Item 5.02. Departure of Directors or Certain Officers; Election of Directors,
Appointment of Certain Officers, Compensatory Arrangements of Certain Officers
As previously disclosed, on December 8, 2020, MTS Systems Corporation, a
Minnesota corporation (the "Company"), entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Amphenol Corporation, a Delaware
corporation ("Parent"), and Moon Merger Sub Corporation, a Minnesota corporation
and wholly-owned subsidiary of Parent ("Merger Sub"). On the terms, and subject
to the conditions, of the Merger Agreement, Merger Sub will merge with and into
the Company (the "Merger"), with the Company continuing as the surviving
corporation and a wholly owned subsidiary of Parent.
On December 18, 2020, each of the following named executive officers of the
Company entered into a retention agreement with the Company regarding a grant
under a retention bonus pool relating to the Merger that was previously approved
by the Compensation and Leadership Development Committee of the Board of
Directors of the Company (the "Board"), with allocations of awards under such
bonus pool in the following amounts: Randy J. Martinez, President and Chief
Executive Officer, $1,440,000; Brian T. Ross, Executive Vice President and Chief
Financial Officer, $500,000; Steven B. Harrison, Executive Vice President and
President, Test & Simulation, $500,000; and David T. Hore, Executive Vice
President and President, Sensors, $500,000. Each retention bonus will be subject
to the terms and conditions of the retention agreement, including: (i) 50% of
the retention bonus will be paid shortly after the date the Merger Agreement is
signed and will be subject to a clawback obligation in the event the executive
resigns without "good reason" or is terminated for "cause", but no clawback will
be required if the consummation of the transactions contemplated by the Merger
Agreement (the "Closing") does not occur, and (ii) 50% of the retention bonus
will be payable on or around the first anniversary of the Closing (subject to
the executive's continued employment through such anniversary or, in the case of
the Company's Chief Executive Officer, an earlier qualifying termination
(including resignation for "good reason" or termination "without cause") on or
after the Closing). The Company's Chief Executive Officer's retention agreement
also includes a requirement for the executing and non-revocation of a release of
claims in favor of the Company on certain terminations of employment.
On December 17, 2020, following a recommendation from the Nominating and
Governance Committee of the Board, Randy J. Martinez's appointment as President
and Chief Executive Officer of the Company by the Board was effective. Mr.
Martinez has served as the Company's Interim President and Chief Executive
Officer since May 23, 2020. Mr. Martinez will remain a member of the Company's
Board. The Board determined to appoint Mr. Martinez as President and Chief
Executive Officer during the pendency of the proposed acquisition by Parent as
part of the Company's efforts to continue to operate in ordinary course and to
assist in maintaining stability within the Company's workforce. From and after
the Closing, Parent will make all determinations with respect to the officers of
the Company, including the position of Chief Executive Officer of the Company.
Mr. Martinez brings an exceptional track record of executive and director-level
leadership in billion-dollar public corporations in aviation, aerospace, defense
and industrials. He joined the Company's Board as an independent director in
March 2014. From 2009 to 2017, Mr. Martinez served in several leadership roles
at AAR Corporation (NYSE), a provider of aviation services to the worldwide
commercial aviation and aerospace, defense industries, most notably President &
Chief Executive Officer of the Airlift Group and Group Vice President, Aviation
Services. Before joining AAR, Mr. Martinez was the Chief Executive Officer at
World Air Holdings, Inc. (NASDAQ). As a graduate of the United States Air Force
Academy, Mr. Martinez served with distinction in the U.S. Air Force for 21
years, retiring as a Colonel and Command Pilot and having held a wide variety of
leadership roles, including command and senior staff positions.
Mr. Martinez was not appointed pursuant to any arrangement or understanding with
any person, and Mr. Martinez does not have any family relationships with any
directors or executive officers of the Company. Mr. Martinez has not had a
direct or indirect material interest in any transaction with the Company since
September 30, 2018, nor is any such transaction currently proposed, that would
be reportable under Item 404(a) of Regulation S-K.
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On December 13, 2020, in connection with Mr. Martinez's appointment as President
and Chief Executive Officer of the Company, the Compensation and Leadership
Development Committee of the Board approved a one-time equity award to Mr.
Martinez equal in value to approximately $2,000,000 on the date of grant, which
is expected to be granted on or about December 22, 2020, and will be provided in
the form of 50% restricted stock units and 50% performance restricted stock
units. Mr. Martinez's base salary will remain at $720,000. On December 17, 2020,
in connection with his appointment as President and Chief Executive Officer of
the Company, Mr. Martinez and the Company entered into an Offer Letter, as
previously approved by the Compensation and Leadership Development Committee of
the Board, reflecting such terms.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are being furnished herewith:
Exhibit No. Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* The Company has omitted schedules and other similar attachments to such
agreement pursuant to Item 601(b) of Regulation S-K. The Company will furnish a
copy of such omitted document to the SEC upon request.
Additional Information Regarding the Merger and Where to Find It
This communication does not constitute an offer to sell or the solicitation of
an offer to buy the securities of MTS Systems Corporation (the "Company") or the
solicitation of any vote or approval. This communication relates to the proposed
merger involving the Company, Parent and Merger Sub, whereby the Company will
become a wholly owned subsidiary of Parent (the "proposed merger"). The proposed
merger will be submitted to the shareholders of the Company for their
consideration at a special meeting of the shareholders. In connection therewith,
the Company intends to file relevant materials with the U.S. Securities and
Exchange Commission (the "SEC"), including a definitive proxy statement on
Schedule 14A (the "definitive proxy statement") which will be mailed or
otherwise disseminated to the Company's shareholders when it becomes available.
The Company may also file other relevant documents with the SEC regarding the
proposed merger. SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT
AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY AND
IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Shareholders may obtain free
copies of the definitive proxy statement, any amendments or supplements thereto
and other documents containing important information about the Company, once
such documents are filed with the SEC, through the website maintained by the SEC
at www.sec.gov. Free copies of the definitive proxy statement and any other
documents filed with the SEC can also be obtained on the Company's website at
investor.mts.com or by contacting the Company's Investor Relations Department at
IRRequests@mts.com.
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Certain Information Regarding Participants in the Solicitation
The Company and certain of its directors, executive officers and employees may,
under the rules of the SEC, be deemed to be participants in the solicitation of
proxies in connection with the proposed merger. Information regarding the
Company's directors and executive officers is contained in the Company's Annual
Report on Form 10-K for the fiscal year ended October 3, 2020, filed with the
SEC on December 15, 2020, its definitive proxy statement on Schedule 14A for the
2020 annual meeting of shareholders, filed with the SEC on December 30, 2019, as
modified or supplemented by any Form 3 or Form 4 filed with the SEC since the
date of such definitive proxy statement, and in subsequent documents filed with
the SEC. Additional information regarding the participants in the proxy
solicitation and a description of their direct or indirect interests, by
security holdings or otherwise, will be included in the definitive proxy
statement and other relevant documents filed with the SEC regarding the proposed
merger, if and when they become available. Free copies of these materials may be
obtained as described in the preceding paragraph.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements are based on
current expectations of future events and may include words such as
"anticipate," "believe," "estimate," "expect," "intend," "may," "plan,"
"should," "will" and "would." If underlying assumptions prove inaccurate or
known or unknown risks or uncertainties materialize, actual results could vary
materially from the expectations of the Company. Risks and uncertainties
include, but are not limited to: (i) the risk that the proposed merger may not
be completed in a timely manner or at all, which may adversely affect the
Company's business and the price of its common stock, (ii) the failure to
satisfy the conditions to the consummation of the proposed merger, including the
adoption of the Merger Agreement by the shareholders of the Company, and the
receipt of certain governmental and regulatory approvals, (iii) the occurrence
of any event, change or other circumstance that could give rise to the
termination of the Merger Agreement, (iv) the effect of the announcement or
pendency of the proposed merger on the Company's business relationships,
operating results and business generally, (v) the risk that the proposed merger
disrupts the Company's current plans and operations and potential difficulties
in the Company's employee retention as a result of the proposed merger and (vi)
the outcome of any legal proceedings that may be instituted against the Company,
Parent or Merger Sub related to the Merger Agreement or the proposed merger. The
foregoing list of risk factors is not exhaustive. Readers are advised to
carefully consider the foregoing risk factors and the other risks and
uncertainties that affect the businesses of the Company described in the "Risk
Factors" section of the Company's Annual Report on Form 10-K for the fiscal year
ended October 3, 2020, filed with the SEC on December 15, 2020, its Quarterly
Report on Form 10-Q for the quarter ended June 27, 2020, filed with the SEC on
August 3, 2020, and other reports and documents filed from time to time with the
SEC. These filings identify and address other important risks and uncertainties
that could cause actual events and results to differ materially from those
contained in the forward-looking statements. Copies of these filings are
available online at investor.mts.com. Forward-looking statements speak only as
of the date they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and the Company assumes no obligation and does not
intend to update or revise these forward-looking statements, whether as a result
of new information, future events or otherwise. The Company does not give any
assurance that it will achieve its expectations.
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