1
EXHIBIT (c)(3)
June 16, 1997
Board of Directors
Imo Industries Inc.
0000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Chairman of the Board
Dear Xx. Xxxxxx:
This letter expresses the intention of United Dominion Industries Limited
or its designee (the "Purchaser") and Imo Industries Inc. (the "Company") with
respect to proceeding with negotiations towards the potential acquisition of
the company (the "Proposed Transaction") by the Purchaser:
1. Purchaser and the Company agree that Purchaser will be provided
access to the Company's financial, legal, tax, human resources, environmental,
health and safety, and other records, its personnel, its operations and its
facilities for the conduct of a due diligence review from the date hereof
through and until June 30, 1997 (the "Due Diligence Period").
2. During the Due Diligence Period, the Purchaser and the Company
agree to work diligently in good faith towards the preparation and execution of
a definitive Agreement and Plan of Merger (the "Merger Agreement") covering,
among other things, the terms of the Proposed Transaction and containing
representations and warranties, covenants, indemnities, provision for a
break-up fee, a fiduciary out and conditions typical of a transaction of this
type. The execution and delivery of the Merger Agreement by the Purchaser shall
be subject to the Purchaser's satisfactory completion of its due diligence
review.
2
Imo Industries Inc.
June 16, 1997
Page 2
3. In order to cause Purchaser to be willing to spend the time and
incur the expense necessary to conduct due diligence and negotiate a Merger
Agreement, the Company agrees that it will not, and no director, officer,
stockholder, employee, agent or other representative of the company shall be
authorized by the Company to, negotiate or solicit proposals for the sale or
other disposition of the Company or its assets (whether by means of a negotiated
sale of securities or assets, tender or exchange offer, merger or other
business combination, recapitalization, restructuring or other transaction (any
such transaction being referred to herein as a "Sale")) with or from any other
party during the Due Diligence Period; provided, however that this obligation
shall terminate at 5:00 p.m., New York time on June 25, 1997, if the Purchaser
has not notified the Company by that time that its board of directors has
determined to proceed with the transaction. In addition, the Company agrees
that it will immediately cease and cause to be terminated during such period any
existing activities, discussions or negotiations with any person other than the
Purchaser or its affiliates in respect of a Sale. In the event the company
receives an unsolicited offer (an "Other Offer") during the Due Diligence
Period and is advised in writing by its legal counsel that its board of
directors has a fiduciary obligation to consider and respond to such Other
Offer prior to the expiration of the Due Diligence Period, it may do so
provided it advises Purchaser of the receipt of such Other Offer and allows
Purchaser to submit a competing offer for consideration by the Company's board
at the same meeting at which such Other Offer is to be considered. In
consideration of the Company's agreement hereto, Purchaser agrees to diligently
pursue its review during the Due Diligence Period and agrees further to notify
the Company within twenty-four (24) hours of any determination to not proceed
with a transaction as contemplated by the parties, whereupon the provisions of
this paragraph will terminate.
4. The parties hereto agree, until entry into the Merger Agreement, to
keep confidential, and to cause their respective affiliates and representatives
to keep confidential, all discussions, communications and evaluation materials
relating to the
3
Imo Industries Inc.
June 16, 1997
Page 3
Proposed Transaction, including (i) the existence of this letter, (ii) the fact
that negotiations are taking place concerning the Proposed Transaction and
(iii) the terms, conditions and other facts with respect to the Proposed
Transaction, except and only to the extent that, in the opinion of counsel,
disclosure is advisable in connection with or pursuant to any governmental or
court proceeding, law or regulation. The Purchaser further agrees that the
terms of this paragraph 4 are in addition to the Purchaser's obligations under
that certain Confidentiality Agreement, dated as of April 25, 1997, between the
Purchaser and the Company.
5. It is the intention of the Company to call and hold a meeting of
its board of directors to consider a transaction with Purchaser prior to the
end of the Due Diligence Period. In the event it is not able to do so, the
provisions of paragraph 3 above shall be automatically extended until such time
as such a meeting is held unless the Purchaser has advised the Company that it
no longer is pursuing a transaction with the Company.
If the foregoing correctly sets forth our agreement with respect to the
matters set forth herein, please so indicate by executing in the appropriate
space provided below.
UNITED DOMINION INDUSTRIES LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Its: Chairman & CEO
---------------------------------
The foregoing is hereby agreed to and accepted as of the date first written
above:
IMO INDUSTRIES INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Its: Chairman, Chief Executive Officer and President
-----------------------------------------------
