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AGREEMENT AND PLAN OF MERGER
Among
ITT INDUSTRIES, INC.,
XXXXXX ACQUISITION, INC.
and
GOULDS PUMPS, INCORPORATED
Dated as of April 20, 1997
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TABLE OF CONTENTS
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ARTICLE I
THE OFFER
SECTION 1.1 The Offer....................................................................... 1
SECTION 1.2 Company Action.................................................................. 3
ARTICLE II
THE MERGER
SECTION 2.1 The Merger...................................................................... 4
SECTION 2.2 Effective Time.................................................................. 4
SECTION 2.3 Effects of the Merger........................................................... 5
SECTION 2.4 Certificate of Incorporation; By-Laws........................................... 5
SECTION 2.5 Directors and Officers.......................................................... 5
SECTION 2.6 Conversion of Securities........................................................ 5
SECTION 2.7 Treatment of Options............................................................ 6
SECTION 2.8 Dissenting Shares and Section 262 Shares........................................ 6
SECTION 2.9 Surrender of Shares; Stock Transfer Books....................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification; Subsidiaries.................................... 8
SECTION 3.2 Certificate of Incorporation and By- Laws....................................... 9
SECTION 3.3 Capitalization.................................................................. 9
SECTION 3.4 Authority Relative to This Agreement............................................ 10
SECTION 3.5 No Conflict; Required Filings and Consents...................................... 11
SECTION 3.6 Compliance...................................................................... 12
SECTION 3.7 SEC Filings; Financial Statements............................................... 12
SECTION 3.8 Absence of Certain Changes or Events............................................ 13
SECTION 3.9 Absence of Litigation........................................................... 14
SECTION 3.10 Employee Benefit Plans.......................................................... 14
SECTION 3.11 Tax Matters..................................................................... 16
SECTION 3.12 Offer Documents; Proxy Statement................................................ 17
SECTION 3.13 Environmental Matters........................................................... 17
SECTION 3.14 Brokers......................................................................... 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
SECTION 4.1 Corporate Organization.......................................................... 21
SECTION 4.2 Authority Relative to This Agreement............................................ 21
SECTION 4.3 No Conflict; Required Filings and Consents...................................... 21
SECTION 4.4 Offer Documents; Proxy Statement................................................ 22
SECTION 4.5 Brokers......................................................................... 22
SECTION 4.6 Funds........................................................................... 23
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending
the Merger..................................................................... 23
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meeting............................................................ 25
SECTION 6.2 Proxy Statement................................................................. 26
SECTION 6.3 Company Board Representation; Section 14(f)..................................... 26
SECTION 6.4 Access to Information; Confidentiality.......................................... 27
SECTION 6.5 No Solicitation of Transactions................................................. 28
SECTION 6.6 Employee Benefits Matters....................................................... 30
SECTION 6.7 Directors' and Officers' Indemnification and Insurance.......................... 31
SECTION 6.8 Delivery of Schedules........................................................... 32
SECTION 6.9 Notification of Certain Matters................................................. 33
SECTION 6.10 Further Action; Reasonable Best Efforts......................................... 33
SECTION 6.11 Public Announcements............................................................ 34
SECTION 6.12 Disposition of Litigation....................................................... 34
SECTION 6.13 Rights.......................................................................... 34
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the Merger..................... 35
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination..................................................................... 35
SECTION 8.2 Effect of Termination........................................................... 37
SECTION 8.3 Fees and Expenses............................................................... 37
SECTION 8.4 Amendment....................................................................... 39
SECTION 8.5 Waiver.......................................................................... 40
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and Agreements...................... 40
SECTION 9.2 Notices......................................................................... 40
SECTION 9.3 Certain Definitions............................................................. 41
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SECTION 9.4 Severability.................................................................... 42
SECTION 9.5 Entire Agreement; Assignment.................................................... 42
SECTION 9.6 Parties in Interest............................................................. 43
SECTION 9.7 Governing Law................................................................... 43
SECTION 9.8 Headings........................................................................ 43
SECTION 9.9 Counterparts.................................................................... 43
Annex A - Offer Conditions
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 20, 1997 (the
"Agreement"), among ITT INDUSTRIES, INC., an Indiana corporation ("Parent"),
XXXXXX ACQUISITION, INC., a Delaware corporation and a wholly owned subsidiary
of Parent ("Purchaser"), and GOULDS PUMPS, INCORPORATED, a Delaware corporation
(the "Company").
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of the Company and the stockholders of the Company to
enter into this Agreement with Parent and Purchaser, providing for the merger
(the "Merger") of Purchaser with the Company in accordance with the General
Corporation Law of the State of Delaware ("DGCL"), upon the terms and subject to
the conditions set forth herein; and
WHEREAS, the Board of Directors of Parent and Purchaser have each
approved the Merger of Purchaser with the Company in accordance with the DGCL
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.1 and no event shall have occurred
and no circumstance shall exist which would result in a failure to satisfy any
of the conditions or events set forth in Annex A hereto (the "Offer
Conditions"), Purchaser shall, as soon as reasonably practicable after the date
hereof (and in any event within five business days from the date of public
announcement of the execution hereof), commence an offer (the "Offer") to
purchase for cash all of the issued and outstanding shares of Common Stock, par
value $1.00 per share (referred to herein as either the "Shares" or "Company
Common Stock"), of the Company at a price of $37.00 per Share, net to the seller
in cash. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer shall be subject only to the satisfaction or waiver by
Purchaser of the Offer Conditions. Purchaser expressly reserves the right, in
its sole discretion, to waive any such condition (other than the Minimum
Condition as defined in the Offer Conditions) and make any other changes in the
terms and conditions of the Offer, provided that, unless previously approved by
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the Company in writing, no change may be made which changes the Minimum
Condition or decreases the price per Share payable in the Offer, changes the
form of consideration payable in the Offer (other than by adding consideration),
reduces the maximum number of Shares to be purchased in the Offer, or amends the
terms or Offer Conditions or imposes conditions or terms to the Offer in
addition to those set forth herein which, in either case, are adverse to holders
of the Shares. Purchaser agrees that, unless it is permitted to terminate this
Agreement pursuant to Section 8.1(a), 8.1(b), 8.1(c)(ii) or 8.1(e), it can
terminate the Offer only on a scheduled expiration date. Purchaser further
agrees that: (A) in the event it would otherwise be entitled to terminate the
Offer at any scheduled expiration thereof due to the failure of one or more of
the conditions set forth in paragraphs (a), (b), (c), (d)(i), (e) or (h) of the
Offer Conditions to be satisfied or waived, it shall give the Company notice
thereof and, at the request of the Company, extend the Offer until the earlier
of (1) such time as such condition is or conditions are satisfied or waived and
(2) the date chosen by the Company which shall not be later than (x) the Outside
Date (as defined in Section 8.1) applicable to the condition or conditions with
respect to which the extension is requested or (y) the earliest date on which
the Company reasonably believes such condition or conditions will be satisfied;
provided that if such condition is not or conditions are not satisfied by any
date chosen by the Company pursuant to this clause (y), the Company may request
further extensions of the Offer in accordance with the terms of this Section
1.2(a); and (B) in the event that it would otherwise be entitled to terminate
the Offer at the initial scheduled expiration date thereof due solely to the
failure of the Minimum Condition to be satisfied or waived, it shall, at the
request of the Company (which request may be made by the Company only on one
occasion), extend the Offer for up to five business days from such initial
scheduled expiration date. Purchaser covenants and agrees that, subject to the
terms and conditions of this Agreement, including but not limited to the Offer
Conditions, it will accept for payment and pay for Shares as soon as it is
permitted to do so under applicable law. It is agreed that the Offer Conditions
are for the benefit of Purchaser and may be asserted by Purchaser regardless of
the circumstances giving rise to any such condition (except for any action or
inaction by Purchaser or Parent constituting a breach of this Agreement) or,
except with respect to the Minimum Condition, may be waived by Purchaser, in
whole or in part at any time and from time to time, in its sole discretion.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Purchaser shall file a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer with the Securities and Exchange
Commission (the "SEC"). The Schedule 14D-1 shall contain an Offer to Purchase
and forms of the related letter of transmittal (which Schedule 14D-1, Offer to
Purchase and other documents, together with any supplements or amendments
thereto, are referred to herein collectively as the "Offer Documents"). Parent
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and Purchaser agree that the Company and its counsel shall be given an
opportunity to review the Schedule 14D-1 before it is filed with the SEC.
Parent, Purchaser and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents that shall have become
false or misleading in any material respect, and Parent and Purchaser further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to
be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws.
SECTION 1.2 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that: (i) its Board of
Directors, at a meeting duly called and held on April 20, 1997, has unanimously
(A) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
holders of Shares, (B) approved this Agreement and the transactions contemplated
hereby, including each of the Offer and the Merger, and (C) resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares to Purchaser thereunder and approve this Agreement and the transactions
contemplated hereby (it being understood that, notwithstanding anything in this
Agreement to the contrary, if the Company's Board of Directors determines in
good faith, based upon the advice of outside counsel, that failure to modify or
withdraw its recommendation would constitute a breach of their fiduciary duties
under applicable law, the Board of Directors may so modify or withdraw its
recommendation and such modification or withdrawal shall not constitute a breach
of this Agreement); and (ii) Xxxxxxx, Xxxxx & Co. (the "Financial Adviser") has
delivered to the Board of Directors of the Company its written opinion that the
consideration to be received by holders of Shares, other than Parent and
Purchaser, pursuant to each of the Offer and the Merger is fair to such holders.
The Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Company's Board of Directors described in this Section
1.2(a).
(b) The Company shall file with the SEC, contemporaneously with the
commencement of the Offer pursuant to Section 1.1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9"), containing the recommendations of the Company's
Board of Directors described in Section 1.2(a)(i) and shall promptly mail the
Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9 and all
amendments thereto will comply in all material respects with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder. The Company, Parent and Purchaser each
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 that shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws.
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(c) In connection with the Offer, if requested by Purchaser, the
Company shall promptly furnish Purchaser with mailing labels, security position
listings, any non-objecting beneficial owner lists and any available listings or
computer files containing the names and addresses of the record holders of
Shares, each as of a recent date, and shall promptly furnish Purchaser with such
additional information (including but not limited to updated lists of
stockholders, mailing labels, security position listings and non-objecting
beneficial owner lists) and such other assistance as Parent, Purchaser or their
agents may reasonably require in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, Parent and each of
their affiliates and associates shall hold in confidence the information
contained in any of such lists, labels or additional information and, if this
Agreement is terminated, shall promptly deliver to the Company all copies of
such information then in their possession.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
of this Agreement and in accordance with the DGCL, at the Effective Time (as
defined in Section 2.2), Purchaser shall be merged with and into the Company. As
a result of the Merger, the separate corporate existence of Purchaser shall
cease and the Company shall continue as the surviving corporation of the Merger
(the "Surviving Corporation"). At Parent's election, any direct or indirect
subsidiary of Parent other than Purchaser may be merged with and into the
Company instead of the Purchaser. In the event of such an election, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
such election.
SECTION 2.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or a
certificate of merger or a certificate of ownership and merger (the "Certificate
of Merger") with the Secretary of State of the State of Delaware, in such form
as required by and executed in accordance with the relevant provisions of the
DGCL (the date and time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (or such later time as is specified
in the Certificate of Merger) being the "Effective Time").
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SECTION 2.3 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time all the
property, rights, privileges, immunities, powers and franchises of the Company
and Purchaser shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.4 Certificate of Incorporation; By-Laws. (a) At the
Effective Time and without any further action on the part of the Company and
Purchaser, the Restated Certificate of Incorporation of the Company (as amended,
the "Certificate of Incorporation"), as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter and further amended as provided therein and under
the DGCL.
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the By-Laws of Purchaser shall be the By-Laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the Purchaser
and as provided by law.
SECTION 2.5 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section
2.6(b) and any Dissenting Shares (as defined in Section 2.8(a))) shall be
cancelled, extinguished and converted into the right to receive $37.00 in
cash or any higher price that may be paid pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof, without interest,
upon surrender of the certificate formerly representing such Share in the
manner provided in Section 2.9, less any required withholding taxes.
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(b) Each share of Company Common Stock held in the treasury of the
Company and each Share owned by Parent, Purchaser or any other direct or
indirect subsidiary of Parent or of the Company, in each case immediately
prior to the Effective Time, shall be cancelled and retired without any
conversion thereof and no payment or distribution shall be made with
respect thereto.
(c) Each share of common, preferred or other capital stock of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
nonassessable share of identical common, preferred or other capital stock
of the Surviving Corporation.
SECTION 2.7 Treatment of Options. Immediately prior to the Effective
Time, each outstanding stock option and any related stock appreciation right
granted to employees and non-employee directors of the Company and its
subsidiaries (together, an "Option"), whether or not then exercisable, shall be
cancelled by the Company, and the holder thereof shall be entitled to receive at
the Effective Time or as soon as practicable thereafter from the Company in
consideration for such cancellation an amount in cash equal to the product of
(a) the number of Shares previously subject to such Option and (b) the excess,
if any, of the Merger Consideration over the exercise price per Share previously
subject to such Option.
SECTION 2.8 Dissenting Shares and Section 262 Shares. (a)
Notwithstanding anything in this Agreement to the contrary, shares of Company
Common Stock that are issued and outstanding immediately prior to the Effective
Time and which are held by stockholders who have not voted in favor of or
consented to the Merger and shall have delivered a written demand for appraisal
of such shares of Company Common Stock in the time and manner provided in
Section 262 of the DGCL and shall not have failed to perfect or shall not have
effectively withdrawn or lost their rights to appraisal and payment under the
DGCL (the "Dissenting Shares") shall not be converted into the right to receive
the Merger Consideration, but shall be entitled to receive the consideration as
shall be determined pursuant to Section 262 of the DGCL; provided, however, that
if such holder shall have failed to perfect or shall have effectively withdrawn
or lost his, her or its right to appraisal and payment under the DGCL, such
holder's shares of Company Common Stock shall thereupon be deemed to have been
converted, at the Effective Time, into the right to receive the Merger
Consideration set forth in Section 2.6(a) of this Agreement, without any
interest thereon.
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(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to Section 262 received by the Company, withdrawals of such
demands, and any other instruments served pursuant to the DGCL and received by
the Company and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to any such demands for appraisal or offer to settle or settle any such demands.
SECTION 2.9 Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent for the holders of Shares in connection with the Merger (the "Paying
Agent") to receive the Merger Consideration to which holders of Shares shall
become entitled pursuant to Section 2.6(a). When and as needed, Parent or
Purchaser will make available to the Paying Agent sufficient funds to make all
payments pursuant to Section 2.9(b). Such funds shall be invested by the Paying
Agent as directed by Purchaser or, after the Effective Time, the Surviving
Corporation, provided that such investments shall be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Xxxxx'x Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Surviving Corporation or Parent, as
Parent directs.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration for each Share formerly represented by such Certificate,
and such Certificate shall then be cancelled. No interest shall be paid or
accrued for the benefit of holders of the Certificates on the Merger
Consideration payable upon the surrender of the Certificates. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable.
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(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been made available to the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
to the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise provided for
herein or by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that, except as set forth in the disclosure schedule delivered by the Company to
Purchaser on or prior to the date of execution of this Agreement:
SECTION 3.1 Organization and Qualification; Subsidiaries. Each of the
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and any
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and governmental approvals is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect (as defined below) or prevent or
materially delay the consummation of the Offer or the Merger. Each of the
Company and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing as are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect or prevent or materially delay the consummation of the Offer or the
Merger. When used in connection with the Company or any of its subsidiaries, the
term "Material Adverse Effect" means any change or effect that would be
materially adverse to the business, assets, financial condition, or results of
operations of the Company and its subsidiaries taken as a whole.
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SECTION 3.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Certificate of
Incorporation and the By-Laws of the Company as currently in effect. Such
Certificate of Incorporation and By-Laws are in full force and effect and no
other organizational documents are applicable to or binding upon the Company.
The Company is not in violation of any of the provisions of its Certificate of
Incorporation or By-Laws.
SECTION 3.3 Capitalization. The authorized capital stock of the
Company consists of 90,000,000 shares of Company Common Stock and 750,000 shares
of Preferred Stock, par value $20.00 per share ("Company Preferred Stock"). As
of April 16, 1997, (i) 21,381,593 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
were issued free of preemptive (or similar) rights, (ii) no shares of Company
Common Stock were held in the treasury of the Company and (iii) an aggregate of
1,689,829 shares of Company Common Stock were reserved for issuance and issuable
upon or otherwise deliverable in connection with the exercise of outstanding
Options issued pursuant to the Company Plans (as defined in Section 3.10) and
the 1994 Stock Option Plan for Non-Employee Directors. Since April 16, 1997, no
options to purchase shares of Company Common Stock have been granted and no
shares of Company Common Stock have been issued except for shares issued
pursuant to the exercise of Options outstanding as of April 16, 1997. As of the
date hereof, no shares of Company Preferred Stock are issued and outstanding.
Except (i) as set forth above, (ii) as a result of the exercise of Options
outstanding as of April 16, 1997 and (iii) Rights issued pursuant to the Rights
Plan referred to in Section 6.13, there are outstanding (a) no shares of capital
stock or other voting securities of the Company, (b) no securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (c) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company and (d) no equity equivalents, interests in the
ownership or earnings of the Company or other similar rights (collectively,
"Company Securities"). There are no outstanding obligations of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities. There are no other options, calls, warrants or other rights (other
than Rights issued pursuant to the Rights Plan), agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or any of its subsidiaries to which the Company or any of its
subsidiaries is a party. All shares of Company Common Stock subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive (or similar)
rights. There are no outstanding contractual obligations of the Company or any
of its subsidiaries to repurchase, redeem or otherwise acquire any shares of
Company Common Stock or the capital stock of any subsidiary or to provide funds
to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity. Each of the outstanding
shares of capital stock of each of the Company's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and all such shares are
owned by the Company or another wholly owned subsidiary of the Company and are
owned free and clear of all security interests, liens, claims, pledges,
agreements, limitations in voting rights, charges or other encumbrances of any
nature whatsoever, except where the failure to own such shares free and clear is
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect. The Company has delivered to Parent prior to the date hereof a
list of the subsidiaries and associated entities of the Company which evidences,
among other things, the percentage of capital stock or other equity interests
owned by the Company, directly or indirectly, in such subsidiaries or associated
entities. No entity in which the Company owns, directly or indirectly, less than
a 50% equity interest is, individually or when taken together with all such
other entities, material to the business of the Company and its subsidiaries
taken as a whole.
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SECTION 3.4 Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, with respect to the Merger, the approval of this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock if and to the extent required by applicable law, and the filing of
appropriate merger documents as required by the DGCL). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Parent and Purchaser,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby
(including but not limited to the Offer and the Merger) so as to render
inapplicable hereto and thereto (a) the limitation on business combinations
contained in Section 203 of the DGCL (or any similar provision) and (b) the
supermajority stockholder voting requirements of Article VII of the Certificate
of Incorporation. As a result of the foregoing actions, the only vote required
to authorize the Merger is the affirmative vote of a majority of the outstanding
Shares.
11
SECTION 3.5 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by the Company do not and
will not: (i) conflict with or violate the Certificate of Incorporation or
By-Laws of the Company or the equivalent organizational documents of any of its
subsidiaries; (ii) assuming that all consents, approvals and authorizations
contemplated by clauses (i), (ii) and (iii) of subsection (b) below have been
obtained and all filings described in such clauses have been made, conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
the Company or any of its subsidiaries or by which its or any of their
respective properties are bound or affected; or (iii) result in any breach or
violation of or constitute a default (or an event which with notice or lapse of
time or both could become a default) or result in the loss of a material benefit
under, or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract (other than contracts terminable
at will or upon 90 days' or less notice by the terminating party), agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except, in the case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which are not, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect or
prevent or materially delay consummation of the Offer or the Merger.
12
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the Merger by the Company do not and will not
require any consent, approval, authorization or permit of, action by, filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except for (i) applicable requirements, if any, of the Exchange Act and
the rules and regulations promulgated thereunder, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or other foreign
filings or approvals, state securities, takeover and "blue sky" laws, (ii) the
filing and recordation of appropriate merger or other documents as required by
the DGCL and (iii) such consents, approvals, authorizations, permits, actions,
filings or notifications the failure of which to make or obtain are not,
individually or in the aggregate, reasonably likely to (x) prevent or materially
delay consummation of the Offer or the Merger, (y) otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement or (z) have a Material Adverse Effect.
SECTION 3.6 Compliance. Neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties are bound
or affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except for any such conflicts, defaults or violations which are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect or prevent or materially delay consummation of the Offer or the Merger.
SECTION 3.7 SEC Filings; Financial Statements. (a) The Company and, to
the extent applicable, each of its then or current subsidiaries, has filed all
forms, reports, statements and documents required to be filed with the SEC since
January 1, 1995 (collectively, the "SEC Reports"), each of which has complied in
all material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder, or the Exchange Act, and the rules and regulations
promulgated thereunder, each as in effect on the date so filed. None of the SEC
Reports (including but not limited to any financial statements or schedules
included or incorporated by reference therein) contained when filed, or (except
to the extent revised or superseded by a subsequent filing with the SEC)
contains, any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
13
(b) Each of the audited and unaudited consolidated financial
statements of the Company (including any related notes thereto) included in its
Annual Reports on Form 10-K for each of the two fiscal years ended December 31,
1995 and 1996 filed with the Commission has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly presents the consolidated financial position of the Company
and its subsidiaries at the respective date thereof and the consolidated results
of its operations and changes in cash flows for the periods indicated.
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and its subsidiaries at December 31, 1996, including the
notes thereto, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a balance sheet or in
the notes thereto prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred since December 31,
1996 which are not, individually or in the aggregate, reasonably likely to have
a Material Adverse Effect.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Securities
Act and the rules and regulations promulgated thereunder or the Exchange Act and
the rules and regulations promulgated thereunder.
SECTION 3.8 Absence of Certain Changes or Events. Since December 31,
1996, except as contemplated by this Agreement, disclosed in the SEC Reports
filed and publicly available prior to the date of this Agreement, the Company
and its subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since such date, there has
not been: (i) any changes in the financial condition, results of operations,
assets, business or operations of the Company or any of its subsidiaries having
or reasonably likely to have a Material Adverse Effect; (ii) any condition,
event or occurrence which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect; (iii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any assets of the Company
or any of its subsidiaries which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect; (iv) any change by the Company in
its accounting methods, principles or practices; (v) any revaluation by the
Company of any of its material assets, including but not limited to writing down
the value of inventory or writing off notes or accounts receivable other than in
the ordinary course of business; (vi) any entry by the Company or any of its
subsidiaries into any commitment or transactions material to the Company and its
subsidiaries taken as a whole (other than commitments or transactions entered
into in the ordinary course of business); (vii) any declaration, setting aside
or payment of any dividends or distributions in respect of the Shares other than
the regular quarterly dividend in the amount of $.20 per share; or (viii) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including
without limitation the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan or agreement or arrangement, or any other increase in the
compensation payable or to become payable to any present or former directors,
officers or key employees of the Company or any of its subsidiaries, except for
increases in base compensation in the ordinary course of business consistent
with past practice, or any employment, consulting or severance agreement or
arrangement entered into with any such present or former directors, officers or
key employees.
14
SECTION 3.9 Absence of Litigation. Except as disclosed in the SEC
Reports filed and publicly available prior to the date of this Agreement, there
are no suits, claims, actions, proceedings or investigations pending or, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect. As of the
date hereof, neither the Company nor any of its subsidiaries nor any of their
respective properties is or are subject to any order, writ, judgment,
injunction, decree, determination or award having, or which, insofar as can be
reasonably foreseen, is reasonably likely to have a Material Adverse Effect or
prevent or materially delay consummation of the transactions contemplated
hereby.
SECTION 3.10 Employee Benefit Plans. Except (i) as set forth in the
SEC Reports filed and publicly available prior to the date of this Agreement or
(ii) as is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect or prevent or materially delay the consummation of the
Offer or the Merger:
(a) Schedule 3.10 to this Agreement contains a true and
complete list of each "employee benefit plan" (within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), including, without limitation, multiemployer plans
within the meaning of ERISA section 3(37)), stock purchase, stock
option, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA (including any funding
mechanism therefor now in effect or required in the future as a result
of the transaction contemplated by this Agreement or otherwise),
whether formal or informal, oral or written, legally binding or not,
under which any employee or former employee of the Company or any of
its subsidiaries, has any present or future right to benefits or under
which the Company or any of its subsidiaries has any present or
future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans".
Company Plans which provide benefits to or which are participated in
by, non-U.S. employees and former employees ("Foreign Company Plans")
shall be listed in a separate schedule to be delivered as set forth in
Section 6.8.
15
(b) With respect to each Company Plan (other than Foreign
Company Plans), the Company has delivered or made available to Parent a
current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable:
(i) any related trust agreement or other funding instrument; (ii) the
most recent determination letter, if applicable; (iii) any summary plan
description and other written communications by the Company or any of
its subsidiaries to their employees concerning the extent of the
benefits provided under a Company Plan; and (iv) for the three most
recent years (A) the Form 5500 and attached schedules, (B) audited
financial statements and (C) actuarial valuation reports.
(c)(i) Each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Internal Revenue Code of 1986, as amended (the
"Code"), and other applicable laws, rules and regulations; (ii) each
Company Plan which is intended to be qualified within the meaning of
Code section 401(a) is so qualified and has received a favorable
determination letter as to its qualification, and nothing has occurred,
whether by action or failure to act, that would cause the loss of such
qualification; (iii) no event has occurred and no condition exists that
would subject the Company or any of its subsidiaries, either directly
or by reason of their affiliation with any member of their "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code sections 414(b), (c),
(m) or (o)), to any tax, fine, lien or penalty imposed by ERISA, the
Code or other applicable laws, rules and regulations; (iv) for each
Company Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to the matters covered by the
most recent Form since the date thereof; and (v) no "reportable event"
(as such term is defined in ERISA section 4043), "prohibited
transaction" (as such term is defined in ERISA section 406 and Code
section 4975) or "accumulated funding deficiency" (as such term is
defined in ERISA section 302 and Code section 412 (whether or not
waived)) has occurred with respect to any Company Plan.
16
(d) With respect to each of the Company Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA
but is subject to Title IV of ERISA, as of the Effective Time, the
assets of each such Company Plan are at least equal in value to the
present value of the accrued benefits (vested and unvested) of the
participants in such Company Plan on a termination basis, based on the
actuarial methods and assumptions indicated in the most recent
actuarial valuation reports.
(e) With respect to any multiemployer plan (within the meaning
of ERISA section 4001(a)(3)): (i) none of the Company, any of its
subsidiaries or any member of their Controlled Group has incurred any
withdrawal liability under Title IV of ERISA or would be subject to
such liability if, as of the Effective Time, the Company, any of its
subsidiaries or any member of their Controlled Group were to engage in
a complete withdrawal (as defined in ERISA section 4203) or partial
withdrawal (as defined in ERISA section 4205) from any such
multiemployer plan; and (ii) no multiemployer plan to which the
Company, any of its subsidiaries or any member of their Controlled
Group has any liabilities or contributes, is in reorganization or
insolvent (as those terms are defined in ERISA sections 4241 and 4245,
respectively).
(f) With respect to any Company Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
are pending or, to the knowledge of the Company, threatened, and (ii)
no facts or circumstances exist, to the knowledge of the Company, that
could give rise to any such actions, suits or claims.
(g) No Company Plan exists that could result in the payment to
any present or former employee of the Company or any of its
subsidiaries of any money or other property or accelerate or provide
any other rights or benefits to any present or former employee of the
Company or any of its subsidiaries as a result of the transaction
contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code section 280G.
17
SECTION 3.11 Tax Matters. The Company and each of its subsidiaries,
and any consolidated, combined, unitary or aggregate group for tax purposes of
which the Company or any of its subsidiaries is or has been a member has timely
filed all Tax Returns required to be filed by it in the manner provided by law,
has paid all Taxes (including interest and penalties) shown thereon to be due
and has provided adequate reserves in its financial statements according to
generally accepted accounting principles for any Taxes that have not been paid,
whether or not shown as being due on any returns. All such Tax Returns were
true, correct and complete in all material respects. Except as has been
disclosed to Parent in Schedule 3.11 to this Agreement: (i) no material claim
for unpaid Taxes has become a lien or encumbrance of any kind against the
property of the Company or any of its subsidiaries or is being asserted against
the Company or any of its subsidiaries; (ii) as of the date hereof no audit of
any Tax Return of the Company or any of its subsidiaries is being conducted by a
Tax authority; and (iii) no extension of the statute of limitations on the
assessment of any Taxes has been granted by the Company or any of its
subsidiaries and is currently in effect. As used herein, "Taxes" shall mean any
taxes of any kind, including but not limited to those on or measured by or
referred to as income, gross receipts, capital, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "Tax Return" shall mean any return, report or statement required
to be filed with any governmental authority with respect to Taxes.
SECTION 3.12 Offer Documents; Proxy Statement. Neither the Schedule
14D-9, nor any of the information supplied by the Company for inclusion in the
Offer Documents, shall, at the respective times such Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are filed with the SEC or are
first published, sent or given to stockholders, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Neither the proxy statement to be sent to the stockholders of the Company in
connection with the Stockholders Meeting (as defined in Section 6.1) or the
information statement to be sent to such stockholders, as appropriate (such
proxy statement or information statement, as amended or supplemented, is herein
referred to as the "Proxy Statement"), shall, at the date the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to stockholders
and at the time of the Stockholders Meeting and at the Effective Time, be false
or misleading with respect to any material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders Meeting which
has become false or misleading. Notwithstanding the foregoing, the Company makes
no representation or warranty with respect to any information supplied by Parent
or Purchaser or any of their respective representatives which is contained in
the Schedule 14D-9 or the Proxy Statement. The Schedule 14D-9 and the Proxy
Statement will comply in all material respects as to form with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder.
18
SECTION 3.13 Environmental Matters. (a) Except as disclosed in SEC
Reports filed and publicly available prior to the date of this Agreement and to
the extent that the inaccuracy of any of the following (or the circumstances
giving rise to such inaccuracy), individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect or prevent or materially
delay consummation of the Offer or the Merger:
(i)(A) the Company and its subsidiaries are, and within the period of
all applicable statutes of limitation have been, in compliance with all
applicable Environmental Laws; and (B) the Company and each of its
subsidiaries believes that each of them will, and will not incur material
expense in excess of the amounts reflected in the Company's statements and
capital budgets to, timely attain or maintain compliance with any
Environmental Laws applicable to any of their current operations or
properties or to any of their planned operations over the next three years;
(ii)(A) the Company and its subsidiaries hold all Environmental
Permits (each of which is in full force and effect) required for any of
their current operations and for any property owned, leased, or otherwise
operated by any of them, and are, and within the period of all applicable
statutes of limitation have been, in compliance with all such Environmental
Permits; and (B) neither the Company nor any of its subsidiaries has
knowledge that over the next three years: any of their Environmental
Permits will not be, or will entail material expense to be, timely renewed
or complied with; any additional Environmental Permits required of any of
them for current operations or for any property owned, leased, or otherwise
operated by any of them, or for any of their planned operations, will not
be timely granted or complied with; or any transfer or renewal of, or
reapplication for, any Environmental Permit required as a result of the
Merger will not be, timely effected;
19
(iii)(A) no review by, or approval of, any Governmental Authority or
other person is required under any Environmental Law in connection with the
execution or delivery of this Agreement; and (B) neither the Company nor
any of its subsidiaries has reason to believe that such review or approval
will not be timely obtained or granted;
(iv) neither the Company nor any of its subsidiaries has received any
Environmental Claim (as hereinafter defined) against any of them, and
neither the Company nor any of its subsidiaries has knowledge of any such
Environmental Claim being threatened;
(v) to the knowledge of the Company, Hazardous Materials are not
present on any property owned, leased, or operated by the Company or any of
its subsidiaries, that is reasonably likely to form the basis of any
Environmental Claim against any of them; and neither the Company nor any of
its subsidiaries has reason to believe that Hazardous Materials are present
on any other property that is reasonably likely to form the basis of any
Environmental Claim against any of them;
(vi) neither the Company nor any of its subsidiaries has knowledge of
any material Environment Claim pending or threatened, or of the presence or
suspected presence of any Hazardous Materials that is reasonably likely to
form the basis of any Environmental Claim, in any case against any person
or entity (including without limitation any predecessor of the Company or
any of its subsidiaries) whose liability the Company or any of its
subsidiaries has or may have retained or assumed either contractually or by
operation of law. or against any real or personal property which the
Company or any of its subsidiaries formerly owned, leased, or operated, in
whole or in part; and
(vii) to the knowledge of the Company, the Company has informed the
Parent and the Purchaser of: all material facts which the Company or any of
its subsidiaries reasonably believes could form the basis of a material
Environmental Claim against any of them arising out of the non-compliance
or alleged non-compliance with any Environmental Law, or the presence or
suspected presence of Hazardous Materials at any location; all material
costs the Company reasonably expects it and any of its subsidiaries to
incur to comply with Environmental Laws during the next three years; all
material costs the Company and any of its subsidiaries expect to incur for
ongoing, and reasonably anticipated, investigation and remediation of
Hazardous Materials (including, without limitation, any payments to resolve
any threatened or asserted Environmental Claim for investigation and
remediation costs); and any other material matter affecting the Company or
any of its subsidiaries relating to any Environmental Law.
20
(b) For purposes of this Agreement, the terms below shall have the
following meanings:
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or
notice (written or oral) of noncompliance, violation, or liability, by any
person or entity asserting liability or potential liability (including
without limitation liability or potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or penalties)
arising out of, based on or resulting from (i) the presence, discharge,
emission, release or threatened release of any Hazardous Materials at any
location, (ii) circumstances forming the basis of any violation or alleged
violation of any Environmental Laws or Environmental Permits, or (iii)
otherwise relating to obligations or liabilities under any Environmental
Law.
"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or other
legally enforceable requirement (including, without limitation, common law)
of any foreign government, the United States, or any state, local,
municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of human
health as affected by the environment or Hazardous Materials (including
without limitation employee health and safety) or the environment
(including without limitation indoor air, ambient air, surface water,
groundwater, land surface, subsurface strata, or plant or animal species).
"Environmental Permits" means all permits, licenses, registrations,
approvals, exemptions and other filings with or authorizations by any
Governmental Authority under any Environmental Law.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity (including, without
limitation, a court) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Hazardous Materials" means all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction
thereof), petroleum products, asbestos, asbestos-containing materials,
pollutants, contaminants, radioactivity, electromagnetic fields and all
other materials, whether or not defined as such, that are regulated
pursuant to any Environmental Laws or that could result in liability under
any applicable Environmental Laws.
21
SECTION 3.14 Brokers. No broker, finder or investment banker (other
than the Financial Adviser) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and the Financial Adviser pursuant to which such firm would
be entitled to any payment relating to the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.1 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has the requisite corporate
power and authority and any necessary governmental authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and governmental approvals is not, individually or in
the aggregate, reasonably likely to prevent the consummation of the Offer or the
Merger.
SECTION 4.2 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Purchaser and the consummation by each of
Parent and Purchaser of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Purchaser
other than filing and recordation of appropriate merger documents as required by
the DGCL. This Agreement has been duly executed and delivered by Parent and
Purchaser and, assuming due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of each such
corporation enforceable against such corporation in accordance with its terms.
22
SECTION 4.3 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by Parent and Purchaser do
not and will not: (i) conflict with or violate the respective certificates of
incorporation or by-laws of Parent or Purchaser; (ii) assuming that all
consents, approvals and authorizations contemplated by clauses (i), (ii) and
(iii) of subsection (b) below have been obtained and all filings described in
such clauses have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or Purchaser or by which either
of them or their respective properties are bound or affected; or (iii) result in
any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both could become a default) or result in the loss of
a material benefit under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of Parent or Purchaser pursuant to,
any note, bond, mortgage, indenture, contract (other than contracts terminable
at will or upon 90 days' or less notice by the terminating party), agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Purchaser is a party or by which Parent or Purchaser or any of their
respective properties are bound or affected, except, in the case of clauses (ii)
and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which are not, individually or in the aggregate, reasonably likely
to prevent or materially delay the consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this Agreement by
Parent and Purchaser do not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act and the rules and
regulations promulgated thereunder, the HSR Act or other foreign filings or
approvals, state securities, takeover and "blue sky" laws, (ii) the filing and
recordation of appropriate merger or other documents as required by the DGCL,
and (iii) such consents, approvals, authorizations, permits, actions, filings or
notifications the failure of which to make or obtain are not, individually or in
the aggregate, reasonably likely to prevent the consummation of the Offer or the
Merger.
SECTION 4.4 Offer Documents; Proxy Statement. The Offer Documents, as
filed pursuant to Section 1.1, will not, at the time such Offer Documents are
filed with the SEC or are first published, sent or given to stockholders, as the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The information supplied by Parent
for inclusion in the Proxy Statement shall not, on the date the Proxy Statement
is first mailed to stockholders, at the time of the Stockholders Meeting (as
defined in Section 6.1) or at the Effective Time, contain any statement which,
at such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or shall omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. Notwithstanding the
foregoing, Parent and Purchaser make no representation or warranty with respect
to any information supplied by the Company or any of its representatives which
is contained in or incorporated by reference in any of the foregoing documents
or the Offer Documents. The Offer Documents, as amended and supplemented, will
comply in all material respects as to form with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder.
23
SECTION 4.5 Brokers. No broker, finder or investment banker (other
than Xxxxxx Xxxxxxx & Co. Incorporated) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by and on behalf of Parent or
Purchaser.
SECTION 4.6 Funds. Parent or Purchaser, at the expiration date of the
Offer and at the Effective Time, will have the funds necessary to consummate the
Offer and the Merger, respectively.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date hereof to the
Effective Time, unless Parent shall otherwise agree in writing, the businesses
of the Company and its subsidiaries shall be conducted only in, and the Company
and its subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company and its
subsidiaries shall each use its reasonable best efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. By way of amplification and not limitation, neither the
Company nor any of its subsidiaries shall, between the date of this Agreement
and the Effective Time, directly or indirectly do, or commit to do, any of the
following without the prior written consent of Parent:
24
(a) Amend or otherwise change its certificate of incorporation or
by-laws or equivalent organizational documents;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or authorize
or commit to the issuance, sale, pledge, disposition or encumbrance of, (A)
any shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest (including but not limited
to stock appreciation rights or phantom stock), of the Company or any of
its subsidiaries (except for the issuance of up to 1,749,829 shares of
Company Common Stock required to be issued pursuant to (1) the terms of
Options outstanding as of April 16, 1997, (2) the employment agreement
effective July 1, 1996 between the Company and Xxxxxx X. XxXxxxxxx, and (3)
the plan under which non-employee directors are paid one-half of their
annual retainer in shares of Company Common Stock) or (B) any assets of the
Company or any of its subsidiaries, except for sales of products in the
ordinary course of business and in a manner consistent with past practice;
(c) Declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock (other than (1) regular quarterly dividends
consistent with past practice, in an amount not to exceed $.20 per share
and (2) the distribution of Rights pursuant to the Rights Plan);
(d) Reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) Acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans, advances or capital contributions to, or investments in,
any other person (other than in the ordinary course of business consistent
with past practice); (iii) enter into any contract or agreement other than
in the ordinary course of business consistent with past practice; or (iv)
authorize any single capital expenditure which is in excess of $1,500,000
or capital expenditures (during any three month period) which are, in the
aggregate, in excess of $7,500,000 for the Company and its subsidiaries
taken as a whole;
25
(f) Except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date of this
Agreement, increase the compensation or fringe benefits of any of its
directors, officers or employees, except for increases in salary or wages
of employees of the Company or its subsidiaries who are not officers of the
Company in the ordinary course of business in accordance with past
practice, or grant any severance or termination pay not currently required
to be paid under existing severance plans to or enter into any employment,
consulting or severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of its
subsidiaries, or establish, adopt, enter into or amend or terminate any
collective bargaining agreement or Company Plan, including, but not limited
to, bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees;
(g) Except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(h) Make any material tax election or settle or compromise any
material federal, state, local or foreign tax liability;
(i) Settle or compromise any pending or threatened suit, action or
claim which is material or which relates to the transactions contemplated
hereby;
(j) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not constituting
an inactive subsidiary (other than the Merger);
(k) Pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction (1) in the ordinary course of
business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of the Company or incurred in
the ordinary course of business and consistent with past practice and (2)
of liabilities required to be paid, discharged or satisfied pursuant to the
terms of any contract in existence on the date hereof (including, without
limitation, benefit plans relating to directors); or
26
(l) Take, or offer or propose to take, or agree to take in writing or
otherwise, any of the actions described in Sections 5.1(a) through 5.1(k)
or any action which would make any of the representations or warranties of
the Company contained in this Agreement untrue and incorrect as of the date
when made if such action had then been taken, or would result in any of the
conditions set forth in Annex A not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meeting. (a) If required, the Company, acting
through its Board of Directors, shall in accordance with and subject to
applicable law and the Company's Certificate of Incorporation and By-Laws, (i)
duly call, give notice of, convene and hold a meeting of its stockholders as
soon as practicable following consummation of the Offer for the purpose of
considering and taking action on this Agreement and the transactions
contemplated hereby (the "Stockholders Meeting") and (ii) subject to its
fiduciary duties under applicable law, (A) include in the Proxy Statement the
unanimous recommendation of the Board of Directors that the stockholders of the
Company vote in favor of the approval of this Agreement and the transactions
contemplated hereby and the written opinion of the Financial Adviser that the
consideration to be received by the stockholders of the Company pursuant to the
Offer and the Merger is fair to such stockholders and (B) use its reasonable
best efforts to obtain the necessary approval of this Agreement and the
transactions contemplated hereby by its stockholders. At the Stockholders
Meeting, Parent and Purchaser shall cause all Shares then owned by them and
their subsidiaries to be voted in favor of approval of this Agreement and the
transactions contemplated hereby.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the outstanding Shares, the Company agrees, at the
request of Purchaser, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the DGCL.
SECTION 6.2 Proxy Statement. If required by applicable law, as soon as
practicable following Parent's request, the Company shall file with the SEC
under the Exchange Act and the rules and regulations promulgated thereunder, and
shall use its reasonable best efforts to have cleared by the SEC, the Proxy
Statement with respect to the Stockholders Meeting. Parent, Purchaser and the
Company will cooperate with each other in the preparation of the Proxy
Statement; without limiting the generality of the foregoing, each of Parent and
Purchaser will furnish to the Company the information relating to it required by
the Exchange Act and the rules and regulations promulgated thereunder to be set
forth in the Proxy Statement. The Company agrees to use its reasonable best
efforts, after consultation with the other parties hereto, to respond promptly
to any comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof filed by it and cause such Proxy Statement to be
mailed to the Company's stockholders at the earliest practicable time.
27
SECTION 6.3 Company Board Representation; Section 14(f). (a) Promptly
upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as shall give Purchaser representation on the Board of Directors equal
to the product of the total number of directors on such Board (giving effect to
the directors elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of Shares beneficially owned by Purchaser or any
affiliate of Purchaser bears to the total number of Shares then outstanding, and
the Company shall, at such time, promptly take all action necessary to cause
Purchaser's designees to be so elected, including either increasing the size of
the Board of Directors or securing the resignations of incumbent directors or
both. At such times, the Company will use its reasonable best efforts to cause
persons designated by Purchaser to constitute the same percentage as is on the
board of (i) each committee of the Board of Directors, (ii) each board of
directors of each subsidiary of the Company and (iii) each committee of each
such board, in each case only to the extent permitted by law. Until Purchaser
acquires a majority of the outstanding Shares on a fully diluted basis, the
Company shall use its reasonable best efforts to ensure that all the members of
the Board of Directors and such boards and committees as of the date hereof who
are not employees of the Company shall remain members of the Board of Directors
and such boards and committees.
(b) The Company's obligations to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.3 and shall include in the Schedule 14D-9 or a separate
Rule 14f-1 information statement provided to stockholders such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 6.3.
Parent or Purchaser will supply to the Company and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1.
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(c) Following the election or appointment of Purchaser's
designees pursuant to this Section 6.3 and prior to the Effective Time, any
amendment, or waiver of any term or condition, of this Agreement or the
Certificate of Incorporation or By-Laws of the Company, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Purchaser or waiver or
assertion of any of the Company's rights hereunder, and any other consent or
action by the Board of Directors with respect to this Agreement, will require
only the concurrence of a majority of the directors of the Company then in
office who are neither designated by Purchaser nor are employees of the Company
(the "Disinterested Directors") and such concurrence shall constitute the
authorization of the Board of Directors of the Company and no other action by
the Company, including any action by any other director of the Company, shall be
required for purposes of this Agreement. The number of Disinterested Directors
shall be not less than two. Any person who is a director on the date of this
Agreement, but who, in order to carry out the provisions of this Section 6.3, is
not a director at the Effective Time, shall be entitled to receive all payments
at the time such director resigns as he or she otherwise would have been
entitled to receive if he or she had been a director as of the Effective Time.
SECTION 6.4 Access to Information; Confidentiality. (a) From the date
hereof to the Effective Time, the Company shall, and shall cause its
subsidiaries, officers, directors, employees, auditors and other agents to,
afford the officers, employees, auditors and other agents of Parent, and
financing sources who shall agree to be bound by the provisions of this Section
6.4 as though a party hereto, complete access, consistent with applicable law,
at all reasonable times to its officers, employees, agents, properties, offices,
plants and other facilities and to all books and records, and shall furnish
Parent and such financing sources with all financial, operating and other data
and information as Parent, through its officers, employees or agents, or such
financing sources may from time to time reasonably request.
(b) Each of Parent and Purchaser will hold and will cause its
officers, employees, auditors and other agents to hold in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all documents and information concerning the Company and
its subsidiaries furnished to Parent or Purchaser in connection with the
transactions contemplated in this Agreement (except to the extent that such
information can be shown to have been generally available to you on a
non-confidential basis prior to the date hereof or becomes generally available
to you on a non-confidential basis after the date hereof; provided that the
source of such information was not known by you to be bound by a confidentiality
agreement and will not release or disclose such information to any other person,
except (1) the officers, directors, employees, counsel, investment bankers and
other representatives of Parent and the Purchaser who need to know such
information for the purposes of evaluating the Merger and the other transactions
contemplated by this Agreement and (2) any other person after the Company has
provided written consent to such disclosure. If the transactions contemplated by
this Agreement are not consummated, such confidence shall be maintained for a
period of two years from the date hereof and, if requested by or on behalf of
the Company, Parent and Purchaser will, and will use all reasonable efforts to
cause their auditors and other agents to, return to the Company or destroy all
copies of written information furnished by the Company to Parent and Purchaser
or their agents, representatives or advisors. It is understood that Parent and
Purchaser shall be deemed to have satisfied their obligation to hold such
information confidential if they exercise the same care as they take to preserve
confidentiality for their own similar information.
29
(c) No investigation pursuant to this Section 6.4 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 6.5 No Solicitation of Transactions. The Company, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any acquisition or
exchange of all or any material portion of the assets of, or more than 20% of
the equity interest in, the Company or any of its subsidiaries or any business
combination with or involving the Company or any of its subsidiaries. The
Company may, directly or indirectly, furnish information and access, in each
case only in response to a request for such information or access to any person
made after the date hereof which was not encouraged, solicited or initiated by
the Company or any of its affiliates or any of its or their respective officers,
directors, employees, representatives or agents after the date hereof, pursuant
to appropriate confidentiality agreements, and may participate in discussions
and negotiate with such person concerning any merger, sale of assets, sale of
shares of capital stock or similar transaction (including an exchange of stock
or assets) involving the Company or any subsidiary or division of the Company,
if such person has submitted a written proposal to the Board of Directors of the
Company relating to any such transaction and the Board determines in good faith,
based upon the advice of outside counsel to the Company, that failing to take
such action would constitute a breach of the Board's fiduciary duty under
applicable law. The Board shall notify Parent immediately if any such proposal
is made and shall in such notice, indicate in reasonable detail the identity of
the offeror and the terms and conditions of any proposal and shall keep Parent
promptly advised of all developments which could reasonably be expected to
culminate in the Board of Directors withdrawing, modifying or amending its
recommendation of the Offer, the Merger and the other transactions contemplated
by this Agreement. Except as set forth in this Section 6.5, neither the Company
or any of its affiliates, nor any of its or their respective officers,
directors, employees, representatives or agents, shall, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with,
or provide any information to, any corporation, partnership, person or other
entity or group (other than Parent and Purchaser, any affiliate or associate of
Parent and Purchaser or any designees of Parent or Purchaser) concerning any
merger, sale of any material portion or assets, sale of more than 20% of the
shares of capital stock or similar transactions (including an exchange of stock
or assets) involving the Company or any subsidiary of the Company; provided,
however, that nothing herein shall prevent the Board from taking, and disclosing
to the Company's stockholders, a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any tender offer; provided,
further, that the Board shall not recommend that the stockholders of the Company
tender their Shares in connection with any such tender offer unless the Board
shall have determined in good faith, based upon the advice of outside counsel to
the Company, that failing to take such action would constitute a breach of the
Board's fiduciary duty under applicable law. The Company agrees not to release
any third party from, or waive any provisions of, any confidentiality or
standstill agreement to which the Company is a party, unless the Board shall
have determined in good faith, based upon the advice of outside counsel, that
failing to release such third party or waive such provisions would constitute a
breach of the fiduciary duties of the Board of Directors under applicable law.
30
SECTION 6.6 Employee Benefits Matters. (a) On and after the Effective
Time, Parent shall cause the Surviving Corporation and its subsidiaries to
promptly pay or provide when due all compensation and benefits earned through or
prior to the Effective Time as provided pursuant to the terms of any
compensation arrangements, employment agreements and employee or director
benefit plans (including, without limitation, deferred compensation plans),
programs and policies in existence as of the date hereof for all employees (and
former employees) and directors (and former directors) of the Company and its
subsidiaries. Parent and the Company agree that the Surviving Corporation and
its subsidiaries shall pay promptly or provide when due all compensation and
benefits required to be paid pursuant to the terms of any individual agreement
with any employee, former employee, director or former director in effect as of
the date hereof.
31
(b) Parent shall cause the Surviving Corporation, for the period
commencing at the Effective Time and ending on the first anniversary thereof, to
provide employee benefits under plans, programs and arrangements which, in the
aggregate, will provide benefits to the employees of the Surviving Corporation
and its subsidiaries (other than employees covered by a collective bargaining
agreement) which are no less favorable in the aggregate than those provided
pursuant to the plans, programs and arrangements (other than those related to
the equity securities of the Company) of the Company and its subsidiaries in
effect on the date hereof and employees covered by collective bargaining
agreements shall be provided with such benefits as shall be required under the
terms of any applicable collective bargaining agreement; provided, however, that
nothing herein shall prevent the amendment or termination of any specific plan,
program or arrangement, require that the Surviving Corporation provide or permit
investment in the securities of Parent, the Company or the Surviving Corporation
or interfere with the Surviving Corporation's right or obligation to make such
changes as are necessary to conform with applicable law. Employees of the
Surviving Corporation shall be given credit for all service with the Company and
its subsidiaries, to the same extent as such service was credited for such
purpose by the Company, under each employee benefit plan, program, or
arrangement of the Parent in which such employees are eligible to participate
for purposes of eligibility and vesting; provided, however, that in no event
shall the employees be entitled to any credit to the extent that it would result
in a duplication of benefits with respect to the same period of service.
(c) If employees of the Surviving Corporation and its subsidiaries
become eligible to participate in a medical, dental or health plan of Parent or
its subsidiaries, Parent shall cause such plan to (i) waive any preexisting
condition limitations for conditions covered under the applicable medical,
health or dental plans of the Company and its subsidiaries and (ii) honor any
deductible and out of pocket expenses incurred by the employees and their
beneficiaries under such plans during the portion of the calendar year prior to
such participation.
(d) Nothing in this Section 6.8 shall require the continued employment
of any person or, with respect to clauses (b) and (c) hereof, prevent the
Company and/or the Surviving Corporation and their subsidiaries from taking any
action or refraining from taking any action which the Company and its
subsidiaries prior to the Effective Time, could have taken or refrained from
taking.
32
SECTION 6.7 Directors' and Officers' Indemnification and Insurance.
(a) The By-Laws of the Surviving Corporation shall contain provisions no less
favorable with respect to indemnification than are set forth in Article 12 of
the By-laws of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers or employees of the Company.
(b) Parent shall use its reasonable best efforts to cause to be
maintained in effect for six years from the Effective Time the current policies
of the directors' and officers' liability insurance maintained by the Company
(provided that Parent may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially less
advantageous) with respect to matters occurring prior to the Effective Time to
the extent available; provided, however, that in no event shall Parent or the
Company be required to expend more than an amount per year equal to 150% of
current annual premiums paid by the Company (which the Company represents and
warrants to be not more than $250,000) to maintain or procure insurance coverage
pursuant hereto.
(c) For six years after the Effective Time, Parent agrees that it will
or will cause the Surviving Corporation to indemnify and hold harmless each
present and former director and officer of the Company, determined as of the
Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") (but only to the extent such
Costs are not otherwise covered by insurance and paid) incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent permitted under applicable law (and Parent shall, or shall cause the
Surviving Corporation to, also advance expenses as incurred to the fullest
extent permitted under applicable law provided the person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification).
(d) Any Indemnified Party wishing to claim indemnification under
paragraph (c) of this Section 6.7, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent thereof, but the
failure to so notify shall not relieve Parent of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Parent. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) Parent or the Surviving
Corporation shall have the right to assume the defense thereof and Parent shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Parent or the Surviving
Corporation elects not to assume such defense or counsel for the Indemnified
Parties advises that there are issues that raise conflicts of interest between
Parent or the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and Parent or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that Parent shall be obligated pursuant to this paragraph (d) to pay
for only one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would present such
counsel with a conflict of interest, (ii) the Indemnified Parties will cooperate
in the defense of any such matter and (iii) Parent shall not be liable for any
settlement effected without its prior written consent, which consent shall not
be unreasonably withheld; and provided, further, that Parent shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
33
SECTION 6.8 Delivery of Schedules. The Company shall deliver to
Parent, within ten business days after the date hereof, a schedule listing all
Foreign Company Plans. With respect to each Foreign Company Plan, the Company
will deliver or make available within ten business days after the date hereof,
to Parent a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable: (i) any
related trust agreement or other funding instrument; (ii) the most recent
determination letter, if applicable; (iii) any summary plan description and
other written communications by the Company or any of its subsidiaries to their
employees concerning the extent of the benefits provided under a Company Plan;
and (iv) for the three most recent years (A) the Form 5500 and attached
schedules, (B) audited financial statements and (C) actuarial valuation reports.
SECTION 6.9 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
the occurrence or non-occurrence of any event the occurrence or non-occurrence
of which would, if such representation or warranty were required to be made at
such time, be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate; provided, however, that the delivery of
any notice pursuant to this Section 6.9 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
34
SECTION 6.10 Further Action; Reasonable Best Efforts. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable, including
but not limited to (i) cooperation in the preparation and filing of the Offer
Documents, the Schedule 14D-9, the Proxy Statement, any required filings under
the HSR Act or other foreign filings and any amendments to any thereof and (ii)
using its reasonable best efforts to promptly make all required regulatory
filings and applications including, without limitation, responding promptly to
requests for further information and to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with the Company and its subsidiaries as are necessary
for the consummation of the transactions contemplated by this Agreement and to
fulfill the conditions to the Offer and the Merger. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use their reasonable best efforts to take all such
necessary action.
(b) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
their subsidiaries, from any Governmental Authority with respect to the Offer or
the Merger or any of the other transactions contemplated by this Agreement. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to the HSR Act or any other antitrust law.
(c) Without limiting the generality of the undertakings pursuant to
this Section 6.10: (i) Parent agrees to, if necessary to prevent any
Governmental Authority from taking steps to obtain, or from issuing, any order,
injunction, decree, judgment or ruling or the taking of any other action
restraining, enjoining or otherwise prohibiting the Offer or the Merger, offer
to accept an order to divest (or enter into a consent decree or other agreement
giving effect thereto) such of the Company's or Parent's assets and business as
may be necessary to forestall such order, decree, ruling or action and to hold
separate such assets and business pending such divestiture, but only if the
amount of such assets and businesses would not be material (measured in relation
to the combined assets or revenues of the Company and its subsidiaries and
Parent's fluid technology business, taken as a whole); and (ii) the Company and
Parent each agree to contest and resist any action seeking to have imposed any
order, decree, judgment, injunction, ruling or other order (whether temporary,
preliminary or permanent) (an "Order") that would delay, restrain, enjoin or
otherwise prohibit consummation of the Offer or the Merger and in the event that
any such temporary or preliminary Order is entered in any proceeding that would
make consummation of the Offer or the Merger in accordance with the terms of
this Agreement unlawful or that would prevent or delay consummation of the Offer
or the Merger or the other transactions contemplated by this Agreement, to use
its reasonable best efforts to take promptly any and all steps (including the
appeal thereof, the posting of a bond or the taking of the steps contemplated by
clause (i) of this paragraph) necessary to vacate, modify or suspend such Order
so as to permit such consummation as promptly as practicable after the date
hereof.
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SECTION 6.11 Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer or the Merger and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with its
securities exchange.
SECTION 6.12 Disposition of Litigation. The Company agrees that it
will not settle any litigation currently pending, or commenced after the date
hereof, against the Company or any of its directors by any stockholder of the
Company relating to the Offer or this Agreement, without the prior written
consent of Parent (which shall not be unreasonably withheld).
SECTION 6.13 Rights. The Company will promptly adopt a Stockholder
Rights Plan (the "Rights Plan") in the form delivered to Parent on or prior to
the date hereof. Immediately prior to the purchase of Shares pursuant to the
Offer, the Board of Directors of the Company shall take all necessary action to
terminate all of the outstanding Rights (as defined in the Rights Plan),
effective immediately prior thereto. The Company has taken, or prior to the
adoption of such Rights Plan, will take, all necessary action so that none of
the execution of this Agreement, the making of the Offer, the acquisition of
Shares pursuant to the Offer or the consummation of the Merger will (i) cause
the Rights issued pursuant to such Rights Plan to become exercisable, (ii) cause
any person to become an Acquiring Person (as defined in the Rights Plan) or
(iii) give rise to a Separation Time (as defined in the Rights Plan) or a
Flip-In Date (as defined in the Rights Plan). The Company will not amend the
Rights Plan.
36
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) If required by the DGCL, this Agreement shall have been approved
by the affirmative vote of the stockholders of the Company by the requisite
vote in accordance with the Company's Certificate of Incorporation and the
DGCL (which the Company has represented shall be solely the affirmative
vote of a majority of the outstanding Shares).
(b) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any United
States, foreign, federal or state court or governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the Merger.
(c) Purchaser shall have purchased Shares pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company:
(a) By mutual written consent of Parent, Purchaser and the Company;
(b) By Parent or the Company if any court of competent jurisdiction or
other governmental body located or having jurisdiction within the United
States or any country or economic region in which either the Company or
Parent, directly or indirectly, has material assets or operations, shall
have issued a final order, injunction, decree, judgment or ruling or taken
any other final action restraining, enjoining or otherwise prohibiting the
Offer or the Merger and such order, injunction, decree, judgment, ruling or
other action is or shall have become final and nonappealable;
37
(c) By Parent (only following the Outside Date (as defined below), in
the case of clause (ii) below) if due to an occurrence or circumstance
which resulted in a failure to satisfy any of the Offer Conditions,
Purchaser shall have (i) terminated the Offer in accordance with the terms
of this Agreement or (ii) failed to pay for Shares pursuant to the Offer on
or prior to the Outside Date;
(d) By the Company (only following the Outside Date, in the case of
clause (ii)(B) below) if (i) there shall have been a material breach of any
covenant or agreement on the part of Parent or the Purchaser contained in
this Agreement which materially adversely affects Parent's or Purchaser's
ability to consummate (or materially delays commencement or consummation
of) the Offer, and which shall not have been cured prior to the earlier of
(A) 10 business days following notice of such breach and (B) two business
days prior to the date on which the Offer expires, (ii) Purchaser shall
have (A) terminated the Offer or (B) failed to pay for Shares pursuant to
the Offer on or prior to the Outside Date (unless such failure is caused by
or results from the failure of any representation or warranty of the
Company to be true and correct in any material respect or the failure of
the Company to perform in any material respect any of its covenants or
agreements contained in this Agreement) or (iii) prior to the purchase of
Shares pursuant to the Offer, any person shall have made a bona fide offer
to acquire the Company (A) that the Board of Directors of the Company
determines in its good faith judgment is more favorable to the Company's
stockholders than the Offer and the Merger and (B) as a result of which the
Board of Directors determines in good faith, based upon the advice of
outside counsel, that it is obligated by its fiduciary obligations under
applicable law to terminate this Agreement, provided that such termination
under this clause (iii) shall not be effective until the Company has made
payment of the full fee and expense reimbursement required by Section 8.3;
or
(e) By Parent prior to the purchase of Shares pursuant to the Offer,
if (i) there shall have been a breach of any covenant or agreement on the
part of the Company contained in this Agreement which is reasonably likely
to have a Material Adverse Effect on the Company or which materially
adversely affects (or materially delays) the consummation of the Offer,
which shall not have been cured prior to the earlier of (A) 10 business
days following notice of such breach and (B) two business days prior to the
date on which the Offer expires, (ii) the Board shall have withdrawn or
modified (including by amendment of the Schedule 14D-9) in a manner adverse
to Purchaser its approval or recommendation of the Offer, this Agreement or
the Merger or shall have recommended another offer or transaction, or shall
have resolved to effect any of the foregoing, or (iii) the Minimum
Condition shall not have been satisfied by the expiration date of the Offer
as it may have been extended pursuant hereto and on or prior to such date
(A) any person (including the Company but not including Parent or
Purchaser) shall have made a public announcement with respect to a Third
Party Acquisition that contemplates a direct or indirect consideration (or
implicit valuation) for Shares (including the value of any stub equity) in
excess of the per Share Merger Consideration or (B) any person (including
the Company or any of its affiliates or subsidiaries), other than Parent or
any of its affiliates shall have become (and remain at the time of
termination) the beneficial owner of 19.9% or more of the Shares (unless
such person shall have tendered and not withdrawn such person's Shares
pursuant to the Offer). As used herein, the "Outside Date" shall mean the
latest of (A) 70 days following the date hereof, (B) the date that all
conditions to the Offer set forth in paragraph (a) and (h) of the Offer
Conditions, the satisfaction of which involve compliance with or otherwise
relate to any United States antitrust or competition laws or regulations
(including any enforcement thereof), have been satisfied for a period of 10
business days, or (C) 10 business days following the conclusion of any
ongoing proceedings before any foreign Governmental Authority in connection
with its review of the transactions contemplated hereby pursuant to any
foreign antitrust or competition law or regulation; provided that in no
event shall the Outside Date be later than December 31, 1997.
38
SECTION 8.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except as
set forth in Section 8.3 and Section 9.1; provided, however, that nothing herein
shall relieve any party from liability for any wilful breach hereof.
SECTION 8.3 Fees and Expenses.
(a) If:
(i) Parent terminates this Agreement pursuant to Section 8.1(e)(i)
hereof, or if the Company terminates this Agreement pursuant to Section
8.1(d)(ii) hereof under circumstances that would have permitted Parent to
terminate this Agreement pursuant to Section 8.1(e)(i) hereof, and within
15 months thereafter, the Company enters into an agreement with respect to
a Third Party Acquisition, or a Third Party Acquisition occurs, involving
any party (or any affiliate or associate thereof) (x) with whom the Company
(or its agents) had any discussions with respect to a Third Party
Acquisition, (y) to whom the Company (or its agents) furnished information
with respect to or with a view to a Third Party Acquisition or (z) who had
submitted a proposal or expressed any interest publicly or to the Company
in a Third Party Acquisition, in the case of each of clauses (x), (y) and
(z) prior to such termination; or
39
(ii) Parent terminates this Agreement pursuant to Section 8.1(e)(i)
hereof, or if the Company terminates this Agreement pursuant to Section
8.1(d)(ii) hereof under circumstances that would have permitted Parent to
terminate this Agreement pursuant to Section 8.1(e)(i) hereof and within 15
months thereafter the Company enters into an agreement with respect to a
Third Party Acquisition that contemplates a direct or indirect
consideration (or implicit valuation) for Shares (including the value of
any stub equity) in excess of the per Share Merger Consideration; or
(iii) (1) the Company terminates this Agreement pursuant to
8.1(d)(iii) or (2) the Company terminates this Agreement pursuant to
Section 8.1(d)(ii)(B) hereof and at such time Parent would have been
permitted to terminate this Agreement under Section 8.1(e)(ii) or (iii)
hereof or (3) Parent terminates this Agreement pursuant to Section
8.1(e)(ii) or (iii) hereof;
then the Company shall pay to Parent and Purchaser, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with any termination contemplated by Section
8.3(a)(iii) above, a fee, in cash, of $22 million (less any amounts previously
paid pursuant to Section 8.3(b)), provided, however, that the Company in no
event shall be obligated to pay more than one such fee with respect to all such
agreements and occurrences and such termination.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger or similar business
combination by any person other than Parent, Purchaser or any affiliate thereof
(a "Third Party"); (ii) the acquisition by a Third Party of 20.0% or more of the
assets of the Company and its subsidiaries, taken as a whole; or (iii) the
acquisition by a Third Party of 20.0% or more of the outstanding Shares.
(b) Upon the termination of this Agreement (i) under circumstances in
which Parent shall have been entitled to terminate this Agreement pursuant to
Section 8.1(e)(i) hereof (whether or not expressly terminated on such basis) or
(ii) if any of the representations and warranties of the Company contained in
this Agreement were untrue or incorrect in any material respect when made and at
the time of termination remained untrue or incorrect in any material respect and
such misrepresentation materially adversely affected the consummation (or
materially delayed commencement or consummation) of the Offer, then the Company
shall reimburse Parent, Purchaser and their affiliates (not later than one
business day after submission of statements therefor) for all actual documented
out-of-pocket fees and expenses actually incurred by any of them or on their
behalf in connection with the Offer and the Merger and the consummation of all
transactions contemplated by this Agreement (including, without limitation, fees
and disbursements payable to financing sources, investment bankers, counsel to
Purchaser or Parent or any of the foregoing, and accountants) up to a maximum
amount of $2 million; provided, however, that in no circumstances shall any
payment be made under this Section 8.3(b) after a payment has been made under
Section 8.3(a). Unless required to be paid earlier pursuant to Section 8.1(d),
the Company shall in any event pay the amount requested within one business day
of such request, subject to the Company's right to demand a return of any
portion as to which invoices are not received in due course after request by the
Company.
40
(c) Upon the termination of this Agreement (i) under circumstances in
which the Company shall have been entitled to terminate this Agreement pursuant
to Section 8.1(d)(i) hereof (whether or not expressly terminated on such basis)
or (ii) if any of the representations and warranties of Parent or Purchaser
contained in this Agreement were untrue or incorrect in any material respect
when made and at the time of termination remained untrue or incorrect in any
material respect and such misrepresentation materially adversely affected
Parent's or Purchaser's ability to consummate (or materially delayed
commencement or consummation of) the Offer, then Parent shall reimburse the
Company and its affiliates (not later than one business day after submission of
statements therefor) for all actual documented out-of-pocket fees and expenses
actually incurred by any of them or on their behalf in connection with the Offer
and the Merger and the consummation of all transactions contemplated by this
Agreement (including, without limitation, fees and disbursements payable to
financing sources, investment bankers, counsel to the Company or any of the
foregoing, and accountants) up to a maximum amount of $2 million.
(d) Except as otherwise specifically provided herein, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
SECTION 8.4 Amendment. Subject to Section 6.3, this Agreement may be
amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
41
SECTION 8.5 Waiver. Subject to Section 6.3, at any time prior to the
Effective Time, any party hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.6, Section 6.7 and Article IX shall survive the
Effective Time and those set forth in Section 6.4, Section 8.3 and Article IX
shall survive termination of this Agreement.
SECTION 9.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
if to Parent or Purchaser:
ITT Industries, Inc.
0 Xxxx Xxx Xxx Xxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
with an additional copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
42
if to the Company:
Goulds Pumps, Incorporated
000 Xxxxxx Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
SECTION 9.3 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 of the Exchange Act) has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise,
or (B) the right to vote pursuant to any agreement, arrangement or
understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(d) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession in the United States, in each case applied on a basis consistent
with the manner in which the audited financial statements for the fiscal
year of the Company ended December 31, 1994 were prepared;
43
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holder
of which is generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal
entity.
SECTION 9.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
SECTION 9.5 Entire Agreement; Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned by operation of law or otherwise, except
that Parent and Purchaser may assign all or any of their respective rights and
obligations hereunder to any direct or indirect wholly owned subsidiary or
subsidiaries of Parent, provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations.
44
SECTION 9.6 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, except for the provisions of Section 6.7, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 9.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.8 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
45
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ITT INDUSTRIES, INC.
By:/s/ Xxxxxxxx X. Xxxxx
Title: Authorized Person
XXXXXX ACQUISITION, INC.
By:/s/ Xxxxxxxx X. Xxxxx
Title: Vice President
GOULDS PUMPS, INCORPORATED
By:/s/ Xxxxxx X. XxXxxxxxx
Title: Chairman, Chief Executive
Officer and President
ANNEX A
Offer Conditions
The capitalized terms used in this Annex A have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
deemed to refer to the attached Agreement and the term "Commission" shall be
deemed to refer to the SEC.
Notwithstanding any other provision of the Offer, but subject to the
terms and conditions of the Merger Agreement, Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for any Shares tendered pursuant to
the Offer, and may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered pursuant to the
Offer, and may amend or terminate the Offer (whether or not any Shares have
theretofore been purchased or paid for) to the extent permitted by the Merger
Agreement if, (i) at the expiration of the Offer, a number of shares of Company
Common Stock which, together with any Shares owned by Parent or Purchaser,
constitutes more than 50% of the voting power (determined on a fully-diluted
basis), on the date of purchase, of all the securities of the Company entitled
to vote generally in the election of directors or in a merger shall not have
been validly tendered and not properly withdrawn prior to the expiration of the
Offer, the ("Minimum Condition") or (ii) at any time on or after the date of
this Agreement and prior to the acceptance for payment of Shares, any of the
following conditions occurs or has occurred:
(a) there shall have been entered any order, preliminary or permanent
injunction, decree, judgment or ruling in any action or proceeding before
any court or governmental, administrative or regulatory authority or
agency, or any statute, rule or regulation enacted, entered, enforced,
promulgated, amended or issued that is applicable to Parent, Purchaser, the
Company or any subsidiary or affiliate of Purchaser or the Company or the
Offer or the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency that: (i)
makes illegal or otherwise directly or indirectly restrains or prohibits or
makes materially more costly the making of the Offer in accordance with the
terms of the Merger Agreement, the acceptance for payment of, or payment
A-1
for, some of or all the Shares by Purchaser or any of its affiliates or the
consummation of the Merger; (ii) prohibits the ownership or operation by
the Company or any of its subsidiaries, or Parent or any of its
subsidiaries, of all or any material portion of the business or assets of
the Company or any of its subsidiaries, taken as a whole, or Parent or its
subsidiaries, taken as a whole, or (iii) materially limits the ownership or
operation by the Company or any of its subsidiaries, or Parent or any of
its subsidiaries, of all or any material portion of the business or assets
of the Company or any of its subsidiaries, taken as a whole, or Parent or
its subsidiaries, taken as a whole (other than, in either case, assets or
businesses of the Company or its subsidiaries or Parent's fluid technology
business that are not material (measured in relation to the combined assets
or revenues of the Company and its subsidiaries and Parent's fluid
technology business, taken as a whole)) or compels Parent or any of its
subsidiaries to dispose of or hold separate all or any portion of the
businesses or assets of the Company or any of its subsidiaries or Parent or
any of its subsidiaries (other than, in either case, assets or businesses
of the Company or its subsidiaries or Parent's fluid technology business
that are not material (measured in relation to the combined assets or
revenues of the Company and its subsidiaries and Parent's fluid technology
business, taken as a whole)), as a result of the transactions contemplated
by the Offer or the Merger Agreement; (iii) imposes limitations on the
ability of Parent, Purchaser or any of Parent's affiliates effectively to
acquire or hold or to exercise full rights of ownership of Shares,
including without limitation the right to vote any Shares acquired or owned
by Parent or Purchaser or any of its affiliates on all matters properly
presented to the stockholders of the Company, including without limitation
the adoption and approval of the Merger Agreement and the Merger or the
right to vote any shares of capital stock of any subsidiary directly or
indirectly owned by the Company; or (iv) requires divestiture by Parent or
Purchaser or any of their affiliates of any Shares;
(b) there shall have occurred any event that is reasonably likely to
have a Material Adverse Effect;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices (other than suspensions or limitations
triggered on the New York Stock Exchange by price fluctuations on a trading
day) for, securities on any national securities exchange or in the
over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by
any government or governmental, administrative or regulatory authority or
agency, domestic or foreign, on, the extension of credit by banks or other
lending institutions, (iv) a commencement of a war or armed hostilities or
other national calamity directly involving the United States or materially
adversely affecting (or material delaying) the consummation of the Offer or
(v) in the case of any of the foregoing existing at the time of
commencement of the Offer, a material acceleration or worsening thereof;
A-2
(d) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 25.0% of the outstanding Shares has been acquired by any
corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or any of its
affiliates, or (ii) (A) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent or Purchaser the approval or recommendation of the Offer, the Merger
or the Merger Agreement, or approved or recommended any takeover proposal
or any other acquisition of more than 5% of the outstanding Shares other
than the Offer and the Merger, (B) any such corporation, partnership,
person or other entity or group shall have entered into a definitive
agreement or an agreement in principle with the Company with respect to a
tender offer or exchange offer for any Shares or a merger, consolidation or
other business combination with or involving the Company or any of its
subsidiaries, or (C) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified by reference to a Material
Adverse Effect shall not be true and correct, or any such representations
and warranties that are not so qualified shall not be true and correct in
any respect that is reasonably likely to have a Material Adverse Effect, in
each case as if such representations and warranties were made at the time
of such determination;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement;
(g) the Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been terminated with the consent of the
Company; or
(h) any waiting periods under the HSR Act applicable to the purchase
of Shares pursuant to the Offer or the Merger, and any applicable waiting
periods under any foreign statutes or regulations, shall not have expired
or been terminated;
A-3
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (except for any
action or inaction by Purchaser or any of its affiliates constituting a breach
of the Merger Agreement) giving rise to any such condition, makes it inadvisable
to proceed with the Offer or with such acceptance for payment of or payment for
Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and may
be asserted by Purchaser regardless of the circumstances giving rise to any such
condition (except for any action or inaction by Purchaser or any of its
affiliates constituting a breach of the Merger Agreement) or (other than the
Minimum Condition) may be waived by Purchaser in whole or in part at any time
and from time to time in its sole discretion (subject to the terms of the Merger
Agreement). The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
A-4
