committee retained Evercore based on these qualifications as well as its
familiarity with the company.
The special committee engaged Evercore to act as its financial advisor
pursuant to a letter agreement in connection with the proposed
recapitalization. Pursuant to this letter agreement the company agreed to pay
Evercore a fee which became payable upon the company's request for an opinion.
The company has also agreed to reimburse Evercore for its reasonable
out-of-pocket expenses, including attorneys' fees and disbursements, and to
indemnify Evercore against certain liabilities. Pursuant to a previous
engagement with the company in connection with the special committee's review
of the 1.95 exchange ratio recapitalization proposal, Evercore was paid a fee,
a portion of which was paid upon Evercore's retention, a portion of which
became payable due to the passage of time and a portion of which became payable
upon delivery of an opinion. In connection with this previous engagement, the
company also agreed to reimburse Evercore for its reasonable out-of-pocket
expenses, including attorney's fees and disbursements, and to indemnify
Evercore against certain liabilities.
Houlihan Lokey Opinion
The special committee retained Houlihan Lokey Howard & Zukin Financial
Advisors, Inc. ("Houlihan Lokey") to advise the special committee in connection
with the proposed recapitalization. As part of such services, the special
committee requested that Houlihan Lokey render an opinion as to the fairness,
from a financial point of view, of the consideration to be received by the
holders of Class B Voting Common Stock of the Company in the proposed
recapitalization. Houlihan Lokey had been previously engaged by the special
committee to render a similar opinion with respect to the 1.95 exchange ratio
recapitalization proposal.
On July 28, 2005 Houlihan Lokey presented its analysis to both the
special committee of the board of directors and to the full board of directors,
and delivered its written opinion to the effect that, assuming the proposed
recapitalization is completed as described in the opinion, as of such date and
based on the considerations set forth therein and on other factors Houlihan
Lokey deemed relevant, the consideration to be received by the holders of Class
B Voting Common Stock of the Company in connection with the proposed
recapitalization is fair, from a financial point of view, to such holders
(solely with respect to such Class B Voting Common Stock). Houlihan Lokey's
opinion, dated July 28, 2005, to the special committee of the board of
directors speaks as of that date and that Houlihan Lokey does not have any
obligation to update, revise or reaffirm its opinion, including at the time of
the annual meeting of company shareholders or the meeting of company
shareholders to which this proxy statement/prospectus relates.
The preparation of Houlihan Lokey's fairness opinion was a complex
process and is not necessarily susceptible to partial analysis or summary
description. The following is a brief summary of the opinion and a general
description of the material considerations evaluated and the analysis performed
by Houlihan Lokey in the course of preparing and rendering the Houlihan Lokey
opinion. The summary does not purport to be a complete statement of the
analyses and procedures applied, factors considered, findings, assumptions and
qualifications made, the bases for, and methods of, arriving at such findings,
limitations on the review undertaken in connection with the opinion, the
judgments made or the conclusion reached by Houlihan Lokey or a complete
description of its presentation to the board of directors.
Houlihan Lokey has consented to the inclusion of this summary in, and
the attachment of its opinion to, this proxy statement/prospectus, but does not
thereby admit that Houlihan Lokey comes within the category of persons whose
consent is required under federal securities laws, nor does Houlihan Lokey
thereby admit that it is an expert with respect to any part of this proxy
statement within the meaning of the term "expert" under the federal securities
laws. Houlihan Lokey believes, and so advised the special committee and the
board of directors, that Houlihan Lokey's analyses must be considered as a
whole and that selecting portions of its analyses and of the factors considered
by it, without considering all factors and analyses, could create an incomplete
view of the process underlying its analyses and opinions. Shareholders are
urged to, and should, read the Houlihan Lokey opinion carefully in its entirety
for a description of a
37
complete statement of the analyses and procedures applied, factors considered,
findings, assumptions and qualifications made, the bases for and methods of
arriving at such findings, limitations on the review undertaken in connection
with the opinion, the judgments made or the conclusion reached by Houlihan
Lokey in reaching its opinion. The Houlihan Lokey opinion was provided for the
information and assistance of the members of the special committee and the
board of directors of the company in connection with the evaluation by the
special committee and the board of directors of the fairness, from a financial
point of view, to the holders of Class B Voting Common Stock (solely with
respect to such Class B Voting Common Stock), of the consideration to be
received by the holders of Class B Voting Common Stock of the company in
connection with the proposed recapitalization. Houlihan Lokey's opinion and
financial analyses were only one of many factors considered by the special
committee and the board of directors in its evaluation of the proposed
recapitalization and should not be viewed as determinative of the views of the
special committee or the board of directors with respect to the proposed
recapitalization. Houlihan Lokey did not attempt to assign specific weights to
particular analyses.
The complete text of Houlihan Lokey's opinion is attached as Annex E to this
proxy statement/prospectus. The summary of the opinion set forth below is
qualified in its entirety by reference to such opinion. You are urged to read
the opinion carefully in its entirety for a description of the procedures
followed, the factors considered and the assumptions made by Houlihan Lokey.
Houlihan Lokey's opinion to the special committee of the board of
directors addressed only the fairness, from a financial point of view, to the
holders of Class B Voting Common Stock (solely with respect to such Class B
Voting Common Stock), of the consideration to be received by the holders of
Class B Voting Common Stock of the company in connection with the proposed
recapitalization and did not constitute a recommendation to the holders of
Class B Voting Common Stock as to how they should vote. Houlihan Lokey's
opinion did not address the company's or its shareholders' underlying business
decision to approve or effect the proposed recapitalization. The Houlihan Lokey
opinion was not intended to, nor did it address, the fairness of the proposed
recapitalization to any constituency other than the holders of Class B Voting
Common Stock and, without limiting the foregoing, did not address the fairness
of the proposed recapitalization to the holders of Class A Nonvoting Common
Stock, nor did Houlihan Lokey express any opinion as to the company's business
decision to effectuate the proposed recapitalization. Houlihan Lokey did not
solicit third-party indications of interest in acquiring all or any part of the
company, including all or any part of Class B Voting Common Stock or other
outstanding equity securities. Furthermore, Houlihan Lokey did not negotiate
the proposed recapitalization on any party's behalf or advise the company or
any other party with respect to possible alternatives to the proposed
recapitalization. In particular, Houlihan Lokey did not review or participate
in the preparation of any reports, presentations or other materials prepared by
third parties (other than as set forth above) in connection with the proposed
recapitalization, including the report presented by Evercore to the company's
board.
In connection with the preparation of its opinion, Houlihan Lokey made
certain reviews, analyses and inquiries as it deemed necessary and appropriate
under the circumstances. Among other things, Houlihan Lokey:
1. reviewed the company's Annual Report on Form 10-K for the
fiscal years ended December 31, 2002 through 2004 and
Quarterly Report on Form 10-Q for the period ended March 31,
2005;
2. reviewed a draft of the company's unaudited consolidated
financial statements for the six months ended July 1, 2005,
and internal financial forecasts for the fiscal years ending
December 31, 2005 and 2006;
3. reviewed a certified copy of the company's amended and
restated certificate of incorporation dated April 20, 2001
(which management represented had not been amended subsequent
to that date);
4. reviewed the proposed form of amended and restated
certificate of incorporation of the company, dated June 7,
2005;
38
5. reviewed the company's by-laws, as amended, through July 9,
2002 (which management represented had not been amended
subsequent to that date);
6. reviewed the proposed form of amended and restated by-laws of
the company, dated June 7, 2005
7. reviewed a schedule of the holders of the company's Class B
Voting Common Stock as of May 27, 2005 provided to Houlihan
Lokey by the management;
8. reviewed the Agreement, dated June 7, 2005;
9. reviewed the securities purchase agreement among MK
Investments LLC, Mason Capital Management LLC, and the Kaman
family, dated as of June 28, 2005;
10. reviewed the Notification dated July 22, 2005 from Eric D.
Green, as Arbiter, regarding the arbitration pursuant to the
recapitalization agreement;
11. reviewed certain publicly available data, including current
and historical trading prices for Class A Nonvoting Common
Stock and for the shares of certain companies that Houlihan
Lokey deemed comparable to the company, as well as certain
publicly available information regarding transactions that
Houlihan Lokey considered similar to the proposed
recapitalization;
12. met with certain senior managers of the company to discuss
the operations, prospects and financial projections,
financial condition and capital structure of the company; and
13. conducted such other studies, analyses and inquiries as
Houlihan Lokey deemed appropriate.
In rendering its opinion, Houlihan Lokey relied upon and assumed,
without independent verification, that the financial information provided to it
had been reasonably prepared and accurately and completely reflected the
historical financial performance and current financial condition of the
company, and represented the best currently available estimates of the future
financial results and condition of the company, and that there had been no
material change in the assets, financial condition, business or prospects of
the company since the date of the most recent financial statements made
available to Houlihan Lokey. Houlihan Lokey assumed that the proposed
recapitalization would be implemented in accordance with the terms set forth in
the final forms of the documents presented to Houlihan Lokey as set forth
above, including, without limitation, the operation of the substitute
recapitalization, as defined in the June 7, 2005 recapitalization agreement and
as described in this proxy statement/prospectus. . If there are any changes in
the assumptions or the proposed recapitalization or any of the assumptions in
the Houlihan Lokey opinion prove to be inaccurate or change, the conclusions
reached in the opinion could be materially affected. Houlihan Lokey has not
been engaged to consider, and has expressed no opinion as to the effect of, any
possible changes in the assumptions or the proposed recapitalization as of the
date of this proxy statement/prospectus from those described to Houlihan Lokey
in connection with the delivery of the opinion.
In assessing the fairness, from a financial point of view, of the
consideration to be received by the holders of Class B Voting Common Stock in
the proposed recapitalization, Houlihan Lokey analyzed the following:
o the respective rights and privileges of each class of the Company's
outstanding common stock, and the current ownership profile of each
such class;
o the historical closing prices of Class A Nonvoting Common Stock over
the year prior to the date of
Houlihan Lokey's opinion;
39
o the pro forma Common Stock ownership stake of the holders of Class B
Voting Common Stock, and the voting and economic rights and privileges
of such holders by virtue of their pro forma ownership versus their
current rights and privileges;
o the aggregate implied value of the premium to be paid to holders of
Class B Voting Common Stock, expressed as a percentage of the
company's total equity market capitalization;
o the terms of precedent transactions in which companies with two or
more classes of common stock with different voting rights
recapitalized those shares into one class of stock;
o the equity premiums paid in selected precedent public
change-of-control transactions;
o the pro forma effect of the proposed recapitalization on the company's
earnings per share; and
o the public market's attribution of a valuation premium, if any, to
high-vote shares in cases where other public companies have two or
more classes of stock that are publicly traded.
Additionally, Houlihan Lokey's analysis contemplates that the proposed
recapitalization will be effected with a deemed value per share of $15.54 for
Class A Nonvoting Common Stock. The following is a summary of the material
financial analyses performed by Houlihan Lokey in connection with rendering its
opinion.
Summary of Rights and Privileges of Kaman Common Stock
The company has approximately 22,470,597 shares of (non-voting) Class
A Nonvoting Common Stock outstanding on a fully diluted basis. The company has
approximately 667,814 shares of (voting) Class B Voting Common Stock
outstanding. The Class A Nonvoting Common Stock is publicly traded on the
NASDAQ. There is no public market for the Class B Voting Common Stock.
The following is a summary of certain rights and privileges of each
class of the company's common stock. This is not a comprehensive description of
each class, which is contained in the company's current certificate of
incorporation. See "Comparison of Shareholders Rights " and "Description of
Capital Stock."
Holders of Class B Voting Common Stock control 100% of the company's
voting power in the election of directors and certain other matters for which
shareholder approval is required. Holders of Class A Nonvoting Common Stock are
entitled to an annual noncumulative dividend of $0.10 per share when and as
declared by the board of directors from the company's unreserved and
unrestricted earned surplus prior to the payment of any dividend on the Class B
Voting Common Stock. Following the declaration and payment of such dividend to
holders of Class A Nonvoting Common Stock, the holders of Class B Common Stock
are entitled to a similar dividend of $0.10 per share and after payment of any
such dividends on both the Class A Nonvoting Common Stock and Class B Voting
Common Stock, both classes are entitled to share ratably in any further
dividends declared in that year The board of directors has the right, in its
sole discretion, to change Class B Voting Common Stock such that it is
convertible into Class A Nonvoting Common Stock, although the company's
certificate of incorporation is silent on conversion ratio.
Holders of Class A Nonvoting Common Stock are not entitled to vote in
the election of directors and those other matters. The Class A Nonvoting Common
Stock is entitled to dividends as declared by the board of directors from the
company's unreserved and unrestricted earned surplus; noncumulative; prior to
any dividends on Class B Voting Common Stock.
The company's certificate of incorporation is silent as to the
relative rights and privileges of Class A Nonvoting Common Stock and Class B
Voting Common Stock in the event of a conversion of Class B Stock into Class A
Stock, a merger or combination involving the company, a liquidation or
winding-up of the company, or a split or combination of the shares comprising
either class.
Historical Trading Analysis of Kaman Common Stock
As part of its analysis, Houlihan Lokey examined the historical
trading profile of the Class A Nonvoting Common Stock. For the year ending June
6, 2005 (the last trading day prior to the public
40
announcement of the initial recapitalization), Class A Nonvoting Common Stock
traded in a range of $10.94 per share to $15.74 per share and trading closed at
$15.48 per share on June 6, 2005.
The following table summarizes the average daily trading volume of the
Class A Nonvoting Common Stock over the trailing 1-month, 3-month, 6-month and
12-month periods.
-----------------------------------------------------------
Average Daily Volume Class A Nonvoting
Common Stock
-----------------------------------------------------------
1 Month 46,500
-----------------------------------------------------------
3-Month 45,800
-----------------------------------------------------------
6-Month 47,300
-----------------------------------------------------------
12-Month 47,500
-----------------------------------------------------------
Houlihan Lokey also considered the trading profile of Class A
Nonvoting Common Stock from the June 7, 2005 public announcement of the
original recapitalization proposal through July 27, 2005, the day prior to the
board of directors' decision to recommend the substitute recapitalization
proposal, which is referred to herein as the recapitalization proposal or
recapitalization, to shareholders, during which time the stock price increased
from $15.50 per share to $18.99 per share.
Analysis of Ownership and Voting Profile
Houlihan Lokey considered the existing economic and voting rights of
each class of the company's stock, compared to the pro-forma economic and
voting rights of each class. Currently, the 22,470,597 outstanding shares of
Class A Nonvoting Common Stock constitute approximately 97.1% of the combined
outstanding common stock. The 667,814 shares of outstanding Class B Voting
Common Stock constitute the remaining 2.9% of the combined outstanding common
stock and 100% of the voting power of the outstanding common stock.
Upon consummation of the proposed recapitalization, assuming all
holders of Class B Voting Common Stock select the all stock option, the Class B
Voting Common Stock would be reclassified into 2,390,774 shares of Common Stock
and would account for 9.6% of the outstanding Common Stock and 9.6% of the
voting power of the outstanding Common Stock. Alternatively, assuming all
holders of Class B Stock select the cash option, the Class B Stock will be
reclassified into an aggregate of approximately $18.1 million in cash and
1,228,778 shares of Common Stock, which will account for 5.2% of the
outstanding Common Stock and 5.2% of the voting power of the outstanding Common
Stock.
Earnings Dilution Analysis
Houlihan Lokey considered the dilutive effect of the proposed
recapitalization on the per share earnings of the company. Assuming all holders
of Class B Voting Common Stock select the all-stock option, the increased
number of shares outstanding would dilute the earnings per share by
approximately 6.9%. Alternatively, if all holders of Class B Voting Common
Stock selected the cash option, assuming the company financed the necessary
$18.1 million cash payment at an annual interest rate of 4.5%, the increased
number of shares outstanding and the incremental interest expense would dilute
the earnings per share by approximately 5.6%.
Analysis of Similar Recapitalization Transactions
Houlihan Lokey identified and analyzed thirty-seven dual class
recapitalization transactions of publicly traded companies from March 1993
through January 2005. In each of these transactions, a public company with two
classes of stock with different voting rights reclassified or converted the two
classes into a single class of voting stock. Of these thirty-seven dual class
recapitalization transactions, 26 resulted in a change in control whereby the
high-vote class of stock effectively relinquished its control of the
stockholder vote and/or control over the election of the board of directors as
a result of the recapitalization transaction. Houlihan Lokey considered the
twenty-six change of control transactions more relevant to the
41
proposed recapitalization, given that the effect of the proposed
recapitalization would be to eliminate the effective ability of the holders of
Class B Stock to control the company. Houlihan Lokey made the following
observations regarding the twenty-six precedent change of control transactions:
o Exchange Ratio: 15 of the 26 transactions had conversion ratios of
1:1; 11 of the 26 transactions had conversion ratios greater than 1:1,
with an average of 1.31 and a median of 1.15. The Class B Voting
Common Stock exchange ratio in the proposed recapitalization will be
3.58.
o Economic Interest: For the 11 transactions with conversion ratios
greater than 1:1, the median economic interest of the high-vote
shareholders increased from 15.8% to 17.8%. The economic interest of
the holders of Class B Voting Common Stock in the proposed
recapitalization will increase from 2.9% to 9.6% (assuming an
all-stock election).
o Voting Power: For the 11 transactions with conversion ratios greater
than 1:1, the median voting power of the controlling class fell from
75.9% to 17.8%. The voting power of the holders of the Class B Voting
Common Stock in the proposed recapitalization will drop from 100% to a
maximum of 9.6% (assuming an all-stock election).
o Aggregate Premium Paid: For the 11 transactions with conversion ratios
greater than 1:1, the average and median aggregate premium paid to the
high-vote shareholders, as a percentage of the aggregate market value
of equity, were 3.4% and 2.3%, respectively. The aggregate premium to
be paid to all holders of Class B Voting Common Stock in the proposed
recapitalization will be 7.4%.
o Cash Consideration: 6 of the 26 change-of-control transactions (and 7
of all 37 transactions) included some portion of cash consideration
paid to the high-vote shareholders. The holders of the Class B Voting
Common Stock in the proposed recapitalization will have the option to
take almost half of the total consideration in cash.
Analysis of Public Companies With Dual-Class Capital Structures
Houlihan Lokey identified and analyzed a group of companies that have
two classes of publicly traded common stock with different voting rights. These
companies were classified into two groups:
o 15 companies with voting stock and non-voting stock; and
o 12 companies with high-vote stock and low-vote stock.
The analysis indicated that for the 15 companies Houlihan Lokey
examined with voting / non-voting shares, the average and median premium
(discount) of the daily closing price of the voting stock compared to the daily
closing price of the non-voting stock was: (0.8%) and 0.5%, respectively, over
a trailing 30-day period; (1.2%) and 0.6%, respectively, over a trailing 60-day
period; and (1.3%) and 0.6% over a trailing one-year period.
The analysis indicated that for the twelve companies Houlihan Lokey
examined with high-vote / low-vote shares, the average and median premium
(discount) of the daily closing price of the high-vote stock compared to the
daily closing price of the low-vote stock was: 3.4% and 0.4%, respectively,
over a trailing 30-day period; 3.2% and 0.7%, respectively, over a trailing
60-day period; and 3.2% and 0.6% over a trailing one-year period.
Analysis of Premia Paid in Public Stock-for-Stock Acquisitions
Houlihan Lokey examined the premia paid in certain stock-for-stock
acquisitions involving publicly traded companies in the aerospace and
industrial sectors, and found that the median premium paid by the acquirer for
the target company's stock was approximately 27% in the aerospace sector and
46% in the industrial sector.
* * * * * * * * * *
Houlihan Lokey was not requested to, and did not, solicit third party
indications of interest in acquiring all or any part of the company. Houlihan
Lokey did not independently verify the accuracy and
42
completeness of the information supplied to it with respect to the company and
does not assume any responsibility with respect to such information. Houlihan
Lokey was not requested to, and did not, make an independent evaluation or
appraisal of the company's assets or liabilities, contingent or otherwise, and
was not furnished with any evaluations or appraisals. Houlihan Lokey did not
make any physical inspection or independent appraisal of any of the properties
or assets of the Company. Houlihan Lokey's analysis was necessarily based on
business, economic, market and other conditions as they existed at the time of
delivery of its opinion and could be evaluated by Houlihan Lokey at the date of
its opinion and presentation to the board of directors of the company.
Houlihan Lokey is a nationally recognized investment banking firm with
expertise in, among other things, valuing businesses and securities and
rendering fairness opinions. Houlihan Lokey is continually engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, leveraged buyouts, private placements of debt and equity,
corporate reorganizations, employee stock ownership plans, corporate and other
purposes. The company selected Houlihan Lokey because of its experience and
expertise in performing valuations and fairness analysis. Houlihan Lokey does
not beneficially own nor has it ever beneficially owned any interest in the
company. Furthermore, Houlihan Lokey has no agreement or understanding to
provide additional services to the company beyond the scope of this fairness
opinion.
Fees and Expenses. The company has agreed to pay Houlihan Lokey its
customary fee for such services plus its reasonable out-of-pocket expenses
incurred in connection with the rendering of a fairness opinion, including
Houlihan Lokey's reasonable expenses of legal counsel. No portion of the fee
was contingent upon approval of the proposed recapitalization by shareholders
or completion of the proposed recapitalization. The company has further agreed
to indemnify Houlihan Lokey against certain liabilities and expenses related to
or arising in connection with the rendering of its services, including
liabilities under the federal securities laws. Houlihan Lokey also received a
fee from the company in connection with its previous engagement with the
company.
Conditions to the Recapitalization
Completion of the recapitalization requires, among other things:
o approval of the recapitalization proposal by separate class
votes of Class A Nonvoting Common Stock and Class B Voting
Common Stock; and
o the absence of any law or injunction preventing the
recapitalization.
The Recapitalization Agreement
The following description of the recapitalization agreement has been
included to provide you with information regarding its terms. The
recapitalization agreement contains representations and warranties made by
certain of the parties thereto. The statements embodied in those
representations and warranties were made for purposes of the agreement between
the parties and are subject to qualifications and limitations agreed by the
parties in connection with negotiating the terms of the recapitalization
agreement. In addition, certain representations and warranties may be subject
to a contractual standard of materiality different from those generally
applicable to shareholders, or may have been used for the purpose of allocating
risk between the parties rather than establishing matters as facts.
Pursuant to the recapitalization agreement, a copy of which (without
schedules or exhibits) is attached as Annex A to this proxy
statement/prospectus, members of the Kaman family, which together controls
approximately 82.6% of the voting power of the outstanding shares of Class B
Voting Common Stock and approximately 3.2% of the voting power of the
outstanding shares of Class A Nonvoting Common Stock, have agreed to vote all
shares of Class B Voting Common Stock over which they have voting control in
favor of the recapitalization proposal and the other certificate of
incorporation amendment proposal and all shares of Class A Nonvoting Common
Stock over which they have voting control in favor of the recapitalization
proposal, in each case subject to their right to accept a "qualifying
alternative transaction" as described below.
43
Except in certain instances as described below, the Kaman family has
agreed to not, directly or indirectly (a) sell, transfer, tender, exchange,
offer a right of first refusal, assign, pledge, encumber (including, without
limitation, a mortgage, security interest, charge or lien), gift or otherwise
dispose of their shares of the company, (b) grant a voting interest in or
deposit into a voting interest any of their shares of the company, (c) grant a
proxy or power of attorney with respect to their shares of the company, (d)
agree to take any of the foregoing actions or (e) enter into or continue any
discussions or negotiations with, or provide information, advice, aid,
cooperation or assistance to, or explore, initiate, solicit or facilitate
interest from, or enter into or consummate any transaction with, any third
party or its representatives and agents relating to any of the foregoing or a
merger, business combination, consolidation, share exchange, tender offer or a
recapitalization involving the company or its subsidiaries.
Qualifying Alternative Transactions; Arbitration; Substitute Recapitalization
Proposal
The recapitalization agreement allowed the Kaman family to engage in
discussions regarding the possible sale or other disposition of their Class B
Voting Common Stock and terminate the recapitalization agreement if such other
transaction constituted a qualifying alternative transaction and certain other
conditions were met. As described in "The Recapitalization - Background of the
Recapitalization", the Kaman family entered into an agreement that it
represented to be a qualifying alternative transaction with the intention of
terminating the recapitalization agreement. As permitted by the
recapitalization agreement, the company submitted questions to arbitration as
to whether or not the proposed alternative transaction constituted a qualifying
alternative transaction and whether specified conditions to the Kaman family's
ability to terminate the recapitalization agreement had been met. The arbiter
determined that the alternative transaction was a qualifying alternative
transaction and that the other conditions to the Kaman family's right to
terminate the recapitalization agreement had been met. As permitted by the
recapitalization agreement, the Company proposed a substitute recapitalization
proposal, which is referred to herein as the recapitalization proposal or
recapitalization, pursuant to which each share of Class B Voting Common Stock
will be reclassified into either all stock or part stock/part cash
consideration that is $0.65 greater per share than the consideration offered by
the qualifying alternative transaction.
Certain Covenants
The Kaman family has agreed, and has agreed to cause their
representatives and agents, to provide all information and materials and take
all such action as may be required in order to permit the company to comply
with all applicable SEC requirements with respect to the documents related to
the shareholders' meetings. The Kaman family also has agreed not to act in
concert with any other person (other than the other shareholders consistent
with the recapitalization agreement) to solicit proxies in advance of the
shareholders' meetings, call, or participate in any call for, a special meeting
of the shareholders of the company, participate in or solicit other
shareholders of the company for the approval of, one or more shareholder
proposals or assist, advise or act in concert with anyone (other than the
company) with respect to any of the foregoing.
The company has agreed to register the shares of Common Stock to be
received by the Kaman family by filing either a post-effective amendment to the
registration statement containing this proxy statement/prospectus or a shelf
registration statement with the SEC following the consummation of the
recapitalization. The company will permit resales of shares of Common Stock by
the Kaman family under such registration statement until the earlier to occur
of (a) the first anniversary of the consummation of the recapitalization (as
such period may be extended to account for any "suspension periods" as
described in the following sentence) or (b) the first date on which the
shareholders may sell their shares of Common Stock under Rule 144 of the
Securities Act of 1933, as amended (the "Securities Act"). In the event that
the chairman, chief executive officer or chief financial officer certifies that
filing or maintaining the effectiveness of the registration statement would
have a material adverse effect on the company or its shareholders or would
require disclosure of material information for which the company has a valid
business purpose of retaining as confidential, the company may postpone filing
or suspend the use of the
44
registration statement by the shareholders for a "suspension period" of no more
than 45 consecutive calendar days. Notwithstanding the foregoing, the Kaman
family will be entitled to at least 270 days of effective registration rights
per year and no suspension period may commence if it is less than 30 days from
the prior suspension period.
Indemnification
Subject to certain exceptions, including in the case of a breach by
members of the Kaman family who are party to the recapitalization agreement,
the company has agreed in the recapitalization agreement to indemnify the Kaman
family and John Yavis as the attorney-in-fact for Charles H. Kaman for any and
all out-of-pocket attorneys' fees and their related expenses incurred by them
arising out of or resulting from the defense of any third party allegation,
claim, action, suit, complaint, demand, litigation or legal or administrative
proceeding alleging any wrongful action or inaction by any of them in his, her
or its capacity as a shareholder of the company in connection with the
authorization, execution, delivery and performance of the recapitalization
agreement. Whether or not indemnification is then available for the other
members of the Kaman family or Mr. Yavis, C. William Kaman II, who is both a
director of the company and a member of the Kaman family, will retain his
statutory and certificate of incorporation indemnification rights from the
company for actions taken in his capacity as a director of the company and will
not be required to reimburse the company for any amounts received pursuant to
his indemnification rights as a director of the company.
Termination
The company may terminate the recapitalization agreement if the board
of directors exercises its "fiduciary out" by determining in good faith that
such termination is appropriate in the exercise of its fiduciary duties because
of a material development occurring after the approval by the board of
directors. The recapitalization agreement will automatically terminate in the
event that the holders of Class A Nonvoting Common Stock do not approve the
proposed recapitalization.
Fees and Expenses
In the event that the company exercises its fiduciary out and
terminates the recapitalization agreement prior to the proposed
recapitalization being submitted to the company's shareholders for their
approval, the company will reimburse the Kaman family for their actual
out-of-pocket expenses incurred in connection with the negotiation of the
recapitalization agreement and the shareholders' pursuit of a qualifying
alternative transaction, up to a maximum of $1,250,000. Such reimbursement
amount will not include any amounts paid to the Kaman family under their
indemnification rights or any amounts paid to the arbiters or any financial
advisors. In addition, the Kaman family has agreed to return any amounts paid
by the company under this provision in the event and to the extent that, within
six months following termination of the recapitalization agreement by the
company, the Kaman family sells any of their shares of Class B Voting Common
Stock at an average price in excess of the then current market price for shares
of Class A Nonvoting Common Stock. If the Kaman family also sell shares of
Class A Nonvoting Common Stock in such transaction, the shares of Class A
Nonvoting Common Stock shall be deemed to have been sold at the then market
price for such shares and the shares of Class B Voting Common Stock shall be
deemed to have been sold for the balance of the gross sale proceeds, which
amount shall be the maximum amount for which the Kaman family is obligated to
reimburse the company.
Indemnification Agreements
In connection with the recapitalization, the company has agreed to
enter into indemnification agreements for the benefit of those officers and
directors, including a former director, of the company (other than officers and
directors who are members of the Kaman family) who currently serve at the
request of the company as voting trustees under the Voting Trust Agreement,
dated August 14, 2000, and/or attorneys-in-fact under the Durable Power of
Attorney, dated May 7, 1996, given by Charles H. Kaman. These individuals are
Paul Kuhn (the company's president, chairman and chief executive officer),
Robert Garneau (the company's executive vice president and chief financial
officer), Jack Cahill (the president of the company's Kaman Industrial
Technologies Corporation subsidiary), Wanda Rogers (one of the company's
directors) and John Murtha (one of the company's former directors).
45
Pursuant to the indemnification agreements, which are intended to have
the same basic scope as Connecticut statutory indemnification for actions taken
as directors or officers, the company will indemnify such officers and
directors for any and all expenses and damages, including attorney's fees,
settlements and judgments, incurred in connection with a claim arising from any
action taken or not taken in their capacity as an attorney-in-fact or voting
trustee.
The company has agreed to advance to or pay on behalf of the
indemnified party such expenses upon (i) receipt of a written affirmation of
the indemnified party's good faith belief that his or her conduct (A) was not
opposed to the company's best interests, (B) in the case of any criminal
proceeding, the indemnified party had no reasonable cause to believe his or her
conduct was unlawful, or (C) the proceeding involves conduct for which
liability has been limited under a provision of the company's amended and
restated certificate of incorporation, (ii) receipt of a written undertaking by
or on behalf of the indemnified party to repay any expenses advanced in the
event of a final determination, adjudication or judgment that the indemnified
party is not entitled to indemnification pursuant to the indemnification
agreement, and (iii) if required under applicable law, a determination is made
that the facts then known to those making the determination would not preclude
indemnification under the Connecticut Business Corporation Act.
The company has the right, but not the obligation, to control the
defense of any claim and no claim may be settled without the company's consent,
which shall not be unreasonably withheld. If the company chooses to control the
defense of such claim, it must do so at its sole cost and provide and pay for
the indemnified party the opportunity to participate.
If no "change in control" (as defined in the indemnification
agreement) has occurred, the determination required by the Connecticut Business
Corporation Act that indemnification is permissible may be decided by the board
of directors, a committee of the board of directors, special legal counsel or
the company's shareholders, as chosen by the board of directors. If a change in
control has occurred, such determination shall be made by special legal counsel
unless the change in control was approved by a majority of those directors who
were members of the board of directors prior to the change in control and those
members constitute two-thirds of the board of directors at the time of such
determination.
If there has been a change in control, special legal counsel shall be
selected by the company to determine whether such party is entitled to
indemnity payments under the indemnification agreement. In the event that
indemnification under the indemnification agreement is unavailable, the company
has agreed to contribute to the expenses and damages of the indemnified party
in such proportion that is deemed fair and reasonable in light of the facts and
circumstances by the board of directors or by the arbitrator, agency or court
before which the claim is brought.
The right to indemnification pursuant to the indemnification agreement
is in addition to any other indemnification rights the indemnified party may
have under the company's amended and restated certificate of incorporation,
bylaws or applicable law.
NASDAQ Listing
Shares of Class A Nonvoting Common Stock are currently listed and
traded on The Nasdaq National Market and the shares of Class B Voting Common
Stock are not listed or traded on any exchange or market system. The company
expects that the shares of Common Stock that the company's shareholders will
own following the recapitalization will be listed on The Nasdaq National Market
and that the shares of Common Stock will be traded under the symbol "[KAMN]."
Accounting Treatment
The company will account for the recapitalization by adjusting the
company's capital stock account based on the aggregate par value of the shares
outstanding immediately following completion of the recapitalization. The
change in capital stock will be offset by a decrease in paid-in capital.
United States Federal Income Tax Consequences of the Recapitalization
The following is a general summary of certain U.S. federal income tax
consequences of the recapitalization to holders of shares of Class A Nonvoting
Common Stock and holders of shares of Class B Voting Common Stock. This
discussion is for general information only and does not purport to consider all
46
aspects of U.S. federal income taxation that may be relevant to such holders.
The discussion is based on the provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury regulations promulgated thereunder, judicial
decisions and administrative rulings, all as in effect as of the date hereof
and all of which are subject to change, possibly with retroactive effect. The
summary does not address all of the U.S. federal income tax consequences that
may be relevant to particular holders of Class A Nonvoting Common Stock or
Class B Voting Common Stock in light of their individual circumstances or to
holders who are subject to special rules (e.g., non-U.S. persons, insurance
companies, dealers or brokers in securities or currencies, tax-exempt
organizations, financial institutions, mutual funds, pass-through entities and
investors in such entities, holders of Class A Nonvoting Common Stock or Class
B Voting Common Stock who hold their shares as a hedge or as part of a hedging,
straddle, conversion, synthetic security, integrated investment or other
risk-reduction transaction or who are subject to alternative minimum tax or who
acquired their shares upon the exercise of employee stock options or otherwise
as compensation), nor does it address the U.S. federal income tax consequences
to holders of Class A Nonvoting Common Stock or Class B Voting Common Stock who
do not hold the shares as "capital assets" within the meaning of Section 1221
of the Code (generally, property held for investment).
The company believes that the recapitalization of shares of Class A
Nonvoting Common Stock and Class B Voting Common Stock into shares of Common
Stock through an amendment of the certificate of incorporation will constitute
a tax-free recapitalization for U.S. federal income tax purposes pursuant to
Section 368(a) of the Code.
Accordingly, (1) holders of Class A Nonvoting Common Stock and holders
of Class B Voting Common Stock who do not elect to receive cash in the
transaction will not recognize any gain or loss upon receipt of Common Stock in
exchange for shares of Class A Nonvoting Common Stock or Class B Voting Common
Stock, as the case may be, and (2) the basis of the Common Stock (including
fractional shares) owned immediately following the recapitalization will be the
same as the shareholder's basis in the Class A Nonvoting Common Stock or Class
B Voting Common Stock, as the case may be, owned immediately prior to the
recapitalization, and (3) the holding period of the Common Stock (including
fractional shares) owned by a shareholder immediately following the
recapitalization will include that shareholder's holding period for the Class A
Nonvoting Common Stock or Class B Voting Common Stock, as the case may be,
owned immediately prior to the recapitalization. The receipt of a cash payment
in lieu of fractional shares of Common Stock will likely result in capital gain
or loss measured by the difference between the cash received and the basis in
the fractional shares surrendered.
If a holder of Class B Voting Common Stock exchanges shares of Class B
Voting Common Stock for a combination of Common Stock and cash, the holder will
generally recognize gain (but not loss) in an amount equal to the lesser of (i)
the excess of the sum of the amount of cash and the fair market value of the
Common Stock received pursuant to the recapitalization over that holder's
adjusted tax basis in its shares of Class B Voting Common Stock surrendered and
(ii) the amount of cash received pursuant to the recapitalization. For this
purpose, gain or loss must be calculated separately for each identifiable block
of shares surrendered in the exchange, and a loss realized on one block of
shares may not be used to offset a gain realized on another block of shares.
Any recognized gain will generally be long-term capital gain if the holder's
holding period with respect to the shares of Class B Voting Common Stock
surrendered is more than one year at the effective time of the
recapitalization, and otherwise will be short-term capital gain. Individuals
generally qualify for favorable tax rates on long-term capital gains.
If, however, the cash received has the effect of the distribution of a
dividend, the gain will be treated as a dividend to the extent of the holder's
ratable share of the company's accumulated earnings and profits as calculated
for United States federal income tax purposes. In making this determination,
the holders will be treated as receiving solely Common Stock in the
recapitalization and, immediately thereafter, having the company redeem a
number of shares of Common Stock equal in value to the cash consideration the
holders actually received. The receipt of cash will not have the effect of a
distribution of a dividend under this analysis if this hypothetical redemption
satisfies the requirements for non-dividend treatment under Section 302 of the
Code. Generally the requirements for non-dividend treatment under Section 302
of the Code will be satisfied if (i) a holder's percentage ownership of Common
Stock immediately after the redemption is less than 80% of the holder's
percentage ownership of the Common Stock immediately before the redemption,
(ii) the holder's ownership interest in the company is completely terminated or
(iii) the redemption is "not essentially equivalent to a dividend." If a
holder's percentage
47
ownership of Common Stock is minimal and the holder exercises no control over
the affairs of the company, even a small reduction in the holder's percentage
ownership should satisfy the "not essentially equivalent to a dividend" test.
In determining whether any of these tests are satisfied, holders must generally
take into account not only the stock they own or are deemed to own directly,
but also stock that they are treated as owning constructively by reason of
certain attribution rules under Section 318 of the Code, including, generally,
stock owned by certain family members, stock issuable upon the exercise of
options, stock owned by certain estates and trusts of which the stockholder is
a beneficiary, and stock owned by certain affiliated entities. Holders should
consult their own tax advisers as to application of this test to their
particular circumstances, and as to the potential collateral consequences of
dividend treatment.
THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS
FOR GENERAL INFORMATION ONLY AND IS BASED ON THE LAW IN EFFECT ON THE DATE
HEREOF. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF
ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE RECAPITALIZATION.
Appraisal Rights
Under no circumstances are holders of Class A Nonvoting Common Stock
or Class B Voting Common Stock entitled to appraisal rights under Connecticut
law in connection with the recapitalization or the other certificate of
incorporation amendment proposal.
Federal Securities Law Consequences
All shares of Common Stock held by shareholders following the
recapitalization will be freely transferable, except that shares of Common
Stock held by persons who are deemed to be "affiliates" of the company under
the Securities Act, at the time of the special meetings may be resold by them
only in transactions permitted by Rule 145 under the Securities Act, or as
otherwise permitted under the Securities Act. Persons who may be deemed to be
affiliates of the company for such purposes generally include individuals or
entities that control, are controlled by or are under common control with the
company and include directors and officers of the company. In connection with
the recapitalization, the company has agreed to file a post-effective amendment
to the registration statement containing this proxy statement/prospectus or a
shelf registration statement to register the shares of Common Stock held by the
Kaman family, which will allow such holders to sell their shares of Common
Stock for at least one year following the recapitalization. See "The
Recapitalization--Recapitalization Agreement--Certain Covenants."
Regulatory Matters
To the extent that a shareholder will own shares of Common Stock
valued at $53 million or more following the recapitalization, that shareholder
may have a pre-merger notification filing obligation under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, unless the
shareholder qualifies for an exemption to the filing requirements under the
Act.
Alternative Election by the Holders of Class B Voting Common Stock
Elections to receive the part stock/part cash alternative can be made
as to some or all of the holder's shares of Class B Voting Common Stock, but to
be valid must be received by Mellon Investor Services LLC, the election agent,
not later than 5:00 p.m., Eastern Daylight Savings Time, on [ ], 2005 (the
"election deadline"). Holders of shares of Class B Voting Common Stock who do
not validly make the election by the election deadline, or who make the
election for only a portion of the shares of Class B Voting Common Stock, will
only be eligible to receive the all stock alternative as to the shares for
which no valid election is made.
To make a valid election, either (i) a holder's election form must be
accompanied by share certificates representing at least the number of shares of
Class B Voting Common Stock as to which the election is being made or (ii)
prior to the election deadline, the election agent must have received an
"agent's message" confirming the transfer of at least the number of shares of
Class B Voting Common Stock as to which the holder is making the election to
the election agent's account at The Depository Trust
48
Company. Any holder of Class B Voting Common Stock who wishes to exercise the
election and holds his or her shares in "street name" should follow his or her
broker's instructions for making an election with respect to such shares or
direct the broker to cause the underlying share certificates to be reregistered
in the holder's name.
Once a holder of Class B Voting Common Stock delivers such holder's
form of election and share certificates or "agent's notice" to the election
agent, such holder may not transfer the shares of Class B Voting Common Stock
as to which the election has been made unless such holder revokes the election
by written notice to the election agent that is received prior to the election
deadline. A holder may also change an election at any time prior to the
election deadline by written notice accompanied by a properly completed and
signed, revised election form received by the election agent prior to the
election deadline, provided that the holder has also delivered share
certificates or an "agent's message" representing at least the number of shares
of Class B Voting Common Stock as to which the revised election has been made.
In the event that the recapitalization is not completed, the share
certificates submitted to the election agent will be returned to the holders.
In the recapitalization agreement, the Kaman family has agreed to
elect to take the part cash/part stock alternative to the extent requested to
do so by the company, following the advice of its counsel, to avoid application
of the higher vote requirement of Section 33-841 of the Connecticut Business
Corporation Act to the recapitalization proposal. The company has so requested
that the Kaman family make this election as to not less than 516,735 shares of
their Class B Voting Common Stock. The Kaman family has advised the company
that the Kaman family believes that an election as to a smaller number of
shares would be sufficient to avoid application of the higher vote requirement
and the company expects that there will be further discussions between the
company and the Kaman family's representatives concerning the minimum amount of
the Kaman family election.
If you are a holder of Class B Voting Common Stock, you should have
received an election form with this proxy statement/prospectus. Requests for
additional election forms and questions concerning the procedure for making the
election may be directed to the election agent at [(917) 320-6300].
Share Certificates and Cash for Fractional Shares
Following completion of the recapitalization, each share certificate
currently representing shares of Class A Nonvoting Common Stock will represent
the same number of shares of Common Stock and each share certificate
representing shares of Class B Voting Common Stock for which the part
stock/part cash election was not validly made will represent the number of
whole shares of Common Stock obtained by multiplying the number of shares of
Class B Voting Common Stock shown on the certificate by 3.58, rounded down to
the nearest whole share. Soon after the completion of the recapitalization,
such shareholders will be sent a letter of transmittal with which they can
submit to Mellon Investor Services, the company's transfer agent, the
shareholders' share certificates in exchange for Common Stock share
certificates. Even if this exchange is not made by a shareholder, the
shareholder will be entitled to receive the same dividends and voting rights as
if the shareholder had exchanged their share certificates, however, a holder of
shares of Class B Voting Common Stock must exchange such shareholder's share
certificates to receive the cash payment to be made in lieu of any fractional
share. The amount of the cash payment to be paid to a shareholder will be equal
to the fractional share, calculated after aggregating all shares of Class B
Voting Common Stock owned by such shareholder, times the closing price per
share of the Class A Nonvoting Common Stock on the last trading day occurring
prior to the date on which the recapitalization is completed.
Soon after the completion of the recapitalization, Mellon Investor
Services, the company's transfer agent, will send to shareholders who validly
made the part stock/part cash election the share certificates representing the
Common Stock and a check for the cash payment to which the electing
shareholders are entitled.
Except as described above for electing holders of Class B Voting
Common Stock, please do not send in your share certificates with the enclosed
proxy card and do not surrender any share certificates until you have received
the letter of transmittal from Mellon Investor Services, the company's transfer
agent, following completion of the recapitalization.
49
INTERESTS OF CERTAIN PERSONS IN THE RECAPITALIZATION
Certain members of the company's board of directors have interests in
the recapitalization that are different from, or in addition to, the interests
of the company's shareholders. C. William Kaman II, one of the company's
directors, and his father Charles H. Kaman, chairman emeritus, each owns
directly or indirectly a significant percentage of the outstanding shares of
Class B Voting Common Stock, and shares of Class B Voting Common Stock are also
owned, directly or indirectly, by other members of the Kaman family or their
relatives. The aggregate number of shares of Class B Voting Common Stock owned
directly or indirectly by the members of the Kaman family or their descendants
is 551,711, representing approximately 82.6% of the outstanding shares of that
class of stock. Certain other of the company's executive officers or directors
also own shares of Class B Voting Common Stock, namely (i) Paul Kuhn, the
company's president, chairman and chief executive officer, who owns 3,288
shares, (ii) Robert Garneau, the company's executive vice president and chief
financial officer, who owns 24,404 shares, (iii) Candace Clark, the company's
senior vice president, chief legal officer and secretary, who owns 1,042
shares, (iv) Robert Saunders, the president of the company's Kaman Music
subsidiary, who owns 720 shares and (v) Ronald M. Galla, the company's senior
vice president and chief information officer, who owns 120 shares.
The members of the Kaman family are also parties to the
recapitalization agreement, which provides certain indemnification, expenses
reimbursement, registration rights and other benefits to the members of the
Kaman family and related entities that are parties to the recapitalization
agreement. See "The Recapitalization--The Recapitalization Agreement."
Paul Kuhn, Robert Garneau, Jack Cahill, who is the president of the
company's Kaman Industrial Technologies subsidiary, Wanda Rogers, who is a
director, and John Murtha, who is a director emeritus, each serve as a power of
attorney and/or voting trustee under arrangements under which certain of the
shares of Class B Voting Common Stock owned directly or directly by Charles H.
Kaman are held. Each of them entered into indemnification agreements with the
company in connection with the recapitalization agreement to provide for
indemnification by the company for actions taken by these individuals in these
capacities. See "The Recapitalization--Indemnification Agreements."
50
OTHER CERTIFICATE OF INCORPORATION AMENDMENT PROPOSAL AND PROPOSED
BYLAW AMENDMENTS
The Other Certificate of Incorporation Amendment Proposal
The other certificate of incorporation amendment proposal provides for
amendments to the certificate of incorporation concurrently with the amendments
to the certificate of incorporation effecting the recapitalization. The
amendments effecting the recapitalization are reflected in Article Fourth, and
the amendments effecting the other certificate of incorporation amendment
proposal are reflected in the other Articles, of the proposed amended and
restated certificate of incorporation set forth as Annex B to this proxy
statement/prospectus, which you are encouraged to read in its entirety.
In the other certificate of incorporation amendment proposal, the
company is asking shareholders to approve an amendment to the certificate of
incorporation pursuant to which
o the company's board of directors would be divided into three
classes serving staggered terms;
o the size of the company's board of directors would be limited
to a minimum of three and a maximum of 15 directors, with the
actual number of directors established by the board of
directors in accordance with the bylaws;
o the ability of shareholders to remove directors would be
limited to removal for cause and upon the affirmative vote of
a majority of the shares entitled to vote;
o a supermajority vote of the voting stock would be required to
amend, repeal or modify certain provisions of the certificate
of incorporation and bylaws; and
o certain other changes of an updating nature, including an
amendment to reflect the retirement of previously issued and
retired preferred stock of the company and to provide for
board of directors flexibility to approve the issuance of
preferred stock with no voting rights other than as required
by law and an amendment to reflect certain changes in the
Connecticut law.
Classified Board of Directors; Size of the Company's Board of Directors
The proposed classified board provisions would divide the board of
directors into three classes of directors and provide for a minimum of three
and a maximum of 15 directors, with the actual number of directors established
by the board of directors in accordance with the bylaws. There is currently a
provision in Article III, Section 1 of the bylaws which provides for a minimum
of three and a maximum of fifteen directors. However, this provision would be
included in the certificate of incorporation if this proposal is approved.
Following the recapitalization, the three classes of directors, the
members of each class and their respective term expiration dates would be as
set forth below. Each of these individuals is currently a director.
Class Class Members Term Expiration Date
----- ------------- --------------------
Class 1 E. Reeves Callaway, III, Walter 2006 Annual Meeting of
H. Monteith, Jr. and Wanda Lee Shareholders
Rogers
Class 2 Eileen S. Kraus, C. William Kaman 2007 Annual Meeting of
II and Richard J. Swift Shareholders
Class 3 Brian E. Barents, John A. 2008 Annual Meeting of
DiBiaggio, Edwin A. Huston and Shareholders
Paul R. Kuhn
At each subsequent annual meeting of shareholders, the successors to
the directors whose terms expire that year would be elected to hold office for
a term of three years, so that the term of office of one
51
class of directors would expire in each year. Following the recapitalization,
with a classified board of directors, it would generally require a shareholder
holding a majority of the outstanding shares of Common Stock two annual
meetings of shareholders, rather than one, to elect a majority of the board of
directors.
The board of directors believes (with C. William Kaman II abstaining)
that implementing a classified board is in the best interests of the company
and its shareholders because it should enhance the continuity and stability of
the company's board of directors. At any given time, at least two-thirds of the
directors would have one or more years of experience as directors of the
company. New directors would, therefore, have an opportunity to become familiar
with the affairs of the company and to benefit from the experience of other
members of the board of directors. Although the board of directors believes the
company has not experienced problems with continuity and stability of
leadership and policy in the past, it hopes to avoid the potential for these
problems in the future. The continuity and quality of leadership that results
from a classified board of directors should, in the opinion of the board of
directors, promote the long-term value of the company.
The board of directors also believes (with C. William Kaman II
abstaining) that the classified board provisions are in the best interests of
the company and its shareholders because they should, if adopted, reduce the
possibility that a third party could effect a sudden or surprise change in
control of the company's board of directors. With a classified board, it is
more likely that a potential acquirer would initiate any attempt to acquire
control of the company through arm's-length negotiations with the board of
directors. The classified board provisions would help to ensure that the board
of directors, if confronted by a hostile tender offer, proxy contest or other
surprise proposal from a third party, would have sufficient time to review the
proposal and appropriate alternatives to the proposal and to act in a manner
that it believes to be in the best interests of the company and its
shareholders.
The classified board provisions may make more difficult changes in
control of the company's board of directors, even if the holders of a majority
of the Common Stock believe the changes would be in their best interests. For
example, classifying the board of directors would operate to increase the time
required for someone to obtain control of the company without the cooperation
or approval of the incumbent board of directors, even if that person holds or
acquires a majority of the voting power. Furthermore, elimination of the right
of shareholders to remove directors without cause would make the removal of any
director more difficult, even if a majority of shareholders believe removal is
in the best interests of the shareholders. As a result, there is an increased
likelihood that the classified board provisions could have the effect of making
it easier for directors to remain in office. The classified board provisions
may discourage certain tender offers and other attempts to change control of
the company, even though shareholders might feel those attempts would be
beneficial to them or the company. Because tender offers for control usually
involve a purchase price higher than the prevailing market price, the
classified board provisions may have the effect of preventing or delaying a bid
for the company's shares that could be beneficial to the company and its
shareholders.
At this time, no offer to acquire control of the company is
outstanding and the company is not aware of any effort to increase or decrease
the size of the board of directors.
Additional information regarding the company's executive officers and
directors is contained in the company's annual report on Form 10-K for the
fiscal year ended December 31, 2004, which is incorporated by reference in this
proxy statement/prospectus. To obtain copies of this document, please follow
the procedures described under "Where You Can Find More Information," beginning
on page 61 of this proxy statement/prospectus.
Removal of Directors
The other certificate of incorporation amendment proposal would also
amend Article VII of the certificate of incorporation to provide that directors
may be removed only for cause by shareholders upon the affirmative vote of a
majority of the shares entitled to vote.
The proposed removal for cause provisions would provide that a
director may only be removed for cause by the company's shareholders if the
number of votes cast to remove him or her exceeds the number of votes cast not
to remove him or her and only at a meeting called for the purpose of removing
him or her.
52
The proposed removal for cause provisions further provide that the
notice of such meeting must state that the purpose, or one of the purposes, of
the meeting is the removal of such director.
The board of directors believes (with C. William Kaman II abstaining)
that implementing a classified board is in the best interests of the company
and its shareholders because it should enhance the continuity and stability of
the company's board of directors. Allowing shareholders to remove a director
without cause could be used to subvert the protections afforded by the creation
of a classified board of directors. One method employed by takeover bidders to
obtain control of a board of directors is to seek to acquire a significant
percentage of a corporation's outstanding shares through a tender offer or open
market purchases and, at the same time, to wage a proxy contest seeking to
replace the incumbent board with the hand-picked designees of the bidder who
would be more willing to approve the terms of a merger or other business
combination on terms that might be less favorable to the other shareholders of
the corporation than those that would have been approved by the removed
directors. Requiring cause to remove a director precludes the use of this
strategy, thereby encouraging potential takeover bidders to obtain the
cooperation of the existing board of directors before attempting a takeover.
The classified board provisions would not prevent a negotiated acquisition of
the company with the cooperation of the company's board of directors.
The removal for cause provisions may make more difficult changes in
control of the company's board of directors, even if the holders of a majority
of the Common Stock believe the changes would be in their best interests.
Elimination of the right of shareholders to remove directors without cause
would make the removal of any director more difficult, even if a majority of
shareholders believe removal is in the best interests of the shareholders. As a
result, there is an increased likelihood that the removal for cause provisions
could have the effect of making it easier for directors to remain in office.
The removal for cause provisions may discourage certain tender offers and other
attempts to change control of the company, even though shareholders might feel
those attempts would be beneficial to them or the company. Because tender
offers for control usually involve a purchase price higher than the prevailing
market price, the removal for cause provisions may have the effect of
preventing or delaying a bid for the company's shares that could be beneficial
to the company and its shareholders.
At this time, no offer to acquire control of the company is
outstanding and the company is not aware of any effort to remove any director,
either for cause or without cause.
Supermajority Voting Requirements
The other certificate of incorporation amendment proposal would add an
extra layer of protection by also amending the certificate of incorporation
such that 66 2/3% supermajority vote by shareholders would be required to
amend, repeal or modify certain provisions of the certificate of incorporation.
The proposed supermajority vote would require that at least 66 2/3% of
the outstanding capital stock of the company vote to amend the provisions in
the certificate of incorporation relating to the board of directors and its
powers (Article Seventh), including the provisions that establish the
classified board of directors, permit removal of directors only for cause and
provide for indemnification and limitation of liability for the company's
directors or officers. The proposed supermajority vote would also require the
same supermajority vote to amend the bylaws of the company or to amend the
supermajority amendment provisions (Articles Eighth and Ninth).
As noted above, the board of directors believes (with C. William Kaman
II abstaining) that these amendments to the certificate of incorporation are in
the best interests of the company and its shareholders because it should
enhance the continuity and stability of the company's board of directors.
Requiring a supermajority vote to amend these provisions further enhances the
continuity and stability of the company's board of directors. Further, these
provisions of the certificate of incorporation provide protection for the
company and the company's board of directors in the event of an outside third
party offer and the requirement of a supermajority vote to amend, modify or
repeal any of these provisions ensures that these provisions would continue to
provide such protections.
At this time, no offer to acquire control of the company is
outstanding and, except for the other certificate of incorporation amendment
proposal set forth in this proxy statement/prospectus, the board of directors
does not know of any effort to amend, modify or repeal any provisions of the
certificate of incorporation.
53
Updating Amendments
Finally, the other certificate of incorporation amendment proposal
would amend the certificate of incorporation to update it to reflect the
retirement of previously issued and retired preferred stock of the company and
provide the board of directors with flexibility to approve the issuance of
preferred stock with no voting rights other than as required by law as well as
reflect certain changes in the Connecticut law with respect to the
indemnification of directors and officers.
Vote Required
Approval of the other certificate of incorporation amendment proposal
requires the affirmative vote by the holders of at least 66 2/3% of the
outstanding shares of Class B Voting Common Stock. Members of the Kaman family
have agreed to vote in excess of 80% of the outstanding shares of Class B
Voting Common Stock in favor of the other certificate of incorporation
amendment proposal, so approval is assured.
Proposed Amendments to Bylaws
The proposed bylaw amendments provide for amendments to the bylaws
concurrently with the amendments to the certificate of incorporation effecting
the recapitalization and the other certificate of incorporation amendment
proposal. The proposed bylaw amendments are reflected in the proposed amended
and restated bylaws set forth as Annex C to this proxy statement/prospectus,
which you are encouraged to read in its entirety. The proposed bylaw amendment
will not be implemented unless the recapitalization is consummated.
The changes included within the proposed bylaw amendments include the
following:
o the ability to call a special meeting of shareholders would
be limited such that a special meeting of shareholders may
only be called by (1) the president or by majority vote of
the board of directors and (2) one or more shareholders
holding in the aggregate at least 35% of the total number of
shares entitled to vote on any issue proposed to be
considered at such meeting;
o a shareholder's notice of board nominations or other business
to be brought before an annual meeting of shareholders
generally must be delivered not less than 75 days nor more
than 90 days prior to the first anniversary of the preceding
year's annual meeting and must contain certain required
information; and
o certain other changes of an updating nature, including
amendments to reflect certain changes in Connecticut law.
The board of directors believes (with C. William Kaman II abstaining)
that implementing these changes is in the best interests of the company and its
shareholders because it should enhance the continuity and stability of the
company's board of directors. The limitation on the company's shareholders'
ability to call a special meeting would limit the opportunities for the
shareholders to remove directors or amend the certificate of incorporation or
bylaw provisions without the board of director's concurrence. Requiring advance
notice by shareholders for director nominations would prevent surprise proxy
contests and give shareholders advance information about dissident nominees.
Requiring advance notice for shareholder proposals would provide the company
and the company's shareholders information with respect to shareholder
proposals and would allow the company to prevent a proposal from being
submitted to a shareholder vote if a shareholder does not comply with the
advance notice provisions.
54
DESCRIPTION OF COMMON STOCK
The following description of the Common Stock, par value $1.00 per
share, that the company's shareholders will own following the recapitalization
is not intended to be complete and is qualified by reference to the Connecticut
Business Corporation Act and to the proposed form of the amended and restated
certificate of incorporation attached as Annex B to this proxy
statement/prospectus and the proposed form of the amended bylaws attached as
Annex C to this proxy statement/prospectus, in each case as it will read upon
completion of the recapitalization.
Authorized Capital Stock
Following the recapitalization, the company will have one class of
common stock, entitled "Common Stock", and the total number of shares of
authorized capital stock will be 50,200,000, comprised as follows
o 50,000,000 shares of Common Stock, par value $1.00 per share;
and
o 200,000 shares of Preferred Stock, par value $1.00 per share.
Based on shares of Class A Nonvoting Common Stock and Class B Voting
Common Stock outstanding on August 17, 2005, the company expects to have up to
approximately 23,712,183 shares of Common Stock issued and outstanding upon
completion of the recapitalization, with the actual number depending on the
elections to be made by the holders of Class B Voting Common Stock. As of
August 17, 2005, no shares of the preferred stock were outstanding.
Common Stock
The following is a description of the Common Stock that the company's
shareholders will own following the recapitalization and assuming approval of
the other certificate of incorporation amendment proposal.
Dividend Rights. Holders of shares of the Common Stock will be
entitled to receive dividends as declared by the board of directors. However,
no dividend will be declared or paid on the shares of Common Stock until the
company has paid (or declared and set aside funds for payment of) all dividends
that have accrued on all classes of the preferred stock.
Voting Rights. Following the recapitalization:
o each share of Common Stock will be entitled to one vote per
share;
o in general, approval of matters submitted to a vote, other
than the election of directors, will require the affirmative
vote of a greater number of the shares of Common Stock
present in person or by proxy than votes cast against such
matters; and
o in general, directors will be elected by a plurality of the
shares of Common Stock present in person or by proxy.
Classified Board. The company's board of directors will be divided
into three classes of directors, initially comprised of two classes of three
directors and one class of four directors. Directors will hold office for
staggered terms of three years each, so that the term of one class expires at
each annual meeting.
Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the company, after payments to holders of preferred stock of
preferential amounts plus any accrued dividends, the company's remaining assets
will be divided among holders of shares of Common Stock.
Preemptive or Other Subscription Rights. Holders of shares of Common
Stock will not have any preemptive rights to subscribe to any additional issue
or sale of capital stock or to acquire any security convertible into capital
stock.
Conversion, Redemption, Sinking Fund and Other Rights. No conversion,
redemption or sinking fund provisions will apply to shares of Common Stock, and
shares of Common Stock will not be liable to further call or assessment by the
company. All issued and outstanding shares of Common Stock will be fully paid
and nonassessable.
55
Restrictions on Alienability. There will be no restrictions on the
alienability of shares of Common Stock.
Anti-Takeover Considerations
Connecticut law, the company's certificate of incorporation (as
amended in connection with the recapitalization and in accordance with the
other certificate of incorporation amendment proposal) and the bylaws (as
amended in connection with the recapitalization) contain provisions that could
serve to discourage or to make more difficult a change in control of the
company without the support of the company's board of directors or without
meeting various other conditions.
Extraordinary Corporate Transactions. Connecticut law provides that,
in general, the holders of the shares entitled to vote thereon must approve any
fundamental corporate transactions such as mergers, share exchanges or sales of
all or substantially all of a corporation's assets and dissolutions.
State Takeover Legislation. Section 33-841 of the Connecticut Business
Corporation Act, in general, prohibits a business combination between a
corporation and an interested shareholder, unless such business combination is
first approved by the corporation's board of directors and then approved by the
affirmative vote of at least: (a) the holders of 80% of the voting power of the
outstanding shares of the voting stock of the corporation; and (b) the holders
of 2/3 of the voting power of the outstanding shares of voting stock of the
corporation other than voting stock held by the interested shareholder who is,
or whose affiliate or associate is, a party to the business combination or held
by an affiliate or associate of the interested shareholder.
The restrictions of Section 33-841 of the Connecticut Business
Corporation Act do not apply to corporations that have elected, in the manner
provided therein, not to be subject to Section 33-841 of the Connecticut
Business Corporation Act, that are investment companies registered under the
Investment Company Act of 1940, or, that are not required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The company is subject to Section 33-841 of the
Connecticut Business Corporation Act. In the recapitalization agreement, the
Kaman family has agreed to elect to take the part cash/part stock alternative
to the extent requested to do so by the company, following the advice of its
counsel, to avoid application of the higher vote requirement of Section 33-841
of the Connecticut Business Corporation Act to the recapitalization proposal.
The company has so requested that the Kaman family make this election as to not
less than 516,735 shares of their Class B Voting Common Stock. The Kaman family
has advised the company that the Kaman family believes that an election as to a
smaller number of shares would be sufficient to avoid application of the higher
vote requirement and the company expects that there will be further discussions
between the company and the Kaman family's representatives concerning the
minimum amount of the Kaman family election. If the Kaman family makes the part
stock/part cash election for the number of shares of its Class B Voting Common
Stock as described above, the company does not believe that the
recapitalization proposal will constitute a business combination with any
interested shareholder pursuant to Section 33-841.
Section 33-844 of the Connecticut Business Corporation Act prohibits a
business combination between a corporation and an interested shareholder for a
period of five years following such interested shareholder's stock acquisition
date unless such business combination or the interested shareholder's purchase
of the corporation's stock is first approved by the corporation's board of
directors. This must include the approval of a majority of the nonemployee
directors, of which there must be at least two. An interested shareholder is
defined generally as the beneficial owner of ten percent or more of the voting
power of the outstanding voting stock of a corporation.
Four limited exceptions exist to the application of Section 33-844 of
the Connecticut Business Corporation Act. One, board of director approval is
not required where the corporation does not have a class of voting stock
registered pursuant to Section 12 of the Exchange Act. In order for this
exception to apply, the corporation's certificate of incorporation must not
provide otherwise, and the failure of the corporation to have a registered
class of voting stock must not have resulted from the stock acquisition that
caused the shareholder to become an interested shareholder . Two, board of
director approval is not required where the interested shareholder became an
interested shareholder inadvertently. In order for this exception to apply, the
interested shareholder must, as soon as practicable, divest itself of an amount
of stock so that it is no longer an interested shareholder and must have not
been at any time during the preceding five years an interested shareholder but
for the inadvertent acquisition. Three, board of director approval is not
required where the interested shareholder was an interested shareholder on
February 1, 1988, provided that the interested shareholder did not increase its
proportionate share of voting stock without prior approval from the board of
directors. Four, board of director approval is not required where
56
the corporation on and after January 1, 1991 agrees to the Connecticut
Partnership Compact and adopts an amendment to its certificate of incorporation
or its bylaws, in the manner provided pursuant to Section 33-845, that
expressly elects for the corporation not to be governed by Section 33-844.
The company is not subject to Section 33-844 of the Connecticut
Business Corporation Act because the Class B Voting Common Stock is not
registered pursuant to Section 12 of the Exchange Act. However, if the
recapitalization proposal is approved and the recapitalization is effected, the
company will thereafter be subject to Section 33-844 of the Connecticut
Business Corporation Act.
The Connecticut Tender Offer Act prohibits tender offers involving
target companies in Connecticut unless the tender offer in question is
effective under the Connecticut Tender Offer Act or exempted by the Connecticut
commissioner of banking or his or her designee. In order for such a tender
offer to become effective, the offeror must comply with certain filing and
substantive requirements set forth in the Connecticut Tender Offer Act.
Rights of Dissenting Shareholders. Under Connecticut law, appraisal
rights may be triggered by any of the five following corporate actions: (1)
subsidiary mergers and mergers where voting shares will not remain outstanding
after the merger becomes effective; (2) share exchanges where shares of the
holder entitled to appraisal rights are being acquired by another corporation;
(3) a disposition of assets that must be approved by the shareholders; (4) an
amendment of the certificate of incorporation that reduces the number of shares
of a class of stock to a fraction that then may be repurchased by the
corporation; and (5) any other merger, share exchange, disposition of assets or
amendment to the certificate designated as triggering appraisal rights in the
certificate of incorporation or bylaws of the corporation or by resolution of
the board of directors. The company does not believe that either the
recapitalization proposal or the other certificate of incorporation amendment
proposal involves any of the transactions which give rise to appraisal rights
under Connecticut law.
Special Meetings of Shareholders. Following the recapitalization, the
bylaws will provide that special meetings of the shareholders may be called at
any time only by the president, by majority vote of the board of directors or
by one or more shareholders holding in the aggregate at least 35% of the total
number of shares entitled to vote on any issue proposed to be considered at
that meeting upon their delivery to the company's secretary of one or more
written demands for the meeting describing the purpose(s) for which it is to be
held.
Cumulative Voting. Connecticut law permits shareholders to cumulate
their votes and either cast them for one candidate or distribute them among two
or more candidates in the election of directors only if expressly authorized in
a corporation's certificate of incorporation. The certificate of incorporation
does not authorize cumulative voting.
Removal of Directors. Connecticut law provides that a company's
shareholders may remove one or more directors with or without cause unless the
certificate of incorporation provides that directors may be removed only for
cause. Following the recapitalization, the company's certificate of
incorporation will provide that a director may only be removed for cause by
shareholders if the number of votes cast to remove him or her exceeds the
number of votes cast not to remove him or her and only at a meeting called for
the purpose of removing him or her, the notice of which must state that the
purpose, or one of the purposes, of the meeting is the removal of the director.
Vacancies. Connecticut law provides that, unless the certificate of
incorporation provides otherwise, if a vacancy occurs on a company's board of
directors, including a vacancy resulting from an increase in the number of
directors, the company's shareholders may fill the vacancy, the company's board
of directors may fill the vacancy or, if the directors remaining in office
constitute fewer than a quorum of the board, they may fill the vacancy by the
affirmative vote of a majority of all the directors remaining in office.
The company's certificate of incorporation provides that any vacancy
in the board of directors by reason of death, resignation or other cause may be
filled for the unexpired portion of the term by a concurring vote of a majority
of the remaining directors in office, or by action of the sole remaining
director in office, though the number of directors at the meeting to fill such
vacancy are less than a quorum and though such majority is less than a quorum.
57
COMPARISON OF
SHAREHOLDERS RIGHTS
Following the recapitalization, the rights of each holder of shares of Common Stock will
be identical in all material respects to the rights of each holder of shares of Class A Nonvoting
Common Stock and Class B Voting Common Stock prior to the recapitalization, except with respect
to the matters specified below:
Pre-Recapitalization Class A Post-Recapitalization
Nonvoting Common Stock and Class B
Voting Common Stock Common Stock
Capital Structure: Two classes of common stock: Class A One class of Common Stock.
Nonvoting Common Stock and Class B
Voting Common Stock.
Voting: Shares of Class A Nonvoting Common Each share of Common Stock entitled
Stock generally not entitled to vote to one vote per share for which
other than as required by law for approval by holders of common stock
certain extraordinary transactions or is required.
authorization of additional shares of
preferred stock or common stock.
Each share of Class B Voting Common
Stock entitled to one vote per share
as to all matters for which common
shareholder approval is required.
Number and Organization of Ten member board, with each director Ten member board, divided into two
Board of Directors: elected for a one year term. classes of three directors each and
Governing documents permit a minimum one class of four directors. In
of three and a maximum of 15 directors. general, directors will hold office
for staggered terms of three years
each, so that the term of one class
expires at each annual meeting.
Governing documents permit a
minimum of three and a maximum of
15 directors.
Removal of Directors: Any director or the entire board of A director or directors may be
directors may be removed, either with removed only for cause, provided that
or without cause, at any time by a quorum consisting of the holders of
shareholder vote, provided that a a majority of the issued and
quorum consisting of the holders of a outstanding shares entitled to be
majority of the issued and outstanding cast is present and the number of
shares entitled to be cast is present votes cast in favor of removal of the
and the number of votes cast in favor director(s) exceeds the number of
of removal of the director(s) exceeds votes cast opposing removal of such
the number of votes cast opposing director(s).
removal of such director(s).
Calling Special Meetings A special meeting of shareholders may A special meeting of shareholders may
of Shareholders: be called at any time by the president only be called by (1) the president
or by resolution of the board of or by majority vote of the board of
directors and must be called by the directors, or (2) one or more
president upon the request of any two shareholders holding in the aggregate
directors or upon the written request at least 35% of the total number of
of one or more shareholders holding in shares entitled to vote on any issue
the aggregate at least 10% of the proposed to be considered at such
total number of shares entitled to meeting upon their delivery to the
vote at such meeting. secretary of the company of one or
58
more written demands for the meeting
describing the purpose(s) for which
it is to be held.
Notice of Shareholder The company's organizational documents To be timely, a shareholder's written
Nominations of Members of are silent with respect to notice of notice to the secretary of the
the Board of Directors: shareholder nominations of members of company must be delivered to or
the board of directors. mailed and received at the principal
executive offices of the company, in
the case of: (i) an annual meeting,
not less than 75 days nor more than
90 days prior to the first
anniversary of the date of the
immediately preceding year's annual
meeting of shareholders; provided,
however, that if the date of the
annual meeting is advanced more than
30 days prior to or delayed by more
than 30 days after the anniversary of
the preceding year's annual meeting,
to be timely, notice by the
shareholder must be so received not
later than the close of business on
the 10th day following the day on
which notice of the date of the
annual meeting was mailed or public
disclosure of the date of the annual
meeting is first given or made,
whichever first occurs; and (ii) a
special meeting of shareholders
called for the purpose of electing
directors, not later than the close
of business on the 10th day following
the day on which notice of the date
of the special meeting was mailed or
public disclosure of the date of the
special meeting is first given or
made, whichever first occurs.
To be in proper written form, a
shareholder's notice to the Secretary
must set forth (a) as to each person
whom the shareholder proposes to
nominate for election as a director
(i) certain personal information of
such nominee, (ii) such nominee's
share ownership, if any, in the
company and (iii) any other
information relating to the nominee
that would be required to be disclosed
in a filing required to be made in
connection with solicitations of
proxies for election of directors
under the Exchange Act and (b) as to
the shareholder giving the notice (i)
certain personal information of such
shareholder, (ii) such shareholder's
share ownership in the company, (iii)
a description of all arrangements
between such shareholder and each
59
proposed nominee and any other person
or persons (including their names)
pursuant to which the nomination(s)
are to be made by such shareholder,
(iv) a representation that such
shareholder intends to appear in
person or by proxy at the meeting to
nominate the person(s) and (v) any
other information relating to such
shareholder that would be required to
be disclosed in a filing required to
be made in connection with
solicitations of proxies for election
of directors under the Exchange Act.
Notice of Shareholder The company's organizational documents For a matter to be properly brought
Business at Annual are silent with respect to notice of before the annual meeting by a
Meetings: shareholder business at annual shareholder, such person must (i) be
meetings. Pursuant to Rule 14a-8 a shareholder of record on the date
promulgated under the Exchange Act, a of the giving of the notice and on
shareholder proposal for a company's the record date for the determination
annual meeting must be received at the of shareholders entitled to notice of
company's principal executive offices and to vote at the annual meeting and
not less than 120 calendar days before (ii) comply with the timing and
the date of the company's proxy notice procedures summarized below.
statement released to shareholders in
connection with the previous year's To be timely, a shareholder's written
annual meeting. However, if the notice to the Secretary must be
company did not hold an annual meeting delivered to or mailed and received
the previous year, or if the date of at the principal executive offices of
this year's annual meeting has been the company not less than 75 days nor
changed by more than 30 days from the more than 90 days prior to the first
date of the previous year's meeting, anniversary of the date of the
then the deadline is a reasonable time immediately preceding year's annual
before the company begins to print and meeting of shareholders; provided,
mail its proxy materials. however, that if the date of the
annual meeting is advanced more than
30 days prior to or delayed by more
than 30 days after the anniversary of
the preceding year's annual meeting,
to be timely, notice by the
shareholder must be so received not
later than the close of business on
the tenth day following the day on
which notice of the date of the annual
meeting was mailed or public
disclosure of the date of the annual
meeting is first given or made,
whichever first occurs.
To be in proper written form, a
shareholder's notice to the Secretary
must set forth as to each matter such
shareholder proposes to bring before
the annual meeting (i) a brief
description of the business desired to
be brought before the meeting and the
reasons for conducting such business
60
at the meeting, (ii) the name and
record address of such shareholder
proposing such business, (iii) such
shareholder's share ownership in the
company, (iv) a description of all
arrangements between such shareholder
and any other person or persons
(including their names) in connection
with the proposal of such business by
such shareholder and any material
interest of such shareholder in such
business and (v) a representation that
such shareholder intends to appear in
person or by proxy at the meeting to
bring such business before the
meeting.
LEGAL MATTERS
The validity of the Common Stock to be issued in connection with the
recapitalization will be passed upon by Shipman & Goodwin LLP.
EXPERTS
The consolidated financial statements incorporated into this proxy
statement/prospectus by reference from Kaman's Annual Report on Form 10-K for
the year ended December 31, 2004, have been audited by KPMG LLP, an independent
registered public accounting firm, as set forth in their report, which is
incorporated herein by reference, and have been so incorporated in reliance
upon their authority as experts in accounting and auditing.
SUBMISSION OF SHAREHOLDER PROPOSALS
Pursuant to SEC rules, proposals of shareholders intended to be
submitted for action at the 2006 Annual Meeting of Shareholders must be
received by the company, 1332 Blue Hills Avenue, Bloomfield, CT 06002 on or
before November 15, 2005. Pursuant to SEC rules and the company's amended
bylaws, shareholders who wish to present a proposal at the 2006 Annual Meeting
of Shareholders, when such proposal is not intended to be included in the
company's notice of meeting, proxy statement and form of proxy relating to that
meeting, must give advance notice to the company, 1332 Blue Hills Avenue,
Bloomfield, CT 06002 on or before February 3, 2006, but no earlier than January
19, 2006, which is the period not less than 75 days, nor more than 90 days,
prior to the first anniversary of the company's last annual meeting of
shareholders held on April 19, 2005.
WHERE YOU CAN FIND MORE INFORMATION
The company files annual, quarterly, and current reports with the SEC
though the company is not currently required to file proxy statements with the
SEC. SEC filings are available to the public over the Internet at the SEC's
website at http://www.sec.gov. You may also read and copy any document the
company files with the SEC at the SEC's Public Reference Room at 450 Fifth
Street N.W., Washington, D.C. 20549. Please call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information on the public reference
room. The company maintains a website at http://www.kaman.com. The information
contained in the company's website is not incorporated by reference in this
proxy statement/prospectus and you should not consider it a part of this proxy
statement/prospectus.
The SEC allows the company to incorporate by reference the information
the company files with them, which means that the company can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this proxy
statement/prospectus, except for any information superseded by information in
this proxy statement/prospectus. This
61
proxy statement/prospectus incorporates important business and financial
information about Kaman that is not included in or delivered with this proxy
statement/prospectus. This proxy statement/prospectus incorporates by reference
the documents set forth below that have previously been filed with the SEC:
- annual report on Form 10-K for the fiscal year ended December 31,
2004;
- quarterly reports on Form 10-Q for the quarterly periods ended
April 1, 2005 and July 1, 2005;
- current reports on Form 8-K filed on February 24, 2005, March 16,
2005, May 6, 2005, June 8, 2005, June 8, 2005, June 23, 2005, June
24, 2005, June 29, 2005, July 1, 2005, July 6, 2005, July 22,
2005, July 29, 2005, August 3, 2005 and August 8, 2005.
The company is also incorporating by reference additional documents
that the company files with the SEC pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act between the date of this proxy statement/prospectus
and the date of the special meetings.
You may request a copy of these filings, at no cost, by writing or
telephoning the company at the following address and telephone number:
Kaman Corporation
1332 Blue Hills Avenue
Bloomfield, CT 06002
Attn: Russell H. Jones
Telephone: (860) 243-6307
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, INCLUDING ANY DOCUMENTS THE
COMPANY MAY SUBSEQUENTLY FILE WITH THE SECURITIES AND EXCHANGE COMMISSION
BEFORE THE SPECIAL MEETING FOR THE CLASS THAT YOU OWN, PLEASE DO SO BY [ ],
2005 SO THAT YOU WILL RECEIVE THEM BEFORE THE SPECIAL MEETINGS FOR THE CLASS OF
STOCK THAT YOU OWN.
Any statement contained in a document incorporated or deemed to be
incorporated by reference into this proxy statement/prospectus will be deemed
to be modified or superseded for purposes of this proxy statement/prospectus to
the extent that a statement contained in this proxy statement/prospectus or any
other subsequently filed document that is deemed to be incorporated by
reference into this proxy statement/prospectus modifies or supersedes the
statement. Any statement so modified or superseded will not be deemed, except
as so modified or superseded, to constitute a part of this proxy
statement/prospectus.
62
ANNEX A
This Annex A contains the recapitalization agreement described in this proxy
statement/prospectus at "The Recapitalization--The Recapitalization Agreement",
but does not contain any of the Schedules or Exhibits thereto. Exhibits A-1 and
A-2 thereto, which are respectively the company's proposed amended and restated
certificate of incorporation and the proposed amended bylaws as they would read
if the recapitalization is completed, can be found as Annexes B and C to this
proxy statement/prospectus. A complete copy of the recapitalization agreement
with all schedules and exhibits was filed by the company with the SEC as an
exhibit 2.1 to a Form 8-K on June 8, 2005 and is incorporated by reference
herein.
A-1
AGREEMENT
---------
THIS AGREEMENT (this "Agreement"), dated as of June 7, 2005, is by and
among (i) Kaman Corporation, a Connecticut corporation (the "Company"), (ii)
Newgate Associates Limited Partnership, a Connecticut limited partnership
("Newgate"), in its capacity as a shareholder of the Company, (iii) Oldgate
Limited Partnership, a Connecticut limited partnership ("Oldgate"), in its
capacity as a shareholder of the Company, (iv) Charles H. Kaman ("Kaman"), in
his capacity as a shareholder of the Company, (v) C. William Kaman II ("CWK"),
in his capacity as (A) as a shareholder of the Company, (B) the sole general
partner of Newgate and Oldgate, (C) a voting trustee (a "Voting Trustee") under
the Voting Trust Agreement, dated August 14, 2000 and as amended as of June 7,
2005 (as so amended, the "Voting Trust Agreement"), (D) an attorney-in-fact (a
"DPA Attorney-in-Fact") under a Durable Power of Attorney, dated May 4, 1996
(the "Durable Power of Attorney"), and (E) the trustee on behalf of his
children, Charles Tyson Kaman ("CTK") and Kathryn S. Kaman ("KSK"), as
shareholders in the Company, (vi) Roberta C. Kaman ("RCK"), in her capacity as
(A) a shareholder of the Company, (B) a DPA Attorney-in-Fact, and (C) a Voting
Trustee, (vii) Steven W. Kaman ("SWK"), in his capacity as (A) a shareholder of
the Company, (B) a DPA Attorney-in-Fact, (C) a Voting Trustee and (D) the
trustee on behalf of his child, Cameryn H. Kaman, as a shareholder of the
Company, and (viii) Cathleen H. Kaman ("CHK"), in her capacity as (A) a
shareholder of the Company, (B) a DPA Attorney-in-Fact, (C) a Voting Trustee
and (D) the trustee on behalf of her child, Zane N. Kaman-Wood, as a
shareholder in the Company. The Company, Newgate, Oldgate, Kaman, CWK, RCK, SWK
and CHK are referred to herein individually as a "Party" and collectively as
the "Parties", and the Parties other than the Company are referred to herein
collectively as the "Shareholders."
W I T N E S S E T H
-------------------
WHEREAS, a Special Committee of the Board of Directors of the Company
(the "Special Committee") was appointed by the Board of Directors of the
Company (the "Board") on April 15, 2003 to consider alternatives to the current
capital structure of the Company;
WHEREAS, the Special Committee and its legal and financial advisors on
the one hand, and the representatives and agents of the Shareholders, as
holders of (i) Class A Common Stock, par value $1.00 per share (the "Class A
Stock"), of the Company and (ii) Class B Common Stock, par value $1.00 per
share (the "Class B Stock"), of the Company and their legal and financial
advisors on the other hand, have been in discussions and negotiations regarding
the material terms of the Proposed Transaction (as defined below);
WHEREAS, the Special Committee has recommended to the Board and the
Board has approved the adoption of an amendment to the Company's Amended and
Restated Certificate of Incorporation (the "Charter") in the form set forth in
Article Fourth of the proposed Amended and Restated Certificate of
Incorporation of the Company attached as Exhibit A-1 hereto (the "Proposed
Recapitalization Amendments") whereby each share of (i) Class A Stock will
become one share of Common Stock authorized by Paragraph A of the Proposed
Recapitalization Amendments, and (ii) Class B stock will be reclassified into
1.95 shares of Common Stock authorized by Paragraph A of the Proposed
Recapitalization Amendments, except that each share of Class B Stock issued and
outstanding and held by recordholder(s) who have, not later than the third
business day immediately preceding the date of the Shareholders' Meeting (as
defined in Paragraph 21), validly elected to accept alternative consideration
as to such shares of Class B Stock (the "Alternative Class B Stock
Consideration") shall be reclassified into one share of validly issued, fully
paid and nonassessable Common Stock authorized by Paragraph A of the Proposed
Recapitalization Amendments and the right to receive an amount in cash equal to
$14.76 (collectively, the "Proposed Recapitalization"), which amount of cash
equals .95 times the Class A Share Deemed Value (as defined in Paragraph
16(d));
WHEREAS, the Special Committee has recommended to the Board and the
Board has approved, contingent upon the completion of the Proposed
Recapitalization
A-2
or the Substitute Recapitalization Proposal (as defined in Paragraph 16(a)),
the adoption of amendments to (i) the Charter (collectively, the "Proposed
Charter Governance Amendments") in the forms set forth in the Amended and
Restated Certificate of the Company attached as Exhibit A-1 hereto (other than
Paragraph C of Article Fourth thereto), and (ii) the Company's Bylaws
(collectively, the "Proposed Bylaw Governance Amendments" and together with the
Proposed Recapitalization and the Proposed Charter Governance Amendments, the
"Proposed Transaction") in the form set forth in Exhibit A-2 hereto, relating
to certain governance matters;
WHEREAS, Houlihan Lokey Howard & Zukin Financial Advisors, Inc., a
financial advisor to the Special Committee, has delivered its opinion to the
Special Committee that the consideration to be received by the holders of the
Class B Stock in the Proposed Recapitalization is fair, from a financial point
of view, to the holders (including the Shareholders) of the Class B Stock
(solely with respect to such Class B Stock);
WHEREAS, Evercore Group Inc., a financial advisor to the Special
Committee, has delivered its opinion to the Special Committee that the Proposed
Recapitalization is fair, from a financial point of view, to the holders of the
Class A Stock (solely with respect to such Class A Stock);
WHEREAS, (i) the Class B Stock is currently the only class of capital
stock of the Company entitled pursuant to the terms of the Charter to vote
generally on matters submitted to the Company's shareholders and (ii) the
holders of Class B Stock will be (a) entitled to vote on the Proposed
Recapitalization or the Substitute Recapitalization Proposal as a separate
class and (b) the only class of capital stock of the Company entitled to vote
on the Proposed Charter Governance Amendments;
WHEREAS, the holders of Class A Stock will (i) have the right to vote
on the Proposed Recapitalization or the Substitute Recapitalization Proposal as
a separate class and (ii) not have the right to vote on the Proposed Charter
Governance Amendments;
WHEREAS, none of the holders of the Class B Stock or the Class A Stock
will have the right to vote on the Proposed Bylaw Governance Amendments;
WHEREAS, subject to Paragraph 21(b), the Board expects to make a
recommendation to the holders of the Class A Stock and the Class B Stock in the
proxy materials sent to the holders of such shares that the holders of each
such class approve the Proposed Recapitalization or the Substitute
Recapitalization Proposal;
WHEREAS, subject to Paragraph 21(b), the Board expects to make a
recommendation to the holders of the Class B Stock in the proxy materials sent
to the holders of such shares that the holders of the Class B Stock approve the
Proposed Charter Governance Amendments;
WHEREAS, (i) the Durable Power of Attorney governs the power to vote
258,375 shares of the Class B Stock, evidenced by the certificate numbers set
forth on Schedule A-1, registered in the name of Kaman on the books and records
of the Company (the "Directly Owned Kaman Class B Shares"), (ii) the Voting
Trust Agreement governs the power to vote 96,601 shares of the Class B Stock,
evidenced by (A) the stock certificate number set forth on Schedule A-2,
registered in the name of John C. Yavis, Jr. as Custodian under the Voting
Trust Agreement on the books and records of the Company, and (B) the voting
trust certificate number set forth on Schedule A-2, registered in the name of
Kaman under the Voting Trust Agreement, any such disposition to be subject to
the Voting Trust Agreement (the "Indirectly Owned Kaman Class B Shares" and,
together with the Directly Owned Kaman Class B Shares, the "Kaman Class B
Shares"), and (iii) the General Power of Attorney governs the power to dispose
or to direct the disposition of (but not the vote of) the Kaman Class B Shares;
WHEREAS, the General Power of Attorney, dated February 11, 1998,
granted by Kaman (the "General Power of Attorney") governs the power to vote
and to dispose or to direct the disposition of 234,626 shares of the Class A
Stock, evidenced by the certificate numbers set forth on Schedule A-3,
registered in the name of Kaman on the books and records of the Company (the
"Kaman Class A Shares" and, together with the Kaman Class B Shares, the "Kaman
Shares");
A-3
WHEREAS, CWK, as the sole general partner of Newgate, has investment
power, which includes the power to dispose or to direct the disposition of, (i)
103,201 shares of Class B Stock, evidenced by (A) the stock certificate number
set forth on Schedule B-1, registered in the name of John C. Yavis, Jr. as
Custodian under the Voting Trust Agreement on the books and records of the
Company, and (B) the voting trust certificate number set forth on Schedule B-1,
registered in the name of Newgate under the Voting Trust Agreement, any such
disposition to be subject to the Voting Trust Agreement (the "Newgate Class B
Shares"), and (ii) 95,264 shares of Class A Stock, evidenced by the certificate
numbers set forth on Schedule B-2, registered in the name of Newgate on the
books and records of the Company (the "Newgate Class A Shares" and, together
with the Newgate Class B Shares, the "Newgate Shares"), pursuant to Section
4.01 of the Limited Partnership Agreement, dated December 23, 1992, as amended
on June 16, 1999, on July 16, 2004 and June 7, 2005 (as so amended, the
"Newgate Partnership Agreement");
WHEREAS, CWK, as the sole general partner of Oldgate, has investment
power, which includes the power to dispose or to direct the disposition of,
148,850 shares of Class A Stock, evidenced by the certificate numbers set forth
on Schedule C, registered in the name of Oldgate on the books and records of
the Company (the "Oldgate Shares"), pursuant to Sections 4.01 and 4.02 of the
Oldgate Limited Partnership Agreement of Limited Partnership, dated December
18, 1996 (the "Oldgate Partnership Agreement");
WHEREAS, CWK has investment power, which includes the power to dispose
or to direct the disposition of, (i) 69,246 shares of Class B Stock, evidenced
by the certificate numbers set forth on Schedule D-1, registered in the name of
CWK, either individually or as trustee, on the books and records of the Company
(the "CWK Class B Shares"), and (ii) 152,277 shares of Class A Stock, evidenced
by the certificate numbers set forth on Schedule D-2, registered in the name of
CWK, either individually or as trustee, on the books and records of the Company
(the "CWK Class A Shares" and, together with the CWK Class B Shares, the "CWK
Shares");
WHEREAS, RCK has investment power, which includes the power to dispose
or to direct the disposition of, (i) 1,471 shares of Class B Stock, evidenced
by the certificate numbers set forth on Schedule E-1, registered in the name of
RCK on the books and records of the Company (the "RCK Class B Shares"), and
(ii) 23,132 shares of Class A Stock, evidenced by the certificate numbers set
forth on Schedule E-2, registered in the name of RCK on the books and records
of the Company (the "RCK Class A Shares" and, together with the RCK Class B
Shares, the "RCK Shares");
WHEREAS, SWK has investment power, which includes the power to dispose
or to direct the disposition of, (i) 10,183 shares of Class B Stock, evidenced
by the certificate numbers set forth on Schedule F-1, registered in the name of
SWK, either individually or as trustee, on the books and records of the Company
(the "SWK Class B Shares"), and (ii) 4,151 shares of Class A Stock, evidenced
by the certificate numbers set forth on Schedule F-2, registered in the name of
SWK on the books and records of the Company (the "SWK Class A Shares" and,
together with the SWK Class B Shares, the "SWK Shares");
WHEREAS, CHK has investment power, which includes the power to dispose
or to direct the disposition of, (i) 12,634 shares of Class B Stock, evidenced
by the certificate numbers set forth on Schedule G-1, registered in the name,
either individually or as trustee, of CHK on the books and records of the
Company (the "CHK Class B Shares"), and (ii) 43,397 shares of Class A Stock,
evidenced by the certificate numbers set forth on Schedule G-2, registered in
the name of CHK on the books and records of the Company (the "CHK Class A
Shares" and, together with the CHK Class B Shares, the "CHK Shares");
WHEREAS, entitlement to vote (i) the Kaman Class A Shares is held by
John C. Yavis, Jr., in his capacity as the Attorney-in-Fact (the "GPA
Attorney-in-Fact") under the General Power of Attorney, (ii) the Newgate Class
A Shares is held by CWK, as the sole general partner of Newgate, under Section
4.01 of the Newgate Partnership Agreement, (iii) the Oldgate Shares is held by
CWK, as the sole general partner of Oldgate, under Sections 4.01 and 4.02 of
the Oldgate Partnership Agreement, (iv) the CWK Class A Shares is held by CWK
either individually or as trustee, (v) the RCK Class A Shares is held by RCK
individually, (vi) the SWK Class A Shares is held by SWK either individually or
as trustee, and (vii) the CHK Class A Shares is held by CHK either individually
or as trustee;
A-4
WHEREAS, entitlement to vote (i) the Kaman Class B Shares is held by
the DPA Attorneys-in-Fact under the Durable Power of Attorney, (ii) the Newgate
Class B Shares is held by the Voting Trustees party to this Agreement under the
Voting Trust Agreement, (iii) the CWK Class B Shares is held by CWK
individually or as trustee, (iv) the RCK Class B Shares is held by RCK
individually, (v) the SWK Class B Shares is held by SWK individually, and (vi)
the CHK Class B Shares is held by CHK individually or as trustee; and
WHEREAS, the Parties intend that this Agreement shall be a "voting
agreement" created under and pursuant to Section 33-716 of the Connecticut
Business Corporation Act and that the irrevocable appointments of proxies by
the Shareholders pursuant to this Agreement are intended to be coupled with an
interest by virtue of the Shareholders entering into this Agreement.
NOW THEREFORE BE IT RESOLVED, that in consideration of the foregoing
and other mutually satisfactory consideration, the receipt and sufficiency of
which has heretofore been acknowledged by the Parties, the Parties hereby agree
as follows:
1. Subject to and in accordance with the other provisions of this
Agreement, the Shareholders and the Company agree to recapitalize the
capital stock of the Company whereby each share of (i) Class A Stock
will become one share of Common Stock authorized by Paragraph A of the
Proposed Recapitalization Amendments, and (ii) Class B stock will be
reclassified into 1.95 shares of Common Stock authorized by Paragraph
A of the Proposed Recapitalization Amendments, except that each share
of Class B Stock issued and outstanding and held by recordholder(s)
who have, not later than the third business day immediately preceding
the date of the Shareholders' Meeting, validly elected to accept the
"Alternative Class B Stock Consideration" as to such shares of Class B
Stock shall be reclassified into one share of validly issued, fully
paid and nonassessable Common Stock authorized by Paragraph A of the
Proposed Recapitalization Amendments and the right to receive an
amount in cash equal to $14.76, in each case without any further
action by the holder thereof other than as set forth in the Proposed
Recapitalization Amendments.
2. Each of the DPA Attorneys-in-Fact hereby agrees (i) that commencing
upon the expiration of the Permitted Termination Period (as defined in
Paragraph 12(a)) and until the Expiration Date (as defined in
Paragraph 12(b)), at any meeting of the shareholders of the Company,
however called, or in connection with any written consent of the
holders of capital stock of the Company, each such DPA
Attorney-in-Fact shall appear at each such meeting, in person or by
proxy, or otherwise cause the Kaman Class B Shares to be counted as
present thereat for purposes of establishing a quorum, and, subject to
Paragraph 21(b), each such DPA Attorney-in-Fact shall vote (or cause
to be voted) or act (or cause to be acted) by written consent with
respect to all of the Kaman Class B Shares (a) in favor of whichever
of the Proposed Recapitalization or the Substitute Recapitalization
Proposal is then recommended by the Board in accordance with this
Agreement and all other actions required in furtherance thereof, (b)
in favor of the Proposed Charter Governance Amendments and all other
actions required in furtherance thereof and (c) against any proposal
that (I) is inconsistent with or contrary to the terms and conditions
of whichever of the Proposed Recapitalization or the Substitute
Recapitalization Proposal is then recommended by the Board in
accordance with this Agreement, the Proposed Charter Governance
Amendments or the Proposed Bylaw Governance Amendments or (II) would
result in a breach of any covenant, representation or warranty or any
other obligation or agreement of such DPA Attorneys-in-Fact or any
other Party contained in this Agreement, and (ii) within two business
days following the expiration of the Permitted Termination Period, to
cause to be provided to the Company a fully executed copy of the
irrevocable proxy in the form attached as Exhibit B hereto; provided,
that such proxy need not be so provided if the Expiration Date shall
have occurred and this Agreement shall not have been reinstated
pursuant to Paragraph 14(b).
3. Each of the Voting Trustees hereby agrees (i) that commencing upon the
expiration of the Permitted Termination Period and until the
Expiration Date, at any meeting of the shareholders of the Company,
however called, or in connection with any written consent of the
holders of capital stock of the Company, each such Voting Trustee
shall appear at each such meeting, in person or
A-5
by proxy, or otherwise cause the Newgate Class B Shares and the
Indirectly Owned Kaman Class B Shares to be counted as present thereat
for purposes of establishing a quorum, and, subject to Paragraph
21(b), each such Voting Trustee shall vote (or cause to be voted) or
act (or cause to be acted) by written consent with respect to all of
the Newgate Class B Shares and the Indirectly Owned Kaman Class B
Shares (a) in favor of whichever of the Proposed Recapitalization or
the Substitute Recapitalization Proposal is then recommended by the
Board in accordance with this Agreement and all other actions required
in furtherance thereof, (b) in favor of the Proposed Charter
Governance Amendments and all other actions required in furtherance
thereof and (c) against any proposal that (I) is inconsistent with or
contrary to the terms and conditions of whichever of the Proposed
Recapitalization or the Substitute Recapitalization Proposal is then
recommended by the Board in accordance with this Agreement, the
Proposed Charter Governance Amendments or the Proposed Bylaw
Governance Amendments or (II) would result in a breach of any
covenant, representation or warranty or any other obligation or
agreement of such Voting Trustees or any other Party contained in this
Agreement and (ii) within two business days following the expiration
of the Permitted Termination Period, to cause to be provided to the
Company a fully executed copy of the irrevocable proxy in the form
attached as Exhibit C hereto; provided, that such proxy need not be so
provided if the Expiration Date shall have occurred and this Agreement
shall not have been reinstated pursuant to Paragraph 14(b).
4. Kaman hereby agrees (i) that commencing upon the expiration of the
Permitted Termination Period and until the Expiration Date, at any
meeting of the shareholders of the Company, however called, or in
connection with any written consent of the holders of capital stock of
the Company, the DPA Attorneys-in-Fact and the GPA Attorney-in-Fact,
acting on behalf of Kaman, shall appear at each such meeting, in
person or by proxy, or otherwise cause the Directly Owned Kaman Class
B Shares (in the case of the DPA Attorneys-in-Fact) and the Kaman
Class A Shares (in the case of the GPA Attorney-in-Fact) to be counted
as present thereat for purposes of establishing a quorum, and, subject
to Paragraph 21(b), the DPA Attorneys-in-Fact and the GPA
Attorney-in-Fact, acting on behalf of Kaman, shall vote (or cause to
be voted) or act (or cause to be acted) by written consent with
respect to all of the Directly Owned Kaman Class B Shares (in the case
of the DPA Attorneys-in-Fact) and the Kaman Class A Shares (in the
case of the GPA Attorney-in-Fact) (a) in favor of whichever of the
Proposed Recapitalization or the Substitute Recapitalization Proposal
is then recommended by the Board in accordance with this Agreement and
all other actions required in furtherance thereof, (b) in the case of
the Directly Owned Kaman Class B Shares, in favor of the Proposed
Charter Governance Amendments and all other actions required in
furtherance thereof and (c) against any proposal that (I) is
inconsistent with or contrary to the terms and conditions of whichever
of the Proposed Recapitalization or the Substitute Recapitalization
Proposal is then recommended by the Board in accordance with this
Agreement, the Proposed Charter Governance Amendments or the Proposed
Bylaw Governance Amendments or (II) would result in a breach of any
covenant, representation or warranty or any other obligation or
agreement of Kaman or any other Party contained in this Agreement and
(ii) within two business days following the expiration of the
Permitted Termination Period, to cause to be provided to the Company a
fully executed copy of the irrevocable proxy in the form attached as
Exhibit D hereto; provided, that such proxy need not be so provided if
the Expiration Date shall have occurred and this Agreement shall not
have been reinstated pursuant to Paragraph 14(b).
5. Newgate hereby agrees (i) that commencing upon the expiration of the
Permitted Termination Period and until the Expiration Date, at any
meeting of the shareholders of the Company, however called, or in
connection with any written consent of the holders of capital stock of
the Company, Newgate shall appear at each such meeting, in person or
by proxy, or otherwise cause the Newgate Class A Shares to be counted
as present thereat for purposes of establishing a quorum, and, subject
to Paragraph 21(b), Newgate shall vote (or cause to be voted) or act
(or cause to be acted) by written consent with respect to all of the
Newgate Class A Shares (a) in favor of whichever of the Proposed
Recapitalization or the Substitute Recapitalization Proposal is then
recommended by the Board in accordance with this Agreement and all
other actions required in furtherance thereof and (b) against any
proposal that (I) is inconsistent with or contrary to the terms and
conditions of whichever of the Proposed Recapitalization or the
Substitute Recapitalization Proposal is then
A-6
recommended by the Board in accordance with this Agreement, the
Proposed Charter Governance Amendments or the Proposed Bylaw
Governance Amendments or (II) would result in a breach of any
covenant, representation or warranty or any other obligation or
agreement of Newgate or any other Party contained in this Agreement
and (ii) within two business days following the expiration of the
Permitted Termination Period, to cause to be provided to the Company a
fully executed copy of the irrevocable proxy in the form attached as
Exhibit E hereto; provided, that such proxy need not be so provided if
the Expiration Date shall have occurred and this Agreement shall not
have been reinstated pursuant to Paragraph 14(b).
6. Oldgate hereby agrees (i) that commencing upon the expiration of the
Permitted Termination Period and until the Expiration Date, at any
meeting of the shareholders of the Company, however called, or in
connection with any written consent of the holders of capital stock of
the Company, Oldgate shall appear at each such meeting, in person or
by proxy, or otherwise cause the Oldgate Shares to be counted as
present thereat for purposes of establishing a quorum, and, subject to
Paragraph 21(b), Oldgate shall vote (or cause to be voted) or act (or
cause to be acted) by written consent with respect to all of the
Oldgate Shares (a) in favor of whichever of the Proposed
Recapitalization or the Substitute Recapitalization Proposal is then
recommended by the Board in accordance with this Agreement and all
other actions required in furtherance thereof, and (b) against any
proposal that (I) is inconsistent with or contrary to the terms and
conditions of whichever of the Proposed Recapitalization or the
Substitute Recapitalization Proposal is then recommended by the Board
in accordance with this Agreement, the Proposed Charter Governance
Amendments or the Proposed Bylaw Governance Amendments or (II) would
result in a breach of any covenant, representation or warranty or any
other obligation or agreement of Oldgate or any other Party contained
in this Agreement and (ii) within two business days following the
expiration of the Permitted Termination Period, to cause to be
provided to the Company a fully executed copy of the irrevocable proxy
in the form attached as Exhibit F hereto; provided, that such proxy
need not be so provided if the Expiration Date shall have occurred and
this Agreement shall not have been reinstated pursuant to Paragraph
14(b).
7. CWK hereby agrees (i) that commencing upon the expiration of the
Permitted Termination Period and until the Expiration Date, at any
meeting of the shareholders of the Company, however called, or in
connection with any written consent of the holders of capital stock of
the Company, CWK shall appear at each such meeting, in person or by
proxy, or otherwise cause the CWK Shares to be counted as present
thereat for purposes of establishing a quorum, and, subject to
Paragraph 21(b), CWK shall vote (or cause to be voted) or act (or
cause to be acted) by written consent with respect to all of the CWK
Shares (a) in favor of whichever of the Proposed Recapitalization or
the Substitute Recapitalization Proposal is then recommended by the
Board in accordance with this Agreement and all other actions required
in furtherance thereof, (b) in the case of the CWK Class B Shares, in
favor of the Proposed Charter Governance Amendments and all other
actions required in furtherance thereof and (c) against any proposal
that (I) is inconsistent with or contrary to the terms and conditions
of whichever of the Proposed Recapitalization or the Substitute
Recapitalization Proposal is then recommended by the Board in
accordance with this Agreement, the Proposed Charter Governance
Amendments or the Proposed Bylaw Governance Amendments or (II) would
result in a breach of any covenant, representation or warranty or any
other obligation or agreement of CWK or any other Party contained in
this Agreement and (ii) within two business days following the
expiration of the Permitted Termination Period, to cause to be
provided to the Company a fully executed copy of the irrevocable proxy
in the form attached as Exhibit G hereto; provided, that such proxy
need not be so provided if the Expiration Date shall have occurred and
this Agreement shall not have been reinstated pursuant to Paragraph
14(b).
8. RCK hereby agrees (i) that commencing upon the expiration of the
Permitted Termination Period and until the Expiration Date, at any
meeting of the shareholders of the Company, however called, or in
connection with any written consent of the holders of capital stock of
the Company, RCK shall appear at each such meeting, in person or by
proxy, or otherwise cause the RCK Shares to be counted as present
thereat for purposes of establishing a quorum, and, subject to
Paragraph 21(b), RCK shall vote (or cause to be voted) or act (or
cause to be acted) by written consent with respect
A-7
to all of the RCK Shares (a) in favor of whichever of the Proposed
Recapitalization or the Substitute Recapitalization Proposal is then
recommended by the Board in accordance with this Agreement and all
other actions required in furtherance thereof, (b) in the case of the
RCK Class B Shares, in favor of the Proposed Charter Governance
Amendments and all other actions required in furtherance thereof and
(c) against any proposal that (I) is inconsistent with or contrary to
the terms and conditions of whichever of the Proposed Recapitalization
or the Substitute Recapitalization Proposal is then recommended by the
Board in accordance with this Agreement, the Proposed Charter
Governance Amendments or the Proposed Bylaw Governance Amendments or
(II) would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of RCK or any other
Party contained in this Agreement and (ii) within two business days
following the expiration of the Permitted Termination Period, to cause
to be provided to the Company a fully executed copy of the irrevocable
proxy in the form attached as Exhibit H hereto; provided, that such
proxy need not be so provided if the Expiration Date shall have
occurred and this Agreement shall not have been reinstated pursuant to
Paragraph 14(b).
9. SWK hereby agrees (i) that commencing upon the expiration of the
Permitted Termination Period and until the Expiration Date, at any
meeting of the shareholders of the Company, however called, or in
connection with any written consent of the holders of capital stock of
the Company, SWK shall appear at each such meeting, in person or by
proxy, or otherwise cause the SWK Shares to be counted as present
thereat for purposes of establishing a quorum, and, subject to
Paragraph 21(b), SWK shall vote (or cause to be voted) or act (or
cause to be acted) by written consent with respect to all of the SWK
Shares (a) in favor of whichever of the Proposed Recapitalization or
the Substitute Recapitalization Proposal is then recommended by the
Board in accordance with this Agreement and all other actions required
in furtherance thereof, (b) in the case of the SWK Class B Shares, in
favor of the Proposed Charter Governance Amendments and all other
actions required in furtherance thereof and (c) against any proposal
that (I) is inconsistent with or contrary to the terms and conditions
of whichever of the Proposed Recapitalization or the Substitute
Recapitalization Proposal is then recommended by the Board in
accordance with this Agreement, the Proposed Charter Governance
Amendments or the Proposed Bylaw Governance Amendments or (II) would
result in a breach of any covenant, representation or warranty or any
other obligation or agreement of SWK or any other Party contained in
this Agreement and (ii) within two business days following the
expiration of the Permitted Termination Period, to cause to be
provided to the Company a fully executed copy of the irrevocable proxy
in the form attached as Exhibit I hereto; provided, that such proxy
need not be so provided if the Expiration Date shall have occurred and
this Agreement shall not have been reinstated pursuant to Paragraph
14(b).
10. CHK hereby agrees (i) that commencing upon the expiration of the
Permitted Termination Period and until the Expiration Date, at any
meeting of the shareholders of the Company, however called, or in
connection with any written consent of the holders of capital stock of
the Company, CHK shall appear at each such meeting, in person or by
proxy, or otherwise cause the CHK Shares to be counted as present
thereat for purposes of establishing a quorum, and, subject to
Paragraph 21(b), CHK shall vote (or cause to be voted) or act (or
cause to be acted) by written consent with respect to all of the CHK
Shares (a) in favor of whichever of the Proposed Recapitalization or
the Substitute Recapitalization Proposal is then recommended by the
Board in accordance with this Agreement and all other actions required
in furtherance thereof, (b) in the case of the CHK Class B Shares, in
favor of the Proposed Charter Governance Amendments and all other
actions required in furtherance thereof and (c) against any proposal
that (I) is inconsistent with or contrary to the terms and conditions
of whichever of the Proposed Recapitalization or the Substitute
Recapitalization Proposal is then recommended by the Board in
accordance with this Agreement, the Proposed Charter Governance
Amendments or the Proposed Bylaw Governance Amendments or (II) would
result in a breach of any covenant, representation or warranty or any
other obligation or agreement of CHK or any other Party contained in
this Agreement and (ii) within two business days following the
expiration of the Permitted Termination Period, to cause to be
provided to the Company a fully executed copy of the irrevocable proxy
in the form attached as Exhibit J hereto; provided, that such proxy
need not be so provided if the Expiration Date shall have occurred and
this Agreement shall not have been reinstated pursuant to Paragraph
14(b).
A-8
11. The Company and the Shareholders approve of the issuance of the public
announcement of this Agreement as previously reviewed and agreed among
them and to consult with, and obtain the approval of, each other
before issuing any other press release or making any other public
announcement with respect to this Agreement, except in each such case
as may be required by applicable law or the Company's listing
agreement with Nasdaq Stock Market, Inc.
12. For purposes of this Agreement, the following terms shall have the
specified definitions:
(a) the "Permitted Termination Period" shall be the period
beginning from the later of (i) the date of this Agreement and (ii) the date of
public announcement of this Agreement, and, unless sooner ended under Paragraph
14(b) or 15(d), continuing until the later of (i) 35 days after the beginning
of the Permitted Termination Period and (ii) five days following written notice
by the Company to the Shareholders that the Company has received confirmation
by the Staff of the Securities and Exchange Commission (the "SEC") that it will
act promptly on a request by the Company for acceleration of effectiveness of
the registration statement containing the Meeting Documents (as defined in
Paragraph 22);
(b) the "Expiration Date" shall be the earliest to occur of
the following: (i) the termination of this Agreement by the Shareholders as
permitted in Paragraph 14(a) unless this Agreement shall have been reinstated
pursuant to Paragraph 14(b); (ii) the consummation of the Proposed
Recapitalization or the Substitute Recapitalization Proposal; (iii) the holders
of Class A Stock shall have failed to approve the Proposed Recapitalization or
the Substitute Recapitalization Proposal at the Shareholders' Meeting (it being
understood that other matters unrelated to this Agreement may be set forth on
the meeting agenda); (iv) the Board shall have determined not to proceed with
the Proposed Recapitalization or the Substitute Recapitalization Proposal as
permitted in Paragraph 21(b); (v) in the event that no Amendment Notice shall
be given under Paragraph 15(b) or a second arbitration commenced under
Paragraph 15(c), the day that is six months after the date of this Agreement;
and (vi) in the event that an Amendment Notice shall be given under Paragraph
15(b) or a second arbitration commenced under Paragraph 15(c), the date
determined under clause (v) plus the number of days by which the Arbitration
Period shall have been extended beyond the Arbitration Period that would have
applied had there been no Amendment Notice and no second arbitration;
(c) "affiliate" of any person shall mean another person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a person, whether through
the ownership of voting securities, by contract, as trustee or executor, or
otherwise; and
(d) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
13. (a) The Shareholders hereby represent and warrant to the Company that
they have delivered to Thomas Groark of Day, Berry & Howard, as
custodian, fully executed copies of the irrevocable proxies to be
delivered pursuant to Paragraphs 2 through 10 of this Agreement and
the share certificates to be delivered by them pursuant to the next
sentence. Not more than two business days following the expiration of
the Permitted Termination Period, the Shareholders shall cause to be
presented to the Company the stock certificates representing the
Shares held by them for the purpose of placing an appropriate legend
concerning the restrictions on transfer and voting imposed hereby and
noting the existence of an irrevocable proxy with respect to the
Shares represented by such certificate; provided, that such stock
certificates need not be so presented if the Expiration Date shall
have occurred and this Agreement shall not have been reinstated
pursuant to Paragraph 14(b). Unless otherwise permitted under this
Agreement, none of the Shareholders shall request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of their Shares.
(b) The Company agrees that if the Expiration Date occurs and neither
the Recapitalization Proposal nor the Substitute Recapitalization Proposal
shall have been consummated, the Company shall
A-9
within two business days thereafter deliver to Thomas Groark of Day, Berry &
Howard, as custodian, (i) any irrevocable proxies previously delivered by the
Shareholders under Paragraph 13(a) and (ii) either any share certificates
previously delivered by the Shareholders under Paragraph 13(a) or replacement
share certificates in the same amounts and with the same registered holders as
any share certificates so previously delivered by the Shareholders, in each
case without any legend.
14. (a) Notwithstanding any other provisions contained in this Agreement,
the Shareholders, or any of them, may until the expiration of the
Permitted Termination Period engage in discussions concerning any
transaction involving the possible sale or other disposition of their
Class B Shares, whether or not such transaction might result in a
Business Combination (as defined in Paragraph 17) (any such sale or
other disposition an "Alternative Transaction"), and terminate this
Agreement to complete an Alternative Transaction, if (i) such
Alternative Transaction constitutes a "Qualifying Alternative
Transaction" (as defined in Paragraph 14(c)), (ii) none of the
Shareholders or their representatives or agents shall have taken any
action from and after the date of this Agreement to solicit either
such Qualifying Alternative Transaction or any other Alternative
Transaction, it being agreed, however, that engaging in discussions or
negotiations with a third party with whom or with which discussions
concerning a possible sale of their Class B Shares have been held by
or on behalf of Kaman or any of the other Shareholders prior to
November 15, 2004, all such parties having been separately identified
in writing by the Shareholders to the Company, or with a third party
that shall have proposed to a Shareholder a Qualifying Alternative
Transaction without having been approached by a Shareholder on or
after the date of this Agreement, shall not be deemed to have violated
this clause (ii), (iii) within two business days following any such
discussions having reached a stage that the Shareholders reasonably
believe in good faith are likely to result in an agreement with the
third party proposing such possible Qualifying Alternative
Transaction, the Shareholders shall have given to the Company written
notice that the Shareholders are in discussions concerning a possible
Qualifying Alternative Transaction, (iv) the Shareholders shall have
given to the Company a written notice of their intent to terminate
this Agreement to complete such Qualifying Alternative Transaction (a
"QAT Termination Notice) and the Company shall not have publicly
announced a "Substitute Recapitalization Proposal" (as defined in
Paragraph 16(a)) within the Match Period (as defined in Paragraph
16(b)), and (v) the Reimbursement Parties (as defined in Paragraph
25(a)) shall have fully reimbursed the Company for any and all Defense
Costs (as defined in Paragraph 25(a)) theretofore reimbursed by the
Company not later than the time of the giving of the QAT Termination
Notice (whether such reimbursement obligation arose under Paragraph 25
or otherwise); provided, that such reimbursement obligation shall not
include any Defense Costs attributable to counsel representing the
directors of the Company generally. Notwithstanding the foregoing, the
Shareholders shall not enter into any agreement under this Paragraph
14 contemplating a transaction that would be restricted under
Paragraphs 17 through 20 unless such agreement shall specifically
provide that it shall not be a breach thereunder for the Company to
make and consummate a Substitute Recapitalization Proposal.
(b) In the event that the Shareholders shall terminate this Agreement
pursuant to Paragraph 14(a) but such Qualifying Alternative Transaction shall
not have been completed on the stated terms as to all of the shares of Class B
Stock owned by the Shareholders (the "Covered Class B Shares") within ten
business days following the earlier to occur of the end of the Match Period and
the Company's written notice to the Shareholders that it does not intend to
announce a Substitute Recapitalization Proposal, the Shareholders shall
immediately abandon such Qualifying Alternative Transaction and such
termination of this Agreement shall be deemed immediately rescinded with the
effect that this Agreement shall be immediately reinstated and the Permitted
Termination Period shall be deemed to have ended. In the event of such
reinstatement, the Reimbursement Parties' right to reimbursement for Defense
Costs under this Agreement shall also be reinstated, retroactive to the date of
the QAT Termination Notice, and the Company shall be required to repay to the
Reimbursement Parties Defense Costs reimbursed by the Reimbursement Parties to
the Company within two business days following receipt by the Company of
written notice from the Shareholders that such Qualifying Alternative
Transaction shall have been abandoned.
A-10
(c) In order to be a "Qualifying Alternative Transaction" for purposes
of this Agreement, a proposed transaction must (i) have proposed consideration
to be paid that is clearly specified and not dependent upon determinations by
the Arbiter (as defined in Paragraph 15(a)) and consists solely of cash and/or
freely marketable, publicly traded securities, with all outstanding shares of
Class B Stock being offered the same consideration, (ii) have a "Class B Share
Deemed Value" (as defined in Paragraph 16(d)) of not less than $46.62, (iii)
offer to purchase not less than all of the outstanding shares of Class B Stock
(including shares held by persons other than the Shareholders) by a third party
that is not an affiliate of any Shareholder (the "Third Party Offeror"), (iv)
have no conditions as to the purchase of the Covered Class B Shares other than
the delivery to the Third Party Offeror of title to the Covered Class B Shares,
subject to no liens or transfer restrictions other than those created by the
Third Party Offeror or imposed by the securities laws, (v) have no termination
right on the part of the Third Party Offeror other than (A) in the event of an
"act of God" such as a plant explosion or a strike materially adversely
affecting the Company (a "Covered Act of God"), the first public disclosure or
written notice to the Third Party Offeror of which occurs after the giving of
the QAT Termination Notice and prior to the giving of the last Reaffirmation
(as defined below) by the Third Party Offeror, or (B) the Company entering into
a material acquisition or divestiture agreement, declaring an extraordinary
dividend or issuing shares of Class B Stock (a "Company Action"), the first
public disclosure or written notice to the Third Party Offeror of which occurs
after the giving of the QAT Termination Notice, (vi) be required to close on
the stated terms or abandoned as to the Covered Class B Shares within ten
business days following the Company notifying the Shareholders that the Board
has determined not to approve a Substitute Recapitalization Proposal and (vii)
include an undertaking from the Third Party Offeror that the offer to holders
of Class B Stock other than the Shareholders will comply with any relevant
securities laws and that the Third Party Offeror will accept such shares for
purchase as promptly as the securities laws permit. In order for a proposed
transaction to be a "Qualifying Alternative Transaction" for purposes of this
Agreement, the Shareholders and the Third Party Offeror each must (i) at the
time of the giving of the QAT Termination Notice, certify that the proposed
transaction has been entered into with a good faith intention that it be
completed on the stated terms promptly in the event that the Company were not
to announce a Substitute Recapitalization Proposal and, in the case of the
Third Party Offeror, also certifying as to the sufficiency and prompt
availability of any required funds and the due authorization, validity and
eligibility for immediate trading of any freely marketable, publicly traded
securities proposed to be included as consideration (each, an "Initial
Certificate"), and (ii) promptly following a request therefor by the Company,
reaffirm in writing the substance of its Initial Certificate and, in the case
of the Third Party Offeror, covenant to the Shareholders and the Company that
it will not exercise its termination right in respect of any Covered Act of God
or Company Action as to which there shall have been public disclosure or
written notice provided to the Third Party Offeror prior to the giving of such
reaffirmation and covenant (each such reaffirmation and/or covenant, a
"Reaffirmation"). The Shareholders must also submit to the Company (and to the
Arbiter if an arbitration is commenced under Paragraph 15) (i) a complete and
accurate copy of all agreements between the Shareholders and the Third Party
Offeror relating to the proposed transaction (the "Third Party Agreements"),
(ii) the Shareholders' calculation of the Class B Share Deemed Value for the
purpose of such proposed transaction (the "Proposed Deemed Value Calculation")
and (iii) in the event that the Company and CWK shall not theretofore have
reached an agreement as to the extent of CWK's right to indemnification as a
director under Connecticut law, the Charter and the Company's Bylaws in respect
of any Claims (as defined in Paragraph 25(a)) that may have been made (the "CWK
Claim Coverage"), the Shareholders' position as to the extent of the CWK Claim
Coverage for such Claims.
15. (a) Should the Company determine to do so, within five business days
following its receipt of a QAT Termination Notice, it may submit to
one of the arbiters previously agreed upon between the Company and the
Shareholders (the "Arbiter") the following issue(s): (i) whether a
proposed transaction meets the standard of a Qualifying Alternative
Transaction; (ii) whether the Proposed Deemed Value Calculation is
correct; (iii) whether the Shareholders and Reimbursement Parties have
met the other conditions of terminating this Agreement under clauses
(ii), (iii) and (v) of Paragraph 14(a); and/or (iv) the extent of the
CWK Claim Coverage, after taking into account the nature of the
Claims, including whether the Claims relate to actions or failures to
act by CWK as a director, a shareholder or otherwise. If it does so,
the Company shall provide in its submission to the Arbiter its
position as to those issues submitted for arbitration. The
Shareholders shall then have two business days in which to provide a
submission to the Arbiter and the Company
A-11
explaining their positions as to those issues submitted for
arbitration. The Arbiter shall be directed to make a determination as
to each of the issues submitted for arbitration within ten business
days following the receipt of such submission by the Shareholders (the
"Arbitration Period"). In the event that the Arbiter determines that
the proposed transaction is a Qualified Alternative Transaction but
the Proposed Deemed Value Calculation is not correct, the Arbiter
shall also determine the Class B Deemed Share Value. In the event that
the Arbiter is asked to make a determination as to the extent of the
CWK Claim Coverage, the Arbiter shall in his determination distinguish
between indemnifiable Claims for actions or failures to act as a
director and non-indemnifiable Claims for actions or failures to act
as a shareholder or other capacity and provide a detailed explanation
as to how he distinguished such Claims.
(b) If the Company determines to submit the matter to arbitration, the
Shareholders shall have a single opportunity to amend the Third Party
Agreements in order to meet the requirements of a Qualifying Alternative
Transaction. Written notice of any such amendment (an "Amendment Notice") must
be given to both the Company and the Arbiter not later than one business day
following the Arbiter having issued his determination and be accompanied by
complete and accurate copies of the amended agreements, an updated Proposed
Deemed Value Calculation and updated Initial Certificates from the Shareholders
and the Third Party Offeror. The Company shall have five business days
following its receipt of an Amendment Notice to determine whether to submit the
proposed transaction, as amended, to arbitration. In the event that an
Amendment Notice is given prior to the Arbiter having issued a determination
and the Company determines to submit the amended transaction for arbitration,
the Arbiter's determination will be then due ten business days following the
receipt of notice of the Company's determination. In the event that an
Amendment Notice is given following the Arbiter having issued a determination
and the Company determines to submit the amended transaction for arbitration,
the Arbiter's determination will be then due five business days following the
receipt of notice of the Company's determination. If the amendment as to which
an Amendment Notice relates changes the Class B Deemed Value of the proposed
transaction, then the Arbiter shall determine the Class B Deemed Value for the
transaction as originally proposed and the Class B Deemed Value for the
transaction as amended, and the average of the two shall be used for purposes
of establishing the minimum value of a Substitute Recapitalization Proposal
under Paragraph 16.
(c) In the event that the initial Arbiter fails to render a
determination by the end of the Arbitration Period, and the Parties shall not
otherwise have agreed, as to all matters that have been submitted for
arbitration, the services of the initial Arbiter shall be immediately
terminated and only those matters as to which the Arbiter shall have rendered a
determination shall be deemed to be settled. In the event that any of the
Parties determines to do so, a new arbitration process as to all such items
neither so determined or agreed between the Parties shall be commenced promptly
with one of the substitute arbiters agreed by the Parties serving as the
Arbiter. At the time of or promptly following commencement of such new
arbitration process, the Parties will submit to the Arbiter the materials
submitted by them in the first arbitration. Such new arbitration shall have a
ten business day Arbitration Period beginning to run from the date of receipt
by the Arbiter of submissions from both the Company and the Shareholders and
the same procedural requirements as set forth above. In the event that the
second Arbiter fails to render a determination by the end of the new
Arbitration Period and the Parties shall not otherwise have agreed as to all
such items, the services of the second Arbiter shall be immediately terminated
and only those matters as to which the Arbiter shall have rendered a
determination shall be deemed to be settled; provided, that, unless the Arbiter
shall have determined otherwise, the proposed transaction shall be deemed to be
a Qualifying Alternative Transaction and the other conditions to the
Shareholders' termination of this Agreement under Paragraph 14(a) shall be
deemed to be met. Notwithstanding the foregoing, only those proposed arbiters
who actually confirm their engagement and accept submissions under Paragraph
15(a) or this Paragraph 15(c) shall be deemed to have been the Arbiter for
purposes of determining application of the proviso to the immediately preceding
sentence.
(d) In the event that an Amendment Notice is given or a second
arbitration process is commenced under Paragraph 15(c), the Permitted
Termination Period shall be deemed to end on (i) the earlier to occur of the
date determined under Paragraph 12(a) and 75 days following the initial filing
with the SEC of the registration statement containing the Meeting Documents or
(ii) the day the arbitration process is completed, if later than the date
determined under clause (i).
A-12
(e) Each of the Company and the Shareholders agrees (i) to comply
promptly with requests from the Arbiter for information or to schedule any oral
presentations to the Arbiter, (ii) that all submissions to the Arbiter will be
provided at the same time to the other party and that all contacts with the
Arbiter will be made jointly, and (iii) that the Arbiter's fee and expenses
will be paid 50% by the Shareholders and 50% by the Company. It is agreed that
each arbiter engaged under this Paragraph 15 shall be treated as the Arbiter
for purposes of this provision.
(f) The Parties acknowledge that public disclosure would need to be
made as to the specifics of a proposed transaction promptly following a QAT
Termination Notice being given and as to the Arbiter's determinations when they
are made.
16. (a) In the event that the Shareholders were to propose a termination
of this Agreement to complete a Qualifying Alternative Transaction by
giving a QAT Termination Notice under Paragraph 14(a), the Company
would have the right to leave this Agreement in place and retain the
Shareholders' contractual support thereunder by publicly announcing
its revision of the Proposed Recapitalization such that the number of
shares of Class A Stock to be received upon exchange of each share of
Class B Stock would be increased to the number of shares needed for
the "Class B Share Deemed Value" of the revised proposed
recapitalization (as so revised, the "Substitute Recapitalization
Proposal") to be equal to the Class B Share Deemed Value in the
Qualified Alternative Transaction, plus $.65. There would also be a
revised part cash/part stock alternative which would have the same
Class B Share Deemed Value as the revised all stock alternative and
the same proportion of stock and cash as under the current
recapitalization proposal (i.e., 48.7% cash and 51.3% stock). For such
purposes, share amounts will be rounded to the nearest 1/100 of a
share and dollar amounts will be rounded to the nearest cent. In
connection with any Substitute Recapitalization Proposal, the
Shareholders agree to elect to take the part cash/part stock
alternative to the extent requested to do so by the Company, following
the advice of its counsel, to avoid application of the higher vote
requirement of Section 33-841 of the Connecticut Business Corporation
Act to the Substitute Recapitalization Proposal.
(b) The Company may exercise the right to substitute a revised
recapitalization proposal under Paragraph 16(a) during the "Match Period",
which would commence upon the Company's receipt of the QAT Termination Notice
and end on the close of business on the later to occur of (i) the tenth
business day following the Company's receipt of the QAT Termination Notice and
(ii) the fifth business day following a determination by the Arbiter (or a
deemed determination under Paragraph 15(c)) that a proposed transaction meets
the requirements of a Qualified Alternative Transaction. The Substitute
Recapitalization Proposal would include the same proposed governance provisions
and be subject to the shareholder approval requirements as contemplated for the
Recapitalization Proposal. If the Company were to so exercise the right of
substitution, the Shareholders' right to Defense Costs under this Agreement
would be reinstated, retroactive to the date of the QAT Termination Notice, and
the Company would be required to repay to the Shareholders Defense Costs
reimbursed by the Shareholders to the Company on the same day that the Company
notifies the Shareholders that the Company has exercised such right of
substitution.
(c) In the event that the Company were to publicly announce a
Substitute Recapitalization Proposal, the Shareholders would not be permitted
to complete the Qualified Alternative Transaction unless this Agreement were to
be later terminated without the Substitute Recapitalization Proposal having
been completed other than by reason of a failure of the Shareholders to have
performed their obligations under this Agreement.
(d) For purposes of this Agreement, the "Class A Share Deemed Value"
of one share of Class A Stock to be received under the Substitute
Recapitalization Proposal would be equal to $15.54. If a proposed transaction
includes only the purchase of shares of Class B Stock and is solely for cash,
the "Class B Share Deemed Value" of the shares of Class B Stock in such
transaction will be the aggregate amount of cash proposed to be paid to the
Shareholders for the Covered Class B Shares divided by the number of Covered
Class B Shares proposed to be purchased from the Shareholders. If a proposed
transaction includes only the purchase of shares of Class B Stock and if the
consideration includes freely
A-13
marketable, publicly traded securities, the "Class B Share Deemed Value" of the
shares of Class B Stock will be the aggregate amount of cash and the aggregate
Fair Market Value (as defined below) of such securities proposed to be paid to
the Shareholders for the Covered Class B Shares divided by the number of
Covered Class B Shares proposed to be purchased from the Shareholders. If a
proposed transaction also includes the purchase of any shares of Class A Stock
from the Shareholders, (i) such shares of Class A Stock shall be valued at the
greater of the value per share ascribed to them in such proposed transaction
(determined using the same methodology as above for valuing shares of Class B
Stock) and the Class A Share Deemed Value, and (ii) all remaining consideration
shall be allocated to the Covered Class B Shares proposed to be purchased from
the Shareholders to determine the "Class B Share Deemed Value" of the Covered
Class B Shares proposed to be purchased from the Shareholders.
(e) The "Fair Market Value" of freely marketable, publicly traded
securities proposed as consideration for the shares of Class B Stock and/or
Class A Stock shall be established by reference to the average closing sale
prices for such securities on the principal exchange or quotation system where
they are traded over the ten trading day period ending on the trading day prior
to the giving of the QAT Termination Notice. Publicly traded securities shall
be deemed to be "freely marketable" for such purposes if (i) there is no
restriction on the trading of such securities other than compliance with the
securities laws and (ii) the issuer of such securities has (A) effected
Securities Act of 1933, as amended (the "Securities Act"), registration of such
securities at the time of issuance, (B) agreed to promptly effect Securities
Act registration of such securities on a resale basis as promptly as
practicable following the time of issuance or (C) represented that no
Securities Act registration is needed for either the issuance or resale of such
securities.
(f) For example, assume that the "Class A Share Deemed Value" is
$15.00 and, to make the math simpler, the Shareholders have 500,000 shares of
Class B Stock and 700,000 shares of Class A Stock. Also assume that as part of
a proposed transaction the proposed purchase price to be paid for the
Shareholders' 500,000 shares of Class B Stock is $20.0 million in cash and
publicly traded securities with a Fair Market Value of $3.5 million and the
proposed purchase price to be paid for the Shareholders' 700,000 shares of
Class A Stock is $5.0 million and publicly traded securities with a Fair Market
Value of $2.0 million. The average stated price for the shares of Class A Stock
is $10.00 per share (the sum of $5.0 million plus $2.0 million, divided by
700,000 shares of Class A Stock). Since this is less than the Class A Share
Deemed Value of $15.00, the difference of $3.5 million ($5.00 per share times
700,000 shares of Class A Stock) needs to be deducted from the $23.5 million
otherwise attributed to the shares of Class B Stock ($20.0 million plus $3.5
million). This leaves $20.0 million attributable to the 500,000 shares of Class
B Stock, for a "Class B Share Deemed Value" of $40.00 ($20.0 million divided by
500,000 shares of Class B Stock). Since the minimum level for a Qualifying
Alternative Transaction is $45.00 ($15.00 times three), this proposed
transaction would not be a Qualifying Alternative Transaction. If, on the other
hand, the average stated price for the shares of Class A Stock had been $15.00
or more and the proposed consideration cash and non-cash for the Class B shares
remained the same as in the example, there would be no adjustment for the
consideration proposed to be paid for the shares of Class A Stock and the
"Class B Share Deemed Value" of the proposed transaction would be $47.00 ($23.5
million divided by 500,000 shares of Class B Stock) and accordingly it would
qualify as a Qualifying Alternative Transaction and the minimum "Class B Share
Deemed Value" for a revised recapitalization proposal would need to be $47.65.
17. Kaman hereby agrees, and hereby agrees on behalf of his
representatives and agents, except as permitted under Paragraph 14 or
15 or as otherwise specifically contemplated by this Agreement, not to
directly or indirectly at any time prior to the Expiration Date (i)
sell, transfer, tender, exchange, offer a right of first refusal,
assign, pledge, encumber (including, without limitation, a mortgage,
security interest, charge or lien), gift or otherwise dispose of the
Kaman Shares, (ii) grant a voting interest in or deposit into a voting
trust any of the Kaman Shares, (iii) grant a proxy or power of
attorney with respect to the Kaman Shares, (iv) agree (whether or not
contingent upon the termination of this Agreement or any other event
or passage of time) to take any of the foregoing actions in this
Paragraph 17, except for the arrangements granting power to the DPA
Attorneys-in-Fact under the Durable Power of Attorney and the GPA
Attorney-in-Fact under the General Power of Attorney existing as of
the date of this Agreement without giving effect to any arrangements
or transactions undertaken by or on behalf of the DPA
Attorneys-in-Fact or the GPA
A-14
Attorney-in-Fact under such instrument occurring on or after the date
of this Agreement (whether or not entered into prior to the date of
this Agreement), or (v) enter into or continue any discussions or
negotiations with, or provide information, advice, aid, cooperation or
assistance to, or explore, initiate, solicit or facilitate interest
from, or enter into or consummate any transaction with, any third
party or its representatives and agents relating to the foregoing
matters in this Paragraph 17 or a merger, business combination,
consolidation, share exchange, tender offer or a recapitalization
involving the Company or any of its subsidiaries or a sale of all or
substantially all of the assets of the Company or any of its
subsidiaries, taken as a whole, in a single transaction or series of
related transactions or any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any
of the foregoing (individually, a "Business Combination").
18. Newgate hereby agrees, and hereby agrees on behalf of its
representatives and agents, except as permitted under Paragraph 14 or
15 or as otherwise specifically contemplated by this Agreement, not to
directly or indirectly at any time prior to the Expiration Date (i)
sell, transfer, tender, exchange, offer a right of first refusal,
assign, pledge, encumber (including, without limitation, a mortgage,
security interest, charge or lien), gift or otherwise dispose of the
Newgate Shares, (ii) grant a voting interest in or deposit into a
voting trust any of the Newgate Shares, (iii) grant a proxy or power
of attorney with respect to the Newgate Shares, (iv) agree (whether or
not contingent upon the termination of this Agreement or any other
event or passage of time) to take any of the foregoing actions in this
Paragraph 18, except for the arrangements granting power to Newgate
under the Newgate Partnership Agreement existing as of the date of
this Agreement without giving effect to any arrangements or
transactions undertaken by or on behalf of Newgate under such
agreement occurring on or after the date of this Agreement (whether or
not entered into prior to the date of this Agreement), or (v) enter
into or continue any discussions or negotiations with, or provide
information, advice, aid, cooperation or assistance to, or explore,
initiate, solicit or facilitate interest from, or enter into or
consummate any transaction with, any third party or its
representatives and agents relating to the foregoing matters in this
Paragraph 18 or a Business Combination.
19. Oldgate hereby agrees, and hereby agrees on behalf of its
representatives and agents, except as permitted by Paragraph 14 or 15
or as otherwise specifically contemplated by this Agreement, not to
directly or indirectly at any time prior to the Expiration Date (i)
sell, transfer, tender, exchange, offer a right of first refusal,
assign, pledge, encumber (including, without limitation, a mortgage,
security interest, charge or lien), gift or otherwise dispose of the
Oldgate Shares, (ii) grant a voting interest in or deposit into a
voting trust any of the Oldgate Shares, (iii) grant a proxy or power
of attorney with respect to the Oldgate Shares, (iv) agree (whether or
not contingent upon the termination of this Agreement or any other
event or passage of time) to take any of the foregoing actions in this
Paragraph 19, except for the arrangements granting power to Oldgate
under the Oldgate Partnership Agreement existing as of the date of
this Agreement without giving effect to any arrangements or
transactions undertaken by or on behalf of Oldgate under such
agreement occurring on or after the date of this Agreement (whether or
not entered into prior to the date of this Agreement), or (v) enter
into or continue any discussions or negotiations with, or provide
information, advice, aid, cooperation or assistance to, or explore,
initiate, solicit or facilitate interest from, or enter into or
consummate any transaction with, any third party or its
representatives and agents relating to the foregoing matters in this
Paragraph 19 or a Business Combination.
20. Each of the Shareholders (other than Kaman, Newgate and Oldgate)
hereby agrees, and hereby agrees on behalf of its representatives and
agents, except as permitted by Paragraph 14 or 15 or as otherwise
specifically contemplated by this Agreement, not to directly or
indirectly at any time prior to the Expiration Date (i) sell,
transfer, tender, exchange, offer a right of first refusal, assign,
pledge, encumber (including, without limitation, a mortgage, security
interest, charge or lien), gift or otherwise dispose of the Shares
held by them, (ii) grant a voting interest in or deposit into a voting
trust any of the Shares held by them, (iii) grant a proxy or power of
attorney with respect to the Shares held by them, (iv) agree (whether
or not contingent upon the termination of this
A-15
Agreement or any other event or passage of time) to take any of the
foregoing actions in this Paragraph 20, or (v) enter into or continue
any discussions or negotiations with, or provide information, advice,
aid, cooperation or assistance to, or explore, initiate, solicit or
facilitate interest from, or enter into or consummate any transaction
with, any third party or its representatives and agents relating to
the foregoing matters in this Paragraph 20 or a Business Combination.
21. (a) A special meeting of the Company's shareholders (the
"Shareholders' Meeting") shall be held as soon as reasonably
practicable after the expiration of the Permitted Termination Period
for the purpose of obtaining approval of (i) whichever of the Proposed
Recapitalization or the Substitute Recapitalization Proposal as is
then recommended by the Board in accordance with this Agreement, by
the affirmative vote of the votes cast within the voting group
favoring the Proposed Recapitalization or the Substitute
Recapitalization Proposal exceeding the votes cast opposing the
Proposed Recapitalization or the Substitute Recapitalization Proposal,
with respect to the Class A Stock and Class B Stock each voting as a
separate class and (ii) the Proposed Charter Governance Amendments, by
the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of the Class B Stock (collectively, the
"Shareholder Approval"), and the Company shall use its commercially
reasonable efforts to obtain the Shareholder Approval, including the
use of a proxy statement reflecting this Agreement and setting forth
the manner in which holders of Class B Stock may elect to receive the
Alternative Class B Stock Consideration and in which the Board
recommends (a) to the holders of the Class B Stock to vote for the
approval of the Proposed Recapitalization or the Substitute
Recapitalization Proposal as contemplated by this Agreement and the
Proposed Charter Governance Amendments and (b) to the holders of the
Class A Stock to vote for the approval of the Proposed
Recapitalization or the Substitute Recapitalization Proposal as
contemplated by this Agreement. The Proposed Charter Governance
Amendments and the Proposed Bylaw Governance Provisions, by their
terms, shall not take effect if the Proposed Recapitalization or the
Substitute Recapitalization Proposal does not occur.
(b) Notwithstanding the foregoing, either of the Special Committee or
the Board may (w) withdraw, modify or propose to withdraw or modify its
recommendation of, or fail to implement one or more of the Proposed Charter
Governance Amendments or the Proposed Bylaw Governance Provisions, (x)
withdraw, modify or propose to withdraw or modify its recommendation of the
Proposed Recapitalization or the Substitute Recapitalization Proposal, (y) fail
to call, delay or cancel the Shareholders' Meeting, and/or (z) in the case of
the Board, terminate this Agreement, in each case if it determines in good
faith it would be appropriate to do so in the exercise of its fiduciary duties;
provided, that (i) no such modification or proposal to modify under clause (w)
may add proposed amendments or have the reasonably likely effect of reducing
shareholder influence unless such modification or proposal to modify is
required by a change in law or regulation or NASDAQ listing rules, and (ii) any
such action under clause (x), (y) or (z) must be based principally on a
material change or development or material information coming to the attention
of the Special Committee or the Board following the date of this Agreement or,
if there is a Substitute Recapitalization Proposal, the date of Board approval
of such Substitute Recapitalization Proposal.
(c) In the event that the Company shall terminate this Agreement under
Paragraph 21(b)(z) before either the Proposed Recapitalization or the
Substitute Recapitalization Proposal has been submitted for Shareholder
Approval, the Company shall reimburse the actual, out of pocket expenses of the
Shareholders incurred in connection with negotiating this Agreement and in
pursuing a Qualifying Alternative Transaction; provided, that (w) such
reimbursement obligation shall not include Defense Costs, any amounts paid to
satisfy judgments or settlements of Claims, any amounts paid to Compass
Partners or other financial advisor or any amounts paid in respect of fees or
expenses of the Arbiter, (x) the Shareholders must provide reasonable
documentation as to such expenses, including a reasonably detailed description
of the hours worked and services provided by counsel or other advisors, (y)
such reimbursement obligation shall be limited to $750,000 in the aggregate if
there shall not have been a Substitute Recapitalization Proposal and $1,250,000
in the aggregate if there shall have been a Substitute Recapitalization
Proposal and (z) the Shareholders agree to return to the Company within two
business days the amount so reimbursed in the event that, within six months
following termination under Paragraph 21(b)(z), the Shareholders sell any of
their Covered Class B shares at an average price in excess of the then current
A-16
market price for the shares of Class A Common Stock, it being agreed that, if
both shares of Class A Stock and shares of Class B Stock are sold in the same
transaction (or a series of related transactions), the shares of Class A Stock
so sold shall be deemed to be sold at the then current market price for such
shares and the Covered Class B Shares so sold shall be deemed to be sold for
the balance of the gross sale proceeds; provided, that the amount to be so
reimbursed shall be limited to the aggregate amount of excess proceeds received
for the Class B Stock over the then current trading price for the Class A
Stock.
22. Each of the Shareholders agrees, and agrees to cause its, his or her
representatives and agents, to provide all information and materials
and take all such action as may be required in order to permit the
Company to promptly comply with all applicable requirements of the SEC
with respect to the relevant documents prepared for the Shareholders'
Meeting (the "Meeting Documents"), including its identity and
ownership of Shares and the nature of its commitments, arrangements
and understandings under this Agreement. The Shareholders shall not be
responsible for the description of the terms of this Agreement in the
Meeting Documents. Each of the Shareholders and its counsel shall be
given a reasonable opportunity to review and comment on the Meeting
Documents before the filing thereof with the SEC, and the Meeting
Documents as filed with the SEC shall be reasonably satisfactory, in
form and substance, to the Shareholders and their counsel. The Company
disclaims any liability for statements made or incorporated by
reference in the Meeting Documents based on information and materials
provided by or on behalf of the Shareholders expressly for inclusion
or incorporation by reference therein.
23. For so long as this Agreement shall remain in effect, each of the
Shareholders agrees, and shall cause its, his or her representatives
and agents, not to, (i) act in concert with any other person (other
than the other Shareholders in a manner consistent with the terms of
this Agreement) by becoming a member of a 13D Group (as defined
below), (ii) solicit, initiate or participate in any "solicitation" of
"proxies" or become a "participant" in any "election contest" (as such
terms are defined or used in Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), (iii) call, or
participate in a call for, any special meeting of shareholders of the
Company, (iv) participate in or solicit shareholders of the Company
for the approval of, one or more shareholder proposals or (v) assist,
advise or act in concert with any person (other than the Company or
its advisors) with respect to, or seek to do, any of the foregoing.
For purposes of this Paragraph 23, "13D Group" shall mean any group of
persons acquiring, holding, voting or disposing of Class A Stock that
would be required under Section 13(d) of the Exchange Act and the
rules and regulations thereunder (assuming the Class A Stock is an
"equity security" within the meaning of Rule 13d-1(i) of the Exchange
Act) to file a statement on Schedule 13D with the SEC as a "person"
within the meaning of Section 13(d)(3) of the Exchange Act if such
group beneficially owned Class A Stock representing more than 5% of
the Class A Stock then outstanding; provided that nothing in this
Agreement shall limit the rights and obligations of the Shareholders
set forth herein, including concerning a Qualifying Alternative
Transaction, or the ability of the Shareholders to confer and
communicate with each other and their representatives and agents with
regard to the Class A Stock and the Class B Stock.
24. The Company agrees, subject to applicable law and the provisions of
this Paragraph 24, to (i)(a) file a post-effective amendment to the
registration statement that will be filed with the SEC to register the
shares of Class A Stock distributed by the Company in the Proposed
Recapitalization or the Substitute Recapitalization Proposal, as well
as other shares of Class A Stock held by the Shareholders
(collectively, the "Subject Shares") within 15 days after the
consummation of the Proposed Recapitalization or the Substitute
Recapitalization Proposal to convert it to a shelf registration
statement covering resales of the Subject Shares, or (b) file a shelf
registration statement with the SEC covering resales of the Subject
Shares within 30 days after the consummation of the Proposed
Recapitalization or the Substitute Recapitalization Proposal, (ii) use
its commercially reasonable efforts to seek prompt effectiveness of
such registration statement, (iii) prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of the Subject Shares thereunder, (iv) furnish to the
A-17
Shareholders such number of conformed copies of such registration
statement and each amendment and supplement thereto (including in each
case all exhibits), and of a summary prospectus or other prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as the
Shareholders may reasonably request, (v) use its commercially
reasonable efforts to register or qualify the Subject Shares under
securities or "blue sky" laws of jurisdictions within the United
States as the Shareholders shall reasonably request, to keep such
registration or qualification in effect for so long as such
registration statement remains in effect, and to take any other action
which may be reasonably necessary to enable the Shareholders to
consummate the disposition in such jurisdictions of the Subject Shares
under such registration statement (provided, however, that the Company
shall not be required in connection therewith or as a condition
thereto to qualify to do business, subject itself to taxation in or to
file a general consent to service of process in any jurisdiction
wherein it would not but for the requirements of this Paragraph 24 be
obligated to do so), and (vi) permit resales by the Shareholders of
the Subject Shares under such registration statement until the earlier
to occur of (a) one year from the date of consummation of the Proposed
Recapitalization plus the length of any Suspension Periods (as defined
below) and (b) the first date on which the Shareholders are permitted
to sell or transfer the Subject Shares under Rule 144 of the
Securities Act, without limitations on volume in any one sale or
transfer; provided that if the Company shall furnish to the
Shareholders a certificate signed by its Chairman, Chief Executive
Officer or Chief Financial Officer stating that (y) filing a
registration statement or maintaining effectiveness of a current
registration statement would have a material adverse effect on the
Company or its shareholders in relation to any material financing,
acquisition or other corporate transaction, and the Company has
determined in good faith that such disclosure is not in the best
interests of the Company and its shareholders or (z) the Company has
determined in good faith that the filing or maintaining effectiveness
of a current registration statement would require disclosure of
material information that the Company has a valid business purpose of
retaining as confidential, the Company shall be entitled to postpone
filing or suspend the use by the Shareholders for a reasonable period
of time, but not in excess of 45 consecutive calendar days (any period
of such postponement or suspension, a "Suspension Period"). The
Company shall be entitled to exercise such suspension right more than
one time in any calendar year; provided that such exercise shall not
prevent the Shareholders from being entitled to at least 270 days of
effective registration rights per year and that no Suspension Period
may commence if it is less than 30 days from the prior such Suspension
Period. The Shareholders agree to provide all information and
materials and take all such action as may be required in order to
permit the Company to comply with all applicable requirements of the
SEC and to obtain any desired acceleration of the effective date of
such registration statement and shall be given a reasonable
opportunity to review and comment on the registration statement and
any amendments thereto before the filing thereof with the SEC, which
shall be not less than five business days in the case of the
registration statement and two business days in the case of any
amendment. The Subject Shares of any Shareholder who fails to provide
such information or otherwise cooperate within the foregoing time
periods may be excluded by the Company from such registration
statement. The Company disclaims any liability for statements made or
incorporated by reference in such registration statement or prospectus
based on information and materials provided by or on behalf of the
Shareholders expressly for inclusion or incorporation by reference
therein, provided that all such statements in the registration
statement, as filed with the SEC, are reasonably satisfactory to the
Shareholders.
25. (a) Subject to the provisions of Paragraphs 25(b) and 25(c), the
Company hereby agrees to reimburse the Shareholders and the GPA
Attorney-in-Fact (individually, a "Reimbursement Party" and,
collectively, the "Reimbursement Parties") for any and all
out-of-pocket attorneys' fees and their related expenses
(collectively, the "Defense Costs") actually and reasonably incurred
by any of the Reimbursement Parties arising out of or resulting from
the defense of any third party allegation, claim, action, suit,
complaint, demand, litigation or legal or administrative proceeding,
including those brought derivatively on behalf of the Company alleging
any wrongful action or inaction by any Shareholder in his, her or its
capacity as a shareholder of
A-18
the Company or any wrongful action or inaction by any of the
Reimbursement Parties taken in connection with any alleged wrongful
action or inaction by a Shareholder in his, her or its capacity as a
shareholder of the Company, in each case in connection with the
authorization, execution, delivery and performance of this Agreement
by any of the Shareholders (collectively, the "Claims"); provided,
that Defense Costs shall not include amounts paid (x) to satisfy
judgments or settlements relating to Claims or (y) in respect of CWK
Claim Coverage. For purposes of this Paragraph 25, "reimbursement"
shall be deemed to include direct payment by the Company of bills that
are submitted by the Reimbursement Parties in compliance with
Paragraph 25(b).
(b) The reimbursement obligation of the Company pursuant to Paragraph
25(a) with respect to Defense Costs will be subject to the following terms and
conditions:
(i) the reimbursement of Defense Costs is conditioned on (A) there
having been no breach of this Agreement by any of the Reimbursement Parties,
(B) there not then existing a "QAT Disqualification" (as defined below), (C)
the Reimbursement Parties and their counsel not having claimed that any
provision of this Agreement is illegal or invalid for any reason, and having
reasonably cooperated with counsel to the Company or members of the Board of
Directors of the Company in the review and defense of any Claim, and (D) there
having been no determination by a court of competent jurisdiction that any of
the Reimbursement Parties has engaged in intentional misconduct or has acted
with gross negligence or in bad faith in connection with any matter the subject
of a Claim;
(ii) within ten business days of his, her or its receipt of notice of
such Claim, a Reimbursement Party must give the Company written notice of any
Claim asserted against such Reimbursement Party, directly or indirectly, for
which such Reimbursement Party expects to receive reimbursement of Defense
Costs under Paragraph 26(a), following which the Company may determine at its
election to undertake the defense thereof by representatives of the Company's
choosing which are reasonably satisfactory to the Reimbursement Parties or
permit the Reimbursement Parties to undertake the defense thereof by
representatives of their choosing which are reasonably satisfactory to the
Company, it being agreed that the Reimbursement Parties shall be responsible
for their own Defense Costs, except to the extent that the Company has a
reimbursement obligation as provided for under Paragraph 25(a), and that a
failure of a Reimbursement Party to give such notice shall not result in a
forfeiture of his, her or its reimbursement rights unless the Company shall
have been materially disadvantaged by such failure;
(iii) notwithstanding the provisions of Paragraph 25(b)(ii), with
respect to any Claim, the Reimbursement Parties will collectively have the
right, if the Company elects to undertake the defense, to employ one law firm
of their choice (in each applicable jurisdiction, if more than one jurisdiction
is involved) to represent the Reimbursement Parties if, in their collective
reasonable judgment, a conflict of interest between the Reimbursement Parties
and the Company exists in respect of such Claim, and in that event the Defense
Costs of such separate counsel shall be reimbursable by the Company pursuant to
and subject to the provisions of this Paragraph 25;
(iv) neither the Company nor any of the Reimbursement Parties will,
without the prior written consent of the other, settle or compromise any Claim
or consent to entry of any judgment relating to any such Claim if such
settlement or compromise will impose a liability or obligation on the other;
and
(v) the Company will reimburse the Defense Costs for which the
Reimbursement Parties are entitled to be reimbursed under Paragraph 25(a) only
after (A) the receipt by the Company of the related bill from counsel, together
with a reasonably detailed descriptions of hours worked and services provided
by counsel, (B) receipt by the Company of either evidence that the Defense
Costs to be reimbursed have actually been paid by the Reimbursement Parties
requesting reimbursement or written confirmation by the Reimbursement Parties
requesting reimbursement that such bill accurately represents an amount owed by
such Reimbursement Parties and (C) the satisfaction of the conditions set forth
in Paragraph 25(b)(i).
(c) Each of the Reimbursement Parties acknowledges and agrees that the
Company shall be entitled to rely upon the assurances of CWK and John C. Yavis,
Jr., acting jointly, as to their authority to act for and bind any other
Reimbursement Party for any action taken under this Paragraph 25.
A-19
(d) A "QAT Disqualification" shall be deemed to commence from the time
at which a QAT Termination Notice shall have been delivered to the Company and
shall be deemed to continue (i) indefinitely in the event that the proposed
Qualifying Alternative Transaction specified in such QAT Termination Notice
shall be completed, (ii) until such time as the Shareholders shall have
confirmed to the Company in writing that such proposed Qualifying Alternative
Transaction shall have been abandoned or (iii) until such time as the Company
shall have publicly announced a Substitute Recapitalization Proposal.
(e) Each of the Reimbursement Parties acknowledges and agrees that,
for so long as a QAT Disqualification shall remain in effect, he, she or it
will not seek or attempt to seek and hereby knowingly and irrevocably releases
and relinquishes any right he, she or it had, has or may in the future have,
directly or indirectly, for reimbursement, indemnification or contribution of
Defense Costs or liability from the Company, any of its subsidiaries or
affiliates, or any of their respective directors or officers, including,
without limitation, from any third party or self insurance arrangement or
policy of the Company or any of its subsidiaries or affiliates, with respect to
Claims; provided, however, that the foregoing release and relinquishment shall
not deprive CWK of any right of indemnification, reimbursement, or any other
right under Connecticut law, the Company Charter or the Company's Bylaws to the
extent of the CWK Claim Coverage. Nothing in this Agreement shall be deemed to
deprive any Shareholder of any right to indemnification, reimbursement, or any
other right or claim, in connection with any litigation or other matter that
does not arise from this Agreement, whether such right or claim is against the
Company or any other person, and whether such right arises under contract,
certificate of incorporation or bylaws, statute, common law or otherwise.
26. Kaman represents and warrants that (i) the Durable Power of Attorney
is in full force and effect and the scope of powers granted thereunder
to the DPA Attorneys-in-Fact has not been revoked, limited, modified
or amended since the date of grant, (ii) the General Power of Attorney
is in full force and effect and the scope of powers granted thereunder
to the GPA Attorney-in-Fact has not been revoked, limited, modified or
amended since the date of grant, (iii) he has not granted any power of
attorney (other than the General Power of Attorney and the Durable
Power of Attorney) or appointed any proxy to vote or otherwise act for
him with respect to the Kaman Shares (other than the irrevocable proxy
executed and delivered by him pursuant to Paragraph 4), (iv) this
Agreement and the irrevocable proxies granted under Paragraphs 2 and 4
have been duly executed and delivered by Kaman, acting through the GPA
Attorney-in-Fact under the General Power of Attorney and the DPA
Attorneys-in-Fact under the Durable Power of Attorney, as the case may
be, and each constitutes the legal, valid and binding obligation of
Kaman and is enforceable against Kaman and his heirs, personal
representatives, successors and permitted assigns in accordance with
its terms, and (v) he owns of record and beneficially the Kaman
Shares, free and clear of any lien, encumbrance, option, pledge,
security interest, right of first refusal or similar restriction,
including any restriction on voting, transfer or other exercise of any
other attribute of ownership thereof, except for the General Power of
Attorney and the Durable Power of Attorney and that the Indirectly
Owned Kaman Class B Shares are subject to the Voting Trust Agreement
and are registered in the name of John C. Yavis, Jr. as custodian.
27. Newgate represents and warrants that (i) the Newgate Partnership
Agreement is a valid and binding agreement of the parties thereto and
is enforceable in accordance with its terms, (ii) CWK is the sole
General Partner of Newgate, (iii) this Agreement and the irrevocable
proxy executed under Paragraph 5 have been duly executed and delivered
by Newgate, acting through CWK as its sole general partner, and each
constitutes the legal, valid and binding obligation of Newgate and is
enforceable against Newgate and its successors and permitted assigns
in accordance with its terms, and (iv) that it owns of record the
Newgate Class A Shares and it owns beneficially the Newgate Class B
Shares, which are registered in the name of John C. Yavis, Jr. as
custodian, in each case free and clear of any lien, encumbrance,
option, pledge, security interest, right of first refusal or similar
restriction, including any restriction on voting, transfer or other
exercise of any other attribute of ownership thereof, except that the
voting of the Newgate Class B Shares are subject to the Voting Trust
Agreement.
A-20
28. Oldgate represents and warrants that (i) the Oldgate Partnership
Agreement is a valid and binding agreement of the parties thereto and
is enforceable in accordance with its terms, (ii) CWK is the sole
General Partner of Oldgate, (iii) this Agreement and the irrevocable
proxy executed under Paragraph 6 have been duly executed and delivered
by Oldgate, acting through CWK as its sole general partner, and each
constitutes the legal, valid and binding obligation of Oldgate and is
enforceable against Oldgate and its successors and permitted assigns
in accordance with its terms, and (iv) that it owns of record and
beneficially the Oldgate Shares, free and clear of any lien,
encumbrance, option, pledge, security interest, right of first refusal
or similar restriction, including any restriction on voting, transfer
or other exercise of any other attribute of ownership thereof.
29. Each of the Voting Trustees represents and warrants to his or her
knowledge that (i) the Voting Trust Agreement is a valid and binding
agreement of the parties thereto and is enforceable in accordance with
its terms and (ii) this Agreement and the irrevocable proxy executed
under Paragraph 3 have been duly executed and delivered by the Voting
Trustees, and each constitutes the legal, valid and binding obligation
of the Voting Trustees and is enforceable against the Voting Trustees
and their respective heirs, personal representatives, successors and
permitted assigns in accordance with its terms.
30. Each of the Shareholders (other than Kaman, Newgate and Oldgate)
represents and warrants that (i) this Agreement and the irrevocable
proxy executed under Paragraph 7, 8, 9 or 10, as the case may be, have
been duly executed and delivered by such Shareholder, and each
constitutes the legal, valid and binding obligation of such
Shareholder and is enforceable against such Shareholder and his or her
heirs, personal representatives, successors and permitted assigns in
accordance with its terms and (ii) he or she owns of record and
beneficially the Shares shown to be owned by such Shareholder on the
Schedules to this Agreement, free and clear of any lien, encumbrance,
option, pledge, security interest, right of first refusal or similar
restriction, including any restriction on voting, transfer or other
exercise of any other attribute of ownership thereof. Each of the
Shareholders (other than Kaman) represents and warrants that to his,
her or its knowledge the representations contained in Paragraphs
26(i), 26(ii) and 26(iii) are correct.
31. Each of the Shareholders acknowledges that (i) he, she or it has (a)
had an opportunity to request information, records and documentation
from, and ask questions of, the Company and the Special Committee in
order to facilitate his, her or its consideration of whether to enter
into this Agreement and (b) discussed and reviewed this Agreement with
the persons for which he, she or it acts in a fiduciary or advisory
capacity in respect of all or a portion of the Shares, (ii) the Board
may determine to withdraw, modify, propose to withdraw or modify or
not implement one or more of the Proposed Charter Governance
Amendments or the Proposed Bylaw Governance Amendments or terminate
this Agreement under the circumstances permitted under Paragraph
21(b)(z). By reason of his, her or its business and financial
experience, each of the Shareholders has the capacity to protect his,
her or its own interests or that of his, her or its fiduciaries in
connection with the transactions contemplated by this Agreement. Each
of the Shareholders is an "accredited investor" or has been advised by
a "purchaser representative", as such terms are defined in Regulation
D promulgated under the Securities Act, and is able to bear the
economic risk of an investment in the Subject Shares, has an adequate
income independent of any income produced from an investment in the
Subject Shares and has sufficient resources to sustain a loss of all
of his, her or its investment in the Subject Shares without economic
hardship if such a loss should occur.
32. In the event that any of the Shareholders acquires record or
beneficial ownership of additional shares of Class A Stock and/or
Class B Stock from and after the date of this Agreement and prior to
the Expiration Date, such additional shares of Class A Stock and/or
Class B Stock shall immediately upon such acquisition become subject
to the terms of this Agreement.
33. This Agreement is the product of extensive discussions and
negotiations between and among the Parties and their respective
advisors. Each of the Parties was represented by or had the
opportunity to consult with counsel who either participated in the
formulation and documentation
A-21
of, or was afforded the opportunity to review and provide comments on,
this Agreement. Accordingly, the general rule of contract construction
known as "contra proferentum" shall not apply to the interpretation of
any provision of this Agreement or any document generated in
connection herewith.
34. Each of the Parties agrees that remedies at law are inadequate to
protect against his, her or its breach or threatened breach of this
Agreement. Each of the Parties agrees, in advance, without prejudice
to any rights to judicial relief such other Party may otherwise have,
to the granting of equitable relief, including injunction, in such
other Party's favor without proof of actual damages. Each of the
Parties agrees to waive and not to seek any requirement for the
securing or posting of a bond in connection with any other Party
seeking or obtaining such relief.
35. If any term or provision of this Agreement, or any application thereof
to any circumstances, shall, to any extent and for any reason, be held
to be invalid or unenforceable, the remainder of this Agreement, or
the application of such term or provision to circumstances other than
those to which it is held invalid or unenforceable, shall not be
affected thereby and shall be construed as if such invalid or
unenforceable provision had never been contained herein and each term
and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by applicable law.
36. This Agreement and the schedules and exhibits attached hereto shall
constitute the entire agreement between and among the Parties with
regard to the subject matter of this Agreement and supersede all prior
agreements and understandings, both written and oral, between and
among the Parties with respect to the subject matter hereof. No
modification, amendment or waiver shall be binding without the written
consent of the Parties affected thereby. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement shall
be assigned by any of the Parties (except by operation of law) without
the prior written consent of each of the other Parties affected
thereby. This Agreement shall inure to the benefit of and be binding
upon each of the Parties and their respective heirs, personal
representatives, successors and permitted assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other
person. It is further understood and agreed that no failure or delay
in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. 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 right, power or remedy by
such Party.
37. This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut, without regard to the conflict
of laws principles thereof. Apart from proceedings before the Arbiter,
all actions and proceedings regarding the rights and obligations under
this Agreement shall be heard and determined in any Connecticut state
or federal court sitting in the City of Hartford.
38. Any notice hereunder shall be made in writing and shall be considered
given when received, by first class mail, by overnight courier or by
facsimile with original copy to follow by first class mail or
overnight courier as follows: (i) if to the Company, to Kaman
Corporation, attention: Candace A. Clark, Senior Vice President, Chief
Legal Officer and Secretary, 1332 Blue Hills Avenue, Bloomfield,
Connecticut 06002, facsimile no.: (860) 243-7397; with a copy (which
shall not constitute notice) to: (a) Eileen S. Kraus, Chairperson of
the Special Committee c/o Candace A. Clark, Senior Vice President,
Chief Legal Officer and Secretary at the address set forth above; and
(b) Skadden, Arps, Slate, Meagher & Flom LLP, attention: Randall H.
Doud, Esq., Four Times Square, New York, New York 10036-6522,
facsimile no.: (917) 777-2524; or (ii) if to any of the Shareholders,
to him, her or it at his, her or its address on the books of the
Company; with a copy (which shall not constitute notice) to: (a)
Murtha Cullina LLP, attention: John C. Yavis, Jr., Esq. and Charles E.
Drummey, Esq., CityPlace I, 185 Asylum Street, Hartford, Connecticut
06103,
A-22
facsimile no.: (860) 240-6150; (b) Dechert LLP, attention: Martin
Nussbaum, Esq., 30 Rockefeller Plaza, New York, New York 10112-2200,
facsimile no.: (212) 212-698-3599; and (c) Day, Berry & Howard LLP,
attention: Thomas J. Groark, Jr., Esq., CityPlace I, Hartford,
Connecticut 06103, facsimile no.: (860) 275-0343.
39. This Agreement may be executed in counterparts and signature pages
exchanged by facsimile, and each counterpart shall be deemed to be an
original, but all counterparts of which shall constitute one and the
same agreement.
40. Except as otherwise provided in this Agreement, each of the Parties
hereto shall pay his, her or its own costs and expenses in connection
with the review of and compliance with this Agreement.
41. From time to time, at the reasonable request of any Party and without
additional consideration, each other Party shall execute and deliver
such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement. Each of the Parties agrees to cooperate and use its
reasonable best efforts to contest and resist any action, including
administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) that is in effect that
restricts, prevents or prohibits the consummation of any of the
transactions contemplated by this Agreement or the approval and
consummation of any settlement of any litigation relating to this
Agreement or the transactions contemplated hereby, including, without
limitation, by pursuing all reasonably available avenues of
administrative and judicial appeal.
42. The representations and warranties in this Agreement shall survive
until the Expiration Date and the reimbursement provisions of
Paragraphs 21(c) and 25 shall survive any termination of this
Agreement by the Board pursuant to Paragraph 21(b)(z).
43. Each of the Shareholders shall be responsible for the payment of any
stock transfer taxes in connection with the conversion of any shares
of the Class B Stock owned by them respectively into shares of the
Class A Common Stock.
44. Each of the Shareholders hereby designates each of CWK and John C.
Yavis, Jr., acting jointly, to act on behalf of the Shareholders
collectively as to any and all matters requiring action or approval by
the Shareholders in their capacities as Reimbursement Parties under
Paragraph 25, in connection with the registration rights provided for
under Paragraph 24 or the disclosure approval rights provided for
under Paragraph 11.
(The remainder of this page has been intentionally left blank.)
A-23
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the date and year first above written.
KAMAN CORPORATION
By: /s/ Candace A. Clark
--------------------------------
Name: Candace A. Clark
Title: Senior Vice President, Chief
Legal Officer and Secretary
NEWGATE ASSOCIATES LIMITED PARTNERSHIP,
by its sole General Partner
By: /s/ C. William Kaman II
--------------------------------
Name: C. William Kaman II
Title: General Partner
OLDGATE ASSOCIATES LIMITED PARTNERSHIP,
by its sole General Partner
By: /s/ C. William Kaman II
--------------------------------
Name: C. William Kaman II
Title: General Partner
CHARLES H. KAMAN, by his Attorney-in-
Fact under the General Power of
Attorney, dated February 11, 1998
By: /s/ John C. Yavis, Jr.
--------------------------------
Name: John C. Yavis, Jr.
Title: Attorney-in-Fact
ROBERTA C. KAMAN, in her capacity as an
Attorney-in-Fact under the Durable
Power of Attorney, dated May 4, 1996
By: /s/ Roberta C. Kaman
--------------------------------
Name: Roberta C. Kaman
Title: Attorney-in-Fact
A-24
ROBERTA C. KAMAN, in her capacity as a
Voting Trustee under the Voting Trust
Agreement, dated August 14, 2000 and as
amended as of June 7, 2005
By: :/s/ Roberta C. Kaman
--------------------------------
Name: Roberta C. Kaman
Title: Voting Trustee
ROBERTA C. KAMAN, in her individual
capacity
/s/ Roberta C. Kaman
------------------------------------
Name: Roberta C. Kaman
C. WILLIAM KAMAN II, in
his capacity as an
Attorney-in-Fact under the
Durable Power of Attorney,
dated May 4, 1996
By: /s/ C. William Kaman II
--------------------------------
Name: C. William Kaman II
Title: Attorney-in-Fact
C. WILLIAM KAMAN II, in his capacity as
a Voting Trustee under the Voting Trust
Agreement, dated August 14, 2000 and as
amended as of June 7, 2005
By: /s/ C. William Kaman II
--------------------------------
Name: C. William Kaman II
Title: Voting Trustee
C. WILLIAM KAMAN II, in
his individual capacity
/s/ C. William Kaman II
--------------------------------
Name: C. William Kaman II
C. WILLIAM KAMAN II, in
his capacity as Trustee
for Charles Tyson Kaman
and Kathryn S. Kaman
By: /s/ C. William Kaman II
--------------------------------
Name: C. William Kaman II
Title: Trustee
A-25
STEVEN W. KAMAN, in his capacity as an
Attorney-in-Fact under the Durable
Power of Attorney, dated May 4, 1996
By: /s/ Steven W. Kaman
--------------------------------
Name: Steven W. Kaman
Title: Attorney-in-Fact
STEVEN W. KAMAN, in his capacity as a
Voting Trustee under the Voting Trust
Agreement, dated August 14, 2000 and as
amended as of June 7, 2005
By: /s/ Steven W. Kaman
--------------------------------
Name: Steven W. Kaman
Title: Voting Trustee
STEVEN W. KAMAN, in his individual
capacity
/s/ Steven W. Kaman
------------------------------------
Name: Steven W. Kaman
STEVEN W. KAMAN, in his capacity as
Trustee for Cameryn H. Kaman
By: /s/ Steven W. Kaman
--------------------------------
Name: Steven W. Kaman
Title: Trustee
CATHLEEN H. KAMAN, in her capacity as
an Attorney-in-Fact under the Durable
Power of Attorney, dated May 4, 1996
By: /s/ Cathleen H. Kaman
--------------------------------
Name: Cathleen H. Kaman
Title: Attorney-in-Fact
CATHLEEN H. KAMAN, in her capacity as a
Voting Trustee under the Voting Trust
Agreement, dated August 14, 2000 and as
amended as of June 7, 2005
By: /s/ Cathleen H. Kaman
--------------------------------
Name: Cathleen H. Kaman
Title: Voting Trustee
A-26
CATHLEEN H. KAMAN, in her individual
capacity
/s/ Cathleen H. Kaman
------------------------------------
Name: Cathleen H. Kaman
CATHLEEN H. KAMAN, in her capacity as
Trustee for Zane N. Kaman-Wood
By: /s/ Cathleen H. Kaman
--------------------------------
Name: Cathleen H. Kaman
Title: Trustee
A-27
ANNEX B
This Annex B contains the proposed form of amended and restated certificate of
incorporation of the company as it would read if the recapitalization is
completed.
B-1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
KAMAN CORPORATION
The certificate of incorporation of Kaman Corporation, as amended to
this date, is further amended and restated in its entirety to read as follows:
FIRST
The name of the corporation is Kaman Corporation (the "corporation").
SECOND
The principal office of the corporation is located in the Town of
Bloomfield in the State of Connecticut.
THIRD
The nature of the business to be transacted and the purpose to be
promoted or carried out by the corporation are to engage in any lawful
business, act or activity for which corporations may be formed under the
Connecticut Business Corporation Act, Chapter 601 of the Connecticut General
Statutes (as the same may be amended from time to time, the "CBCA").
FOURTH
The authorized capital stock of the corporation is as follows:
(a) General Authorization.
(i) Fifty Million (50,000,000) shares of Common Stock of
the par value of One Dollar ($1.00) per share,
which, subject to any voting rights provided to
holders of Preferred Stock at any time outstanding,
will be entitled to vote on all matters with respect
to which shareholders are entitled to vote under
applicable law, this Amended and Restated
Certificate of Incorporation or the Bylaws of the
corporation, or upon which a vote of shareholders is
otherwise duly called for by the corporation. At
each annual or special meeting of shareholders, each
holder of record of shares of Common Stock on the
relevant record date shall be entitled to cast one
vote in person or by proxy for each share of the
Common Stock standing in such holder's name on the
stock transfer records of the corporation; and
(ii) Two Hundred Thousand (200,000) shares of Preferred
Stock of the par value of One Dollar ($1.00) per
share. If so determined in accordance with Paragraph
B of this Article Fourth, such class shall be
entitled to vote only for the election of directors,
with each share being entitled to one vote thereon,
and such voting right of such class to be limited to
the election of such number of directors (subject to
the further limitations below) as may be established
by application of the following formula:
(1) If the number of issued and outstanding
shares of Preferred Stock is not more than
one-fourth (1/4th) of the total number of
authorized shares of such class, such
number as will result in the election by
such shares of one-tenth (1/10th) (to next
lowest whole number) of the total number of
directors then fixed;
(2) If the number of issued and outstanding
shares of Preferred Stock is not more than
one-half (1/2) of the total number of
authorized shares of such class, one-fifth
(1/5th) (to the next lowest whole number)
of the total number of directors then
fixed;
(3) If the number of issued and outstanding
shares of Preferred Stock is not more than
three-fourths (3/4ths) of the total number
of authorized shares of such class,
three-tenths (3/10ths) (to the next lowest
whole number) of the total number of
directors then fixed;
(4) If the number of issued and outstanding
shares of Preferred Stock is more than
three-fourths (3/4ths) of the total number
of authorized shares of such class,
B-2
two-fifths (2/5ths) (to the next lowest
whole number) of the total number of
directors then fixed;
provided, however, that notwithstanding anything herein to the
contrary, (i) such voting right of such class shall be applicable only in the
event that an arrearage in payment of dividends shall exist with respect to any
series of Preferred Stock equal to six quarterly dividends on such series (or
dividends otherwise payable over a period of 18 months in the case of any
series, dividends on which are payable other than on a quarterly basis), (ii)
any such right to elect directors shall cease upon the payment in full of any
such arrearage or arrearages, and (iii) such voting right of such class, when
applicable, shall not under any circumstances entitle the Preferred Stock to
elect less than one (1) nor more than two (2) directors.
(b) Preferred Stock.
(i) The Board of Directors is authorized, subject to the
limitations prescribed by law and the provisions of
this Paragraph B, to provide for the issuance of a
class of Preferred Stock in series and by amending
this Amended and Restated Certificate of
Incorporation, as it may be amended or supplemented
from time to time, by its own resolution solely, to
establish the number of shares to be included in
each such series and to fix the designation, terms,
limitations, and relative rights and preferences of
the shares of each such series. The authority of the
Board of Directors with respect to each series shall
include, but not be limited to, determination of the
following:
(1) The number of shares constituting that
series and the distinctive designation of
that series;
(2) The dividend rate on the shares of that
series and the times of payment thereof,
whether dividends shall be cumulative and,
if so, from which date or dates;
(3) Whether or not the shares of that series
shall have conversion privileges, and, if
so, the terms and conditions of such
conversion, including provision for
adjustment of the conversion rate in such
events as the Board of Directors shall
determine;
(4) Whether or not the shares of that series
shall be redeemable, and, if so, the terms
and conditions of such redemption,
including the date or dates upon or after
which they shall be redeemable, and sinking
fund provisions, if any, providing for the
redemption or purchase of shares of that
series and the amount per share payable in
case of redemption which amount may vary
under different conditions and at different
redemption dates; and
(5) Whether or not that series shall have
voting rights, such voting rights, if any,
to be the voting rights described in
subparagraph (2) of Paragraph A of this
Article Fourth.
(ii) Dividends on outstanding shares of the class of
Preferred Stock shall be declared and paid, or set
apart for payment, before any dividends shall be
declared and paid, or set apart for payment, on
shares of Common Stock with respect to the same
dividend period.
(c) Recapitalization.
(i) As provided for in the Agreement dated as of June 7,
2005, by and among the corporation and various other
parties (the "Recapitalization Agreement"), upon the
filing (the "Effective Time") of this Amended and
Restated Certificate of Incorporation pursuant to
the CBCA, each share of the corporation's Class A
common stock, par value $1.00 per share, issued and
outstanding immediately prior to the Effective Time
(the "Old Class A Common Stock") will become one
share of validly issued, fully paid, and
non-assessable Common Stock authorized by Paragraph
A of this Article FOURTH without any action by the
holder thereof.
(ii) As provided for in the Recapitalization Agreement,
upon the Effective Time, (a) each share of the
corporation's Class B common stock, par value $1.00
per share, issued and outstanding immediately prior
to the Effective Time (the "Old Class B Common
Stock"),
B-3
other than the shares of Old Class B Common Stock
described in clause (b) below, shall be reclassified
as and converted and changed into 3.58 shares of
validly issued, fully paid, and non-assessable
Common Stock authorized by Paragraph A of this
Article FOURTH and (b) each share of Old Class B
Common Stock issued and outstanding immediately
prior to the Effective Time and held by record
holder(s) who have validly elected to accept the
"Alternative Class B Stock Consideration" as to such
shares of Old Class B Common Stock in accordance
with the Recapitalization Agreement, shall be
reclassified as and converted and changed into 1.84
shares of validly issued, fully paid, and
non-assessable Common Stock authorized by Paragraph
A of this Article FOURTH and an amount in cash equal
to $27.10, in each case without any further action
by the holder thereof. Notwithstanding anything to
the contrary set forth herein, (x) in lieu of any
fractional shares of Common Stock to which any
holder of Old Class B Common Stock would otherwise
be entitled pursuant to this Paragraph C
(aggregating for this purpose all of the shares of
Old Class B Common Stock owned of record by such
shareholder), such shareholder shall be entitled to
receive a cash payment equal to the closing price of
the Old Class A Common Stock on the NASDAQ National
Market on the last trading day occurring prior to
the date on which the Effective Time occurs
multiplied by such fraction, and (y) any cash
payment to which any holder of Old Class B Common
Stock would otherwise be entitled pursuant to this
Paragraph C (aggregating for this purpose all of the
shares of Old Class B Common Stock owned of record
by such shareholder) shall be rounded down to the
nearest cent.
(iii) Each certificate that prior to the Effective Time
represented a share or shares of Old Class A Common
Stock shall thereafter represent that number of
shares of Common Stock which the share or shares of
Old Class A Common Stock represented by such
certificate shall have become in accordance with
this Paragraph C, until such certificate is
presented to the corporation or its transfer agent
for transfer or reissue in which event the
corporation or its transfer agent shall issue one or
more stock certificates representing the appropriate
number of shares of Common Stock. Each certificate
that prior to the Effective Time represented a share
or shares of Old Class B Common Stock shall
thereafter represent that number of shares of Common
Stock into which the share or shares of Old Class B
Common Stock represented by such certificate shall
have been reclassified and converted in accordance
with this Paragraph C. Any required cash payment
under this Paragraph C as to any shares of Old Class
B Common Stock will only be made following
presentation to the corporation or its transfer
agent of all the certificates held of record by the
owner of such shares of Old Class B Common Stock.
(d) No Preemptive Rights.
There shall be no preemptive rights to purchase or subscribe for any
unissued stock of the corporation. No shareholder shall be entitled as of right
to purchase or subscribe for any unissued stock of the corporation, whether now
or hereafter authorized or whether of a class now existing or of a class
hereafter created, or to purchase or subscribe for any bonds, certificates of
indebtedness, debentures or other obligations convertible into stock of the
corporation.
FIFTH
The amount of paid-in capital stock with which the corporation
commenced business was Seven Thousand Dollars ($7,000).
SIXTH
The duration of this corporation is unlimited.
SEVENTH
The following provisions are for the regulation of the business of the
corporation and for the purpose of defining and regulating the powers of the
corporation and its officers, directors and shareholders:
(a) Issuance of Authorized Capital Stock.
B-4
The Board of Directors is hereby authorized and empowered to issue
from time to time all or any part of the shares of the unissued authorized
capital stock of the corporation, as then constituted, for such consideration,
not less than par, as is permissible under the CBCA, and, upon receipt of such
consideration by the corporation, all shares of the capital stock of this
corporation so issued shall be deemed fully paid and nonassessable and the
holders of such shares shall not be liable thereunder to this corporation or
its creditors.
(b) Indemnification of Directors and Officers.
Each director and officer of the corporation shall be indemnified by
the corporation against Liabilities, as defined in Section 33-770 of the CBCA,
incurred by him or her in connection with any Proceeding, as defined in Section
33-770 of the CBCA, to which he or she may be made a party by reason of being
or having been a director or officer of the corporation to the fullest extent
permitted by the CBCA. The foregoing right of indemnification shall not be
exclusive of other rights to which he or she may be entitled.
(c) Limitation of Personal Liability.
The personal liability of a director to the corporation or its
shareholders for monetary damages for breach of duty as a director shall be
limited to an amount equal to the amount of compensation received by the
director for serving the corporation during the calendar year in which the
violation occurred (and if the director received no such compensation from the
corporation during the calendar year of the violation, such director shall have
no liability to the corporation or its shareholders for breach of duty) if such
breach did not:
(i) involve a knowing and culpable violation of law by
the director;
(ii) enable the director or an associate, as defined in
Section 33-840 of the CBCA, to receive an improper
personal economic gain;
(iii) show a lack of good faith and a conscious disregard
for the duty of the director to the corporation
under circumstances in which the director was aware
that his or her conduct or omission created an
unjustifiable risk of serious injury to the
corporation;
(iv) constitute a sustained and unexcused pattern of
inattention that amounted to an abdication of the
director's duty to the corporation; or
(v) create liability under Section 33-757 of the CBCA.
Any repeal or modification of this Paragraph C shall not adversely
affect any right or protection of a director of the corporation existing at the
time of such repeal or modification.
Nothing contained in this Paragraph C shall be construed to deny to
the directors of the corporation any of the benefits provided by subsection (d)
of Section 33-756 of the CBCA.
(d) Board of Directors.
(i) Number. Subject to the rights of any holder of any
class or series of Preferred Stock, the Board of
Directors shall consist of not less than three or
more than 15 members, the exact number of which
shall be fixed from time to time by the Board of
Directors.
(ii) Classes. The directors shall be divided into three
classes, designated Class I, Class II and Class III.
Each class shall consist, as nearly as may be
possible, of one-third of the total number of
directors constituting the entire Board of
Directors. The initial division of the Board of
Directors into classes shall be made by the
affirmative vote of a majority of the entire Board
of Directors. The term of the initial Class I
directors shall terminate on the date of the 2006
annual meeting of shareholders; the term of the
initial Class II directors shall terminate on the
date of the 2007 annual meeting of shareholders; and
the term of the initial Class III directors shall
terminate on the date of the 2008 annual meeting of
shareholders. At each succeeding annual meeting of
shareholders beginning in 2006, successors to the
class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If
the number of directors is changed, any increase or
decrease shall be apportioned by the affirmative
vote of a majority of the entire Board of Directors
among the classes so as to maintain the number of
directors in each class as nearly equal as possible,
and any additional director of any
B-5
class elected by the shareholders at an annual
meeting of shareholders to fill a vacancy resulting
from an increase in such class shall hold office for
a term that shall coincide with the remaining term
of that class, but in no case will a decrease in the
number of directors shorten the term of any
incumbent director.
(iii) Term. A director shall hold office until the annual
meeting for the year in which such director's term
expires and until such director's successor shall be
elected and shall qualify, subject, however, to
prior death, resignation, retirement,
disqualification or removal from office.
(iv) Vacancies. Any vacancy on the Board of Directors,
however resulting, may be filled by the
shareholders, or by a majority of the directors then
in office, even if less than a quorum, or by a sole
remaining director, provided, that the term of a
director elected by the directors or the sole
remaining director expires at the next meeting of
shareholders at which directors are elected.
(v) Removal. Any director may be removed from office but
only for cause and only if the number of votes cast
by holders of shares entitled to vote for the
election of directors in favor of the removal of
such director exceeds the number of votes cast by
such shareholders against the removal of such
director and only at a meeting of shareholders
called for the purpose of such removal, the notice
for which states that the purpose or one of the
purposes of the meeting is the removal of such
director.
(vi) Preferred Stock Directors. Notwithstanding the
foregoing, whenever the holders of any one or more
classes or series of Preferred Stock shall have the
right, voting separately by class or series, to
elect one or more directors at an annual or special
meeting of shareholders, the election, terms of
office, filling of vacancies, removal of directors
and other features of the directorships shall be
governed by the terms of this Amended and Restated
Certificate of Incorporation or in any resolution or
resolutions adopted by the Board of Directors
providing for the issuance of any class or series of
Preferred Stock, and such directors so elected shall
not be divided into classes pursuant to this Article
SEVENTH unless expressly provided by such terms.
EIGHTH
In furtherance and not in limitation of the powers conferred by
statute, a majority of the entire Board of Directors is expressly authorized to
adopt, repeal, alter, amend or rescind the Bylaws of the corporation. As used
in this Article EIGHTH, the term "entire Board of Directors" means the total
number of directors which the corporation would have, as fixed by the Board of
Directors under Paragraph D of Article SEVENTH of this Amended and Restated
Certificate of Incorporation, if there were no vacancies. In addition, the
Bylaws of the corporation may be amended, altered, repealed, or rescinded by
the affirmative vote of the holders of sixty-six and two-thirds percent (66
2/3%) of all capital stock of the corporation which by its terms may be voted
on all matters submitted to shareholders of the corporation generally, voting
together as a single class at a duly called meeting of the shareholders of the
corporation.
NINTH
Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66 2/3%) of all capital
stock of the corporation which by its terms may be voted on all matters
submitted to shareholders of the corporation generally, voting together as a
single class at a duly called meeting of the shareholders of the corporation,
shall be required to amend, alter, repeal, rescind or adopt any provision
inconsistent with Articles SEVENTH and EIGHTH of this Amended and Restated
Certificate of Incorporation and this Article NINTH.
B-6
ANNEX C
This Annex C contains the proposed form of amended and restated bylaws of the
company as it would read if the recapitalization is completed.
C-1
KAMAN CORPORATION
AMENDED AND RESTATED BYLAWS
ARTICLE I
Offices
1. The principal office of this corporation shall be at such place in
the Town of Bloomfield in the State of Connecticut as the Board of Directors of
the corporation (the "Board of Directors" or the "Board") shall from time to
time designate. The corporation may have such other offices within or without
the State of Connecticut as the Board of Directors may from time to time
determine.
ARTICLE II
Meetings of Stockholders
1. PLACE OF MEETINGS. All meetings of the stockholders shall be held
at the principal office or place of business of the corporation, or at such
place within or without the State of Connecticut as from time to time may be
designated by resolution of the Board of Directors.
2. ANNUAL MEETINGS. The annual meetings of the stockholders shall be
held on such day, other than a legal holiday, in the month of March or April of
each year and at such time and place as may be designated by the Board of
Directors. The purpose of such meeting shall be the election of directors by
ballot and the transaction of such other business as may properly come before
such meeting. If the annual meeting of the stockholders be not held as herein
prescribed, the election of directors may be held at any meeting thereafter
called pursuant to these bylaws or otherwise lawfully held.
3. NOTICE OF ANNUAL MEETING. A notice setting out the day, hour and
place of such annual meeting shall be mailed, postage prepaid, to each
stockholder of record at the stockholder's address as the same appears on the
stock transfer and registration records of the corporation or its agent, or if
no such address appears, at the stockholder's last known address, not less than
ten (10) days nor more than sixty (60) days before such annual meeting. Such
notice shall also state any proposed amendment or repeal of these bylaws and
any other proposed matter other than the election of directors which, under the
Connecticut Business Corporation Act ("CBCA"), expressly requires the vote of
stockholders.
4. SPECIAL MEETINGS. Special meetings of the stockholders may be
called at any time by the President or by majority vote of the Board of
Directors. A special meeting of the stockholders shall be called by the
President upon the written request of one (l) or more stockholders holding in
the aggregate at least thirty-five percent (35%) of the total number of shares
entitled to vote on any issue proposed to be considered at such meeting upon
their delivery to the Secretary of one (l) or more written demands for the
special meeting describing the purpose or purposes for which it is to be held.
The Secretary shall mail a notice of such meeting to each stockholder of record
not less than ten (10) days nor more than sixty (60) days before such meeting,
and such notice shall state the day, hour and place of such meeting and the
purpose thereof.
5. ADJOURNMENT OF STOCKHOLDERS' MEETING. If an annual or special
stockholders' meeting is adjourned to a different date, time or place, notice
need not be given of the new date, time or place if the new date, time or place
is announced at the meeting before adjournment. If a new record date for the
adjourned meeting is or must be fixed under Section 33-701 of the CBCA,
however, notice of the adjourned meeting must be given under these bylaws to
persons who are stockholders as of the new record date.
6. WAIVER OF NOTICE. (a) A stockholder may waive any notice required
by the CBCA, the certificate of incorporation of the corporation (the
"Certificate of Incorporation") or these bylaws before or after the date and
time stated in the notice. The waiver must be in writing, be signed by the
stockholder entitled to notice and be delivered to the corporation for
inclusion in the minutes or filing with the corporate records.
(b) A stockholder's attendance at a meeting: (1) waives objection
to lack of notice or defective notice of the meeting, unless the stockholder at
the beginning of the meeting objects to holding the meeting or transacting
business at the meeting; and (2) waives objection to consideration of a
particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the stockholder objects to considering
the matter when it is presented.
C-2
7. STOCKHOLDER ACTION WITHOUT MEETING. (a) Any action which, under the
provisions of the CBCA, may be taken at a meeting of stockholders may be taken
without a meeting by one or more consents in writing, setting forth the action
so taken or to be taken, bearing the date of signature and signed by all of the
persons who would be entitled to vote upon such action at a meeting, or by
their duly authorized attorneys. The Secretary shall file such consent or
consents, or certify the tabulation of such consents and file such certificate,
with the minutes of the meetings of the stockholders. Any consent or consents
that become effective as provided herein shall have the same force and effect
as a vote of stockholders at a meeting duly held.
(b) If not otherwise fixed under Section 33-697 of the CBCA or in
accordance with Section 12 of this Article II, the record date for determining
stockholders entitled to take action without a meeting is the date the first
stockholder signs the consent under subsection (a) of this section. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest date appearing on a consent delivered
to the corporation in the manner required by this section, written consents
signed by all other stockholders entitled to vote on the matter are received by
the corporation. A written consent may be revoked by a writing to that effect,
provided such revocation shall not be effective if it is received by the
corporation after the corporation has received a sufficient number of unrevoked
written consents to take such corporate action from all other stockholders
entitled to vote on such action.
8. QUORUM. Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. Unless the CBCA or the Certificate of Incorporation
otherwise provides, a majority of the votes entitled to be cast on a matter by
a voting group constitutes a quorum of that voting group for action on that
matter. Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for
that adjourned meeting.
9. PROXIES. (a) A stockholder may vote each stockholder's shares in
person or by proxy.
(b) A stockholder may appoint a proxy to vote or otherwise act for
such stockholder by signing an appointment form, either personally or by such
stockholder's attorney-in-fact.
(c) An appointment of a proxy is effective when received by the
Secretary or other officer or agent authorized to tabulate votes. A
photographic or similar reproduction of an appointment, or a telegram,
cablegram, facsimile transmission, wireless or similar transmission of an
appointment, received by such person shall be sufficient to effect such
appointment. An appointment is valid for eleven (11) months unless a longer
period is expressly provided in the appointment form.
(d) An appointment of a proxy is revocable by the stockholder
unless the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest. Appointments coupled with an interest
include the appointment of (i) a pledgee; (ii) a person who purchased or agreed
to purchase the shares; (iii) a creditor of the corporation who extended it
credit under the terms requiring the appointment; (iv) an employee of the
corporation whose employment contract requires the appointment; or (v) a party
to a voting agreement created under Section 33-716 of the CBCA.
(e) The death or incapacity of the stockholder appointing a proxy
does not affect the right of the corporation to accept the proxy's authority
unless notice of the death or incapacity is received by the Secretary or other
office or agent authorized to tabulate votes before the proxy exercises
authority under the appointment.
(f) An appointment made irrevocable under subsection (d) of this
Section 9 is revoked when the interest with which it is coupled is
extinguished.
(g) A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if such transferee did not know of its
existence when such transferee acquired the shares and the existence of the
irrevocable appointment was not noted conspicuously on the certificate
representing the shares or on the information statement for shares without
certificates. The Secretary or other officer or agent authorized to tabulate
votes may require such transferee to represent such transferee's lack of
knowledge of such irrevocable appointment and may rely on such representation.
(h) Subject to Section 33-708 of the CBCA and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, the corporation is entitled to accept the proxy's vote or other action as
that of the stockholder making the appointment.
C-3
10. NUMBER OF VOTES OF EACH STOCKHOLDER. Except as otherwise provided
in the Certificate of Incorporation, each stockholder, whether represented in
person or by proxy, shall be entitled to one (l) vote for each share of stock
standing in such stockholder's name on the books of the corporation on the
record date.
11. VOTING. In the election of directors and in voting on any question
on which a vote by ballot is required by law or is demanded by any stockholder,
the voting shall be by ballot; on all other questions it may be viva voce.
12. RECORD DATE. For the purpose of determining which stockholders are
entitled to notice of or to vote at any meeting of the stockholders or any
adjournment thereof, or which stockholders are entitled to receive payment of
any dividend or for any other proper purpose, the Board of Directors, and in
the absence of its action the Secretary of the corporation or any other person
lawfully acting, shall set a record date which shall not be any earlier than
the date on which the Board of Directors, the Secretary or such other
authorized party acts to set such record date and no more than seventy (70) nor
less than ten (10) days before the particular event requiring such
determination of stockholders is to occur.
13. ADVANCE NOTIFICATION OF BUSINESS TO BE TRANSACTED AT MEETINGS OF
STOCKHOLDERS. To be properly brought before the annual or any special meeting
of the stockholders, business must be either (a) specified in the notice of
meeting (or any supplement or amendment thereto) given by or at the direction
of the Board of Directors (or any duly authorized committee thereof), (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors (or any duly authorized committee thereof), or (c) solely in
the case of the annual meeting, otherwise properly brought before the meeting
by any stockholder of the corporation (i) who is a stockholder of record on the
date of the giving of the notice provided for in this Section 13 and on the
record date for the determination of stockholders entitled to notice of and to
vote at an annual meeting and (ii) who complies with the advance notice
procedures set forth in this Section 13.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary
of the corporation.
To be timely, a stockholder's written notice to the Secretary of the
corporation must be delivered to or mailed and received at the principal
executive offices of the corporation not less than seventy-five (75) days nor
more than ninety (90) days prior to the first anniversary of the date of the
immediately preceding year's annual meeting of the stockholders; provided,
however, that if the date of the annual meeting is advanced more than thirty
(30) days prior to or delayed by more than thirty (30) days after the
anniversary of the preceding year's annual meeting, to be timely, notice by the
stockholder must be so received not later than the close of business on the
tenth (10th) day following the day on which notice of the date of the annual
meeting was mailed or public disclosure of the date of the annual meeting is
first given or made (which for this purpose shall include any and all filings
of the corporation made on the EDGAR system of the Securities and Exchange
Commission or any similar public database maintained by the Securities and
Exchange Commission), whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary
of the corporation must set forth as to each matter such stockholder proposes
to bring before the annual meeting (i) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting, (ii) the name and record address of such stockholder
proposing such business, (iii) the class or series and number of shares of
capital stock of the corporation which are owned beneficially or of record by
such stockholder, (iv) a description of all arrangements or understandings
between such stockholder and any other person or persons (including their
names) in connection with the proposal of such business by such stockholder and
any material interest of such stockholder in such business and (v) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to bring such business before the meeting.
Notwithstanding anything in these bylaws to the contrary, no business
shall be conducted at the annual or any special meeting of the stockholders
except business brought before the meeting in accordance with the procedures
set forth in this Section 13; provided, however, that, once business has been
properly brought before the meeting in accordance with such procedures, nothing
in this Section 13 shall be deemed to preclude discussion by any stockholder of
any such business. The officer of the corporation presiding at the meeting
shall, if the facts warrant, determine and declare to the meeting that the
business was not properly brought before the meeting in accordance with the
provisions of this Section 13, and if such officer shall so determine, such
officer shall so declare to the meeting that any such business not properly
brought before the meeting shall not be transacted.
C-4
14. ADVANCE NOTIFICATION OF NOMINATION OF DIRECTORS. Only persons who
are nominated in accordance with the following procedures shall be eligible for
election as directors of the corporation, except as may be otherwise provided
in the Certificate of Incorporation with respect to the rights, if any, of the
holders of shares of preferred stock of the corporation to nominate and elect a
specified number of directors in certain circumstances.
Nominations of persons for election to the Board of Directors may be
made at any annual meeting of the stockholders, or at any special meeting of
the stockholders called for the purpose of electing directors, (a) by or at the
direction of the Board of Directors (or any duly authorized committee thereof),
or (b) by any stockholder of the corporation (i) who is a stockholder of record
on the date of the giving of the notice provided for in this Section 14 and on
the record date for the determination of stockholders entitled to notice of and
to vote at such meeting and (ii) who complies with the advance notice
procedures set forth in this Section 14.
In addition to any other applicable requirements, for a nomination to
be properly made by a stockholder, such stockholder must have given timely
notice thereof in proper written form to the Secretary of the corporation.
To be timely, a stockholder's written notice to the Secretary of the
corporation must be delivered to or mailed and received at the principal
executive offices of the corporation, in the case of: (x) an annual meeting,
not less than seventy-five (75) days nor more than ninety (90) days prior to
the first anniversary of the date of the immediately preceding year's annual
meeting of the stockholders; provided, however, that if the date of the annual
meeting is advanced more than thirty (30) days prior to or delayed by more than
thirty (30) days after the anniversary of the preceding year's annual meeting,
to be timely, notice by the stockholder must be so received not later than the
close of business on the tenth (10th) day following the day on which notice of
the date of the annual meeting was mailed or public disclosure of the date of
the annual meeting is first given or made (which for this purpose shall include
any and all filings of the corporation made on the EDGAR system of the
Securities and Exchange Commission or any similar public database maintained by
the Securities and Exchange Commission), whichever first occurs; and (y) a
special meeting of the stockholders called for the purpose of electing
directors, not later than the close of business on the tenth (10th) day
following the day on which notice of the date of the special meeting was mailed
or public disclosure of the date of the special meeting is first given or made
(which for this purpose shall include any and all filings of the corporation
made on the EDGAR system of the Securities and Exchange Commission or any
similar public database maintained by the Securities and Exchange Commission).
To be in proper written form, a stockholder's notice to the Secretary
of the corporation must set forth (a) as to each person whom the stockholder
proposes to nominate for election as a director (i) the name, age, business
address and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and number of shares of
capital stock of the corporation which are owned beneficially or of record by
the person, if any, and (iv) any other information relating to the person that
would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder and (b) as to the stockholder giving the notice (i) the name and
record address of such stockholder proposing such nomination, (ii) the class or
series and number of shares of capital stock of the corporation which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of
the Exchange Act and the rules and regulations promulgated thereunder. Such
notice must be accompanied by a written consent of each proposed nominee to
being named or referred to as a nominee and to serve as a director if elected.
The corporation may require any proposed nominee to furnish such other
information (which may include meetings to discuss the furnished information)
as may reasonably be required by the corporation to determine the eligibility
of such proposed nominee to serve as a director of the corporation.
No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth in
this Section 14. The officer of the corporation presiding at the meeting shall,
if the facts warrant, determine and declare to the meeting that the nomination
was not made in accordance with the provisions of this Section 14, and if such
officer shall also determine, such officer shall so declare to the meeting that
any such defective nomination shall be disregarded.
C-5
ARTICLE III
Directors
1. NUMBER, ELECTION AND TERM OF OFFICE. The property, business and
affairs of the corporation shall be managed by or under the direction of a
Board of Directors composed of that number of directors as shall be specified
as provided in Article SEVENTH of the Certificate of Incorporation. The
directors shall be divided into classes, shall be elected to staggered terms by
ballot by the stockholders at their annual meeting and shall hold office all as
provided by Article SEVENTH of the Certificate of Incorporation.
2. VACANCIES. Any vacancy in the Board of Directors by reason of
death, resignation or other cause may be filled as provided by Article SEVENTH
of the Certificate of Incorporation.
3. POWERS OF DIRECTORS. The directors shall have the general
management and control of the property, business and affairs of this
corporation and shall exercise all the powers that may be exercised or
performed by this corporation under the statutes, the Certificate of
Incorporation and these bylaws.
4. PLACE OF MEETINGS. The directors may hold their meetings at such
place or places within or without the State of Connecticut as the Board may
from time to time determine.
5. REGULAR MEETINGS. A meeting of the directors for the election of
officers and the transaction of any other business that may come before such
meeting shall be held with or without notice immediately following each annual
meeting of the stockholders at the place designated therefor. Other regular
meetings of the Board of Directors may be scheduled at any meeting of the
Board, duly called and held, and such regular meetings may be held with or
without notice.
6. OTHER MEETINGS. Other meetings of the directors may be held
whenever the President or a majority of the directors may deem it advisable,
notice thereof to be mailed or given orally, by facsimile or by electronic mail
to each director at least two (2) days prior to such meeting. Any such notice
shall be effective in accordance with Section 603 of the CBCA.
7. WAIVER OF NOTICE. A director may waive any notice required by the
CBCA, the Certificate of Incorporation or these bylaws before or after the date
and time stated in the notice. Except as provided in the next sentence of this
Section, the waiver shall be in writing, signed by the director entitled to the
notice and filed with the minutes or corporate records. A director's attendance
at or participation in a meeting waives any required notice to that director of
the meeting unless the director at the beginning of the meeting, or promptly
upon arrival, objects to holding the meeting or transacting business at the
meeting and does not thereafter vote for or assent to action taken at the
meeting.
8. DIRECTORS' CONSENT. (a) Any action required or permitted by the
CBCA to be taken at a Board of Director's meeting may be taken without a
meeting if the action is taken by all members of the Board. The action shall be
evidenced by one or more written consents describing the action taken, signed
by each director, and included in the minutes or filed with the corporate
records reflecting the action taken.
(b) Action taken under this Section 8 is effective when the last
director signs the consent, unless the consent specifies a different effective
date.
(c) A consent signed under this Section 8 has the effect of a
meeting vote and may be described as such in any document.
9. QUORUM. A majority of the number of directors fixed from time to
time by the Board of Directors pursuant to Section D of Article Seventh of the
Certificate of Incorporation and Section 1 of this Article III shall constitute
a quorum for the transaction of business at all meetings of the Board of
Directors, but any number less than a quorum may adjourn such meeting to a
specified date. The act of a majority of the directors present at a meeting at
which a quorum is present at the time of the act shall be the act of the Board
of Directors.
10. COMPENSATION OF DIRECTORS. Directors may receive such compensation
or salary for their services as determined by resolution of the Board of
Directors, including but not limited to a fixed sum and expenses of attendance
for attendance at each regular or special meeting of the Board and any
committee of the Board. Any director may also serve the corporation in any
other capacity and receive compensation therefor.
11. COMMITTEES. The Board of Directors may, by resolution adopted by
the affirmative vote of directors constituting a majority of the entire Board
of Directors, create one or more committees comprising in each
C-6
case two or more directors, which committee or committees shall have and may
exercise all such authority of the Board as may be delegated to it in such
resolution or thereafter by similar resolution, provided, however, that a
committee may not (i) authorize or approve distributions, except according to a
formula or method, or within limits, prescribed by the Board of Directors; (ii)
approve or propose to stockholders action that the CBCA requires to be approved
by the stockholders; (iii) fill vacancies on the Board of Directors or on any
of its committees; or (iv) adopt, amend or repeal these bylaws. Any such
committee shall conduct its meetings or other actions in accordance with the
notice, waiver of notice, action by written consent and quorum provisions as
apply to the Board of Directors under Sections 5, 6, 7, 8 and 9 of this Article
III.
12. DIRECTOR EMERITUS. The Board of Directors may, from time to time,
appoint any former director of the corporation who shall have retired from the
board for reasons of age, health or similar reasons, as Director Emeritus of
the corporation. A Director Emeritus shall be entitled to attend such meetings
of the directors and be compensated therefor as the Board may determine.
13. VICE CHAIRMAN. The Board of Directors may, from time to time,
appoint a Vice Chairman of the Board of Directors from among the then serving
members of the board who, in the absence or incapacity of the Chairman, shall
have the powers and responsibilities of the Chairman with respect to meetings
of the Board of Directors and of the stockholders and shall also assist the
Chairman with respect to meetings of the Board of Directors and of the
stockholders as the Chairman may request. The position of Vice Chairman shall
not be a corporate office or carry with it any of the powers or
responsibilities of any corporate office of the corporation, however, the same
individual may simultaneously serve as Vice Chairman and as a corporate officer
of the corporation. The Vice Chairman shall serve for a term of one year and
until his or her successor is duly appointed and qualified but may be removed
by the Board of Directors at any time with or without cause and with or without
notice or hearing. The Vice Chairman may be compensated for his or her services
as such as the Board may determine.
14. MANDATORY RETIREMENT AGE. The mandatory retirement age for a
director shall be age seventy-two (72); provided that directors serving on
November 14, 2000 shall be eligible to serve until age seventy-five (75).
15. CHAIRMAN EMERITUS. The Board of Directors has created the honorary
position of Chairman Emeritus of the corporation and has designated Charles H.
Kaman the Chairman Emeritus of the Board of Directors of the corporation in
appreciation of his service as Chairman of the Board of Directors from the
inception of the corporation in 1945 to the date of his retirement from the
Board of Directors in 2001. Mr. Kaman's appointment as Chairman Emeritus shall
endure for the duration of his life during which he shall have the right to
attend and observe all meetings of the Board of Directors.
ARTICLE IV
Officers
1. GENERAL: The Board of Directors shall elect a Chairman, a
President, one or more Vice Presidents, a Treasurer and a Secretary, and may
from time to time appoint such other officers as the Board, deems expedient.
Any two or more offices may be held by the same person. The duties of officers
of the corporation shall be such as are prescribed by these bylaws and as may
be prescribed by the Board.
2. CHAIRMAN. The Chairman shall preside at all meetings of the Board
of Directors and of the stockholders and, unless the Board otherwise
determines, he or she shall be the chief executive officer of the corporation.
As Chief Executive Officer, he or she shall have general control and management
of the corporation's business and affairs, subject to the direction of the
Board of Directors. The Chairman shall consult with and advise the President
concerning the operations of the corporation. The Chairman shall perform such
additional duties as may be assigned to him or her from time to time by the
Board of Directors.
3. PRESIDENT. The President shall perform all duties incident to the
office of President and shall have full authority and responsibility for the
operation of the business of the corporation, subject to the direction of the
Board of Directors and the Chief Executive Officer. In the event of the absence
or disability of the Chairman, the President shall perform the duties and have
the power of the Chairman. The President shall perform such additional duties
as may be assigned to him or her from time to time by the Board of Directors or
the Chief Executive Officer.
4. VICE PRESIDENT. Any Vice President shall have the powers and
perform such duties as may be assigned to him or her or by the Board of
Directors or the Chief Executive Officer.
C-7
5. SECRETARY. The Secretary shall keep a record of the minutes of the
proceedings of all meetings of stockholders and directors and shall issue all
notices required by law or by these bylaws, and he or she shall discharge all
other duties required of such officer by law or designated from time to time by
the Board of Directors or by the Chief Executive Officer or as are incident to
the office of Secretary. The Secretary shall have the custody of the seal of
this corporation and all books, records and papers of this corporation, except
such as shall be in the charge of the Treasurer or of some other person
authorized to have custody and possession thereof by a resolution of the Board
of Directors.
6. TREASURER. The Treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation, keep full and
accurate accounts of receipts and disbursements and books belonging to the
corporation, deposit all moneys and valuable effects in the name and to the
credit of the corporation in depositories approved by the Board of Directors,
and, in general, perform such other duties as may from time to time be assigned
to him or her by the Board of Directors or by the Chief Executive Officer or as
are incident to the office of Treasurer.
7. TERM OF OFFICE. Each of such officers shall serve for the term of
one year and until his or her successor is duly appointed and qualified, but
any officer may be removed by the Board of Directors at any time with or
without cause and with or without notice or hearing. Vacancies among the
officers by reason of death, resignation or other causes shall be filled by the
Board of Directors.
C-8
8. COMPENSATION. The compensation of all officers shall be fixed by
the Board of Directors, and may be changed from time to time by a majority vote
of the Board.
ARTICLE V
Issue and Transfer of Stock
1. CERTIFICATES. Certificates of stock shall be in form authorized or
adopted by the Board of Directors and shall be consecutively numbered, provided
that each certificate shall set forth upon its face as at the time of issue:
the name of this corporation, a statement that this corporation is organized
under the laws of the State of Connecticut, the name of the person to whom
issued, the number of shares represented thereby and the par value of each such
share; and provided that each certificate shall be signed by the President or a
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer, and shall be sealed with the seal of the
corporation. Any such signature may be affixed manually or in facsimile.
2. TRANSFER. The stock of the corporation shall be transferred only
upon the books of the corporation either by the stockholder in person, or by
power of attorney executed by the stockholder for that purpose, upon the
surrender for cancellation of the old stock certificate. Prior to due
presentment for registration of transfer of a security, the corporation shall
treat the registered owner of a security as the person exclusively entitled to
vote, receive notifications and dividends, and otherwise to exercise all the
rights and powers of the shares represented by such security.
The form of transfer shall be as follows:
For value received________________________hereby sell, assign and transfer unto
____________ ______shares of the capital stock represented by the within
certificate and do hereby irrevocably constitute and appoint _______________to
transfer the said stock on the books of the within named corporation with full
power of substitution in the premises.
Dated_________________, 2__.
In the presence
of:________________________________________________________________
New certificates shall thereupon be issued to the purchaser or assignee.
ARTICLE VI
Seal
1. The seal of the corporation shall have inscribed thereon the name
of the corporation, the word "Seal" and the word "Connecticut", and shall be in
the custody of the Secretary.
ARTICLE VII
Fiscal Year
1. The fiscal year of the corporation shall commence on January 1.
ARTICLE VIII
Amendments
1. These bylaws may be adopted, amended or repealed at any validly
called and convened meeting of the Board of Directors by the affirmative vote
of Directors holding a majority of the number of directorships at the time or
by the unanimous written consent of the Board of Directors as provided in
Article III, Section 8 of these bylaws. Any notice of a meeting of the Board of
Directors at which bylaws are to be adopted, amended or repealed shall include
notice of such proposed action. --
C-9
ANNEX D
[EVERCORE GROUP INC. LETTERHEAD]
July 28, 2005
Special Committee of the Board of Directors
Kaman Corporation
1332 Blue Hills Avenue
Bloomfield, Connecticut 06002
Members of the Special Committee of the Board of Directors:
We understand that Kaman Corporation ("Kaman") has entered into a
recapitalization agreement with certain of its shareholders, dated as of June
7, 2005 (the "Recapitalization Agreement"), which provides for, among other
things, a Proposed Recapitalization. Capitalized terms used herein but not
defined shall have the meaning assigned to them in the Recapitalization
Agreement. We further understand that, in accordance with the Recapitalization
Agreement, the Shareholders have proposed to Kaman a transaction which was
determined by the Arbiter to be a Qualifying Alternative Transaction and that,
in accordance with the Recapitalization Agreement, Kaman proposes to exercise
its right to implement a Substitute Recapitalization Proposal pursuant to
which, among other things, (i) each share of Class A Stock will become entitled
to one vote per share on all matters submitted generally to the shareholders of
Kaman and (ii) each share of Class B Stock will be reclassified into 3.58
shares of Class A Stock, with individual holders of Class B Stock being
permitted, not later than the third business day immediately preceding the date
of the Shareholders' Meeting, to elect to instead receive in exchange for any
or all of the shares of such holder's Class B Stock, on a per share basis, (x)
1.84 shares of Class A Stock and (y) an amount in cash equal to $27.10
(collectively, the "Substitute Recapitalization"). The terms and conditions of
the Substitute Recapitalization are more fully set forth in the
Recapitalization Agreement.
You have asked us whether, in our opinion, as of the date hereof, the
Substitute Recapitalization is fair, from a financial point of view, to the
holders of Class A Stock (solely with respect to such Class A Stock).
In connection with rendering our opinion, we have, among other things:
(i) Discussed the past and current operations and financial
condition and the prospects of Kaman with the management of
Kaman;
(ii) Analyzed certain publicly available financial statements and
other information relating to Kaman;
(iii) Analyzed certain internal financial statements and other
financial and operating data concerning Kaman prepared by and
furnished to us by the management of Kaman;
(iv) Analyzed certain financial projections concerning Kaman
prepared by and furnished to us by the management of Kaman;
(v) Reviewed the financial terms, to the extent available, of
certain comparable transactions;
(vi) Reviewed the reported prices and trading activity of the
Class A Stock;
(vii) Compared the financial performance of Kaman and the prices
and trading activity of the Class A Stock with that of
certain other publicly-traded companies and their securities;
(viii) Reviewed the Recapitalization Agreement; and
D-1
(ix) Performed such other analyses and examinations and considered
such other factors as we have in our sole judgment deemed
appropriate.
For purposes of our analysis and opinion, we have not assumed any
responsibility for independently verifying the accuracy and completeness of the
information reviewed by us or reviewed for us. With respect to the financial
projections of Kaman which were furnished to us, we have assumed that such
financial projections have been reasonably prepared by Kaman, on bases
reflecting the best currently available estimates and good faith judgments of
the future competitive, operating and regulatory environments and related
financial performance of Kaman. We have not made nor assumed any responsibility
for making any independent valuation or appraisal of the assets or liabilities
of Kaman, nor have we been furnished with any such appraisals. Our opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information and the Recapitalization Agreement and related exhibits and
schedules thereto made available to us as of, the date hereof. Our opinion does
not address Kaman's underlying business decision to effect the Substitute
Recapitalization nor does it constitute a recommendation to any Kaman
shareholder as to how such holder should respond to the Substitute
Recapitalization.
In connection with the Substitute Recapitalization, we have not been
asked to pass upon, and express no opinion with respect to, any matter other
than the fairness from a financial point of view, as of the date hereof, of the
Substitute Recapitalization to the holders of Class A Stock (solely with
respect to such Class A Stock).
We have acted as financial advisor to the Special Committee of the
Board of Directors of Kaman in connection with the Substitute Recapitalization
and will receive fees for our services upon the rendering of this opinion. In
addition, Kaman has agreed to reimburse our expenses and to indemnify us for
certain liabilities arising out of our engagement.
It is understood that this letter is for the information and benefit
of the Special Committee of the Board of Directors of Kaman and may not be
quoted or referred to or relied upon or used for any other purpose without our
prior written consent, except that we hereby agree that a copy of this letter
may be provided to the full Board of Directors of Kaman and we hereby consent
to the inclusion of the full text of this opinion and to a reference to or
description of this opinion in any document delivered to the shareholders of
Kaman in connection with the Substitute Recapitalization, provided that such
reference to or description of this opinion is in a form acceptable to us and
our counsel. This opinion is not intended to confer any rights or remedies upon
any employee, creditor or shareholder of Kaman or any other party.
Based upon and subject to the foregoing, it is our opinion that as of
the date hereof, the Substitute Recapitalization is fair, from a financial
point of view, to the holders of Class A Stock (solely with respect to such
Class A Stock).
Very truly yours,
EVERCORE GROUP INC.
By: /s/ Saul D. Goodman
------------------------------
Saul D. Goodman
Senior Managing Director
D-2
ANNEX E
[HOULIHAN LOKEY HOWARD & ZUKIN FINANCIAL ADVISORS, INC. LETTERHEAD]
July 28, 2005
Special Committee of the Board of Directors
Kaman Corporation
1332 Blue Hills Avenue
Bloomfield, Connecticut 06002
Dear Committee Members:
We understand that Kaman Corporation, a Connecticut corporation
("Kaman" or the "Company"), which currently has Class A common stock, par value
$1.00 per share (non-voting) ("Class A Stock"), and Class B common stock, par
value $1.00 per share (voting) ("Class B Stock"), following a recapitalization
(the "Recapitalization"), will have a single class of common stock, par value
$1.00 per share ("Common Stock"). Holders of the Common Stock will be entitled
to one vote per share of Common Stock on all matters submitted generally to the
stockholders of the Company. The recapitalization will be effected through an
amendment to the Company's Amended and Restated Certificate of Incorporation,
pursuant to which each share of (i) Class A Stock will become one share of
Common Stock and (ii) Class B Stock will be reclassified as and converted and
changed into 3.58 shares of Common Stock; provided, that, prior to the
consummation of the Recapitalization, individual holders of the Class B Stock
may elect to instead receive in exchange for any or all of their shares of
Class B Stock, on a per share basis, (a) 1.84 shares of Common Stock and (b)
and cash of $27.10.
All such shares and cash payments to be issued in consideration of
Class B shares under the Recapitalization are referred to collectively herein
as the "Recapitalization Consideration." The Recapitalization and other related
transactions disclosed to Houlihan Lokey are referred to collectively herein as
the "Transaction."
You have requested our opinion (the "Opinion") as to the matters set
forth below. This opinion constitutes the "Opinion" as such term is defined in
the retainer agreement entered into by the Company and Houlihan Lokey, dated
July 5, 2005. This Opinion does not address the underlying business decision by
the Company or its stockholders to approve or effect the Transaction. This
Opinion also does not address the fairness of the Transaction to any
constituency other than the holders of the Class B Stock (as specified in the
last paragraph below) and, without limiting the foregoing, does not address the
fairness of the Transaction to the holders of the Class A Stock. We have not
been requested to, and did not, solicit third party indications of interest in
acquiring all or any part of the Company, including all or any part of the
Class B Stock or other outstanding equity securities. Furthermore, at your
request, we have not negotiated the Transaction on any party's behalf or
advised you or any other party with respect to possible alternatives to the
Transaction.
In connection with this Opinion, we have made such reviews, analyses
and inquiries as we have deemed necessary and appropriate under the
circumstances. Among other things, we have:
(i) reviewed the Company's Annual Report on Form 10-K for the
fiscal years ended December 31, 2002 through 2004 and
Quarterly Report on Form 10-Q for the period ended March 31,
2005;
(ii) reviewed a draft of the Company's unaudited consolidated
financial statements for the quarter ended July 1, 2005 and
internal financial forecasts for the fiscal years ending
December 31, 2005 and 2006;
(iii) reviewed a certified copy of the Company's Amended and
Restated Certificate of Incorporation dated April 20, 2001
(which management has represented to us has not been amended
subsequent to that date);
(iv) reviewed the proposed Amended and Restated Certificate of
Incorporation of the Company, dated June 7, 2005;
E-1
(v) reviewed the Company's By-Laws, as amended, through July 9,
2002 (which management has represented to us has not been
amended subsequent to that date);
(vi) reviewed the proposed Amended and Restated By-Laws of the
Company, dated June 7, 2005
(vii) reviewed a schedule of the holders of the Company's Class B
Stock as of May 27, 2005 provided to us by the management;
(viii) reviewed the Agreement regarding the Recapitalization, dated
June 7, 2005;
(ix) reviewed the Securities Purchase Agreement by and among MK
Investments LLC, Mason Capital Management LLC and the Family
Shareholders, regarding the Third Party Offer, dated as of
June 28, 2005;
(x) reviewed the Notification dated July 21, 2005 from Eric D.
Green, as Arbiter, regarding the arbitration pursuant to the
Recapitalization Agreement;
(xi) reviewed certain publicly available data, including current
and historical trading prices for the Class A Stock and for
the shares of certain companies that we deem comparable to
the Company, as well as certain publicly available
information regarding transactions that we consider similar
to the Transaction;
(xii) met with certain senior managers of the Company to discuss
the operations, prospects and financial projections,
financial condition and capital structure of the Company; and
(xiii) conducted such other studies, analyses and inquiries as we
have deemed appropriate.
We have relied upon and assumed, without independent verification,
that the financial forecasts and projections provided to us have been
reasonably prepared and reflect the best currently available estimates of the
future financial results and condition of the Company, and that there has been
no material change in the assets, financial condition, business or prospects of
the Company since the date of the most recent financial statements made
available to us. We have assumed that the Transaction will be implemented in
accordance with the terms set forth in the final forms of the documents
presented to us as set forth above. We also have assumed that the current
holdings of the Company's Class B Stock are consistent with those set forth on
the schedule dated as of May 27, 2005 presented to us by management.
We have not independently verified the accuracy and completeness of
the information supplied to us with respect to the Company and do not assume
any responsibility with respect to it. We have not made any physical inspection
or independent appraisal of any of the properties or assets of the Company. Our
opinion is necessarily based on business, economic, market and other conditions
as they exist, and can be evaluated by us, at the date of this letter.
Based upon the foregoing, and in reliance thereon, it is our opinion
that the consideration to be received by the holders (including holders that
have been identified in the schedules set forth above as members and affiliates
of the Kaman family) of Class B Stock of the Company ("Class B Shareholders) in
connection with the Transaction is fair, from a financial point of view, to the
Class B Shareholders (solely with respect to such Class B Stock).
HOULIHAN LOKEY HOWARD & ZUKIN FINANCIAL ADVISORS, INC.
E-2
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Subsection (a) of Section 33-771 of the Connecticut Business
Corporation Act, or the CBCA, provides that a corporation may indemnify an
individual who is a party to a proceeding because he is a director against
liability incurred in the proceeding if: (1)(A) he conducted himself in good
faith; (B) he reasonably believed (i) in the case of conduct in his official
capacity, that his conduct was in the best interests of the corporation; and
(ii) in all other cases, that his conduct was at least not opposed to the best
interests of the corporation; and (C) in the case of any criminal proceeding,
he has no reasonable cause to believe his conduct was unlawful; or (2) he
engaged in conduct for which broader indemnification has been made permissible
or obligatory under a provision of the certificate of incorporation as
authorized by the CBCA.
Subsection (b) of Section 33-771 of the CBCA provides that a
director's conduct with respect to an employee benefit plan for a purpose he
reasonably believed to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement that his
conduct was at least not opposed to the best interest of the corporation.
Subsection (c) of Section 33-771 of the CBCA provides that the
termination of a proceeding by judgment, order, settlement or conviction or
upon a plea of nolo contendere or its equivalent is not, of itself,
determinative that the director did not meet the relevant standard of conduct
described in Section 33-771 of the CBCA.
Subsection (d) of Section 33-771 of the CBCA provides that, unless
ordered by a court, a corporation may not indemnify a director: (1) in
connection with a proceeding by or in the right of the corporation except for
reasonable expenses incurred in connection with the proceeding if it is
determined that the director has met the relevant standard of conduct under
Section 33-771(a) of the CBCA; or (2) in connection with any proceeding with
respect to conduct for which he was adjudged liable on the basis that he
received a financial benefit to which he was not entitled, whether or not
involving action in his official capacity.
Section 33-772 of the CBCA provides that a corporation shall indemnify
a director of the corporation who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party because he
was a director of the corporation, against reasonable expenses incurred by him
in connection with the proceeding.
Subsection (a) of Section 33-776 of the CBCA provides that a
corporation may indemnify an officer of the corporation who is a party to a
proceeding because he is an officer of the corporation (1) to the same extent
as a director, and (2) if he is an officer but not a director, to such further
extent, consistent with public policy, as may be provided by contract, the
certificate of incorporation, the bylaws or a resolution of the board of
directors. Subsection (c) of Section 33-776 of the CBCA provides that an
officer of the corporation who is not a director is entitled to mandatory
indemnification under Section 33-772 to the same extent to which a director may
be entitled to indemnification.
Article SEVENTH of the company's certificate of incorporation provides
that it will indemnify each director and officer of the company against
expenses reasonably incurred by him or her in connection with any action, suit
or proceeding instituted or threatened to which he or she may be made a party
by reason of being or having been a director or officer of the company, except
as to matters as to which he or she shall be adjudged in such action, suit or
proceeding to have been neglectful of his or her duty as such director or
officer. The right of indemnification conferred upon our directors and officers
by Article SEVENTH of the company's certificate of incorporation is not
exclusive of other rights to indemnification to which the company's directors
and officers may be entitled.
In addition, the company maintains a directors' and officers'
liability insurance policy.
The company has also entered into indemnification agreements with
certain officers and directors, including a former director, of the company in
connection with the recapitalization and have agreed in the recapitalization
agreement to indemnify the members if the Kaman family for certain matters, in
each case as described in the proxy statement/prospectus contained in this
registration statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been
II-1
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits -- See Exhibit Index on page II-3.
Item 22. Undertakings.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
EXHIBIT INDEX
Exhibit
No.
2.1 Agreement, dated as of June 7, 2005, by and among Kaman Corporation,
Newgate Associates Limited Partnership, Oldgate Limited Partnership,
Charles H. Kaman, C. William Kaman II, Roberta C. Kaman, Steven W.
Kaman and Cathleen H. Kaman (incorporated by reference to Exhibit 2.1
to Kaman's current report on Form 8-K, filed June 8, 2005 and, without
certain exhibits, attached as Annex A to the proxy
statement/prospectus contained in this registration statement).
3.1 Amended and Restated Certificate of Incorporation in the form to
become effective if the recapitalization is implemented (attached as
Annex B to the proxy statement/prospectus contained in this
registration statement).
3.2 Amended and Restated Bylaws in the form to become effective if the
recapitalization is implemented (attached as Annex C to the proxy
statement/prospectus contained in this registration statement).
5.1** Opinion of Shipman & Goodwin LLP as to the legality of the securities
being registered.
10.1 Form of individual Indemnification Agreements, dated as of June 7,
2005, entered into with Paul Kuhn, Jack Cahill and Wanda Rogers
(incorporated by reference to Exhibit 10.1 to Kaman's current report
on Form 8-K, filed June 8, 2005).
10.2 Form of individual Indemnification Agreement, dated as of June 7,
2005, entered into with Robert Garneau and John Murtha (incorporated
by reference to Exhibit 10.2 to Kaman's current report on Form 8-K,
filed June 8, 2005).
11.1 Earnings per share calculation (incorporated by reference to Exhibit
11 to Kaman's annual report on Form 10-K, filed March 16, 2005, and
Kaman's quarterly report on Form 10-Q, filed August 3, 2005).
21.1* Subsidiaries of Kaman Corporation.
23.1* Consent of KPMG LLP.
23.2** Consent of Shipman & Goodwin LLP (included in Exhibit 5.1 opinion)
24.1* Power of Attorney (included in signature page to this registration
statement).
99.1* Consent of Evercore Group Inc.
99.2* Consent of Houlihan Lokey Howard & Zukin Financial Advisors, Inc.
99.3* Form of Class A Nonvoting Common Stock Proxy Card
99.4* Form of Class B Voting Common Stock Proxy Card
99.5** Class B Voting Common Stock Election Form
* Filed herewith
** To be filed by amendment
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Bloomfield, State of
Connecticut, on the 18th day of August, 2005.
KAMAN CORPORATION
By: /s/ Paul R. Kuhn
----------------------------------
Name: Paul R. Kuhn
Title: President, Chairman and
Chief Executive Officer
KNOWN BY ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below, constitutes and appoints Paul R. Kuhn, Robert M. Garneau and
Candace A. Clark, or any of them, acting alone, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in his name, place and stead, in any and all capacities, in
connection with the registrant's Registration Statement in the name and on
behalf of the registrant or on behalf of the undersigned as a director or
officer of the registrant, on Form S-4 under the Securities Act of 1933, as
amended, including, without limiting the generality of the foregoing, to sign
the Registration Statement and any and all amendments (including post-effective
amendments) to the Registration Statement, and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent or either of them, acting alone, full
power and authority to do and perform each and every act and thing requisite
and necessary to be done and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, thereby ratifying and confirming
all that said attorney-in-fact and agent or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Paul R. Kuhn
--------------------------------
Name: Paul R. Kuhn
Title: President, Chairman and
Chief Executive Officer
Date: August 12, 2005
/s/ Robert M. Garneau
--------------------------------
Name: Robert M. Garneau
Title: Executive Vice President, Chief Financial Officer
and Chief Accounting Officer
Date: August 12, 2005
/s/ Brian E. Barents
--------------------------------
Name: Brian E. Barents
Title: Director
Date: August 12, 2005
II-4
/s/ E. Reeves Callaway
--------------------------------
Name: E. Reeves Callaway
Title: Director
Date: August 12, 2005
/s/ John A. DiBiaggio
--------------------------------
Name: John A. DiBiaggio
Title: Director
Date: August 13, 2005
/s/ Edwin A. Huston
--------------------------------
Name: Edwin A. Huston
Title: Director
Date: August 12, 2005
--------------------------------
Name: C. William Kaman II
Title: Director
Date: August __, 2005
/s/ Eileen S. Kraus
--------------------------------
Name: Eileen S. Kraus
Title: Director
Date: August 10, 2005
/s/ Walter H. Monteith, Jr.
--------------------------------
Name: Walter H. Monteith, Jr.
Title: Director
Date: August 12, 2005
/s/ Wanda L. Rogers
--------------------------------
Name: Wanda L. Rogers
Title: Director
Date: August 11, 2005
/s/ Richard J. Swift
--------------------------------
Name: Richard J. Swift
Title: Director
Date: August 12, 2005