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EXHIBIT 99.1
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
Between
COOPER INDUSTRIES, INC.
and
WYMAN-GORDON COMPANY
Dated as of January 10, 1994
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STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
(Not Part of the Agreement)
SECTION PAGE
PARTIES 1
PREAMBLES 1
ARTICLE I SALE OF COMPANY COMMON STOCK 1
1.1 Purchase and Sale 1
1.2 Consideration 1
1.3 Closing Balance Sheet 2
1.4 Seller's Review of Preliminary Closing
Balance Sheet 5
1.5 Buyer Response to Seller's Letter 5
1.6 Meeting to Resolve Proposed Adjustments 5
1.7 Resolution by Accounting Arbitrator 6
1.8 Positive or Negative Purchase Price Adjustment 6
1.9 Values 7
1.10 Place of Payment 7
ARTICLE II CLOSING 7
2.1 Time and Place of Closing 7
2.2 Deliveries by the Seller 7
2.3 Deliveries by the Buyer 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER 8
3.1 Organization 8
3.2 Capitalization 9
3.3 Authority Relative to This Agreement 9
3.4 Consents and Approvals; No Violations 10
3.5 Financial Statements 10
3.6 Absence of Certain Changes 11
3.7 No Undisclosed Liabilities 11
3.8 Information in Proxy Statement 12
3.9 Litigation 12
3.10 Compliance With Applicable Law 12
3.11 Taxes 13
3.12 ERISA; Employee Benefits 13
3.13 Intellectual Property 15
3.14 Material Contracts; No Defaults 16
3.15 Environmental Compliance 16
3.16 Title to Real Property 17
3.17 Company Assets 17
3.18 Labor Matters 17
3.19 Purchase for Investment 18
3.20 No Beneficial Ownership of the Buyer's Stock 18
3.21 Change in Control 18
3.22 Business of the Company 18
3.23 Representations Accurate 18
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SECTION PAGE
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER 19
4.1 Organization 19
4.2 Capitaliztion 19
4.3 Authority Relative to this Agreement 20
4.4 Consents and Approvals; No Violations 21
4.5 Reports 21
4.6 Absence of Certain Changes 22
4.7 No Undisclosed Liabilities 22
4.8 Information in Proxy Statement 23
4.9 Litigation 23
4.10 Compliance with Applicable Law 23
4.11 Taxes 23
4.12 ERISA; Employee Benefits 24
4.13 Intellectual Property 25
4.14 No Defaults 26
4.15 Environmental Compliance 26
4.16 Representations Accurate 26
4.17 Purchase for Investment 27
ARTICLE V COVENANTS 27
5.1 Business Covenants of the Seller 28
5.2 Business Covenants of the Buyer 29
5.3 Current Information 31
5.4 Access to Information 31
5.5 Reasonable Best Efforts 32
5.6 Consents; Filings 33
5.7 Shareholder Meeting 33
5.8 Amendment to Articles of Organization
and By-Laws 34
5.9 Rights Agreement 34
5.10 Brokers or Finders 34
5.11 Fees and Expenses 34
5.12 Employee Benefits 34
5.13 Public Announcements 42
5.14 Use of the Company Name 42
5.15 Company Books and Records 43
5.16 Disclosure Supplements 43
5.17 Ancillary Agreement 43
5.18 WARN Act 44
5.19 Taxes 44
5.20 Existing Insurance Coverage 50
5.21 Certain Obligations 50
5.22 Survival; Indemnification 51
5.23 Repurchase of Receivables 55
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SECTION PAGE
ARTICLE VI CONDITIONS 55
6.1 Conditions to Each Party's Obligation to
Effect the Transactions Contemplated by
this Agreement 55
6.2 Conditions of Obligations of the Seller to
Effect the Transactions Contemplated by this
Agreement 56
6.3 Conditions of Obligations of the Buyer to
Effect the Transactions Contemplated by
this Agreement 57
ARTICLE VII TERMINATION AND ABANDONMENT 57
7.1 Termination 57
7.2 Procedure and Effect of Termination 58
ARTICLE VIII MISCELLANEOUS 58
8.1 Amendment and Modification 58
8.2 Waiver of Compliance; Consents 58
8.3 Investigations; Survival Upon Termination 59
8.4 Notices 59
8.5 Annexes, Schedules and Exhibits 60
8.6 Descriptive Headings 60
8.7 Counterparts 60
8.8 Entire Agreement; Assignment 60
8.9 Governing Law 60
8.10 Specific Performance 60
8.11 Alternative Dispute Resolution 61
8.12 Non-Competition 62
8.13 Further Assurances 63
8.14 No Third-Party Beneficiaries 63
8.15 Remedies; Waiver 63
8.16 Severability 63
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AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT, dated as of
January 10, 1994 (the "Agreement"), between Cooper Industries,
Inc., an Ohio corporation (the "Seller"), and Wyman-Gordon Company,
a Massachusetts corporation (the "Buyer").
WHEREAS, the Seller owns all of the issued and outstanding
shares of common stock, par value $.208-1/3 per share (the "Company
Common Stock"), of Cameron Forged Products Company, a Delaware
corporation (the "Company"); and
WHEREAS, the Seller desires to sell and the Buyer desires to
purchase the Company Common Stock; and
WHEREAS, simultaneously with the execution and delivery of the
Stock Purchase Agreement dated as of January 10, 1994 by and
between the Buyer and the Seller (the "Original Agreement") and as
an inducement to enter into the Original Agreement, the Buyer and
the Seller have entered into the Investment Agreement dated as of
the date hereof and in the form attached hereto as Annex I (the
"Investment Agreement"), providing for certain arrangements with
respect to their relationship following consummation of the
transactions contemplated by this Agreement; and
WHEREAS, the Buyer and the Seller wish to make certain
technical corrections to the Original Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth,
and intending to be legally bound hereby, the parties hereto agree
to amend and restate in its entirety the Original Agreement and all
the terms and provisions thereof to read in their entirety as
follows:
ARTICLE I
SALE OF COMPANY COMMON STOCK
1.1 Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as hereinafter
defined) the Seller will sell, assign, transfer and deliver to the
Buyer, and the Buyer will accept and purchase from the Seller, all
of the Company Common Stock.
1.2 Consideration.
(a) Upon the terms and subject to the conditions of
this Agreement, and in consideration of the sale, assignment,
transfer and delivery of the Company Common Stock the Buyer will
pay, issue, and deliver to the Seller the Consideration. The
Consideration consists of (i) the Cash Consideration, (ii) the
Balance Sheet Consideration Amount and (iii) the Equity
Consideration.
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(b) The "Cash Consideration" $5,000,000 payable as
follows: (i) The Buyer will pay to the Seller the sum of $400,000
at Closing and (ii) the Buyer will execute and deliver to Seller,
at Closing, Buyer's promissory note, dated as of the Closing, in
the form attached hereto as Annex II in the principal amount of
$4,600,000 (the "Note").
(c) The "Equity Consideration" is 16,500,000 shares,
par value $1.00 per share, of the Buyer's Common Stock. At Closing
Buyer will issue and deliver to Seller the Equity Consideration.
(d) The Balance Sheet Consideration Amount will be
determined and paid as set forth herein. Within five days
following the date on which the Final Net Asset Value is determined
pursuant to the provisions of Section 1.8, either Seller shall pay
to Buyer the Negative Net Asset Amount or Buyer shall pay to Seller
the Positive Net Asset Amount, in either case, together with
interest thereon at the annual rate of 4% per annum from the
Closing Date (as hereinafter defined) until the date paid (the
"Balance Sheet Consideration Amount").
1.3 Closing Balance Sheet. Within 60 days following the
Closing Date, the Buyer shall prepare and deliver to the Seller a
consolidated balance sheet of the Company and the Company
Subsidiaries as of the close of business on the Closing Date (the
"Preliminary Closing Balance Sheet"). The Preliminary Closing
Balance Sheet and the final balance sheet determined in accordance
with Sections 1.4, 1.5, 1.6 and 1.7 of this Article I (the "Final
Closing Balance Sheet") shall be prepared in accordance with
principles, practices and procedures that are the same as those
which resulted in the asset and liability values reflected in the
Balance Sheet dated September 26, 1993, which is attached hereto as
Annex III (the "Peg Balance Sheet"). The Preliminary Closing
Balance Sheet and the Final Closing Balance Sheet are sometimes
collectively referred to herein as the Preliminary and Final
Closing Balance Sheets. Notwithstanding the foregoing, the
following specific provisions shall take precedence over such
principles, practices and procedures in the preparation of the
Preliminary and Final Closing Balance Sheets:
(a) The asset and liability amounts included in the
Preliminary and Final Closing Balance Sheets will be the same as
those included in the Peg Balance Sheet except as necessary to
reflect those changes in the asset and liability values that result
from new transactions and actual changes in facts and circumstances
occurring during the period after (but not including) September 26,
1993 (the "Peg Date") through and including the Closing Date (the
"Change Period"). (To illustrate, if an item of machinery and
equipment was included in the Peg Balance Sheet at a net book value
of $1 million, but had not been used for the past several years, or
would no longer function, or would require major repairs to put it
in working condition, this item would be valued at $1 million in
the Preliminary and Final Closing Balance Sheets because no changes
in facts or circumstances occurred during the Change Period which
would warrant a reduction in the book value of that asset as of the
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Closing Date that would not have been equally appropriate as of the
Peg Date. However, if a change in facts or circumstances occurred
during the Change Period which would have warranted a change in the
book value of such item of machinery and equipment that would not
have been equally appropriate as of the Peg Date, then the book
value of such item would be changed on the Preliminary and Final
Closing Balance Sheets. As further examples, any liability which
was under-accrued or over-accrued as of the Peg Date, absent a
change in facts and circumstances during the Change Period, will be
recorded so that it is equally under-accrued or over-accrued as of
the Closing Date, and the aging of accounts receivable may
constitute a change in facts and circumstances warranting a change
in the bad debt reserve.)
(b) The quantities of inventory used to determine the
inventory amount to be included in the Preliminary and Final
Closing Balance Sheets will be based on the results of a physical
inventory to be taken as of the opening of business on the Closing
Date in accordance with procedures to be mutually agreed to by the
parties. The physical inventory quantities will be priced
utilizing the same standard costs which were used in the
determination of the inventory amount reflected in the Peg Balance
Sheet and in the case of items which were not on hand as of the Peg
Date in accordance with the normal procedures of the Company. The
Preliminary and Final Closing Balance Sheets will include a LIFO
debit of $8,226,129 which is the same amount as the LIFO debit
included in the Peg Balance Sheet. The Preliminary and Final
Closing Balance Sheets will not include any reserve or accrual with
respect to inventory shrinkage but will include reserves or
accruals for any other inventory valuation matter that are equal in
amount to any such reserves or accruals that were included in the
Peg Balance Sheet, including without limitation, reserves and
accruals for excess, obsolete or slow moving inventory or for loss
jobs.
(c) No depreciation or amortization expense shall be
recorded for the Change Period. As a result, the accumulated
depreciation and amortization balances reflected in the Preliminary
and Final Closing Balance Sheets shall be the same as the amounts
included in the Peg Balance Sheet adjusted only for asset sales or
other dispositions in the ordinary course of business and in
accordance with the terms of this Agreement.
(d)The Peg Balance Sheet did not and the Preliminary and
Final Closing Balance Sheets will not include any payable or
receivable for (i) federal income tax or (ii) state and local
income tax balances. The deferred tax balances on the Preliminary
and Final Closing Balance Sheets will be the same as the deferred
tax balances included in the Peg Balance Sheet adjusted only to
reflect changes in the book or tax basis of the underlying assets
and liabilities which occur during the Change Period.
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(e) The Peg Balance Sheet did not and the Preliminary and
Final Closing Balance Sheets will not include any cash either on-
hand or in banks other than cash equal to the "Receivables Purchase
Price" paid by the Seller to the Company pursuant to the Factoring
Agreement (as hereinafter defined) and the Peg Balance Sheet did
not and the Preliminary and Final Closing Balance Sheets will not
include any payable or receivable between the Company and the
Seller including any of Seller's Affiliates.
(f)The Peg Balance Sheet did not and the Preliminary and
Final Closing Balance Sheets will not include any assets or
liabilities with respect to the Company's Domestic Retirement and
Savings Plans or Seller U.K. Pension Plans (as such terms are
hereinafter defined).
(g) The Peg Balance Sheet did not and the Preliminary and
Final Closing Balance Sheets will not include any amounts as to
land, land improvements or buildings or environmental accruals with
respect to the Katy Road Site (as hereinafter defined).
(h) For purposes of this Agreement, a change in
translation rates between the U.S. dollar and various foreign
currencies, including the U.K. pound, during the Change Period will
be considered to be a change in facts and circumstances.
(i) The deferred tax asset amount included in the
Preliminary and Final Closing Balance Sheets will be net of a
deferred tax asset valuation allowance of $2,776,000 which is the
same as the deferred tax asset valuation allowance included in the
Peg Balance Sheet.
(j) The Peg Balance Sheet did not and the Preliminary and
Final Closing Balance Sheets will not include any amounts (assets
or liabilities) with respect to the Gulf Metals Site (as
hereinafter defined).
(k) The Peg Balance Sheet did not and the Preliminary and
Final Closing Balance Sheets will not include any adjustments to
asset or liability amounts, including any adjustments for currency
translation (increase or decrease) which may occur in connection
with a transfer as contemplated by this Agreement at other than
current book value of U.K. assets or other assets used in the
Business between (i) Seller and the Seller's Subsidiaries and (ii)
the Company and the Company's Subsidiaries.
(l) The Tech Mod accrual to be included in the
Preliminary and Final Closing Balance Sheets will be the same as
the Tech Mod accrual included in the Peg Balance Sheet.
(m) The Preliminary and Final Closing Balance Sheets will
include a prepaid asset equal to 1% of the trade and notes
receivable of the Company sold to Seller pursuant to the Factoring
Agreement.
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(n)The Peg Balance Sheet did not and the Preliminary and
Final Closing Balance Sheets will not include any reserve or
accrual with respect to any loss or potential liability which the
Company may have in connection with Item 1 in Section 3.7 of the
Seller Disclosure Schedule.
(o) The Preliminary and Final Closing Balance Sheets will
not include any accruals with respect to company matching
contributions to the Seller Salaried 401(k) Plan and the Seller
Hourly 401(k) Plan (as such terms are defined in Section 5.12(c)).
1.4 Seller's Review of Preliminary Closing Balance Sheet.
Seller shall have 30 days following receipt of the Preliminary
Closing Balance Sheet to review (the "Seller's Review") such
balance sheet. If Seller determines, in Seller's reasonable
judgment, that it has not been prepared in accordance with the
provisions of Section 1.3 then within the said 30-day period
allowed for Seller's Review, Seller shall prepare and deliver a
letter to Buyer (the "Seller's Letter") setting forth in reasonable
detail the adjustments that Seller determines are appropriate.
During the said 30-day period, Buyer shall grant Seller reasonable
access during normal business hours to the books and records of the
Company and its working papers pertaining to the Preliminary
Closing Balance Sheet and shall authorize the Company's auditors to
grant Seller's auditors access to any working papers or other
documents prepared by such auditors with respect to the Preliminary
Closing Balance Sheet. If Seller does not prepare and furnish
Seller's Letter to Buyer within the said 30-day period, then the
Preliminary Balance Sheet as prepared by Buyer will become the
Final Closing Balance Sheet.
1.5 Buyer Response to Seller's Letter. Buyer will have 15
days following receipt of Seller's Letter, if any, to review such
letter and prepare a written response (the "Buyer's Letter")
setting forth Buyer's position with respect to each adjustment
proposed by Seller in Seller's Letter. If Buyer does not prepare
and furnish Buyer's Letter to Seller within the 15 days allowed,
then all of the adjustments set forth in Seller's Letter shall be
deemed to have been accepted by Buyer, and the Final Closing
Balance Sheet shall be prepared by adjusting the Preliminary
Closing Balance Sheet for all of the adjustments set forth in
Seller's Letter.
1.6 Meeting to Resolve Proposed Adjustments. As soon as
practicable, but not later than ten days following the receipt by
Seller of Buyer's Letter, if any, the parties shall meet and
endeavor to mutually resolve any of Seller's adjustments not agreed
to in Buyer's Letter. If the parties reach agreement on the
remaining adjustments, if any, then the Final Closing Balance Sheet
shall be prepared by adjusting the Preliminary Closing Balance
Sheet for the adjustments agreed to in Buyer's Letter and those
resolved by the parties.
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1.7 Resolution by Accounting Arbitrator. If the parties do
not meet within the said ten-day period, or they fail to agree to
meet at some later date, or they meet but are unable to resolve all
of the adjustments set forth in Seller's Letter to the mutual
satisfaction of both parties, then the parties, jointly, or if one
party is unwilling then the other party singly, shall engage the
New York office of the firm of Deloitte & Touche (the "Accounting
Arbitrator") to resolve any of Seller's adjustments which remain
unresolved. The Accounting Arbitrator shall be furnished with a
copy of the Agreement, the Peg Balance Sheet, the Preliminary
Closing Balance Sheet, Seller's Letter, Buyer's Letter and any
other relevant correspondence between the parties. The Accounting
Arbitrator must, within 30 days from the date such documents are
furnished, complete his review and render a written report setting
forth his conclusion with respect to each of Seller's adjustments
which were unresolved between the parties. The Accounting
Arbitrator shall be granted access to the books and records of the
Company as well as the working papers or other documents which
either party or its accountants may have which relate to the
Preliminary Closing Balance Sheet and any other documents or
information which the Accounting Arbitrator may deem appropriate.
The Accounting Arbitrator's review shall be limited to the purpose
of determining whether, in respect of each disputed adjustment, the
Seller's proposed adjustment or the Buyer's position with respect
to the Seller's proposed adjustment is more nearly in accordance
with the terms of this Agreement. The parties shall have the right
to submit written materials to the Accounting Arbitrator and make
oral presentations all in accordance with procedures to be set
forth in the engagement letter between the parties and the
Accounting Arbitrator. In arriving at his determination the
Accounting Arbitrator must select for each adjustment either the
Seller's proposed adjustment or Buyer's position with respect to
the Seller's proposed adjustment. The decision by the Accounting
Arbitrator shall be in writing and delivered to both Buyer and
Seller. The Accounting Arbitrator's said decision shall be
conclusive and binding upon the parties and may be entered and
enforced in any court of competent jurisdiction. The parties agree
to submit to the jurisdiction of any such court for the enforcement
of such award or decision. Each party shall pay 50% of the fees
and expenses of the Accounting Arbitrator. If the Accounting
Arbitrator is engaged, the Final Closing Balance Sheet will be
prepared by adjusting the Preliminary Closing Balance Sheet for any
of Seller's adjustments accepted by Buyer's Letter, those agreed to
by the parties and those determined by the Accounting Arbitrator.
1.8 Positive or Negative Purchase Price Adjustment. When the
Final Closing Balance Sheet is determined pursuant to the
provisions of Sections 1.4, 1.5, 1.6 or 1.7, then the net
asset/equity value set forth on such Final Closing Balance Sheet
will be the Final Net Asset Value and the Positive or Negative Net
Asset Amount shall be determined by comparing the Final Net Asset
Value to the net asset/equity amount set forth on the Peg Balance
Sheet (the "Peg Value"). If the Peg Value is more than the Final
Net Asset Value, then the excess is the Negative Net Asset Amount.
If the Final Net Asset Value is more than the Peg Value, then the
excess is the Positive Net Asset Amount.
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1.9 Values. On or about the date that the number of shares
was fixed between the parties the estimated value of the Equity
Consideration was $47,437,500. This amount added to the Cash
Consideration of $5,000,000 is $52,437,500. These values will be
utilized by the Buyer for all relevant financial accounting
purposes.
1.10 Place of Payment. All payments to Seller under this
Agreement shall be made by wire transfer in immediately available
funds to Chase Manhattan Bank, New York, ABA #021000021, for credit
to Cooper Industries, Inc., account number 910-1-144781. All
payments to Buyer under this Agreement shall be made by wire
transfer in immediately available funds to Shawmut Bank, Boston,
for the credit to Wyman-Gordon Company, account number 030-03-
92612.
ARTICLE II
CLOSING
2.1 Time and Place of Closing. The closing of the transac-
tions contemplated by this Agreement (the "Closing") will take
place at the offices of the Seller, at 10:00 A.M. (Houston time) on
the fifth business day following the date on which all of the
conditions to each party's obligations hereunder have been
satisfied or waived; or at such other place or time or both as the
parties may agree. The date on which the Closing actually occurs
is hereinafter referred to as the "Closing Date." The Closing and
the consummation of the transactions contemplated hereby shall be
deemed effective as of the close of business on the Closing Date.
2.2 Deliveries by the Seller. At the Closing the Seller will
deliver the following to the Buyer:
(a)Stock certificates representing the Company Common
Stock, issued to and registered in the name or names of the Buyer
or its designee or designees, together with evidence of payment of
any applicable stock transfer taxes.
(b)The resignations of those members of the Boards of
Directors of the Company, the U.K. Sub or the Pipeline Sub (as such
terms are hereinafter defined) who will continue after the Closing
to be employees of the Seller.
(c)The stock books, stock ledgers, minute books and
corporate seals of the Company, the U.K. Sub and the Pipeline Sub;
provided that any of the foregoing items shall be deemed to have
been delivered pursuant to this Section 2.2(c) if delivered to or
otherwise located at the offices of the Company, the U.K. Sub or
the Pipeline Sub.
(d)The officers' certificate and other documents contem-
plated by Sections 6.1 and 6.3.
(e)All other documents required to be delivered by the
Seller on or prior to the Closing Date pursuant to this Agreement.
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2.3 Deliveries by the Buyer. At the Closing the Buyer will
deliver the following to the Seller:
(a)Stock certificates representing the Equity Consider-
ation issued to and registered in the name or names of the Seller
or its designee or designees, together with evidence of payment of
any stock transfer taxes.
(b)$400,000 in cash.
(c)The Note duly executed by the Buyer.
(d)A letter from Wachtell, Lipton, Rosen & Katz addressed
to the Seller and dated the Closing Date stating that (without
opining as to Massachusetts law) neither the execution nor delivery
of the Rights Agreement (as hereinafter defined) will constitute a
breach or violation of any of the provisions of the Original Rights
Agreement (as hereinafter defined).
(e)The officers' certificate and other documents contem-
plated by Sections 6.1 and 6.2.
(f)All other documents required to be delivered by the
Buyer on or prior to the Closing Date pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows:
3.1 Organization. Each of the Seller, the Company, CFPD,
Ltd., incorporated under the laws of England and Scotland and a
wholly owned subsidiary of the Company (the "U.K. Sub"), and
Cameron Pipeline, Inc., a Texas corporation and a wholly owned
subsidiary of the Company (the "Pipeline Sub" and, together with
the U.K. Sub, the "Company Subsidiaries"), is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
Each of the Seller, the Company and the Company Subsidiaries is
duly qualified or licensed and in good standing to do business in
each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect. "Material
Adverse Effect," as used in this Article III, means a material
adverse effect on the business operations or financial condition of
the Company and the Company Subsidiaries, taken as a whole, or on
the Business (as defined below). The Seller has heretofore
delivered to the Buyer accurate and complete copies of the
Certificate of Incorporation and By-laws (or similar organizational
documents), as currently in effect, of the Company and each Company
Subsidiary. The Company has no subsidiaries other than the Company
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Subsidiaries and does not own, directly or indirectly, any capital
stock or other equity securities of any corporation or have any
direct or indirect equity ownership in any business other than the
Company Subsidiaries. The Company Subsidiaries have no
subsidiaries and do not own, directly or indirectly, any capital
stock or other equity securities of any corporation or have any
direct or indirect equity ownership in any business.
3.2 Capitalization.
(a)The authorized capital stock of the Company consists
of 5,000 shares of Company Common Stock, all of which are issued
and outstanding as of the date hereof. Except as listed in Section
3.2(a) of the Seller's disclosure schedule (the "Seller Disclosure
Schedule"), the authorized capital stock of the U.K. Sub consists
of 1,000,000 shares of common stock (the "U.K. Stock"), one share
of which is issued and outstanding as of the date hereof. The
authorized capital stock of the Pipeline Sub consists of 1,000
shares of common stock par value $1.00 per share (the "Pipeline
Stock"), all of which are issued and outstanding as of the date
hereof. All of the shares of Company Common Stock are owned by the
Seller, and all of the shares of U.K. Stock and Pipeline Stock are
owned by the Company, and are in each case validly issued, fully
paid, nonassessable and free of preemptive rights. Except pursuant
to this Agreement, there are no subscriptions, options, warrants,
convertible or exchangeable securities, calls, rights or other
agreements or commitments obligating the Seller, the Company or the
Company Subsidiaries to issue, transfer or sell any securities of
the Company or of the Company Subsidiaries.
(b)The Seller has good and marketable title to the shares
of Company Common Stock, and the Company has good and marketable
title to the shares of U.K. Stock and Pipeline Stock, free and
clear of all pledges, security interests, liens, charges,
encumbrances, equities, claims and options of whatever nature.
Upon consummation of the transactions contemplated hereby, the
Buyer will acquire good and marketable title to the shares of
Company Common Stock, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and
options of whatever nature.
(c)Section 3.2(c) of the Seller Disclosure Schedule sets
forth the name, jurisdiction of incorporation and capitalization of
each Company Subsidiary and the jurisdictions in which the Company
and each Company Subsidiary are qualified to do business.
3.3 Authority Relative to This Agreement. The Seller has
full corporate power and authority to execute and deliver this
Agreement, the Investment Agreement and the other instruments,
agreements and documents contemplated by this Agreement and the
Investment Agreement (the "Other Agreements") and to perform its
obligations hereunder and thereunder. The execution and delivery
of this Agreement, the Investment Agreement and the Other
Agreements and the consummation of the transactions contemplated
hereby or thereby have been duly and validly authorized by the
Board of Directors of the Seller and no other corporate proceedings
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on the part of the Seller are necessary to authorize this
Agreement, the Investment Agreement and the Other Agreements or to
consummate the transactions so contemplated. This Agreement and
the Investment Agreement have been duly and validly executed and
delivered by the Seller and (assuming they are duly and validly
executed by the Buyer) constitute, and the Other Agreements will
when executed (assuming due and valid execution by any other
parties thereto) constitute, valid and binding agreements of the
Seller, enforceable against the Seller in accordance with their
respective terms, except as such enforceability may be limited by
respective applicable bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally and by
general equitable principles (regardless of whether enforceability
is considered in a proceeding in equity or at law).
3.4 Consents and Approvals; No Violations. Except for
applicable requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and German pre-merger notification
laws, no filing with, and no permit, authorization, consent or
approval of, any governmental body or authority, including courts
of competent jurisdiction, domestic or foreign ("Governmental
Entity"), is necessary for the consummation by the Seller of the
transactions contemplated by this Agreement and the Investment
Agreement and the Other Agreements. Except as set forth in Section
3.4 of the Seller Disclosure Schedule, neither the execution and
delivery of this Agreement, the Investment Agreement and the Other
Agreements by the Seller nor the consummation by the Seller of the
transactions contemplated hereby or thereby nor compliance by the
Seller with any of the provisions hereof or thereof will (i)
conflict with or breach any provision of the Certificate of
Incorporation or By-laws (or similar organizational documents) of
the Seller, any Seller Subsidiary (as defined below), the Company
or any Company Subsidiary, (ii) violate or breach any provision of,
or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation
or acceleration or result in the creation of any lien) under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or
obligation to which the Seller, the Company or any Company
Subsidiary is a party or by which the Seller, the Company or any
Company Subsidiary or any of their properties or assets may be
bound, or (iii) violate any order, judgment, writ, injunction,
decree, statute, rule or regulation applicable to the Seller, the
Company or any Company Subsidiary or any of their properties or
assets, except in the case of clauses (ii) and (iii) for
violations, breaches or defaults which would not either have a
Material Adverse Effect or prevent or delay the consummation of the
transactions contemplated hereby. For purposes of this Agreement,
the "Seller Subsidiaries" means the subsidiaries of the Seller
other than the Company and the Company Subsidiaries.
3.5 Financial Statements. Attached hereto as Exhibit A are
true and complete copies of (i) the audited combined balance sheets
of the Cameron Forged Products Division of the Seller, which
includes the Company, that portion of Cooper (Great Britain) Ltd.
to the extent that it previously conducted all or part of the
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15
Business (as hereinafter defined) and the Pipeline Sub
(collectively, "Cameron"), as of December 31, 1993 and December 31,
1992 (collectively the "Company Balance Sheets"), and (ii) the
related audited combined statements of operations and cash flows
for each of the years ended December 31, 1991, 1992 and 1993
(collectively with the Company Balance Sheets, the "Company
Financial Statements"), together with the notes thereto and an
opinion of E&Y relating thereto. The Company Financial Statements
and the Peg Balance Sheet have been prepared from, and are in
accordance with, the books and records of Cameron and the books and
records of Seller that pertain to Cameron. The Company Balance
Sheets fairly present the financial position of Cameron as of their
respective dates, and the other related statements included in the
Company Financial Statements fairly present the results of
operations and changes in financial position of Cameron for the
periods then ended. The Company Financial Statements have been
prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis, except as
otherwise disclosed in the notes thereto.
3.6 Absence of Certain Changes. Except as disclosed in
Section 3.6 of the Seller Disclosure Schedule or in Annex IV
hereto, or as disclosed in the Company Financial Statements, since
September 30, 1993, none of the Company, the Company Subsidiaries
and the Business has (i) taken any of the actions set forth in
Section 5.1(a) through Section 5.1(o) of this Agreement, (ii)
suffered a Material Adverse Effect, or any change in circumstances
that is reasonably likely to have a Material Adverse Effect (other
than any change generally affecting the industry in which the
Business is engaged), or (iii) entered into any transaction, or
conducted its business or operations, other than in the ordinary
course of business and consistent with past practice.
3.7 No Undisclosed Liabilities. Any reference in this
Agreement to Seller's Knowledge shall be a reference solely to the
actual knowledge of Kenneth L. Hardcastle and his direct reports,
and Michael J. Sebastian, D. Bradley McWilliams, Alan J. Hill,
Robert W. Teets, Stephen V. O'Neill, Donald R. Sheley, Jr. and
Bruce E. Himmelreich. Seller's Knowledge shall not include any
constructive knowledge, imputed knowledge or any knowledge
attributed to Seller solely because Seller or its agents or
employees should have known the matter in question. Except as and
to the extent set forth in Section 3.7 of the Seller Disclosure
Schedule, to Seller's Knowledge, neither the Company nor any
Company Subsidiary has any liabilities (absolute, accrued,
contingent or otherwise) of a kind required to be reflected in a
balance sheet prepared in accordance with GAAP, or required to be
disclosed in the notes thereto, except (a) liabilities which were
reflected in the December 31, 1992, or the December 31, 1993,
Company Balance Sheets or disclosed in the notes thereto, (b)
liabilities which were incurred since December 31, 1993 in the
ordinary course of business, consistent with past practice and
which would be reflected in a balance sheet prepared in accordance
with GAAP, (c) liabilities which have not had a Material Adverse
Effect, and are not reasonably likely to have a Material Adverse
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16
Effect, and (d) liabilities incurred in connection with this
Agreement. Except as disclosed in Section 3.7 of the Seller
Disclosure Schedule or the Exhibits or Annexes hereto, there are no
material obligations or liabilities of the Company or the Company
Subsidiaries to the Seller or any of the Seller Subsidiaries that
will exist after the Closing Date.
3.8 Information in Proxy Statement. None of the information
supplied in writing by the Seller, the Seller Subsidiaries, the
Company or the Company Subsidiaries (including without limitation
the Company Financial Statements and any other financial statements
of the Company and the Company Subsidiaries) for inclusion or
incorporation by reference in the proxy statement relating to the
meeting of the Buyer's shareholders to be held with respect to the
transactions contemplated by this Agreement (the "Proxy Statement")
will, at the time the Proxy Statement is mailed to the shareholders
of the Buyer or at the time of the meeting of shareholders of the
Buyer, 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 light of the
circumstances under which they are made, not misleading.
3.9 Litigation. Except as disclosed in Section 3.9 of the
Seller Disclosure Schedule, (a) there are no existing orders,
injunctions, judgments or decrees of any Governmental Entity which
apply to the Company or any Company Subsidiary or any assets,
properties or operations of the foregoing and (b) there are no
actions, suits or proceedings, at law or in equity, pending, or to
Seller's Knowledge, threatened, or to Seller's Knowledge, any
investigations pending or threatened involving the Company or the
Company Subsidiaries by or before any Governmental Entity which in
the case of either Clause (a) or (b) above are reasonably likely to
have a Material Adverse Effect.
3.10 Compliance With Applicable Law. Except as set forth in
Section 3.10 of the Seller Disclosure Schedule, and except with
respect to environmental matters, which are addressed in Section
3.15 hereof, (a) the Company and the Company Subsidiaries are, and
the Business has been conducted, in compliance with all laws,
ordinances, rules, regulations, decrees and orders of all Govern-
mental Entities ("Laws"), except where the failure to be in
compliance is not reasonably likely to have a Material Adverse
Effect and (b) the Seller, the Company, and the Company
Subsidiaries hold all permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities necessary to
conduct the Business as currently conducted (the "Company
Permits"), and such Company Permits are in full force and effect,
except for such failure to hold or be in full force and effect
which would not be reasonably likely to have a Material Adverse
Effect. To Seller's Knowledge, no suspension, cancellation or
termination of any of the Company Permits is threatened or imminent
that would be reasonably likely to have a Material Adverse Effect.
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3.11 Taxes. The Company has duly filed all returns of income
Taxes (as hereinafter defined) of the Company and the Company
Subsidiaries and all material returns of other Taxes of the Company
and the Company Subsidiaries required to be filed by them or such
income or other returns have been included in a return filed by an
affiliated group or by a consolidated, unitary or combined group of
companies of which the Company is or has been a member, and the
Seller or the Company has duly paid, caused to be paid or made
adequate provision for the payment of all such Taxes required to be
paid in respect of the periods covered by such returns and has made
adequate provision for payment of all Taxes anticipated to be
payable in respect of all calendar periods since the periods
covered by such returns. Except as disclosed in Section 3.11 of
the Seller Disclosure Schedule, no material deficiency or
adjustment in respect of any Taxes against the Company or any
Company Subsidiary remains unpaid and no material claim or
assessment for any such deficiency or adjustment is pending or, to
Seller's Knowledge, threatened. There are no material claims for
Taxes (other than Taxes attributable to Seller or the Seller
Subsidiaries) against the Company or any Company Subsidiaries which
might result in a lien, charge or encumbrance on any of the assets
of the Company or any Company Subsidiary.
3.12 ERISA; Employee Benefits. The Seller hereby represents
and warrants to Buyer that as of the date hereof and as of the
Closing Date:
(a)Section 3.12(a) of the Seller Disclosure Schedule
identifies each Seller Employee Plan with an annual cost in excess
of $100,000. The Seller has furnished or made available to Buyer
true and complete copies of such Seller Employee Plans (and, if
applicable, related trust agreements) and all amendments thereto
and written interpretations thereof together with (i) the most
recent annual report prepared in connection with any such Seller
Employee Plan (Form 5500 or 5500-C including, if applicable,
Schedules A and B thereto), (ii) the summary plan description
currently in effect for each such Seller Employee Plan and all
modifications thereof, (iii) for each such Seller Employee Plan
with respect to which there is no summary plan description in ef-
fect, a written description of such Seller Employee Plan including
all materials distributed or made available to employees with re-
spect to such Seller Employee Plan and (iv) the most recent
financial statements and actuarial reports (if any) for each such
Seller Employee Plan and its related trust (if any), (collectively,
the "Seller Employee Plan Documents").
(b)Neither the Company nor the Seller nor any subsidiary
of either has incurred, or reasonably expects to incur prior to the
Closing Date, any Controlled Group Liability that could become a
material liability of Buyer or any Buyer Subsidiary (including the
Company) after the Closing Date. Except as set forth on Section
3.12(b) of the Seller Disclosure Schedule, no Seller Employee Plan
with an annual cost in excess of $100,000 is a Title IV Plan. No
Seller Employee Plan is a Multiemployer Plan.
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18
(c)Except as set forth in Section 3.12(c) of the Seller
Disclosure Schedule, each Seller Employee Plan with an annual cost
in excess of $100,000 has been maintained in compliance in all
material respects with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and
regulations including but not limited to ERISA and the Code.
Neither the Seller nor any Related Person has engaged in, nor to
Seller's Knowledge has any other Person engaged in, any "prohibited
transaction" (as defined in ERISA and the Code) with respect to any
such Seller Employee Plan.
(d)Section 3.12(d) of the Seller Disclosure Schedule
identifies each Seller Benefit Arrangement with an annual cost in
excess of $100,000. The Seller has furnished or made available to
Buyer true and complete copies or, if no written document exists,
descriptions of each such Seller Benefit Arrangement. Each such
Seller Benefit Arrangement has been maintained in compliance in all
material respects with its terms and with the requirements pre-
scribed by any and all applicable statutes, orders, rules and
(e)Section 3.12(e) of the Seller Disclosure Schedule
identifies each Seller International Plan with an annual cost in
excess of $100,000. The Seller has furnished or made available to
Buyer true and complete copies or, if no written document exists,
descriptions of each such Seller International Plan. Each such
Seller International Plan has been maintained in all material
respects in compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and
regulations (including any special provisions relating to qualified
plans where such Seller International Plan was intended to so
qualify) and has been maintained in good standing with applicable
regulatory authorities.
(f)Except as set forth on Section 3.12(f) of the Seller
Disclosure Schedule, there are no actions, suits, arbitrations,
inquiries, investigations or other proceedings (other than routine
claims for benefits), pending or, to the Seller's Knowledge,
threatened, with respect to any Seller Employee Plan, Seller
Benefit Arrangement or Seller International Plan which would be
reasonably likely to have a Material Adverse Effect.
(c) Except as set forth on Section 3.12(g) of the Seller
Disclosure Schedule, and except for coverage mandated by Section
4980B of the Code, no Employees or Former Employees and no
beneficiaries or dependents of Employees or Former Employees are or
may become entitled under any Seller Employee Plan, Seller Benefit
Arrangement or Seller International Plan to post-employment welfare
benefits of any kind, including without limitation death or medical
benefits, having an annual cost, in the aggregate, in excess of
$100,000.
(h)Except as set forth on Section 3.12(h) of the Seller
Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not result in any obligation to
pay severance, separation pay or other compensation in the
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19
aggregate in excess of $100,000 associated with the termination of
employment to any Employee or Former Employee, result in any
increase in the amount of compensation or benefits or accelerate
the vesting or timing of any payment of any compensation or
benefits payable to or with respect to any Employee or Former
Employee, or cause any amounts paid or payable by the Company, the
Buyer or their subsidiaries to or with respect to any Employee or
Former Employee to fail to be deductible for U. S. federal income
tax purposes by reason of Section 280G of the Code.
(i)Except (i) as set forth on Section 3.12(i) of the
Seller Disclosure Schedule, (ii) pursuant to the terms of each
Seller Employee Plan, Seller International Plan and Seller Benefit
Arrangement, respectively, (iii) pursuant to any collective
bargaining agreement or (iv) pursuant to applicable law, there are
no arrangements, understandings or agreements, written or
unwritten, formal or informal, which would prevent the termination
of each Seller Employee Plan, Seller International Plan and Seller
Benefit Arrangement, respectively, in each case, without any
liability to the Company in excess of $100,000, other than for
accrued benefits thereunder.
3.13 Intellectual Property. Section 3.13 of the Seller
Disclosure Schedule sets forth a list of all of the Company's or
any of the Company Subsidiaries' domestic and foreign patents and
patent applications currently being used in the Business. "Company
Intellectual Property" means all of the Company's or any of the
Company Subsidiaries' domestic and foreign letters patent, patents,
patent applications, patent licenses, trademark licenses, software
licenses and knowhow licenses, trade names, trademarks, copyrights,
service marks, trademark registrations and applications, service
mark registrations and applications and copyright registrations and
applications currently being used in the Business. Except as set
forth in Section 3.13 of the Seller Disclosure Schedule and except
for any claim, infringement, act or omission that would not be
reasonably likely to have a Material Adverse Effect (a) no claim is
pending or, to Seller's Knowledge, threatened which alleges that
any of the Company Intellectual Property is invalid or
unenforceable or which is otherwise adverse to the right, title and
interest of the Company and the Company Subsidiaries in and to the
Company Intellectual Property, (b) to Seller's Knowledge, no
actions or operations of any other person, association,
corporation, individual, partnership, trust or other entity or
organization, including a Governmental Entity (a "Person") infringe
upon or conflict with the right, title or interest of the Company
and the Company Subsidiaries in and to the Company Intellectual
Property, and (c) to Seller's Knowledge, no Company Intellectual
Property infringes on the rights owned or held by any other Person.
Except as set forth in Section 3.13 of the Seller Disclosure
Schedule, no existing contract, agreement or understanding between
the Seller, the Company or any Company Subsidiary and any other
party would impede or prevent the continued use by the Company and
the Company Subsidiaries of the entire right, title and interest of
the Company and the Company Subsidiaries in and to the Company
Intellectual Property except such contracts or understandings that
would not be reasonably likely to have a Material Adverse Effect.
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20
3.14 Material Contracts; No Defaults. Except as set forth in
Section 3.14 of the Seller Disclosure Schedule or in the notes to
the Company Balance Sheets, neither the Company nor any Company
Subsidiary is a party to any written: (a) material consulting
agreement or collective bargaining agreement; (b) indenture,
mortgage, note or other agreement relating to the borrowing of
money not in the ordinary course of business by the Company or any
Company Subsidiary or the guaranty by the Company or any Company
Subsidiary of an obligation of a third party for the borrowing of
money; (c) agreement which involves a certain (rather than
contingent) obligation of the Company or any Company Subsidiary of
more than $1,000,000 in any twelve-month period; or (d) agreement
containing covenants limiting the ability of the Company or any
Company Subsidiary to compete in any line of business with any
Person or in any area or territory (collectively, the "Company
Contracts"). Except as set forth in Section 3.14 of the Seller
Disclosure Schedule, (1) there is not, under any of the Company
Contracts, any existing default or event of default or event or
condition which, with or without due notice or lapse of time or
both, would constitute a default or event of default on the part of
the Company or any Company Subsidiary, or, to the Seller's
Knowledge, the other parties thereto, except such defaults, events
of default and other events which would not be reasonably likely to
have a Material Adverse Effect, and (2) the Company Contracts are
(i) valid and binding obligations of the Company or the Company
Subsidiaries and, to the Seller's Knowledge, the other parties
thereto, (ii) are in full force and effect and (iii) are
enforceable in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting
creditors' rights generally and by general equitable principles
(regardless of whether enforceability is considered in a proceeding
in equity or at law).
3.15 Environmental Compliance.
(a)Except as set forth on Section 3.15 of the Seller
Disclosure Schedule, all operations, properties and business
activities of the Company, the Company Subsidiaries and the
Business are in compliance with all Environmental Laws and neither
the Company nor any of the Company Subsidiaries has or is subject
to any claim, notice of investigation or liability based upon any
Environmental Law or arising from the disposal of any Regulated
Materials except where such failure to be in compliance or such
claim, notice of investigation or liability would not be reasonably
likely to have a Material Adverse Effect.
(b)"Environmental Laws" means all Laws and Company Permits
concerning, relating to or controlling (i) the handling, transpor-
tation, sale, offering for sale, storage, treatment, discharge,
disposal, release, use, processing or manufacture of any material
or substance or (ii) the introduction of any material, substance,
radiation or other emission into the environment or workplace,
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Solid
Waste Disposal Act as amended by the Resource Conservation and
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21
Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, and the Occupational Safety and Health Act.
(c)"Regulated Material" means any material, substance,
radiation or emission which is regulated by or subject to any
Environmental Law.
3.16 Title to Real Property. Section 3.16 of the Seller
Disclosure Schedule sets forth a list of all of the Owned Real
Property reflected on the September 30, 1993 Company Balance Sheet
or acquired by the Company or any of the Company Subsidiaries sub-
sequent to the date thereof and conveyed hereby to Buyer (the
"Company Real Property"), together with all Company Leases (as
defined below). The Company or one of the Company Subsidiaries has
good and marketable title to the Company Real Property, free and
clear of all mortgages, liens, pledges, charges or encumbrances of
any kind or character, except for current property taxes not yet
payable or such encumbrances that would not be reasonably likely to
have a Material Adverse Effect. To Seller's Knowledge, there is no
appropriation, condemnation or like proceeding relating to the
Company Real Property. Each lease for any leased real property (a
"Company Lease") is a valid and binding lease under which the
Company or one of the Company Subsidiaries is entitled to occupy
and use the parcel of real property for its current use to which
such Company Lease relates except for such failure to be valid and
binding as would not be reasonably likely to have a Material
Adverse Effect.
3.17 Company Assets. Except for those assets, properties,
contract rights, or licenses listed on Section 3.17 of the Seller
Disclosure Schedule, the Company and the Company Subsidiaries will
own or have at Closing the right to use all of the assets,
properties, contract rights and licenses currently used to operate
the Business, or reflected on the September 30, 1993 Company
Balance Sheet (the "Company Assets"), except for cases in which the
failure to own or to have such right to use would not be reasonably
likely to have a Material Adverse Effect. To the Seller's
Knowledge, the consummation of the transactions contemplated by
this Agreement will not, in and of itself, adversely affect the
ownership of or right to use the Company Assets, the Company
Intellectual Property and the Company Permits of the Company or the
Company Subsidiaries, except in cases where the failure to own or
to have such right to use would not be reasonably likely to have a
Material Adverse Effect.
3.18 Labor Matters. Except as set forth on Section 3.18 of
the Seller Disclosure Schedule and except as would not constitute a
Material Adverse Effect:
(a)there is no unfair labor practice complaint against
the Company or any of the Company Subsidiaries pending or, to the
Seller's Knowledge, threatened before the National Labor Relations
Board or the Ministry of Labor, as the case may be;
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22
(b)there is no labor strike, dispute, slowdown or
stoppage pending or, to the Seller's Knowledge, threatened against
or affecting the Company, any of the Company Subsidiaries or the
Business; and
(c)there is no grievance or arbitration proceeding
arising out of or under collective bargaining agreements pending
or, to the Seller's Knowledge, threatened against or affecting the
Company, any of the Company Subsidiaries or the Business.
3.19 Purchase for Investment. The Seller is acquiring the
Equity Consideration for its own account as principal, with no view
to any distribution of any of the Equity Consideration or any
beneficial interest in the Equity Consideration to any third party,
and the Seller has no agreement, understanding or arrangement to
sell, pledge or otherwise dispose of the Equity Consideration or
any beneficial interest in the Equity Consideration to any other
Person. The Seller understands and agrees that the Equity
Consideration has not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or applicable state
securities laws, and therefore may not be sold or otherwise
transferred, unless the Equity Consideration is registered under
the Securities Act and any applicable state securities laws or
unless an exemption from such registration is available.
3.20 No Beneficial Ownership of the Buyer's Stock. The Seller
and its Affiliates do not hold, have the right to vote or direct
the voting of, or otherwise beneficially own any shares of Common
Stock, par value $1.00 per share, of the Buyer (the "Buyer Common
Stock").
3.21 Change in Control. Except as set forth in Section 3.21
of the Seller Disclosure Schedule or in cases which would not be
reasonably likely to have a Material Adverse Effect, neither the
Company nor any Company Subsidiary is party to any contract,
agreement or understanding relating to employment which contains a
"change in control," "potential change in control" or similar
provision.
3.22 Business of the Company. To the Seller's Knowledge, the
Company has not engaged in any businesses other than the Business,
and the Pipeline Sub has not engaged in any businesses other than
the transmission of natural gas.
3.23 Representations Accurate. To Seller's Knowledge, the
representations and warranties of the Seller set forth in this
Agreement and qualified by materiality or by Material Adverse
Effects shall be true and correct (subject to such qualification)
as of the Closing Date (except for representations and warranties
that expressly speak only as of some other time), subject to the
disclosures in the Seller Disclosure Schedule as supplemented or
amended through the Closing Date and excluding those failures to be
true and correct that do not have a Material Adverse Effect. To
Seller's Knowledge, the representations and warranties of the
Seller set forth in this Agreement and not qualified by materiality
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23
or by Material Adverse Effects shall be true and correct in all
material respects as of the Closing Date (except for
representations and warranties that expressly speak only as of some
other time), subject to the disclosures in the Seller Disclosure
Schedule as supplemented or amended through the Closing Date and
excluding those failures to be true and correct that do not have a
Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
4.1 Organization. Except as disclosed in Section 4.1 of the
Buyer's disclosure schedule attached hereto (the "Buyer Disclosure
Schedule"), each of the Buyer and its Subsidiaries (collectively,
the "Buyer Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on
its business as now being conducted. Each of the Buyer and the
Buyer Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a
Material Adverse Effect. "Material Adverse Effect," as used in
this Article IV, means a material adverse effect on the business,
operations or financial condition of the Buyer and Buyer Subsidiar-
ies taken as a whole. The Buyer has heretofore delivered to the
Seller accurate and complete copies of the Articles of Organization
and By-laws, as currently in effect, of the Buyer.
4.2 Capitalization.
(a)The authorized capital stock of the Buyer consists of
(i) 35,000,000 shares of Buyer Common Stock, of which 17,984,249
shares are issued and outstanding as of the date hereof, and (ii)
5,000,000 shares of preferred stock, no par value, none of which
are issued or outstanding as of the date hereof. All of the issued
and outstanding shares of Buyer Common Stock are (and the Equity
Consideration will upon issuance be) validly issued, fully paid,
nonassessable and free of preemptive rights. As of the date
hereof, approximately 1,690,609 shares of Buyer Common Stock were
issuable upon exercise of stock options ("Stock Options") granted
under the Buyer's Long-Term Incentive Plan and Executive Long-Term
Incentive Program (collectively, the "Stock Plans") and an in-
determinate number of shares of Buyer Common Stock were reserved
for issuance in accordance with the Rights Agreement, dated as of
October 19, 1988 by and between the Buyer and State Street Bank &
Trust Company, as Rights Agent (the "Original Rights Agreement").
Except pursuant to this Agreement, the Stock Plans, the Original
Rights Agreement and the Buyer's Savings/Investment Plan or as
disclosed in Section 4.2 of the Buyer Disclosure Schedule, there
are no subscriptions, options, warrants, calls, rights or other
-19-
24
agreements or commitments obligating the Buyer to issue, transfer
or sell any of its securities, including any right of conversion or
exchange under any outstanding security.
(b)Upon consummation of the transactions contemplated
hereby, the Seller will acquire good and marketable title to the
Equity Consideration, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and
options of whatever nature.
(c)Except as disclosed in Section 4.2 of the Buyer
Disclosure Schedule, the only direct or indirect subsidiaries of
the Buyer are those named in the Buyer SEC Reports. Except as
disclosed in Section 4.2 of the Buyer Disclosure Schedule, or in
the Buyer SEC Reports, the Buyer does not own, directly or
indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity ownership
interest in any business. All of the outstanding shares of capital
stock of each of the Buyer Subsidiaries have been validly issued
and are fully paid, nonassessable and free of preemptive rights
and, except as set forth in Section 4.2 of the Buyer Disclosure
Schedule are owned by either the Buyer or another of the Buyer
Subsidiaries free and clear of all pledges, security interests,
liens, charges, encumbrances, equities, claims and options of
whatever nature. Except as disclosed in Section 4.2 of the Buyer
Disclosure Schedule there are no outstanding subscriptions,
options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character relating to the issued
or unissued capital stock or other securities of any Buyer
Subsidiary, or otherwise obligating the Buyer or any Buyer
Subsidiary to issue, transfer or sell any such securities. Except
for the Investment Agreement, there are not now, and at the Closing
Date there will not be, any voting trusts or other agreements or
understandings to which the Buyer or any Buyer Subsidiary is a
party or is bound with respect of the voting of the capital stock
of the Buyer or any Buyer Subsidiary. Except as set forth above or
in Section 4.2 of the Buyer Disclosure Schedule, there are no
persons or entities (other than Buyer Subsidiaries) in which the
Buyer or any Buyer Subsidiary has any voting rights or equity
interests.
4.3 Authority Relative to this Agreement. The Buyer has full
corporate power and authority to execute and deliver this
Agreement, the Investment Agreement and the Other Agreements and to
perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement, the Investment Agreement and the
Other Agreements and the consummation of the transactions
contemplated hereby or thereby have been duly and validly
authorized and approved by the Board of Directors of the Buyer,
including by a two-thirds vote of the Continuing Directors at a
meeting at which a Continuing Director Quorum (as such terms are
defined in the Buyer's Articles of Organization) was present for
purposes of approving the amendment to Article 6(c)2 of the Buyer's
Articles of Organization in the form attached hereto as Annex V
(the "Fair Price Charter Amendment")), and no other corporate
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proceedings on the part of the Buyer are necessary to authorize
this Agreement, the Investment Agreement and the Other Agreements
(other than the approval of the transactions contemplated hereby by
the requisite affirmative vote of the holders of Buyer Common
Stock). This Agreement and the Investment Agreement have been duly
and validly executed and delivered by the Buyer and (assuming they
are duly and validly executed by the Seller) constitute, and the
Other Agreements will when executed constitute, valid and binding
agreements of the Buyer, enforceable against the Buyer in
accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally and by
general equitable principles (regardless of whether enforceability
is considered in a proceeding in equity or at law).
4.4 Consents and Approvals; No Violations. Except as
disclosed in Section 4.4 of the Buyer Disclosure Schedule, and
except for applicable requirements of the Exchange Act and German
pre-merger notification laws, no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity, is
necessary for the consummation by the Buyer of the transactions
contemplated by this Agreement and the Investment Agreement.
Except as set forth in Section 4.4 of the Buyer Disclosure Sched-
ule, neither the execution and delivery of this Agreement, the
Investment Agreement and the Other Agreements by the Buyer nor the
consummation by the Buyer of the transactions contemplated hereby
or thereby nor compliance by the Buyer with any of the provisions
hereof or thereof will (i) conflict with or breach any provision of
the Articles of Organization or By-Laws (or similar organizational
documents) of the Buyer or any Buyer Subsidiary, (ii) violate or
breach any provision of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or result in the creation
of any lien) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, contract, agreement
or other instrument or obligation to which the Buyer or any Buyer
Subsidiary is a party or by which any of them or any of their
properties or assets may be bound, or (iii) violate any order,
judgment, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer, any Buyer Subsidiary or any of their
properties or assets, except in the case of clauses (ii) and (iii)
for violations, breaches or defaults which would not either have a
Material Adverse Effect or prevent or delay the consummation of the
transactions contemplated hereby.
4.5 Reports. Except as disclosed in Section 4.5 of the Buyer
Disclosure Schedule, the Buyer has filed all required forms,
reports and documents with the Securities and Exchange Commission
(the "SEC") since January 1, 1990 (collectively, the "Buyer SEC
Reports"), each of which has complied in all material respects with
all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act. Except as
disclosed in Section 4.5 of the Buyer Disclosure Schedule, as of
their respective dates, none of the Buyer SEC Reports, including
without limitation, any financial statements or schedules
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(including the related notes) included therein, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make
the statements therein not misleading. Each of the balance sheets
(including the related notes) included in the Buyer SEC Reports
fairly presents the consolidated financial position of the Buyer
and the Buyer Subsidiaries as of the date thereof, and the other
related statements (including the related notes) included therein
fairly present the consolidated results of operations and cash
flows of the Buyer and the Buyer Subsidiaries for the respective
periods indicated. Each of the financial statements (including the
related notes) included in the Buyer SEC Reports has been prepared
from and is in accordance with the books and records of the Buyer
and has been prepared in accordance with GAAP consistently applied
during the period involved, except as otherwise noted therein and
except for year-end audit adjustments, consisting of normal and
recurring adjustments. The Buyer has delivered to the Seller
accurate and complete copies of all Buyer SEC Reports filed since
January 1, 1990.
4.6 Absence of Certain Changes. Except as disclosed in
Section 4.6 of the Buyer Disclosure Schedule or as disclosed in the
Buyer SEC Reports, since December 31, 1992, neither the Buyer nor
any of the Buyer Subsidiaries has (i) taken any actions set forth
in Section 5.2(a) through Section 5.2(l) of this Agreement, (ii)
suffered a Material Adverse Effect, or (iii) entered into any
transaction, or conducted its business or operations, other than in
the ordinary course of business and consistent with past practice.
4.7 No Undisclosed Liabilities. Any reference in this
Agreement to Buyer's Knowledge shall be a reference solely to the
actual knowledge of John M. Nelson, David P. Gruber, and their
direct reports. Buyer's Knowledge shall not include any
constructive knowledge, imputed knowledge or any knowledge
attributed to Buyer solely because Buyer or its agents or employees
should have known the matter in question. Except as and to the
extent set forth in Section 4.7 of the Buyer Disclosure Schedule,
to Buyer's Knowledge, neither the Buyer nor any Buyer Subsidiary
has any liabilities (absolute, accrued, contingent or otherwise) of
a kind required to be reflected in a balance sheet prepared in
accordance with GAAP, or required to be disclosed in the notes
thereto, except (a) liabilities which were reflected in the audited
consolidated balance sheet of the Buyer and the Buyer Subsidiaries
as of December 31, 1992 incorporated in the Buyer's Annual Report
on Form 10-K for the fiscal year ended December 31, 1992 (the
"Buyer Balance Sheet") or disclosed in the notes thereto, (b)
liabilities which were incurred since December 31, 1992 in the
ordinary course of business, consistent with past practice and
which would be reflected in a balance sheet prepared in accordance
with GAAP, (c) liabilities which do not constitute a Material
Adverse Effect and would not be reasonably likely to constitute a
Material Adverse Effect and (d) liabilities incurred in connection
with this Agreement.
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4.8 Information in Proxy Statement. None of the information
supplied in writing by the Buyer for inclusion or incorporation by
reference in the Proxy Statement will, at the time the Proxy
Statement is mailed to the shareholders of the Buyer and at the
time of the meeting of shareholders of the Buyer, 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 light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply in
all material respects with the provisions of the Exchange Act, and
the rules and regulations thereunder, except that no representation
is made by the Buyer with respect to statements made therein based
on information supplied by the Seller or the Company in writing for
inclusion or incorporation by reference therein.
4.9 Litigation. Except as disclosed in Section 4.9 of the
Buyer Disclosure Schedule or in the Buyer SEC Reports, (a) there
are no existing orders, injunctions, judgments or decrees of any
Governmental Entity which apply to Buyer or any Buyer Subsidiary or
to the assets, properties or operations of the foregoing and (b)
there are no actions, suits, proceedings, at law or in equity,
pending, or to Buyer's Knowledge, threatened or to Buyer's
Knowledge any investigations pending or threatened involving the
Buyer or the Buyer Subsidiaries, or before any Governmental Entity
which in the case of either clause (a) or (b) are reasonably likely
to have a Material Adverse Effect.
4.10 Compliance with Applicable Law. Except as set forth in
Section 4.10 of the Buyer Disclosure Schedule, or in the Buyer SEC
Reports, and except with respect to environmental matters, which
are addressed in Section 4.15 hereof, (a) the Buyer and the Buyer
Subsidiaries are, and the business, operations or financial
condition of the Buyer and the Buyer Subsidiaries has been
conducted, and is, in compliance with all Laws, except where the
failure to be in compliance would not be reasonably likely to have
a Material Adverse Effect, and (b) the Buyer and Buyer Subsidiaries
hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary to conduct their
respective businesses as currently conducted (the "Buyer Permits"),
and such Buyer Permits are in full force and effect, except for
such failures to hold or be in full force and effect which would
not be reasonably likely to have a Material Adverse Effect .
4.11 Taxes. The Buyer and each Buyer Subsidiary has duly
filed all returns of income Taxes (as hereinafter defined) and all
material returns of other Taxes required to be filed by it, and the
Buyer has duly paid, caused to be paid or made adequate provision
for the payment of all Taxes required to be paid in respect of the
periods covered by such returns and has made adequate provision for
payment of all Taxes anticipated to be payable in respect of all
calendar periods since the periods covered by such returns. Except
as set forth in Section 4.11 of the Buyer Disclosure Schedule, the
United States federal and state income tax returns of the Buyer
have been audited by the Internal Revenue Service or relevant state
tax authorities or are closed by the applicable statute of
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limitations for all taxable years through 1986. All deficiencies
and assessments asserted as a result of such audits have been paid,
fully settled or adequately provided for in the financial
statements contained in the Buyer SEC Reports, or are being
contested in good faith by appropriate proceedings. Except as set
forth in Section 4.11 of the Buyer Disclosure Schedule, there are
no outstanding agreements or waivers extending the statutory period
of limitation relating to the payment of Taxes of the Buyer or its
subsidiaries for taxable periods for which the applicable statute
of limitations has not expired.
4.12 ERISA; Employee Benefits. The Buyer hereby represents
and warrants to Seller that as of the date hereof and as of the
Closing Date:
(a)Section 4.12(a) of the Buyer's Disclosure Schedule
identifies each Buyer Employee Plan with an annual cost in excess
of $100,000. The Buyer has furnished or made available to Seller
true and complete copies of such Buyer Employee Plans (and, if
applicable, related trust agreements) and all amendments thereto
and written interpretations thereof together with (i) the most
recent annual report prepared in connection with any such Buyer
Employee Plan (Form 5500 or 5500-C including, if applicable,
Schedules A and B thereto), (ii) the summary plan description
currently in effect for each such Buyer Employee Plan and all
modifications thereof, (iii) for each such Buyer Employee Plan with
respect to which there is no summary plan description in effect, a
written description of such Buyer Employee Plan including all
materials distributed or made available to employees with respect
to such Buyer Employee Plan and (iv) the most recent financial
statements and actuarial reports (if any) for each such Buyer
Employee Plan and its related trust (if any) (collectively, the
Buyer Employee Plan Documents").
(b)Except as set forth in Section 4.12(b) of the Buyer
Disclosure Schedule, no Buyer Employee Plan with an annual cost in
excess of $100,000 is a Title IV Plan or a Multiemployer Plan.
(c)Each Buyer Employee Plan with an annual cost in excess
of $100,000 that is intended to be qualified under Section 401(a)
of the Code has been determined by the Internal Revenue Service to
be so qualified and no event has occurred since the date of such
determination that would adversely affect such qualification; each
trust created under any such Buyer Employee Plan has been
determined by the Internal Revenue Service to be exempt from tax
under Section 501(a) of the Code and no event has occurred since
the date of such determination that would adversely affect such
exemption. The Buyer has furnished to Seller the most recent
determination letter of the Internal Revenue Service relating to
each such Buyer Employee Plan. Each such Buyer Employee Plan has
been maintained in compliance in all material respects with its
terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations, including but
not limited to ERISA and the Code. Neither the Buyer
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nor any Related Person engaged in, nor to Buyer's Knowledge has any
other Person has engaged in, any "prohibited transaction" (as
defined in ERISA and the Code) with respect to any such Buyer
Employee Plan.
(d)Section 4.12(d) of the Buyer's Disclosure Schedule
identifies each Buyer Benefit Arrangement with an annual cost in
excess of $100,000. The Buyer has furnished or made available to
Seller true and complete copies or, if no written document exists,
descriptions of each such Buyer Benefit Arrangement. Each such
Buyer Benefit Arrangement has been maintained in compliance in all
material respects with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and
regulations.
(e)Section 4.12(e) of the Buyer Disclosure Schedule
identifies each Buyer International Plan with an annual cost in
excess of $100,000. The Buyer has furnished or made available to
Seller true and complete copies or, if no written document exists,
descriptions of each such Buyer International Plan. Each such
Buyer International Plan has been maintained in compliance in all
material respects with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and
regulations (including any special provisions relating to qualified
plans where such Buyer International Plan was intended to so
qualify) and has been maintained in good standing with applicable
regulatory authorities.
(f)Except as set forth on Section 4.12(f) of the Buyer
Disclosure Schedule, there are no actions, suits, arbitrations,
inquiries, investigations or other proceedings (other than routine
claims for benefits) pending or, to the Buyer's Knowledge,
threatened, with respect to any Buyer Employee Plan, Buyer Benefit
Arrangement or Buyer International Plan which would be reasonably
likely to have a Material Adverse Effect.
(g)Except as set forth on Section 4.12(g) of the Buyer
Disclosure Schedule, and except for coverage mandated by Section
4980B of the Code, no Employees or Former Employees and no
beneficiaries or dependents of Employees or Former Employees are or
may become entitled under any Buyer Employee Plan, Buyer Benefit
Arrangement or Buyer International Plan to post-employment welfare
benefits of any kind, including without limitation death or medical
benefits, having an annual cost, in the aggregate, in excess of
$100,000.
4.13 Intellectual Property. "Buyer Intellectual Property"
means all of the Buyer's or any of the Buyer Subsidiaries' domestic
and foreign letters patent, patents, patent applications, patent
licenses, trademark licenses, software licenses and know-how
licenses, trade names, trademarks, copyrights, service marks,
trademark registrations and applications, service mark registra-
tions and applications and copyright registrations and applications
currently being used by the Buyer or any Buyer Subsidiary. Except
as set forth in Section 4.13 of the Buyer Disclosure Schedule or
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Buyer's SEC Reports and except for any claim, infringement, act or
omission that would not be reasonably likely to have a Material
Adverse Effect (a) no claim is pending or, to the knowledge of the
Buyer, threatened to the effect that any of the Buyer Intellectual
Property is invalid or unenforceable or which is otherwise adverse
to the right, title and interest of the Buyer and the Buyer
Subsidiaries in and to the Buyer Intellectual Property; (b) to the
knowledge of the Buyer, no actions or operations of any Person
infringe upon or conflict with the right, title or interest of the
Buyer and the Buyer Subsidiaries in and to the Buyer Intellectual
Property; and (c) to the knowledge of the Buyer, no Buyer
Intellectual Property infringes on the rights owned or held by any
other Person. Except as set forth in Section 4.13 of the Buyer
Disclosure Schedule, no contract, agreement or understanding
between the Buyer or any Buyer Subsidiary and any other party
exists which would impede or prevent the continued use by the Buyer
and the Buyer Subsidiaries of the entire right, title and interest
of the Buyer and the Buyer Subsidiaries in and to the Buyer
Intellectual Property.
4.14 No Defaults. Except as set forth in Section 4.14 of the
Buyer Disclosure Schedule or in the Buyer SEC Reports, to Buyer's
Knowledge, Buyer and the Buyer Subsidiaries are not in default
under, and no condition exists that with notice or lapse of time or
both would constitute a default under, (i) any mortgage, loan
agreement, indenture, evidence of indebtedness or other instrument
evidencing borrowed money, Buyer and Buyer Subsidiaries'
organizational documents, any other material agreement, contract,
lease, license to which Buyer or Buyer Subsidiaries are a party or
by which they or their properties are bound, or (ii) any judgment,
order or injunction of any court, arbitrator or Governmental
Entity, except in the case of clause (i) and (ii) above those that
will not be reasonably likely to have a Material Adverse Effect.
4.15 Environmental Compliance. Except as set forth in Section
4.15 of the Buyer Disclosure Schedule, all operations, properties
and business activities of the Buyer and the Buyer Subsidiaries are
in compliance with all Environmental Laws, and neither the Buyer
nor any of the Buyer Subsidiaries has or is subject to any claim,
notice of investigation or liability based upon any Environmental
Law or arising from the disposal of any Regulated Material except
where such failure to be in compliance or such claim, notice of
investigation or liability would not be reasonably likely to have a
Material Adverse Effect.
4.16 Representations Accurate. To Buyer's Knowledge, the
representations and warranties of the Buyer set forth in this
Agreement and qualified by materiality or by Material Adverse
Effects shall be true and correct (subject to such qualification)
as of the Closing Date (except for representations and warranties
that expressly speak only as of some other time), subject to the
disclosures in the Buyer Disclosure Schedule as supplemented or
amended through the Closing Date and excluding those failures to be
true and correct that do not have a Material Adverse Effect. To
Buyer's Knowledge, the representations and warranties of the Buyer
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set forth in this Agreement and not qualified by materiality or by
Material Adverse Effects shall be true and correct in all material
respects as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time),
subject to the disclosures in the Buyer Disclosure Schedule as
supplemented or amended through the Closing Date and excluding
those failures to be true and correct that do not have a Material
Adverse Effect.
4.17 Purchase for Investment. The Buyer is acquiring the
Company Common Stock for its own account as principal, with no view
to any distribution of any of the Company Common Stock or any
beneficial interest in the Company Common Stock to any third party,
and the Buyer has no agreement, understanding or arrangement to
sell, pledge or otherwise dispose of the Company Common Stock or
any beneficial interest in the Company Common Stock to any other
Person. The Buyer understands and agrees that the Company Common
Stock has not been registered under the Securities Act, or
applicable state securities laws, and neither the Seller nor the
Company has any obligation hereunder to so register and, therefore,
the Company Common Stock may not be sold or otherwise transferred
so as to cause the sale of the shares hereunder by the Seller to be
unlawful or violative of any law or regulation, unless the Company
Common Stock is registered under the Securities Act and any
applicable state securities laws or unless an exemption from such
registration is available.
ARTICLE V
COVENANTS
5.1 Business Covenants of the Seller. Except as expressly
contemplated by this Agreement, the Ancillary Agreements (as
hereinafter defined) and except for the pre-Closing transactions
described in Annex IV hereto between the Seller and its Affiliates,
on the one hand, and the Company and the Company Subsidiaries, on
the other hand, during the period from the date of this Agreement
and continuing until the Closing Date, the Seller will cause the
Company and the Company Subsidiaries to carry on their respective
businesses in the ordinary course, consistent with past practice,
and to use their respective reasonable best efforts to preserve
intact their present business organizations, to keep available the
services of their present officers and key employees and to
preserve their relationships with customers, suppliers, licensors,
licensees, contractors, distributors and others having business
dealings with them. Without limiting the generality of the
foregoing, and except as provided herein, the Seller will not,
without the prior consent of the Buyer, cause or permit the Company
and the Company Subsidiaries to:
(a)(i)declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that the
Company Subsidiaries may declare and pay a dividend to the Company,
(ii) split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in
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respect of, in lieu of or in substitution for shares of its capital
stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its
subsidiaries, or propose to do any of the foregoing;
(b)authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance
or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any
other securities (including indebtedness having the right to vote)
or equity equivalents (including, without limitation, stock
appreciation rights), except pursuant to any Company Benefit Plan,
or amend in any material respect any of the terms of any such
agreements, commitments, stock, securities or equity equivalents
outstanding on the date hereof;
(c)amend or propose to amend its charter or by-laws;
(d)acquire, sell, lease, encumber, transfer or dispose of
any assets other than in the ordinary course of business consistent
with past practice;
(e)make any capital expenditures which in the aggregate
exceed $100,000;
(f)create, incur or assume any long-term debt (including
obligations in respect of capital leases);
(g)except in the ordinary course of business consistent
with past practice, create, incur, assume, maintain or permit to
exist any short-term debt (including obligations in respect of
capital leases) or assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person, except that such debt or
obligations which are set forth on the Seller Disclosure Schedule
may be maintained and permitted to exist;
(h)permit any of its current insurance policies to be
cancelled or terminated or any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than
coverage remaining under those cancelled, terminated or lapsed are
in full force and effect;
(i)change any of the accounting principles or practices
used by it (except as required by GAAP);
(j)except as required by law, or pursuant to the terms of
any collective bargaining agreement, (i) enter into, adopt, amend
or terminate any Company Benefit Plan or any agreement,
arrangement, plan or policy between itself and one or more of its
directors, executive officers, or other employees, or (ii) increase
in any manner the compensation or fringe benefits of any director,
officer or other employee or pay any benefit not required by any
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plan or arrangement as in effect as of the date hereof, except such
increases as are granted in the ordinary course of business
consistent with past practice (which shall include normal periodic
performance reviews and related compensation and benefit increases
but not any general across-the-board increases);
(k)amend or terminate any material agreements,
commitments or contracts, or enter into other material agreements,
commitments or contracts, except in the ordinary course of business
consistent with past practice and not in excess of current
requirements;
(l)lend any money in excess of $100,000 to any Person
other than an Affiliate or trade creditor;
(m)merge or consolidate with or into any other Person; or
(n)enter into any agreement with any Person for the
purchase of inventory for the Company in excess of $500,000 if such
purchase would cause the Company's inventory to exceed
substantially the amount of inventory required to fill outstanding
contracts with customers of the Company; or
(o)agree to take any of the foregoing actions.
Notwithstanding the provisions of this Section 5.1, nothing in
this Agreement shall be construed or interpreted to prevent the
Seller, the Company and the Company Subsidiaries from making,
accepting or settling intercompany advances to, from or with one
another, or engaging in any other transaction incidental to their
normal cash management procedures, including without limitation,
short-term investments in time deposits, certificates of deposit
and bankers acceptances made in the ordinary course of business.
5.2 Business Covenants of the Buyer. Except as expressly
contemplated by this Agreement, during the period from the date of
this Agreement and continuing until the Closing Date, the Buyer
will, and will cause the Buyer Subsidiaries to, carry on their
respective businesses in the ordinary course, consistent with past
practice, and to use their respective reasonable best efforts to
preserve intact their present business organizations, to keep
available the services of their present officers and key employees
and to preserve their relationships with customers, suppliers,
licensors, licensees, contractors, distributors and others having
business dealings with them. Without limiting the generality of
the foregoing, and except as provided herein, the Buyer will not,
and will cause the Buyer Subsidiaries not, without the prior
consent of the Seller, to:
(a)(i)declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, (ii) split,
combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
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stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its
subsidiaries, or propose to do any of the foregoing;
(b)authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance
or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any
other securities (including indebtedness having the right to vote)
or equity equivalents (including, without limitation, stock
appreciation rights) except in accordance with Buyer's Stock Plans,
or amend in any material respect any of the terms of any such
agreements, commitments, stock, securities or equity equivalents
outstanding on the date hereof;
(c)amend or propose to amend its charter or by-laws in
any manner adverse to the interests of the Seller;
(d)make any capital expenditures which in the aggregate
exceed the amounts contemplated by the Buyer's most recent annual
operating budget, unless the Buyer notifies and consults with the
Seller prior to taking any such action;
(e)create, incur or assume any long-term debt (including
obligations in respect of capital leases) in excess of $1,000,000;
(f)except in connection with draws made pursuant to the
Financing Agreement dated March 8, 1993 by and between The CIT
Group/Business Credit, Inc. and the Buyer, among others, or
otherwise in the ordinary course of business consistent with past
practice, create, incur, assume, maintain or permit to exist any
short-term debt (including obligations in respect of capital
leases) in excess of $1,000,000 or assume, guarantee, endorse or
otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person
(except that any such debt or obligations set forth in Section
5.2(f) of the Buyer Disclosure Schedule may be maintained and
permitted to exist);
(g)lend any money in excess of $100,000, unless the Buyer
notifies and consults with the Seller prior to taking any such
action;
(h)except as required by law, (i) enter into, adopt,
amend or terminate any agreement, arrangement, plan or policy
between itself and one or more of its directors or executive
officers, or (ii) increase in any manner the compensation or fringe
benefits of any director or executive officer or pay any benefit to
any director or executive officer not required by any plan or
arrangement as in effect as of the date hereof;
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(i)enter into any material agreements, commitments or
contracts relating to the acquisition or divestiture of any
businesses;
(j)amend or terminate any material agreements,
commitments or contracts, or enter into, other material agreements,
commitments or contracts, except in the ordinary course of business
consistent with past practice and not in excess of current
requirements, unless the Buyer notifies and consults with the
Seller prior to taking any such action;
(k)merge or consolidate with or into any other Person; or
(l)agree to take any of the foregoing actions.
5.3 Current Information. During the period from the date of
this Agreement to the Closing Date, the Buyer will notify the
Seller and the Seller will notify the Buyer of any material change
(or any event which might reasonably be expected to cause a
material change) in the normal course of business or operations of
the Buyer and the Buyer Subsidiaries or of the Company and the
Company Subsidiaries, as the case may be, and of any complaints,
investigations or hearings by any Governmental Entity (or communi-
cations indicating that the same may be contemplated), or the
institution or threat or settlement of significant litigation, in
each case involving the Buyer or the Buyer Subsidiaries or the
Company or the Company Subsidiaries, as the case may be, and to
keep each other fully informed of such events.
5.4 Access to Information.
(a)Between the date of this Agreement and the Closing
Date the Buyer will and will cause the Buyer Subsidiaries to, (i)
give the Seller and the Company and their authorized representa-
tives reasonable access to all books, records, plants, offices,
warehouses and other facilities and properties of the Buyer and the
Buyer Subsidiaries, (ii) permit the Seller and the Company and
their authorized representatives to make such inspections thereof,
during regular business hours, as they may reasonably request, and
(iii) cause their officers to furnish the Seller and the Company
and their authorized representatives with such financial and oper-
ating data and other information with respect to the business,
operations and properties of the Buyer and the Buyer Subsidiaries
as the Seller and the Company may from time to time reasonably
request; provided, however, that any such investigation shall be
conducted in such a manner as not to interfere unreasonably with
the operation of the business of the Buyer and the Buyer
Subsidiaries.
(b)Between the date of this Agreement and the Closing
Date the Seller will and will cause the Company and the Company
Subsidiaries to, (i) give the Buyer and the Buyer Subsidiaries and
their authorized representatives reasonable access to all books,
records, plants, offices, warehouses and other facilities and
properties of the Company, the Company Subsidiaries and the
Business, and to reasonably permit the Buyer to make copies of such
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36
books and records, (ii) permit the Buyer and the Buyer Subsidiaries
and their authorized representatives to make such inspections
thereof, during regular business hours, as they may reasonably
request, and (iii) cause its officers to furnish the Buyer and the
Buyer Subsidiaries and their authorized representatives with the
monthly financial reporting package of the Company that is prepared
for the Seller in its ordinary practice and with such other
financial and operating data and other information with respect to
the business, operations and properties of the Company, the Company
Subsidiaries and the Business as the Buyer and the Buyer Sub-
sidiaries may from time to time reasonably request; provided,
however, that any such investigation shall be conducted in such
manner as not to interfere unreasonably with the operation of the
business of the Seller, the Company and the Company Subsidiaries.
(c)Notwithstanding (a) and (b) above, the Buyer, the
Buyer Subsidiaries, the Seller, the Seller Subsidiaries, the
Company and the Company Subsidiaries shall not be obligated to
furnish information if, in the opinion of counsel, such furnishing
of information would be reasonably likely to violate the law.
(d)Between the date of this Agreement and the Closing
Date (or, if this Agreement terminates pursuant to Section 7.1 or
otherwise, for three years from the date hereof), the Buyer will
hold and will cause the Buyer Subsidiaries and their respective
officers, directors, employees, representatives, consultants and
advisors to hold and the Seller will hold and will cause the Seller
Subsidiaries, the Company and the Company Subsidiaries and their
respective officers, directors, employees, representatives, consul-
tants and advisors to hold in strict confidence in accordance with
the terms of the Confidentiality Agreement, dated January 29, 1992,
between the Buyer and the Seller (the "Confidentiality Agreement"),
all documents and information furnished to each other and their
representatives, consultants or advisors in connection with the
transactions contemplated by this Agreement; provided, however,
that the Buyer shall not be required hereunder to hold in strict
confidence such documents and information that relate solely to the
operation of the Company, the Company Subsidiaries or the Business.
The Confidentiality Agreement will terminate on the Closing Date.
5.5 Reasonable Best Efforts. Subject to the terms and condi-
tions of this Agreement, each of the parties hereto agrees to use
its reasonable best efforts to take, or cause to be taken, all
actions, 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. Without limiting the foregoing, the Buyer agrees to use
its reasonable best efforts to, as promptly as practicable, (a)
prepare and file with the SEC the Proxy Statement, respond to the
comments (if any) of the staff of the SEC with respect thereto, and
mail to the shareholders of the Buyer the definitive Proxy
Statement, which Proxy Statement shall contain the recommendation
of the Board of Directors of the Buyer to the Buyer's shareholders
regarding the transactions contemplated by this Agreement, and (b)
take such actions as may be required to cause, prior to the Closing
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37
Date, the Equity Consideration to be received by the Seller pursu-
ant to this Agreement to be eligible for quotation on the NASDAQ
National Market System (subject to official notice of issuance).
The Seller shall use its reasonable best efforts (i) to provide to
the Buyer all information about the Seller, the Seller
Subsidiaries, the Company or the Company Subsidiaries (including
without limitation the Company Financial Statements and any other
financial statements of the Company and the Company Subsidiaries)
required to be included or incorporated by reference in the Proxy
Statement and (ii) otherwise to cooperate with the Buyer in taking
the actions described in the preceding sentence.
5.6 Consents; Filings.
(a)Each of the parties hereto will use its reasonable
best efforts to obtain consents of all Persons necessary for the
consummation of the transactions contemplated by this Agreement.
(b)Each of the parties hereto will use its reasonable
best efforts to file expeditiously the appropriate German pre-
merger filings. The Buyer and the Seller will make all such other
filings, notifications and requests for consent, approval or
permission that may be required by statute, regulation or judicial
decree in connection with the transactions contemplated by this
Agreement and will cooperate in providing each other or their
respective outside counsel any information, including reasonable
access to knowledgeable individuals, necessary in connection
therewith. The Buyer and the Seller shall, upon the request of any
Governmental Entity, supply such agency with any additional re-
quested information as expeditiously as is reasonably possible, and
shall use their reasonable best efforts to cause the satisfaction
or termination of the applicable waiting period under German pre-
merger notification laws. The Buyer and the Seller shall use their
reasonable best efforts to resolve as promptly as practicable any
concern on the part of any Governmental Entity regarding the
legality of the transactions contemplated hereby, but shall not be
required to divest any assets, significantly change the conduct of
the business currently conducted by the Buyer, the Seller or the
Company or otherwise materially restrict the future business
activities of the Buyer, the Seller or the Company.
5.7 Shareholder Meeting. The Buyer shall duly call, give
notice of, convene and hold a meeting of its shareholders as
promptly as practicable for the purpose of adopting and approving
this Agreement and the transactions contemplated hereby (including,
without limitation, adopting and approving (i) an amendment to the
Buyer's Articles of Organization providing that the number of
authorized shares of Buyer Common Stock be increased to 70,000,000
(the "Authorized Shares Amendment"), (ii) the issuance of the
Equity Consideration, and (iii) the Fair Price Charter Amendment)
and for such other purposes as may be necessary or desirable to
effectuate the transactions contemplated by this Agreement. The
Buyer shall use its reasonable best efforts to obtain the agreement
of its Affiliates to vote all shares of Buyer Common Stock
beneficially owned by each such Affiliate in favor of the matters
presented to the Buyer's shareholders in connection with the
transactions contemplated by this Agreement.
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5.8 Amendment to Articles of Organization and By-Laws. As
promptly as practicable following adoption of the Authorized Shares
Amendment and the Fair Price Charter Amendment by the requisite
affirmative vote of the Buyer's shareholders but prior to Closing,
the Buyer shall file with the Secretary of the Commonwealth of
Massachusetts articles of amendment, duly signed in accordance with
the Massachusetts Business Corporation Law, setting forth the
Authorized Shares Amendment, the Fair Price Charter Amendment, and
the due adoption thereof. Prior to Closing, the Board of Directors
shall adopt and approve the amendment to the Buyer's By-laws in the
form attached hereto as Annex VI (the "Control Share Acquisitions
Amendment").
5.9 Rights Agreement. As promptly as practicable following
the approval and adoption of the Amended and Restated Rights
Agreement in the form attached hereto as Annex VII (the "Rights
Agreement") by the Buyer's Board of Directors but prior to the
Closing, the Buyer shall execute and deliver the Rights Agreement.
5.10 Brokers or Finders. Each of the Buyer and the Seller
represents, as to itself, its subsidiaries and its Affiliates, that
no agent, broker, investment banker, financial advisor or other
firm or Person is or will be entitled to any broker's or finder's
fee or any other commission or similar fee in connection with any
of the transactions contemplated by this Agreement, except
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and
Shearson Lehman Brothers, Inc. ("Shearson"), whose fees and ex-
penses, if any, will be paid by the Buyer in accordance with the
Buyer's agreement with DLJ or Shearson, and Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") and The First Boston
Corporation ("First Boston"), whose fees and expenses, if any, will
be paid by the Seller in accordance with the Seller's agreement
with Merrill Lynch or First Boston; and the Buyer and the Seller
each agree to indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect
to any other fees, commissions or expenses asserted by any Person
on the basis of any act or statement alleged to have been made by
or on behalf of such party.
5.11 Fees and Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, all costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses; provided, however, that in no event shall
such expenses be paid by the Company or the Company Subsidiaries.
5.12 Employee Benefits.
(a)The following terms, as used in this Agreement, have
the following meanings:
"Buyer Benefit Arrangement" means any employment,
severance or similar contract, arrangement or policy, or any plan
or arrangement (whether or not written) providing for severance
benefits, insurance coverage (including any self-insured arrange-
ments), workers' compensation, disability benefits, supplemental
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unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights, fringe benefits, perquisites or other
forms of compensation or post-retirement insurance, compensation
benefits that (i) is not a Buyer Employee Plan, (ii) is entered
into or maintained, as the case may be, by the Buyer or any of its
Affiliates, and (iii) covers any individual employed or formerly
employed, as the case may be, by the Buyer or a subsidiary or
Affiliate of the Buyer.
"Buyer Employee Plan" means any "employee benefit
plan", as defined in Section 3(3) of ERISA, that (i) is subject to
any provision of ERISA, (ii) is maintained, administered or con-
tributed to by the Buyer or any of its Affiliates, and (iii) covers
any individual employed or formerly employed by the Buyer or a
subsidiary or Affiliate of the Buyer.
"Buyer International Plan" means any employment,
severance or similar contract, arrangement or policy (exclusive of
any such contract which is terminable within thirty days without
liability of the Buyer or any of its Affiliates), or any plan or
arrangement providing for severance, insurance coverage (including
any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights,
fringe benefits, perquisites or other forms of compensation or
post-retirement insurance, compensation or benefits that (i) is not
a Buyer Employee Plan or a Buyer Benefit Arrangement, (ii) is
maintained or contributed to by the Buyer or any of its Affiliates,
and (iii) covers any individual employed or formerly employed or by
the Buyer or a subsidiary or Affiliate of the Buyer outside the
United States.
"COBRA" means Part 6 of Title I of ERISA and Section
4980B of the Code.
"Company Domestic Retirement and Savings Plans"
shall mean the Seller Employee Plans which are included in the
definition of "employee pension benefit plan" as defined in Section
3(2) of ERISA.
"Controlled Group Liability" means any and all li-
abilities under (i) Title IV of ERISA, (ii) section 302 of ERISA,
(iii) sections 412 and 4971 of the Code, (iv) the continuation
coverage requirements of section 601 et seq. of ERISA and section
4980B of the Code and (v) corresponding or similar provisions of
foreign laws or regulations.
"Employee" means any individual who, on the Closing
Date, is employed in the Business in any active or inactive status
and whose current employment in the Business has not been
terminated and, if applicable, any beneficiary thereof.
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"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute
thereto, and the rules and regulations promulgated thereunder.
"Former Employee" means any individual employed in
the Business by the Seller or any of its Affiliates and whose
employment has been terminated prior to the Closing Date (and, if
applicable, any beneficiary thereof), excluding any individuals
subsequently employed by the Seller or any of its Affiliates
outside of the Business.
"Multiemployer Plan" means each Employee Plan that
is a multiemployer plan, as defined in Section 3(37) of ERISA.
"Related Person" of any Person means any other
Person which, together with such Person, would or at any time has
been treated as a single employer with either the Buyer or the
Seller (as appropriate), the Company or any Affiliate under Section
414 of the Code.
"Seller Benefit Arrangement" means any employment,
severance or similar contract, arrangement or policy, or any plan
or arrangement (whether or not written) providing for severance
benefits, insurance coverage (including any self-insured arrange-
ments), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights, fringe benefits, perquisites or other
forms of compensation or post-retirement insurance, compensation
benefits that (i) is not a Seller Employee Plan, (ii) is entered
into or maintained, as the case may be, by the Seller or any of its
Affiliates, and (iii) covers any individual employed or formerly
employed, as the case may be, in the Business in the United States.
"Seller Employee Plan" means any "employee benefit
plan", as defined in Section 3(3) of ERISA, that (i) is subject to
any provision of ERISA, (ii) is maintained, administered or con-
tributed to by the Seller or any of its Affiliates, and (iii)
covers any individual employed or formerly employed in the
Business.
"Seller Hourly 401(k) Plan" shall mean the Cameron
Iron Works, USA Inc. Savings-Investment Plan for Hourly Employees.
"Seller International Plan" means any employment,
severance or similar contract, arrangement or policy (exclusive of
any such contract which is terminable within thirty days without
liability of the Seller or any of its Affiliates), or any plan or
arrangement providing for severance, insurance coverage (including
any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights,
fringe benefits, perquisites or other forms of compensation or
post-retirement insurance, compensation or benefits that (i) is not
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a Seller Employee Plan or a Seller Benefit Arrangement, (ii) is
maintained or contributed to by the Seller or any of its Affiliates
and (iii) covers any individual employed or formerly employed
outside the United States in the Business.
"Seller Salaried 401(k) Plan" shall mean the Cooper
Industries, Inc. Savings and Stock Ownership Plan.
"Seller Self-Insured LTD Benefits" shall mean the
long-term disability benefits which are self-insured and payable
through the Cameron Iron Works, USA Inc. Employee Benefit Trust and
administered by Thomas L. Jacobs to certain Employees or Former
Employees who became eligible for long-term disability benefits on
or before August 31, 1990 under the terms of the Company's long-
term disability benefit plans in effect on or before August 31,
1990.
"Seller U.K. Pension Plan" shall mean the Cameron
Iron Works Retirement Benefits Scheme (1974).
"Title IV Plan" means an Employee Plan, other than
any Multiemployer Plan, subject to Title IV of ERISA.
(b) As of the Closing Date each Employee will continue
as an employee of the Company in the same status and at the same
salary or wage and benefit levels as provided to such Employee on
the Closing Date by the Company; provided that, nothing herein
shall prevent the Buyer from altering such salary, wage and benefit
levels or terminating the employment of any Employee after the
Closing Date.
(c) Prior to the Closing Date, the Buyer shall establish
a plan or plans which are substantially similar in all material
respects to the Company Domestic Retirement and Savings Plans. The
Buyer reserves the right to amend or terminate such plans at any
time after the Closing Date. Such plan or plans shall provide
credit for the service earned in each of the Company Domestic
Retirement and Savings Plans for purposes of eligibility (including
for early retirement subsidies and disability benefits) and
vesting. Such plan or plans shall also provide credit for benefit
accrual purposes from the Closing Date forward. Benefit accruals
shall cease under each of the Company Domestic Retirement and
Savings Plans as of the Closing Date for all Employees, except for
the Seller Salaried 401(k) Plan in which eligible Employees will
continue to contribute and accrue company matching contributions in
accordance with the terms of such plan through May 31, 1994 and
except for the Seller Hourly 401(k) Plan in which eligible
Employees will continue to contribute and accrue company matching
contributions in accordance with the terms of such plan through May
29, 1994, such employee and matching contributions in each case to
be made by Seller. Buyer shall reimburse Seller in an amount equal
to 31.25% of the company matching contribution accrued by eligible
Employees in the Seller Salaried 401(k) Plan for the period from
May 16, 1994 through May 31, 1994 and for 42.86% of the company
matching contribution accrued by eligible Employees in the Seller
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Hourly 401(k) Plan for the period from May 23, 1994 through May 29,
1994. Buyer will transfer to Seller the employee 401(k) plan
contributions for the period from May 16, 1994 through May 31, 1994
for eligible Employees in the Seller Salaried 401(k) Plan and for
the period May 23, 1994 through May 29, 1994 for eligible Employees
in the Seller Hourly 401(k) Plan. Service on and after the Closing
Date with the Buyer or any Affiliate, subsidiary or successor of
the Buyer shall be credited under each Company Domestic Retirement
and Savings Plan which is not a Section 401(k) plan solely for the
purposes of eligibility (including for early retirement subsidies
and disability benefits) and vesting. Employees shall not be
considered terminated or retired by the Seller under the Company
Domestic Retirement and Savings Plans until they are no longer
being credited with service for purposes of eligibility (including
for early retirement subsidies and disability benefits) and
vesting. The Seller shall take all necessary steps to remove the
Company as sponsoring employer or a participating employer of the
Company Domestic Retirement and Savings Plans as of the Closing
Date, except for the Seller Salaried 401(k) Plan in which case the
Company shall be removed as a sponsoring or participating employer
as of May 31, 1994 and except for the Seller Hourly 401(k) Plan in
which case the Company shall be removed as a sponsoring or
participating employer as of May 29, 1994. The Seller shall retain
all assets and liabilities associated with each Company Domestic
Retirement and Savings Plan. Notwithstanding the foregoing, as
soon as practicable after the Closing Date, Seller shall cause the
trustee of Seller Salaried 401(k) Plan and the trustee of the
Seller Hourly 401(k) Plan to segregate or otherwise identify the
assets of each such plan and related trust and make any and all
filings and submissions to the appropriate governmental agencies
arising in connection with the transfer of assets as described
below. The manner in which the account balances of Employees under
each such plan are invested shall not be affected by such
segregation or identification of assets. As soon as practicable
after the Closing Date, Buyer shall establish or designate profit
sharing plans with a salary reduction 401(k) feature for the
benefit of Employees (such Buyer plans, the "Successor Individual
Account Plans"), shall take all necessary action, if any, to
qualify the Successor Individual Account Plans under the applicable
provisions of the Code and shall make any and all filings and
submissions to the appropriate governmental agencies required to be
made by it in connection with the transfer of assets described
below. The successor Individual Account Plans shall include loan
and in-service withdrawal provisions substantially similar to those
of the Seller Salaried 401(k) Plan and the Seller Hourly 401(k)
Plan, respectively. As soon as practicable after the Closing Date,
but not earlier than (i) thirty (30) days after the filing of all
necessary governmental forms and (ii) the receipt of a favorable
determination letter with respect to the qualification of each of
the Successor Individual Account Plans or the receipt of an opinion
of counsel acceptable to the Buyer and the Seller regarding such
qualified status, Seller shall cause the transfer of the entire
account balance (which account balances will have been credited
with any employer contribution for the current Plan year to which
the applicable Employee is entitled under the terms of this
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Agreement) to the appropriate trustee as designated by Buyer under
the trust agreement forming a part of the Successor Individual
Account Plans. The assets to be transferred shall be in the form
of cash, common stock of the Seller or preferred stock of the
Seller, as determined by Seller. The transfer of assets to the
Successor Individual Account Plans described herein shall each
satisfy the requirements of the Code. In consideration for the
transfer of assets described herein, Buyer shall, effective as of
the date of transfer described herein, assume all of the
obligations of Seller and any of its Affiliates in respect of the
transferred account balances for the Employees under both the
Seller Salaried 401(k) Plan and the Seller Hourly 401(k) Plan
(exclusive of any portion of such account balances which are paid
or otherwise withdrawn prior to the date of transfer described
herein). Neither Buyer nor any of its Affiliates shall assume any
other obligations or liabilities arising under or attributable to
the Seller Salaried 401(k) Plan or the Seller Hourly 401(k) Plan.
The Buyer, the Company and their Affiliates shall indemnify and
hold the Seller and its Affiliates harmless against all obligations
and liabilities arising out of or relating to the maintenance of
any plan it establishes pursuant to the provisions of this Section
5.12(c). Notwithstanding any other provision contained in this
Agreement to the contrary, in the event the Buyer, the Company, or
their Affiliates modify or terminate any plan it establishes
pursuant to the provisions of this Section 5.12(c), the Buyer, the
Company and their Affiliates indemnify and shall hold the Seller
and its Affiliates harmless against any increase in the obligations
or liabilities of the Seller and its Affiliates that arise out of
or relating to such modification or termination.
(d) The Buyer shall procure (or shall procure that the
U.K. Sub procures) that:
(i) on or before the Closing Date it establishes a
retirement benefit scheme which is approved or is capable of exempt
approval under Chapter I of Part XIV of the Income and Corporation
Taxes Act 1988 (the "New Plan") for the benefit of the employees of
the U.K. Sub and that such employees are offered membership of the
New Plan with effect from the Closing Date;
(ii) the benefits to be provided by the New Plan for
the employees of the U.K. Sub shall be substantially similar in all
material respects to those provided under the Seller U.K. Pension
Plan (details of which have been disclosed) as of the Closing Date
(for purposes of this paragraph 5.12(d)(ii), "substantially
similar" shall mean that any differences between the New Plan and
the Seller U.K. Pension Plan shall not constitute a change to any
Employee's contract of employment); and
(iii) for the purpose of vesting benefits in the
New Plan in respect of those employees of the U.K. Sub who have not
at the Closing Date qualified for preserved benefits under the
Seller U.K. Pension Plan, the New Plan will recognize the period of
pensionable service such employees have accrued under the Seller
U.K. Pension Plan to the intent that they shall qualify for
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preserved benefits on the date that they would have done had their
pensionable service under the Seller U.K. Pension Plan not ceased
as a consequence of this Agreement. In the case of those employees
of the U.K. Sub who already qualify for preserved benefits under
the Seller U.K. Pension Plan the New Plan shall contain provisions
which immediately vest the accrual of their benefits after the
Closing Date in the New Plan. Buyer reserves the right to modify
or terminate the New Plan at any time or from time to time after
Closing Date.
(e) The Seller shall procure that in respect of those
employees of the U.K. Sub who have not at the Closing Date
qualified for preserved benefits under the Seller U.K. Pension Plan
such persons will each be offered the opportunity of electing for a
deferred vested benefit in accordance with the provisions of Rules
12(b) of the Consolidating Trust Deed and rules of the Seller U.K.
Pension Plan dated 13 December 1993 (therein described
"Discretionary award of Short Service Benefit in relation to Non
Qualifying Members") as an alternative to receiving a refund of
member contributions to which he or she may be entitled under the
terms of the Seller U.K. Pension Plan as at the Closing Date.
(f) Except for liabilities or obligations arising under
the Company Domestic Retirement and Savings Plans (but not
including liabilities or obligations transferred to plans
designated by Buyer in accordance with paragraph 5.12(c)), the
Seller Self-Insured LTD Benefits, the Seller U.K. Pension Plan, the
1993 ESPP and any Seller Benefit Arrangement providing for the
issuance of Seller Stock ("Seller Stock Plans") as of the Closing
Date the Company shall retain, or the Buyer shall assume, all
liabilities or other obligations associated with the Seller
Employee Plans, the Seller Benefit Arrangements and the Seller
International Plan for or attributable to any Employee or Former
Employee.
(g) Except for liabilities or obligations arising under
the Company Domestic Retirement and Savings Plans, the Seller U.K.
Pension Plan, the Seller Self-Insured LTD Benefits, the 1993 ESPP
and the Seller Stock Plans (i) the Buyer, the Company and their Af-
filiates shall indemnify and hold the Seller and its Affiliates
harmless against liabilities or obligations arising under the
Seller Employee Plans, Seller Benefit Arrangements and Seller
International Plans in respect of any Employee or Former Employee
(including any beneficiary or dependent thereof) and all
obligations and liabilities arising out of or relating to the
employment of any Employee or Former Employee by the Company before
or after the Closing other than obligations and liabilities
expressly retained by the Seller pursuant to this Section 5.12 and
(ii) without limiting the generality of the foregoing, the Company,
the Buyer and their Affiliates shall assume, be solely responsible
for, and shall hold the Seller and its Affiliates harmless against,
any claims for workers compensation, medical benefits, life
insurance, or other insured or uninsured welfare benefits of any
kind incurred by any Employee or Former Employee or beneficiary
thereof. The Company shall, as of the Closing Date, assume and
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retain, and hold the Seller and its Affiliates harmless against,
all obligations and liabilities of the Company and its Affiliates
to provide post-retirement health benefits to any Employee or
Former Employee. Seller hereby indemnifies Buyer and its
Affiliates against and agrees to hold each of them harmless from
any and all damage, loss, liability and expense (including, without
limitation, reasonable expenses of investigation and reasonable
attorney fees and expenses) incurred or suffered by Buyer or any of
its Affiliates (including the Company) as a result of, arising out
of or relating to (I) the imposition of any Controlled Group
Liability with respect to any employee benefit plan (as that term
is defined in Section 3(3) of ERISA (whether or not such plan is
subject to ERISA)) or arrangement currently or previously
maintained or contributed to by Seller, the Company or any ERISA
Affiliate of Seller or the Company at any time or to which Seller
or any Related Person had or has an obligation to contribute at any
time, other than any Seller Employee Plan, Seller Benefit
Arrangement or Seller International Plan to the extent maintained
for the benefit of Employees or Former Employees of the Company and
its Subsidiaries or (II) the Company Domestic Retirement and
Savings Plans and the Seller U.K. Pension Plan.
(h) The Company shall be responsible for continuation
coverage requirements under Section 4980B of the Code for
"qualifying events" (within the meaning of 4980B(f)(3) of the Code)
with respect to any Employee or Former Employee.
(i) After the Closing, the Buyer shall cause the Company
and the Company Subsidiaries to comply with their collective
bargaining obligations.
(j) Certain Employees as of July 1, 1993 (including
certain Former Employees who became so since July 1, 1993) are
participating in the 1993 Offering to the Seller's employees ("ESPP
Participants") under the Seller's Employee Stock Purchase Plan (the
"1993 ESPP"), a payroll deduction stock purchase plan under which
options were granted on July 1, 1993, to purchase shares of Seller
common stock on September 8, 1995, and the related payroll
administration is being conducted by the Company in accordance with
the Seller's 1993 ESPP standard administration manual. On or
before the Closing Date, the Seller will cause the 1993 ESPP to be
continued subsequent to the Closing Date for all ESPP Participants
who become employed by the Buyer on the Closing Date and the Seller
undertakes to cause shares to be issued, and to pay interest on
payroll deposits from and after the Closing Date, all in accordance
with the 1993 ESPP, to the ESPP Participants who continue in the
1993 ESPP. The Buyer agrees to continue, or cause to be continued,
the payroll administration related to such continued participation
in the 1993 ESPP, promptly forwarding all cash withholdings to the
Seller with appropriate records. The Seller has the right to
refrain from issuing any of the shares under the 1993 ESPP to any
then-participating ESPP Participant until the Buyer has remitted to
the Seller the amount of any payroll deduction due on behalf of
such participant. Except as provided in this Section 5.12(j), the
Buyer shall not have any obligation to continue the 1993 ESPP after
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the Closing Date and shall have no obligation to offer any other
stock purchase plan to Employees. Except for any damage, loss,
liability or expense (including, without limitation, reasonable
expenses of investigation and reasonable attorney fees and
expenses) which is the result of, arises from or relates to the
gross negligence or willful misconduct of Buyer or the Company, or
their affiliates and subsidiaries, with respect to their compliance
with the provisions of this Section 5.12(j), Seller hereby
indemnifies Buyer and its Affiliates against and agrees to hold
each of them harmless from any and all damage, loss, liability and
expense (including, without limitation, reasonable expenses of
investigation and reasonable attorney fees and expenses) incurred
or suffered by Buyer or any of its Affiliates (including the
Company) as a result of, arising out of or relating to the 1993
ESPP and the Seller Stock Plans.
(k) As of the Closing Date, Seller shall retain all
assets of the Cameron Iron Works, USA Inc. Employee Benefit Trust
and all liabilities associated with the Seller Self-Insured LTD
Benefits. Seller shall be solely responsible for the funding and
provision of the Seller Self-Insured LTD Benefits. Buyer and the
Company shall have no right or entitlement to any of the assets of
the Cameron Iron Works, USA Inc. Employee Benefit Trust. Buyer,
Seller and the Company hereby agree to take any and all necessary
steps to assign all assets and liabilities associated with the
Seller Self-Insured LTD Benefits to Seller.
5.13 Public Announcements. Neither the Buyer nor the Seller
will issue any press release or otherwise make any public statement
with respect to the transactions contemplated hereby without the
other party's prior consent, except as required by law or stock
exchange or NASDAQ rules or regulations.
5.14 Use of the Company Name.
(a) Except as provided in this Section 5.14, no interest
in or right to use the "Cameron" name is being conveyed pursuant to
this Agreement, and following the Closing Date the Buyer, the
Company and the Company Subsidiaries shall not use the "Cameron"
name in any manner in connection with their businesses or
operations, provided, however, the Buyer, the Company and the
Company Subsidiaries shall have the right (i) to use the name
"Cameron Forged Products" in conjunction with the name "Wyman-
Gordon Company" for three years following the Closing Date, and
(ii) to dispose of or consume existing inventory, stationery,
promotional or advertising literature, labels, office forms and
packaging materials (other than that which relates to oil field
equipment forgings) which may be labeled with the "Cameron" name
for up to six months following the Closing Date.
(b) Immediately following the Closing, the Buyer shall
cause the Company to file with the office of the Secretary of State
of the State of Delaware all documents necessary to change the name
of the Company to a name reasonably satisfactory to the Seller.
Pending the effectiveness of the Company's name change, the Buyer
shall file all necessary documentation with the appropriate
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Governmental Entities to evidence its doing business as an entity
using a name other than "Cameron Forged Products Company". The
Buyer shall take the equivalent action with respect to such name in
any other jurisdiction where it has been or is used.
5.15 Company Books and Records. For a period of eight years
after the Closing Date, the Buyer shall, or shall cause the
Company, the Company Subsidiaries and their successors and assigns,
to (i) retain and, as reasonably requested, permit the Seller and
its employees or agents to inspect and copy all books and records
of the Company or any Company Subsidiary which relate to the period
prior to the Closing Date and (ii) cooperate in arranging
discussions with (and the calling as witnesses) officers,
directors, employees and agents of the Company, the Company
Subsidiaries and their successors and assigns, on matters which
relate to the Company or the Company Subsidiaries with respect to
the period prior to the Closing Date.
5.16 Disclosure Supplements. Prior to the Closing Date, the
Buyer will, by giving written notice to the Seller, supplement or
amend the Buyer Disclosure Schedule with respect to any matters
hereinafter arising which, if existing or occurring at or prior to
the date of this Agreement, would have been required to be set
forth or described in the Buyer Disclosure Schedule or which is
necessary to correct any information in the Buyer Disclosure
Schedule or in any representation and warranty of the Buyer which
has been rendered inaccurate thereby. Prior to the Closing Date,
the Seller will, by giving written notice to the Buyer, supplement
or amend the Seller Disclosure Schedule with respect to any matters
hereafter arising which, if existing or occurring at or prior to
the date of this Agreement, would have been required to be set
forth or described in the Seller Disclosure Schedule or which is
necessary to correct any information in the Seller Disclosure
Schedule or in any representation and warranty of the Seller which
has been rendered inaccurate thereby. For purposes of determining
the accuracy of the representations and warranties of the Seller
contained in Article III and the accuracy of the representations
and warranties of the Buyer contained in Article IV in order to
determine the fulfillment of the conditions set forth in Sections
6.2 and 6.3, respectively, the Buyer Disclosure Schedule and the
Seller Disclosure Schedule shall be deemed to include only that
information contained therein on the date of this Agreement and
shall be deemed to exclude any information contained in any subse-
quent supplement or amendment thereto.
5.17 Ancillary Agreements.
(a) As promptly as practicable after the date hereof,
the Buyer and the Seller will negotiate in good faith the terms of
the following agreements (collectively the "Ancillary Agreements"):
(i) a lease agreement pursuant to which the Buyer
or the U.K. Sub will lease space and certain oil tool equipment to
the Seller or an Affiliate of the Seller at the Livingston,
Scotland facility, in the event the Buyer deems such lease
agreement to be necessary or appropriate;
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(ii) a lease agreement pursuant to which the Seller
or a Seller Subsidiary will lease space and certain equipment to
the Company or an Affiliate of the Buyer at the Katy Road Site;
(iii) a supply agreement pursuant to which the
Buyer will cause the Company to supply forgings to the Seller or an
Affiliate of the Seller;
(iv) a license agreement pursuant to which the Seller
will grant to the Company a non-exclusive license to make and sell
certain products covered by the Seller's hot isostatic pressing
patents;
(v) a license agreement pursuant to which the Seller
will grant to the Company a non-exclusive license to make and sell
to RMI Titanium Company certain forgings to be used in a titanium
riser covered by the Seller's patent therefor;
(vi) a computer services agreement pursuant to which
the Seller will permit the Company to continue to use the Seller's
Cooper Oil Tool computer; and
(vii) an agreement providing for the Seller to
factor the Company's receivables (the "Factoring Agreement").
(b) The Ancillary Agreements will include the terms set
forth in the term sheets appearing as Annex VIII hereto, and such
other terms to which the parties may agree in writing.
5.18 WARN Act. The Buyer agrees to indemnify, defend and hold
harmless the Seller, its present or former officers and directors,
agents and Affiliates, against any claims, damages, wages, fines,
penalties and expenses, including attorneys' fees, arising from the
failure to comply with the Worker Adjustment and Retraining
Notification Act (the "WARN Act") arising from or relating to a
"plant closing" or "mass layoff" (as those terms are defined in the
WARN Act) by the Company occurring on or after the Closing Date.
5.19 Taxes.
(a) With respect to Seller's sale of the Company Common
Stock hereunder, if Seller gives Buyer written notice within 30
days after the Closing Date ("Seller's Notice"), Seller and Buyer
shall jointly make each available Section 338(h)(10) Election in
accordance with applicable Tax Laws and as set forth herein,
provided that Seller does not own, and is not deemed to own, and as
a result of the transactions contemplated by this Agreement will
not own and will not be deemed to own, fifty percent (50%) or more
of Buyer's issued and outstanding common stock. If the Section
338(h)(10) Election is to be made, Seller and Buyer will supply in
advance to one another copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof)
to be sent or made by Buyer or Seller or their respective
representatives to or with the Internal Revenue Service relating to
such election. Buyer and Seller agree to report the transfers
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under this Agreement consistent with such Section 338(h)(10) Elec-
tion, and shall take no position or action contrary thereto (unless
required to do so by applicable Tax Laws or an administrative
settlement with Tax Authorities), including but not limited to any
dissolution, merger, consolidation, or liquidation of the Company
into the Buyer for a period of two years following the Closing Date
without the prior written consent of the Seller, which consent may
be withheld in its sole discretion. If the Section 338(h)(10)
Election is to be made, Seller agrees to cause the Company and the
Company Subsidiaries to recognize the gain, and to pay all tax on
such gain, with respect to any intangible asset deemed sold
pursuant to such election to the extent necessary to enable Buyer,
the Company and the Company Subsidiaries to amortize such
intangible asset pursuant to the provisions of Section 197 of the
Code.
(b) Buyer and Seller shall be jointly responsible for the
preparation and filing of all Section 338 Forms in accordance with
applicable Tax Laws and the terms of this Agreement, and each party
shall deliver to the other party such Forms and related documents
at least 30 days prior to the date such Section 338 Forms as are
required to be filed under applicable Tax Laws.
(c) The parties hereby agree that, for purposes of the
allocation of the Aggregate Deemed Sale Price ("ADSP") (as defined
under applicable Treasury Regulations), the fair market value of
the machinery and equipment, dies, land and buildings of the U.K.
Sub is $24,415,000, and the fair market value of the remaining
assets of the U.K. Sub is at net book value.
(d) Seller shall be liable for, shall pay and shall
indemnify and hold Buyer and the Company and the Company
Subsidiaries harmless against all Taxes of the Company and the
Company Subsidiaries for any taxable year or taxable period ending
on or before the Closing Date, including, without limitation, any
Taxes resulting from the making of the Section 338(h)(10) Election
and any liability for Taxes pursuant to Treasury Regulation Section
1.1502-6. All liabilities and obligations between the Company and
the Company Subsidiaries on the one hand, and the Seller and any of
Seller's Affiliates on the other hand, under any tax allocation
agreement or arrangement in effect on or prior to the Closing Date
(other than this Agreement or as set forth herein) shall cease to
exist as of the date hereof.
(e) Buyer shall be liable for, shall pay and shall
indemnify and hold Seller harmless against, any and all Taxes of
the Company and the Company Subsidiaries for any taxable year or
taxable period commencing after the Closing Date.
(f) Any Taxes for a taxable period beginning before the
Closing Date and ending after the Closing Date (the "Straddle
Period") with respect to the Company or any Company Subsidiary
shall be apportioned between Seller and Buyer based on the actual
operations of the Company or the Company Subsidiary, as the case
may be, during the portion of such period ending on the Closing
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Date (the "Pre-Closing Straddle Period") and the portion of such
period beginning on the date following the Closing Date, and for
purposes of Sections 5.19(d) and 5.19(e), each portion of such
period shall be deemed to be a taxable period. With respect to any
Taxes for the Straddle Period, at least thirty days prior to the
due date for the payment of such Taxes, Buyer shall present Seller
with a schedule detailing the computation of the Pre-Closing
Straddle Period Tax; and within ten days after Buyer presents
Seller with such schedule, Seller shall pay the Company the amount
of the Pre-Closing Straddle Period Tax as computed by Buyer. In
the event Seller disputes Buyer's computation of the Pre-Closing
Straddle Period Tax, Seller shall not be relieved of its obligation
to pay, in the first instance, any such disputed amount. Whether
any such disputed amount was in fact due from Seller shall be
resolved in accordance with Section 5.19(m). If upon such
resolution it is determined that any of such disputed amount was
not payable to Buyer and such amount has been paid to Buyer, then
Buyer shall refund to Seller such amount, plus interest at the rate
required to be paid under Section 6621 of the Code.
(g) Seller shall (x) prepare and file all Federal income
Tax and unitary state Tax returns for the Company and the Company
Subsidiaries with respect to all periods, or partial periods,
ending on or prior to the Closing Date (including all tax returns,
reports and forms relating thereto which are due after the Closing
Date) and (y) prepare and file or cause the Company and the Company
Subsidiaries to prepare and file all other Tax returns, reports and
forms for the Company which are due prior to the Closing Date, and
shall pay all Taxes with respect to clause (x) and at the time of
such filing shall pay or shall cause the Company or the Company
Subsidiaries to pay all Taxes with respect to clause (y). To the
extent requested by Seller, the Company and the Company
Subsidiaries shall participate in the filing of and shall file any
required Tax returns with respect to any period ending on or prior
to the Closing Date. Buyer shall prepare or cause to be prepared
the schedules in respect of the Company and the Company
Subsidiaries containing the information necessary for Seller to
prepare any consolidated or combined returns.
(h) Buyer or the Company and the Company Subsidiaries
shall prepare and file all state and local Tax returns, forms and
reports, other than returns with respect to unitary state Taxes,
for the Company and the Company Subsidiaries with respect to any
tax period for which such return, form or report is due after the
Closing Date, and shall remit all Taxes with respect thereto and
shall be free to make, or cause to be made, any tax elections in
respect of such Taxes and to claim any deductions or credits, in
connection therewith; provided that all returns filed by Buyer or
the Company and the Company Subsidiaries for any period beginning
prior to the Closing Date shall be prepared by Buyer, or the
Company and the Company Subsidiaries, in a manner consistent with
the Company's and the Company's Subsidiaries prior practices,
except for changes necessary to comply with changes in Law.
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(i) Seller shall have exclusive control over any dispute
relating to any Tax liability or return of Seller or any Affiliate
of Seller (including the Company and the Company Subsidiaries for
periods prior to the Closing Date) filed by Seller for or with
respect to any period, or partial period, ending on or prior to the
Closing Date, provided that Seller shall keep Buyer currently
informed of the progress of any such dispute. In the event that
the Section 338(h)(10) Election is not made, Buyer shall be
entitled to participate in any such dispute at its own expense to
the extent the same relate to the Company or any Company
Subsidiary; and Seller, with the consent of Buyer, which will not
be unreasonably withheld, may settle any or all such disputes,
accept any determination as final, pay any Tax claim or take such
other action to contest or concede any Tax claimed. If Buyer shall
withhold its consent to any action desired to be taken by Seller in
connection with any such dispute, (x) Buyer shall be responsible
for, and shall indemnify and hold Seller and its Affiliates
harmless from and against, any Taxes required to be paid by Seller
in connection therewith in excess of the amount which Seller would
otherwise have paid if Buyer's consent had not been so withheld,
(y) Buyer shall thereafter control the content of all submissions
made by Seller to any administrative or judicial authority to the
extent they relate to the Company and (z) (i) if such dispute
involves issues other than those relating solely to the Company or
the Company Subsidiaries, Seller shall control all other aspects of
such dispute, or (ii) if such dispute involves only issues relating
solely to the Company or the Company Subsidiaries, Buyer shall
thereafter control such dispute. Buyer shall cooperate and shall
cause its Affiliates to cooperate with Seller and its Affiliates in
connection with any and all such disputes and will execute all
lawful, true and correct powers-of-attorney, affidavits, and other
papers necessary in connection therewith, and will provide Seller
reasonable access during normal business hours to the employees and
business, financial and Tax records or other similar information of
the Company and the Company Subsidiaries to the extent relating to
such dispute.
(j) Buyer and the Company shall have exclusive control
over any dispute relating to any Tax liability or return of Buyer
or the Company or any Company Subsidiary filed for or with respect
to any tax period for which a return is due after the Closing Date
(other than Federal income Taxes and unitary state Taxes relating
to periods or partial periods ending on or prior to the Closing
Date). Seller and its Affiliates shall cooperate with Buyer and
its Affiliates in connection with any and all such disputes and
will execute all lawful, true and correct powers-of-attorney,
affidavits, and other papers necessary in connection therewith, and
will provide Buyer, the Company and the Company Subsidiaries
reasonable access during normal business hours to the employees and
business, financial and Tax records or other similar information of
Seller and its Affiliates to the extent relating to such dispute.
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(k) Buyer shall cause the Company and the Company
Subsidiaries to elect, where permitted by law, to carryforward any
net operating loss, net capital loss, charitable contribution or
other item arising after the Closing Date that could, in the
absence of such an election (collectively, "Carrybacks"), be
carried back to a taxable period of the Company or the Company
Subsidiaries ending on or before the Closing Date in which the
Company or the Company Subsidiaries filed a consolidated, combined
or unitary tax return with Seller or any of Seller's Affiliates.
Buyer, on its own behalf and on behalf of its tax Affiliates,
hereby waives any right to use or apply any net operating loss, net
capital loss, charitable contribution or other item of the Company
for any tax year ending on any date following the Closing Date to
part or all of the period prior to the Closing Date.
(l) As soon as practicable, but in any event within 15
days after Seller's or Buyer's request, as the case may be, Buyer
shall deliver to Seller, or Seller shall deliver to Buyer, as the
case may be, such information and other data relating to the Tax
returns and Taxes of the Company and shall make available such
knowledgeable employees of Seller, Buyer, the Company or any of
their Affiliates, as the case may be, as Seller or Buyer, as the
case may be, may reasonably request, including providing the
information and other data customarily required by Seller or Buyer,
as the case may be, to cause the completion and filing of all Tax
returns for which it has responsibility or liability under this
Agreement or to respond to audits by any Taxing Authority with
respect to any Tax returns or Taxes for which it has any
responsibility or liability under this Agreement or to otherwise
enable Seller or Buyer, as the case may be, to satisfy its
accounting or tax requirements.
(m) If Seller and Buyer disagree as to the amount of
Taxes for which either of them is liable to the other under this
Section 5.19, Seller and Buyer shall promptly consult each other in
an effort to resolve such dispute. If any such point of
disagreement cannot be resolved within 15 days of the date of
consultation, Seller and Buyer shall within ten days after such
15-day period jointly select a firm of nationally recognized
independent public accountants who has not represented either Buyer
or Seller for three years prior to the date of the dispute (the
"Neutral Auditors") to act as an arbitrator to resolve all points
of disagreement concerning tax accounting matters with respect to
this Agreement. If the parties cannot agree on the selection of
the Neutral Auditors within such ten-day period, then such Neutral
Auditors shall be selected by the American Arbitration Association.
All fees and expenses relating to the work performed by the
arbitrator in accordance with this Section 5.19(m) shall be borne
equally by Seller and Buyer.
(n) Seller and Buyer shall (x) each give the other
prompt written notice of the receipt of any claim by any taxing
authority that, if successful, may result in an indemnity payment
pursuant to this Section 5.19 and (y) each transmit to the other a
written description reasonably detailing the nature of the claim, a
copy of all papers served with respect to such claim and the basis
of its claim for indemnification under this Section 5.19.
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(o) Seller will not allow the Company or any Company
Subsidiary to elect to be excluded from any consolidated federal
income tax return of the Seller and its Affiliates with respect to
which it is otherwise includible on account of any taxable period,
whether of 30 days or less or otherwise.
(p) For purposes of this Agreement, the following terms
shall have the following meanings:
(i) "Code" means the Internal Revenue Code of 1986,
as amended.
(ii) "Returns" means any and all returns, decla-
rations, reports, statements and other documents required to be
filed in respect of any Tax.
(iii) "Section 338 Forms" means all returns,
documents, statements, and other forms that are required to be
submitted to any Federal, state, county, or other local Taxing
Authority in connection with a Code Section 338(h)(10) Election.
Section 338 Forms shall include, without limitation, any "statement
of section 338 election" and United States Internal Revenue Service
Form 8023 (together with any schedules or attachments thereto) that
are required pursuant to relevant Treasury Regulations and any
substantially similar forms under a state or local statute
corresponding to Federal laws.
(iv) "Section 338(h)(10) Election" means an election
described in Section 338(h)(10) of the Code with respect to
Seller's sale of the Company Common Stock to Buyer pursuant to this
Agreement. "Section 338(h)(10) Election" shall also include any
substantially similar election under a state or local statute
corresponding to Federal laws.
(v) "Tax" means any of the Taxes.
(vi) "Taxes" means all federal, state, local and
foreign income, profits, franchise, unincorporated business,
withholding, capital, general corporate, customs duties,
environmental (including taxes under Section 59A of the Code),
disability, registration, alternative, add-on, minimum, estimated,
sales, goods and services, use, occupation, property, severance,
production, excise, recording, ad valorem, gains, transfer,
value-added, unemployment compensation, social security premium,
privilege and any and all other taxes (including interest,
additions to tax and penalties thereon, and interest on such addi-
tions to tax and penalties);
(vii) "Tax Laws" means the Code, Federal, state,
county, local, or foreign laws relating to Taxes and any
regulations or official administrative pronouncements released
thereunder.
(viii) "Taxing Authority" means any Governmental
Entity having jurisdiction over the assessment, determination,
collection, or other imposition of Tax.
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5.20 Existing Insurance Coverage. As of the Closing Date, the
Seller or its Affiliates will cancel insurance coverage applicable
to the Company or the Company Subsidiaries for occurrences (with
respect to any "occurrence" policies) or claims made (with respect
to any "claims-made" policies) after the Closing Date (other than
insurance policies in the name of the Company Subsidiaries);
provided, however, that the remaining insurance coverage shall be
available to the Buyer, the Company and the Company Subsidiaries
with respect to insured occurrences or series of occurrences
relating to the Company, the Company Subsidiaries or the Business
on or prior to the Closing Date, if and only to the extent that the
Buyer or the Company has assumed or paid the loss or liability
attributed to such occurrences. If after the Closing, the Seller
actually receives from an insurer cash proceeds (excluding any
return of premium or reimbursed attorneys or investigation or other
fees) attributable to such insurance coverage with respect to any
insured occurrences or any series of occurrences on or prior to the
Closing Date or any claims that were asserted on or prior to the
Closing Date, then such cash proceeds shall be paid to the Buyer
net of any deductible, co-payment, retro fees, self-insured
premiums, defense costs or other charges paid or payable to the
insurance carrier or obligations to reimburse the insurance carrier
for which the Seller (or any of its Affiliates) is liable, to the
extent that the Buyer or the Company has assumed or paid the loss
or liability attributed to such occurrence or series of
occurrences. The Buyer shall reimburse the Seller for any
administrative costs, retro fees, premiums, self-insured or
deductible loss costs or other expenses that the Seller is charged
after the Closing by such insurance carrier relating to insurance
coverage applicable to the Company or the Company Subsidiaries
prior to Closing.
5.21 Certain Obligations. "Seller's Company Obligations"
shall mean any obligation, commitment, liability or responsibility
of the Seller, its Affiliates or their Predecessors (whether or not
also an obligation, commitment, liability, or responsibility of or
claim against, in whole or in part, the Company, the U.K. Sub or
the Pipeline Sub) arising, undertaken or created before the Closing
Date in connection with, on behalf of or for the benefit of any
Cameron Entity, or arising from the conduct of the Business,
including without limitation (i) any consulting, employment or
severance agreements, guarantees, letters of credit, performance
bonds, or indemnities, or obligations or indemnities to officers or
directors of any Cameron Entity, (ii) any agreements with any
transferors to the Seller, its Affiliates, or their Predecessors,
of any assets of any Cameron Entity or of the Business, (iii) any
labor or collective bargaining agreements relating to any Cameron
Entity, (iv) any contracts with any Governmental Entity relating to
any Cameron Entity, (v) any sales or purchase agreements relating
to any Cameron Entity, (vi) any leases of real or personal proper-
ty relating to any Cameron Entity, and (vii) any other agreements
or commitments relating to any Cameron Entity under which the
Seller, its Affiliates or Predecessors will have any liability
after the Closing Date; provided, however, that the Seller's
Company Obligations shall exclude the matters that the Seller is
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required to indemnify pursuant to Section 5.22(b) or Section
5.22(f). The Seller shall cause the Company to assume the Seller's
Company Obligations, effective on the Closing Date, and the Company
shall thereafter discharge the same in accordance with their terms.
5.22 Survival; Indemnification.
(a) Survival of Representations, Warranties and
Covenants. Except for the representation and warranty of the
Seller in Section 3.23 hereof and the Buyer in Section 4.16 hereof
which will survive the Closing and remain in full force and effect
thereafter until 18 months after the Closing, the representations
and warranties of the parties contained in this Agreement shall
expire with, and be terminated and extinguished by, the Closing of
the transactions contemplated hereby and shall not survive the
Closing Date. Any claim for indemnification with respect to the
representation and warranty of the Seller in Section 3.23 hereof
and the Buyer in Section 4.16 hereof that is not asserted by notice
given as herein provided within the 18-month period may not be
pursued and hereby is irrevocably waived and released after such
time. Subject to the preceding 18-month limitation on the
indemnity with respect to Sections 3.23 and 4.16, the covenants of
the parties in Article V hereof (including without limitation the
indemnities contained therein) will survive the Closing and remain
in full force and effect thereafter without limitation as to time,
except in connection with (i) any applicable statute of limitations
or (ii) any such covenant that, by its terms, is otherwise limited
with respect to time.
(b) Cross Indemnity. Subject to the terms and conditions
of this Section 5.22, the Seller hereby agrees to indemnify and
hold the Buyer, its Affiliates, and their directors, officers or
employees (collectively, "Buyer's Group") harmless from and against
all demands, claims, causes of action, assessments, losses, damages
(including without limitation fines, penalties and punitive
damages), liabilities and costs and expenses, including without
limitation attorneys' fees and any expenses incident to the
enforcement of this Section 5.22 (collectively, "Losses"), which
the Buyer's Group may suffer, sustain or become subject to by
reason of or resulting from (i) any inaccuracy in the
representation or warranty of the Seller contained in Section 3.23
of this Agreement, or (ii) any breach of any covenant by the Seller
in Article V of this Agreement. Subject to the terms and con-
ditions of this Section 5.22, the Buyer hereby agrees to indemnify
and hold the Seller, its Affiliates, and their directors, officers
or employees (collectively, "Seller's Group") harmless from and
against all Losses which the Seller's Group may suffer, sustain or
become subject to by reason of or resulting from (i) any inaccuracy
in the representation or warranty of the Buyer contained in Section
4.16 of this Agreement, (ii) any breach of any covenant by the
Buyer in Article V of this Agreement, or (iii) the Seller's Company
Obligations. The party seeking indemnification pursuant to this
Section 5.22 is hereinafter referred to as an "Indemnified Party"
and the party from whom indemnification is sought is hereinafter
referred to as an "Indemnifying Party."
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(c) Limitation of Indemnification. Notwithstanding any
contrary provision, no claim by either party against the other for
indemnification arising under this Article V shall be valid and
assertible unless the aggregate amount of Losses associated with
such claim shall exceed $100,000. Further, any claims by the
Indemnified Party against the Indemnifying Party shall be
determined net of any tax benefit actually recognized and utilized
to offset or reduce the tax liability of the Indemnified Party or
the other members of its group. All payments pursuant to this
Section 5.22 shall be treated as adjustments to the purchase price
of the Company Common Stock.
(d) Sole Remedy. Other than the rights, obligations, and
remedies provided for in Article I, Article V, Article VII and
Article VIII hereof, the Buyer and the Seller agree that the rights
to indemnification provided in this Section 5.22 and elsewhere in
this Article V will be the exclusive rights, obligations and
remedies with respect to all provisions of this Agreement. Each
party, on behalf of itself and its Affiliates, irrevocably waives
any claim, cause of action or theory of liability it might
otherwise be entitled to assert in respect of such provisions
except for the right to seek indemnification on the terms and
subject to the conditions set forth in this Section 5.22 and
elsewhere in this Article V.
(e) Additional Indemnification by the Buyer. Subject to
the terms and conditions of this Section 5.22 and in addition to
the indemnification provided for in Section 5.22(b), the Buyer
agrees, other than the Losses that the Seller is required to
indemnify pursuant to Section 5.22(b) or Section 5.22(f), the
employee benefit matters addressed in Section 5.12 and the tax
matters addressed in Section 5.19, to indemnify and hold the
Seller's Group harmless from and against all Losses which the
Seller's Group may suffer, sustain or become subject to by reason
of or resulting from any liabilities or obligations of or relating
to, or claims against, any Cameron Entity or the Business on,
before or after the Closing Date, including without limitation (i)
to indemnify and hold the Seller's Group harmless from and against
all Losses which the Seller's Group may suffer, sustain or become
subject to by reason of or resulting from any Product Liability
Claims arising out of or resulting from Products sold or furnished
by the Seller, any of its Affiliates or any Cameron Entity
(including without limitation any product liability assumed in
connection with the acquisition of any business or product line)
on, before or after the Closing Date; (ii) to indemnify and hold
the Seller's Group harmless from and against all Losses which the
Seller's Group may suffer, sustain or become subject to by reason
of or resulting from (A) any noncompliance of the operations,
properties or business activities of any Cameron Entity or the
Business with any Environmental Law on, before or after the Closing
Date or (B) any liabilities or obligations of or relating to, or
claims against, any Cameron Entity or the Business based upon any
Environmental Law, or arising from the disposal of any Regulated
Materials, on, before, or after the Closing Date; and (iii) to
indemnify and hold the Seller's Group harmless from and against all
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Losses which the Seller's Group may suffer, sustain or become
subject to by reason of or resulting from (A) any workers'
compensation claim filed against any Cameron Entity on, before or
after the Closing Date, and (B) any employment or severance
agreements entered into by the Seller or the Company relating to
employees of the Company on, before or after the Closing Date,
other than severance payments under the Employment Agreement listed
on Section 5.22(e) of the Seller Disclosure Schedule. It is the
intention of the parties that the indemnity provided herein shall
survive the Closing and shall, with respect to environmental claims
under CERCLA, be an agreement expressly not barred by 42 U.S.C.
Section 9607(e)(1).
(f) Additional Indemnification by the Seller. Subject to
the terms and provisions of this Section 5.22 and in addition to
the indemnification provided for in Section 5.22(b), the Seller
agrees, other than the Losses that the Buyer is required to
indemnify pursuant to Section 5.22(b), the employee benefit matters
addressed in Section 5.12 and the tax matters addressed in Section
5.19, (i) to indemnify and hold the Buyer's Group harmless from and
against all Losses which the Buyer's Group may suffer, sustain or
become subject to by reason of or resulting from any liabilities or
obligations of or relating to, or claims against, the Seller or the
Seller Subsidiaries on, before or after the Closing Date to the
extent that such liabilities, obligations or claims (x) do not
relate to the Business and (y) arise from the activity of (a) any
Cameron Entity (other than the Company or the Pipeline Sub) before
the Closing Date, or (b) the Seller or any of the Seller's
subsidiaries (other than the Cameron Entities), (ii) except to the
extent the actions of the Buyer, the Company or their Affiliates
may cause or increase any such Losses after the Closing Date, to
indemnify and hold the Buyer's Group harmless from and against all
Losses which the Buyer's Group may suffer, sustain or become
subject to by reason of or resulting from any Regulated Materials
disposed of on, or discharged into the environment at, the Katy
Road Site or the Gulf Metals Site on or before the Closing Date;
and (iii) to indemnify and hold the Buyer's Group harmless from and
against all Losses which the Buyer's Group may suffer, sustain or
become subject to by reason of or resulting from severance payments
under the Employment Agreement listed on Section 5.22(e) of the
Seller Disclosure Schedule. It is the intention of the parties
that the indemnity provided herein shall survive the Closing and
shall, with respect to environmental claims under CERCLA, be an
agreement expressly not barred by 42 U.S.C. Secion 9607(e)(1).
(g) Conditions of Indemnification of Third Party Claims.
The obligations and liabilities of the parties under this Article V
with respect to claims of Losses resulting from the assertion of
liability by third parties ("Third-Party Claim") shall be subject
to the following terms and conditions:
(i) The Indemnified Party shall give written notice
to the Indemnifying Party of any such Claim promptly after the
Indemnified Party receives notice thereof, which written notice
shall state the nature and basis of such Claim and, if
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determinable, the amount thereof, provided that failure to so
notify the Indemnifying Party shall in no case prejudice the rights
of the Indemnified Party under this Agreement unless the
Indemnifying Party shall actually be prejudiced by such failure and
then only to the extent of such actual prejudice. Upon receipt of
notice of any such Claim from the Indemnified Party, the Indemni-
fying Party will undertake the defense thereof by representatives
of its own choosing.
(ii) In the event that the Indemnifying Party, within
a reasonable time after notice of any such Claim, fails to defend
the same, the Indemnified Party shall (upon further notice to the
Indemnifying Party) have the right to undertake the defense,
compromise or settlement of such Claim on behalf of and for the
account and risk of the Indemnifying Party, subject to the right of
the Indemnifying Party to assume the defense of such Claim at any
time prior to settlement, compromise or final determination
thereof.
(iii) Anything in this Section 5.22 to the contrary
notwithstanding, the Indemnifying Party shall have the right, at
its own cost and expense, to defend, compromise or settle such
Claim; provided, however, that the Indemnifying Party shall not,
without the Indemnified Party's written consent, settle or
compromise any Claim or consent to entry of any judgment which does
not include as an unconditional term thereof the giving by the
claimant or plaintiff to the Indemnified Party a release from all
liability in respect of such Claim. The Indemnified Party shall
have the right at its own expense to participate in the defense of
the Claim.
(h) Certain Definitions. As used in this Agreement:
(i) "Product Liability Claim" means any claim or
cause of action, regardless of form and whether absolute, accrued,
contingent or otherwise, arising out of injury to persons or damage
to property, relating to the design or manufacture of or the
introduction into commerce by sale, exchange or assignment of the
Products.
(ii) "Business" means research, development, engi-
neering, melting, refining, remelting, forging, extrusion,
machining, manufacturing, distribution, sales, marketing, service
or repair operations associated with the Products.
(iii) "Products" means closed die forgings (includ-
ing rotating parts for aircraft engines or industrial turbines,
aircraft landing gear, structural airframe parts, ordnances and
related parts, military and power plant nuclear forgings, valves,
heavy wall pipe and fittings, power generation forgings and
oilfield equipment forgings), extrusions (including for aircraft
engines, pipe, oilfield equipment, bar stock and ordnances), super
alloy powder products, skid rails and related components for use in
metallurgical reheat furnaces, including custom-shaped insulators
and high velocity burners, and other forged products.
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(iv) "Cameron Entities" means (x) the Company, (y)
the Pipeline Sub and (z) that portion of each of the following
companies to the extent that it presently conducts or previously
conducted all or part of the Business: (i) the U.K. Sub, (ii) the
forged products division of Cameron Iron Works, Inc., (iii) the
forged products division of Cameron Iron Works USA, Inc., (iv)
Cameron Forge Company, (v) the forged products division of Cameron
Iron Works Limited, (vi) Cooper Industries, Inc., (vii) Cooper
(Great Britain) Ltd., (viii) Cameron Iron Works, Inc., (ix) Cameron
Iron Works USA, Inc., and (x) Cameron Iron Works Limited, and (xi)
any direct or indirect Predecessor or successor to any of the
foregoing that conducted or conducts all or part of the Business.
(v) "Predecessor" means an entity which has previ-
ously held an interest to which the entity to whom the reference is
made has succeeded, including without limitation an entity which
conveyed, transferred or assigned all or substantially all of its
assets to the entity to whom the reference is made or an entity
which was merged or amalgamated into or consolidated with the
entity to whom the reference is made.
(vi) "Katy Road Site" means the former Cameron Iron
Works, Katy Road Facility located at 1000 Silber Road, Houston
(Harris County), Texas.
(vii) "Gulf Metals Site" means the Gulf Metals State
Superfund Site in Houston (Harris County), Texas, located northeast
of the intersection of Mykawa Road and Almeda-Genoa Road.
(viii) "Affiliate" shall mean any person or entity
that directly or indirectly controls or is controlled by or is
under the common control of the party referred to.
5.23 Repurchase of Receivables. Pursuant to the Factoring
Agreement, the Company has agreed to assign to the Seller prior to
Closing its trade and notes receivables (the "Receivables"). The
Buyer agrees to purchase from the Seller all Receivables that are
outstanding 90 days after the Closing Date. Within five business
days following the 90th day after the Closing Date, the Seller will
prepare a statement listing the balance of the outstanding
Receivables on such date, deducting the same reserve amount
previously deducted in determining the Receivables Purchase Price.
Within five business days after receipt of such statement, subject
to the terms of the Factoring Agreement, the Company shall pay to
the Seller such amount at its bank account designated in this
Agreement.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the
Transactions Contemplated by this Agreement. The respective
obligations of each party to effect the transactions contemplated
by this Agreement shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:
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(a) Each of the Seller and the Buyer shall have executed
and delivered the Investment Agreement.
(b) The transactions contemplated by this Agreement
shall have been approved by the requisite affirmative vote of the
holders of the Buyer Common Stock and the requisite consent to the
transactions contemplated by this Agreement shall have been
obtained from the holders of the 10 3/4% Senior Notes due 2003
issued pursuant to the Indenture, dated as of March 16, 1993, by
and among the Buyer, certain subsidiaries of the Buyer and State
Street Bank and Trust Company, as Trustee, and by The CIT
Group/Business Credit, Inc.
(c) Articles of amendment, signed in accordance with the
Massachusetts Business Corporation Law and setting forth the
Authorized Shares Amendment, the Fair Price Charter Amendment, and
the due adoption thereof, shall have been filed with the Secretary
of the Commonwealth of Massachusetts and shall be in full force and
effect.
(d) The Buyer's Board of Directors shall have adopted
and approved the Control Share Acquisitions Amendment and it shall
be in full force and effect.
(e) The Rights Agreement shall have been executed and
delivered by the Buyer and the other party thereto and shall be in
full force and effect.
(f) No statute, rule, regulation, executive order, decree
or injunction shall have been enacted, entered, promulgated or
enforced, and no action, suit or proceeding shall be pending or
threatened, by any Governmental Entity of competent jurisdiction
which prohibits or challenges the consummation of the transactions
contemplated by this Agreement, or conditions such consummation on
the matters referred to in the last sentence of Section 5.6(b)
hereof, and is in effect.
(g) The Ancillary Agreements shall have been negotiated
on terms mutually satisfactory to the Buyer and the Seller and
executed and delivered by each of the parties thereto.
6.2 Conditions of Obligations of the Seller to Effect the
Transactions Contemplated by this Agreement. The obligations of
the Seller to effect the transactions contemplated by this
Agreement are further subject to the satisfaction at or prior to
the Closing Date of the condition that the representations and
warranties of the Buyer set forth in this Agreement and qualified
as to materiality or Material Adverse Effects shall be true and
correct and those not so qualified shall be true and correct in all
material respects as of the date of this Agreement and as of the
Closing Date, as if made at and as of the Closing Date (except for
representations and warranties that expressly speak only as of some
other time), the Buyer shall have delivered the documents and other
items to be delivered pursuant to Section 2.3, and the Buyer shall
have performed and complied, in all material respects, with all
obligations and covenants required to be performed or complied with
by it under this Agreement at or prior to the Closing Date.
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6.3 Conditions of Obligations of the Buyer to Effect the
Transactions Contemplated by this Agreement. The obligations of
the Buyer to effect the transactions contemplated by this Agreement
are further subject to the satisfaction at or prior to the Closing
Date of the condition that the representations and warranties of
the Seller set forth in this Agreement and qualified as to
materiality or Material Adverse Effects shall be true and correct
and those not so qualified shall be true and correct in all
material respects as of the date of this Agreement (except to the
extent that the transactions set forth on Annex IV have not been
consummated as of such date) and as of the Closing Date, as if made
at and as of the Closing Date (except for representations and
warranties that expressly speak only as of some other time), the
Seller shall have delivered the documents and other items to be
delivered pursuant to Section 2.2, and the Seller shall have
performed and complied, in all material respects, with all obliga-
tions and covenants required to be performed or complied with by
them under this Agreement at or prior to the Closing Date.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval by the
shareholders of the Buyer of the transactions contemplated by this
Agreement:
(a) by mutual consent of the parties hereto;
(b) by the Seller or the Buyer, if the transactions
contemplated by this Agreement shall not have been consummated
before June 30, 1994 (unless the failure to consummate the
transactions contemplated by this Agreement by such date shall be
due to the breach of this Agreement by the party seeking to
terminate this Agreement);
(c) by the Seller, if there has been a material violation
or breach by the Buyer of any agreement, representation or warranty
contained in this Agreement which has rendered the satisfaction of
any condition to the obligations of the Seller impossible and such
violation or breach has not been waived by the Seller;
(d) by the Buyer, if there has been a material violation
or breach by the Seller of any agreement, representation or
warranty contained in this Agreement which has rendered the
satisfaction of any condition to the obligations of the Buyer
impossible and such violation or breach has not been waived by the
Buyer; or
(e) by either of the parties hereto if this Agreement and
the transactions contemplated hereby are not duly approved by the
shareholders of the Buyer at a meeting of shareholders (or any
adjournment thereof) duly called and held for such purpose.
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7.2 Procedure and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions
contemplated hereby by either or both of the parties pursuant to
Section 7.1, written notice thereof shall forthwith be given to the
other party hereto and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned, without
further action by either of the parties hereto. If this Agreement
is terminated as provided herein:
(a) upon request therefor, each party will redeliver all
documents, work papers and other material of the other party
relating to the transactions contemplated hereby, whether obtained
before or after the execution hereof, to the party furnishing the
same or will destroy such documents;
(b) all information received by the Seller and the
Company with respect to the business of the Buyer or by the Buyer
with respect to the business of the Company (other than information
which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distri-
bution or filed as public information with any Governmental Entity)
shall not at any time be used for the advantage of the Person
receiving the information or to the detriment of the Person
furnishing such information; and each of the Seller and the Buyer
will use its reasonable best efforts to prevent the disclosure
thereof to third Persons except as may be required by law;
(c) neither party hereto shall have any liability or fur-
ther obligation to the other party hereto pursuant to this
Agreement except as stated in this Section 7.2 and in Sections
5.4(d), 5.10 and 5.11; and
(d) all filings, applications and other submissions made
pursuant to Sections 5.6, 5.7 and 5.8 shall, to the extent
practicable, be withdrawn from the agency or other Person to which
made.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by
written agreement of each of the parties.
8.2 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to
comply with any obligation, covenant, agreement or condition herein
may be waived by the party or parties entitled to the benefits
thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this
Section 8.2.
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8.3 Investigations; Survival Upon Termination. Subject to
Section 5.22(a), the respective representations and warranties of
the parties contained herein or in any certificates, schedules,
exhibits or other documents delivered prior to or at the Closing
shall not be deemed waived or otherwise affected by any
investigation made by any party hereto. Each and every such
representation and warranty shall expire with, and be terminated
and extinguished by, the termination of this Agreement pursuant to
Section 7.1 or otherwise; and thereafter none of the parties hereto
or any of their respective officers or directors shall be under any
liability whatsoever with respect to any such representations or
warranties. This Section 8.3 shall have no effect upon any other
obligation of the parties hereto, whether to be performed before or
after the Closing Date.
8.4 Notices. All notices and other communications hereunder
shall be validly given, made or served, if in writing and delivered
personally, sent by facsimile transmission (receipt of which is
confirmed) or mailed by registered or certified mail (return
receipt requested), postage prepaid, to the parties at the fol-
lowing addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of
address shall be effective only upon receipt thereof):
(a) if to Seller or the Company, to:
Cooper Industries, Inc.
First City Tower, Suite 4000
1001 Fannin Street
Houston, Texas 77002
Attention: General Counsel
Facsimile No.: 713-739-5882
(b) if to the Buyer, to:
Wyman-Gordon Company
244 Worcester Street
Box 8001
North Grafton, Massachusetts 01536-8001
Attention: Wallace F. Whitney, Jr., Esq.
Facsimile No.: (508) 839-7500
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Adam O. Emmerich, Esq.
Facsimile No.: (212) 403-2000
Notice given by facsimile shall be deemed delivered on
the business day after it is sent to the recipient. Notice given
by mail as set out above shall be deemed delivered five calendar
days after the same is mailed.
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8.5 Annexes, Schedules and Exhibits. All annexes,
schedules and exhibits attached hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if
set forth in full herein. All references to "this Agreement"
shall be deemed to include all annexes, schedules and exhibits to
this Agreement. Information set forth in any section to the
Seller Disclosure Schedule or the Buyer Disclosure Schedule is
deemed set forth in all other sections of such Disclosure
Schedule. Disclosure of any fact or item in any annex, schedule
or exhibit hereto referenced by a particular paragraph or section
in this Agreement shall, should the existence of the fact or item
or its contents be relevant to any other paragraph or section, be
deemed to be disclosed with respect to that other paragraph or
section whether or not a specific cross reference appears.
Disclosure of any fact or item in any annex, schedule or exhibit
hereto shall not necessarily mean that such item or fact
individually is material to (i) the Seller or the Company
individually or the Seller and the Company taken as a whole or
(ii) the Buyer or its subsidiaries individually or the Buyer and
its subsidiaries taken as a whole.
8.6 Descriptive Headings. The descriptive headings herein
are inserted for convenience only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
8.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which shall be considered one and the same agreement.
8.8 Entire Agreement; Assignment. The Confidentiality
Agreement, the Investment Agreement, this Agreement, including
the annexes, schedules and exhibits hereto and thereto, and the
other instruments, agreements, documents, schedules and
certificates referred to herein and therein, embody the entire
agreement and understanding of the parties hereto and supersede
all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by either of the parties hereto
without the prior written consent of the other party.
8.9 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York
without regard to any applicable principles of conflicts of law.
8.10 Specific Performance. The parties hereto agree that if
any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached,
irreparable damage would occur, no adequate remedy at law would
exist and damages would be difficult to determine, and that the
parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
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8.11 Alternative Dispute Resolution.
(a) The parties shall attempt in good faith to resolve
any dispute arising out of or relating to this Agreement promptly
by negotiations between executives who have authority to settle
the controversy. Any party may give the other party written
notice of any dispute not resolved in the normal course of
business. Within 20 days after delivery of said notice,
executives of both parties shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem
necessary, to exchange relevant information and to attempt to
resolve the dispute. If the matter has not been resolved within
60 days of the disputing party's notice, or if the parties fail
to meet within 20 days, either party may initiate mediation of
the controversy or claims as provided in Section 8.11(c).
(b) If a negotiator intends to be accompanied at a
meeting by an attorney, the other negotiator shall be given at
least three working days' notice of such intention and may also
be accompanied by an attorney. All negotiations pursuant to this
clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of
Evidence and state rules of evidence.
(c) If negotiation fails within the time limits
provided in Section 8.11(a), either party may initiate a
mediation proceeding by a request in writing to the other party.
Thereupon, both parties will be obligated to engage in a
mediation. The proceeding will be conducted in accordance with
the presently effective CPR Model Procedure for Mediation of
Business Disputes, with the following exceptions:
(i) The mediator shall be an attorney experienced
in mediating large commercial disputes, who shall be compensated
at his normal hourly or per diem rates for all time spent by him
in connection with the proceedings, and whose fees shall be borne
equally by the parties. If the parties have not agreed within 30
days of the request for mediation on the selection of a mediator
willing to serve, the Center for Public Resources, upon the
request of either party, shall appoint a member of the CPR Panels
of Neutrals who meets the above qualifications as the mediator.
(ii) Efforts to reach a settlement will continue
until the conclusion of the proceeding, which is deemed to occur
when: (a) a written settlement is reached, (b) the mediator
concludes and informs the parties in writing that further efforts
would not be useful, or (c) after making a good faith effort to
mediate, either party or both parties assert in writing that an
impasse has been reached. Neither party may withdraw before the
conclusion of the proceeding. Thereafter, if a settlement has
not been reached, the parties shall be free to pursue such rights
and remedies, at law or in a equity, as may be available to them.
(d) The parties regard the obligations in this Section
8.11 as an essential provision of this Agreement and one that is
legally binding on them. In case of a violation of such
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obligation by either party, the other may bring an action to seek
enforcement of such obligation in any court of law having
jurisdiction thereof. This Section 8.11 shall in no way affect
the arbitration procedures set forth in Article I or Article V of
this Agreement.
8.12 Non-Competition.
(a) The Seller agrees that, until the later to occur
of (i) the Seller's ceasing to own at least 10% of the
outstanding shares of Buyer Common Stock and (ii) the expiration
of a period of three years commencing on the Closing Date, the
Seller will not, and the Seller will not permit any of its
subsidiaries (regardless of whether such Person is a subsidiary
of the Seller on the date hereof) to, engage in the manufacturing
or marketing of the Products currently manufactured or marketed
by the Company or the U.K. Sub in competition with the Buyer or
any subsidiary of the Buyer (a "Competing Business"); provided,
however, that (i) the Seller or any Affiliate of the Seller
(other than the Company and the Company Subsidiaries) may
continue any existing non-aerospace forging operations and may
make any reasonable maintenance, improvements and refinements
thereto; and (ii) the Seller or any Affiliate of the Seller may
acquire any business which includes ancillary forging operations
in support of its main business; provided further that this
covenant shall not prevent the Seller or its Affiliates from
acquiring shares in or the business or assets of any company,
business or entity (the "Target") having a Competing Business (i)
if no more than $10,000,000 of the Target's sales revenue (as
recorded in the then latest available audited accounts) arises
from the Competing Business or (ii) if the sales revenue of the
Competing Business is greater than $10,000,000 of the Target's
sales revenue, if the Seller uses its reasonable commercial
efforts to dispose of the Competing Business within a two-year
period from the date of acquisition of the Target. If the Seller
cannot dispose of the Competing Business on terms reasonably
acceptable to it during such two-year period, then the Seller
shall be free to retain and operate the Competing Business
without any restriction of this Agreement. The Seller ac-
knowledges and agrees that the foregoing restrictions are rea-
sonably designed to protect the Buyer's substantial investment
and are reasonable with respect to duration, geographical area
and scope.
(b) In the event of breach by the Seller or any sub-
sidiary of the Seller of any of the provisions of Section
8.12(a), the Buyer may, in addition to any other rights or
remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violations of the
provisions of Section 8.12(a).
8.13 Further Assurances. Each party shall execute and
deliver both before and after the Closing such instruments,
agreements and other documents and take such other actions as the
other party may reasonably request to consummate or implement the
transactions contemplated hereby or to evidence such events or
matters.
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8.14 No Third-Party Beneficiaries. Nothing in this
Agreement, express or implied, is intended to confer upon any
other Person, other than the Buyer's Group and the Seller's Group
in connection with Section 5.22, any rights or remedies of any
nature whatsoever under or by reason of this Agreement. Nothing
in this Agreement is intended to relieve or discharge the
obligation of any third Person to (or to confer any right of
subrogation or action over against) any party to this Agreement.
8.15 Remedies; Waiver. All rights and remedies existing
under this Agreement and any related agreements or documents are
cumulative to and not exclusive of, any rights or remedies
otherwise available under applicable law. No failure on the part
of any party to exercise or delay in exercising any right
hereunder shall be deemed a waiver thereof, nor shall any single
or partial exercise preclude any further or other exercise of
such or any other right.
8.16 Severability. If any provision of this Agreement is
determined to be invalid, illegal or unenforceable by any
Governmental Entity, the remaining provisions of this Agreement
to the extent permitted by Law shall remain in full force and
effect, provided that the economic and legal substance of the
transactions contemplated by this Agreement are not affected in
any manner materially adverse to any party. In the event of any
such determination, the parties agree to negotiate in good faith
to modify this Agreement to fulfill as closely as possible the
original intents and purposes hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
COOPER INDUSTRIES, INC.
By: /s/ H. John Riley, Jr.
H. John Riley, Jr.
President and Chief
Operating Officer
WYMAN-GORDON COMPANY
By: /s/ Luis E. Leon
Luis E. Leon
Vice President, Treasurer
and Chief Financial Officer
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ANNEX V
Fair Price Charter Amendment
Article 6(e)2 of the Articles of Organization of the Buyer
shall be amended to add the following sentence to the end
thereof:
Notwithstanding the foregoing, Cooper Industries, Inc.
("Cooper") and its Affiliates and Associates (together, the
"Cooper Group") shall not be deemed to be an Interested
Stockholder for so long as (A) the Cooper Group beneficially
owns at least 10% or more of the outstanding shares of
Common Stock continuously from and after the Closing Date
(as defined in the Stock Purchase Agreement, dated as of
January 10, 1994, between Cooper and the Company) and (B)
the Cooper Group does not acquire beneficial ownership of
any shares of Common Stock in breach of the Investment
Agreement, dated as of January 10, 1994, between Cooper and
the Company (other than an inadvertent breach which is
remedied as promptly as practicable by a transfer of the
shares of Common Stock so acquired to a person or entity
which is not a member of the Cooper Group).
-65-
</TEXT