CONFORMED COPY
__________________________________________________________
AGREEMENT AND PLAN OF MERGER
Among
ITT INDUSTRIES, INC.,
GEORGE ACQUISITION, INC.
and
GOULDS PUMPS, INCORPORATED
Dated as of April 20, 1997
__________________________________________________________
TABLE OF CONTENTS
ARTICLE I
THE OFFER . . . . . . . . . . . . . . 5
SECTION 1.1 The Offer . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.2 Company Action . . . . . . . . . . . . . . . . . . 6
ARTICLE II
THE MERGER . . . . . . . . . . . . . . 7
SECTION 2.1 The Merger . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Effective Time . . . . . . . . . . . . . . . . . . 8
SECTION 2.3 Effects of the Merger . . . . . . . . . . . . . . 8
SECTION 2.4 Certificate of Incorporation; By-Laws . . . . . . 8
SECTION 2.5 Directors and Officers . . . . . . . . . . . . . . 8
SECTION 2.6 Conversion of Securities . . . . . . . . . . . . . 8
SECTION 2.7 Treatment of Options . . . . . . . . . . . . . . . 9
SECTION 2.8 Dissenting Shares and Section 262 Shares . . . . . 9
SECTION 2.9 Surrender of Shares; Stock Transfer Books . . . . 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . 11
SECTION 3.1 Organization and Qualification; Subsidiaries . . . 11
SECTION 3.2 Certificate of Incorporation and By-Laws . . . . . 11
SECTION 3.3 Capitalization . . . . . . . . . . . . . . . . . . 11
SECTION 3.4 Authority Relative to This Agreement . . . . . . . 12
SECTION 3.5 No Conflict; Required Filings and Consents . . . . 13
SECTION 3.6 Compliance . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.7 SEC Filings; Financial Statements . . . . . . . . 15
SECTION 3.8 Absence of Certain Changes or Events . . . . . . . 15
SECTION 3.9 Absence of Litigation . . . . . . . . . . . . . . 15
SECTION 3.10 Employee Benefit Plans . . . . . . . . . . . . . . 15
SECTION 3.11 Tax Matters . . . . . . . . . . . . . . . . . . . 17
SECTION 3.12 Offer Documents; Proxy Statement . . . . . . . . . 18
SECTION 3.13 Environmental Matters . . . . . . . . . . . . . . 18
SECTION 3.14 Brokers . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER . . . . . . . . . . . 21
SECTION 4.1 Corporate Organization . . . . . . . . . . . . . . 21
SECTION 4.2 Authority Relative to This Agreement . . . . . . . 21
SECTION 4.3 No Conflict; Required Filings and Consents . . . . 21
SECTION 4.4 Offer Documents; Proxy Statement . . . . . . . . . 22
SECTION 4.5 Brokers . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.6 Funds . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER . . . . . . . 23
SECTION 5.1 Conduct of Business of the Company Pending the
Merger . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . . . 25
SECTION 6.1 Stockholders Meeting . . . . . . . . . . . . . . . 25
SECTION 6.2 Proxy Statement . . . . . . . . . . . . . . . . . 25
SECTION 6.3 Company Board Representation; Section 14(f) . . . 25
SECTION 6.4 Access to Information; Confidentiality . . . . . . 26
SECTION 6.5 No Solicitation of Transactions . . . . . . . . . 27
SECTION 6.6 Employee Benefits Matters . . . . . . . . . . . . 28
SECTION 6.7 Directors' and Officers' Indemnification and
Insurance . . . . . . . . . . . . . . . . . . . 29
SECTION 6.8 Delivery of Schedules . . . . . . . . . . . . . . 30
SECTION 6.9 Notification of Certain Matters . . . . . . . . . 31
SECTION 6.10 Further Action; Reasonable Best Efforts . . . . . 31
SECTION 6.11 Public Announcements . . . . . . . . . . . . . . . 32
SECTION 6.12 Disposition of Litigation. . . . . . . . . . . . . 32
SECTION 6.13 Rights . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
CONDITIONS OF MERGER . . . . . . . . . . . 32
SECTION 7.1 Conditions to Obligation of Each Party to
Effect the Merger . . . . . . . . . . . . . . . 32
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . 33
SECTION 8.1 Termination . . . . . . . . . . . . . . . . . . . 33
SECTION 8.2 Effect of Termination . . . . . . . . . . . . . . 34
SECTION 8.3 Fees and Expenses . . . . . . . . . . . . . . . . 35
SECTION 8.4 Amendment . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.5 Waiver . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . 37
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . 37
SECTION 9.2 Notices . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.3 Certain Definitions . . . . . . . . . . . . . . . 37
SECTION 9.4 Severability . . . . . . . . . . . . . . . . . . . 38
SECTION 9.5 Entire Agreement; Assignment . . . . . . . . . . . 39
SECTION 9.6 Parties in Interest . . . . . . . . . . . . . . . 39
SECTION 9.7 Governing Law . . . . . . . . . . . . . . . . . . 39
SECTION 9.8 Headings . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.9 Counterparts . . . . . . . . . . . . . . . . . . . 39
Annex A - Offer Conditions
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 20, 1997 (the
"Agreement"), among ITT INDUSTRIES, INC., an Indiana corporation ("Parent"),
GEORGE ACQUISITION, INC., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and GOULDS PUMPS, INCORPORATED, a
Delaware corporation (the "Company").
WHEREAS, the Board of Directors of the Company has determined that
it is in the best interests of the Company and the stockholders of the
Company to enter into this Agreement with Parent and Purchaser, providing for
the merger (the "Merger") of Purchaser with the Company in accordance with
the General Corporation Law of the State of Delaware ("DGCL"), upon the terms
and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of Parent and Purchaser have each
approved the Merger of Purchaser with the Company in accordance with the DGCL
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall
not have been terminated in accordance with Section 8.1 and no event shall
have occurred and no circumstance shall exist which would result in a failure
to satisfy any of the conditions or events set forth in Annex A hereto (the
"Offer Conditions"), Purchaser shall, as soon as reasonably practicable after
the date hereof (and in any event within five business days from the date of
public announcement of the execution hereof), commence an offer (the "Offer")
to purchase for cash all of the issued and outstanding shares of Common
Stock, par value $1.00 per share (referred to herein as either the "Shares"
or "Company Common Stock"), of the Company at a price of $37.00 per Share,
net to the seller in cash. The obligation of Purchaser to accept for payment
Shares tendered pursuant to the Offer shall be subject only to the
satisfaction or waiver by Purchaser of the Offer Conditions. Purchaser
expressly reserves the right, in its sole discretion, to waive any such
condition (other than the Minimum Condition as defined in the Offer
Conditions) and make any other changes in the terms and conditions of the
Offer, provided that, unless previously approved by the Company in writing,
no change may be made which changes the Minimum Condition or decreases the
price per Share payable in the Offer, changes the form of consideration
payable in the Offer (other than by adding consideration), reduces the
maximum number of Shares to be purchased in the Offer, or amends the terms or
Offer Conditions or imposes conditions or terms to the Offer in addition to
those set forth herein which, in either case, are adverse to holders of the
Shares. Purchaser agrees that, unless it is permitted to terminate this
Agreement pursuant to Section 8.1(a), 8.1(b), 8.1(c)(ii) or 8.1(e), it can
terminate the Offer only on a scheduled expiration date. Purchaser further
agrees that: (A) in the event it would otherwise be entitled to terminate the
Offer at any scheduled expiration thereof due to the failure of one or more
of the conditions set forth in paragraphs (a), (b), (c), (d)(i), (e) or (h)
of the Offer Conditions to be satisfied or waived, it shall give the Company
notice thereof and, at the request of the Company, extend the Offer until the
earlier of (1) such time as such condition is or conditions are satisfied or
waived and (2) the date chosen by the Company which shall not be later than
(x) the Outside Date (as defined in Section 8.1) applicable to the condition
or conditions with respect to which the extension is requested or (y) the
earliest date on which the Company reasonably believes such condition or
conditions will be satisfied; provided that if such condition is not or
conditions are not satisfied by any date chosen by the Company pursuant to
this clause (y), the Company may request further extensions of the Offer in
accordance with the terms of this Section 1.2(a); and (B) in the event that
it would otherwise be entitled to terminate the Offer at the initial
scheduled expiration date thereof due solely to the failure of the Minimum
Condition to be satisfied or waived, it shall, at the request of the Company
(which request may be made by the Company only on one occasion), extend the
Offer for up to five business days from such initial scheduled expiration
date. Purchaser covenants and agrees that, subject to the terms and
conditions of this Agreement, including but not limited to the Offer
Conditions, it will accept for payment and pay for Shares as soon as it is
permitted to do so under applicable law. It is agreed that the Offer
Conditions are for the benefit of Purchaser and may be asserted by Purchaser
regardless of the circumstances giving rise to any such condition (except for
any action or inaction by Purchaser or Parent constituting a breach of this
Agreement) or, except with respect to the Minimum Condition, may be waived by
Purchaser, in whole or in part at any time and from time to time, in its sole
discretion.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Purchaser shall file a Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1") with respect to the Offer with the Securities and
Exchange Commission (the "SEC"). The Schedule 14D-1 shall contain an Offer
to Purchase and forms of the related letter of transmittal (which Schedule
14D-1, Offer to Purchase and other documents, together with any supplements
or amendments thereto, are referred to herein collectively as the "Offer
Documents"). Parent and Purchaser agree that the Company and its counsel
shall be given an opportunity to review the Schedule 14D-1 before it is filed
with the SEC. Parent, Purchaser and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents that
shall have become false or misleading in any material respect, and Parent and
Purchaser further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be filed with the SEC and the other Offer Documents
as so corrected to be disseminated to holders of Shares, in each case as and
to the extent required by applicable federal securities laws.
SECTION 1.2 Company Action. (a) The Company hereby approves of
and consents to the Offer and represents and warrants that: (i) its Board of
Directors, at a meeting duly called and held on April 20, 1997, has
unanimously (A) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in
the best interests of the holders of Shares, (B) approved this Agreement and
the transactions contemplated hereby, including each of the Offer and the
Merger, and (C) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares to Purchaser thereunder and approve
this Agreement and the transactions contemplated hereby (it being understood
that, notwithstanding anything in this Agreement to the contrary, if the
Company's Board of Directors determines in good faith, based upon the advice
of outside counsel, that failure to modify or withdraw its recommendation
would constitute a breach of their fiduciary duties under applicable law, the
Board of Directors may so modify or withdraw its recommendation and such
modification or withdrawal shall not constitute a breach of this Agreement);
and (ii) Goldman, Sachs & Co. (the "Financial Adviser") has delivered to the
Board of Directors of the Company its written opinion that the consideration
to be received by holders of Shares, other than Parent and Purchaser,
pursuant to each of the Offer and the Merger is fair to such holders. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Company's Board of Directors described in this Section
1.2(a).
(b) The Company shall file with the SEC, contemporaneously with
the commencement of the Offer pursuant to Section 1.1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9"), containing the
recommendations of the Company's Board of Directors described in Section
1.2(a)(i) and shall promptly mail the Schedule 14D-9 to the stockholders of
the Company. The Schedule 14D-9 and all amendments thereto will comply in
all material respects with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations promulgated thereunder.
The Company, Parent and Purchaser each agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 that shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities
laws.
(c) In connection with the Offer, if requested by Purchaser, the
Company shall promptly furnish Purchaser with mailing labels, security
position listings, any non-objecting beneficial owner lists and any available
listings or computer files containing the names and addresses of the record
holders of Shares, each as of a recent date, and shall promptly furnish
Purchaser with such additional information (including but not limited to
updated lists of stockholders, mailing labels, security position listings and
non-objecting beneficial owner lists) and such other assistance as Parent,
Purchaser or their agents may reasonably require in communicating the Offer
to the record and beneficial holders of Shares. Subject to the requirements
of law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Offer and the
Merger, Parent and each of their affiliates and associates shall hold in
confidence the information contained in any of such lists, labels or
additional information and, if this Agreement is terminated, shall promptly
deliver to the Company all copies of such information then in their
possession.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the DGCL, at the
Effective Time (as defined in Section 2.2), Purchaser shall be merged with
and into the Company. As a result of the Merger, the separate corporate
existence of Purchaser shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation"). At
Parent's election, any direct or indirect subsidiary of Parent other than
Purchaser may be merged with and into the Company instead of the Purchaser.
In the event of such an election, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such election.
SECTION 2.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the
parties hereto shall cause the Merger to be consummated by filing this
Agreement or a certificate of merger or a certificate of ownership and merger
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as required by and executed in accordance with the
relevant provisions of the DGCL (the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
(or such later time as is specified in the Certificate of Merger) being the
"Effective Time").
SECTION 2.3 Effects of the Merger. The Merger shall have the
effects set forth in the applicable provisions of the DGCL. Without limiting
the generality of the foregoing and subject thereto, at the Effective Time
all the property, rights, privileges, immunities, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 2.4 Certificate of Incorporation; By-Laws. (a) At the
Effective Time and without any further action on the part of the Company and
Purchaser, the Restated Certificate of Incorporation of the Company (as
amended, the "Certificate of Incorporation"), as in effect immediately prior
to the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation until thereafter and further amended as provided
therein and under the DGCL.
(b) At the Effective Time and without any further action on the
part of the Company and Purchaser, the By-Laws of Purchaser shall be the By-
Laws of the Surviving Corporation and thereafter may be amended or repealed
in accordance with their terms or the Certificate of Incorporation of the
Purchaser and as provided by law.
SECTION 2.5 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate
of Incorporation and By-Laws of the Surviving Corporation, and the officers
of the Company immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed (as the case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to
Section 2.6(b) and any Dissenting Shares (as defined in Section 2.8(a)))
shall be cancelled, extinguished and converted into the right to receive
$37.00 in cash or any higher price that may be paid pursuant to the
Offer (the "Merger Consideration") payable to the holder thereof,
without interest, upon surrender of the certificate formerly
representing such Share in the manner provided in Section 2.9, less any
required withholding taxes.
(b) Each share of Company Common Stock held in the treasury of the
Company and each Share owned by Parent, Purchaser or any other direct or
indirect subsidiary of Parent or of the Company, in each case
immediately prior to the Effective Time, shall be cancelled and retired
without any conversion thereof and no payment or distribution shall be
made with respect thereto.
(c) Each share of common, preferred or other capital stock of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
nonassessable share of identical common, preferred or other capital
stock of the Surviving Corporation.
SECTION 2.7 Treatment of Options. Immediately prior to the
Effective Time, each outstanding stock option and any related stock
appreciation right granted to employees and non-employee directors of the
Company and its subsidiaries (together, an "Option"), whether or not then
exercisable, shall be cancelled by the Company, and the holder thereof shall
be entitled to receive at the Effective Time or as soon as practicable
thereafter from the Company in consideration for such cancellation an amount
in cash equal to the product of (a) the number of Shares previously subject
to such Option and (b) the excess, if any, of the Merger Consideration over
the exercise price per Share previously subject to such Option.
SECTION 2.8 Dissenting Shares and Section 262 Shares. (a)
Notwithstanding anything in this Agreement to the contrary, shares of Company
Common Stock that are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders who have not voted in favor
of or consented to the Merger and shall have delivered a written demand for
appraisal of such shares of Company Common Stock in the time and manner
provided in Section 262 of the DGCL and shall not have failed to perfect or
shall not have effectively withdrawn or lost their rights to appraisal and
payment under the DGCL (the "Dissenting Shares") shall not be converted into
the right to receive the Merger Consideration, but shall be entitled to
receive the consideration as shall be determined pursuant to Section 262 of
the DGCL; provided, however, that if such holder shall have failed to perfect
or shall have effectively withdrawn or lost his, her or its right to
appraisal and payment under the DGCL, such holder's shares of Company Common
Stock shall thereupon be deemed to have been converted, at the Effective
Time, into the right to receive the Merger Consideration set forth in Section
2.6(a) of this Agreement, without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands
for appraisal pursuant to Section 262 received by the Company, withdrawals of
such demands, and any other instruments served pursuant to the DGCL and
received by the Company and (ii) the opportunity to direct all negotiations
and proceedings with respect to demands for appraisal under the DGCL. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to any such demands for appraisal or offer to settle or
settle any such demands.
SECTION 2.9 Surrender of Shares; Stock Transfer Books. (a) Prior
to the Effective Time, Purchaser shall designate a bank or trust company to
act as agent for the holders of Shares in connection with the Merger (the
"Paying Agent") to receive the Merger Consideration to which holders of
Shares shall become entitled pursuant to Section 2.6(a). When and as needed,
Parent or Purchaser will make available to the Paying Agent sufficient funds
to make all payments pursuant to Section 2.9(b). Such funds shall be
invested by the Paying Agent as directed by Purchaser or, after the Effective
Time, the Surviving Corporation, provided that such investments shall be in
obligations of or guaranteed by the United States of America, in commercial
paper obligations rated A-1 or P-1 or better by Moody's Investors Service,
Inc. or Standard & Poor's Corporation, respectively, or in certificates of
deposit, bank repurchase agreements or banker's acceptances of commercial
banks with capital exceeding $500 million. Any net profit resulting from, or
interest or income produced by, such investments will be payable to the
Surviving Corporation or Parent, as Parent directs.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each record holder, as of the Effective Time, of
an outstanding certificate or certificates which immediately prior to the
Effective Time represented Shares (the "Certificates"), a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Paying Agent) and instructions for use in effecting
the surrender of the Certificates for payment of the Merger Consideration
therefor. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for each
Share formerly represented by such Certificate, and such Certificate shall
then be cancelled. No interest shall be paid or accrued for the benefit of
holders of the Certificates on the Merger Consideration payable upon the
surrender of the Certificates. If payment of the Merger Consideration is to
be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the person requesting such payment shall
have paid any transfer and other taxes required by reason of the payment of
the Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not
applicable.
(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds (including any interest received with respect
thereto) which had been made available to the Paying Agent and which have not
been disbursed to holders of Certificates, and thereafter such holders shall
be entitled to look to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) only as general creditors thereof
with respect to the Merger Consideration payable upon due surrender of their
Certificates. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company.
From and after the Effective Time, the holders of Certificates evidencing
ownership of Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares except as otherwise
provided for herein or by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that, except as set forth in the disclosure schedule delivered by the Company
to Purchaser on or prior to the date of execution of this Agreement:
SECTION 3.1 Organization and Qualification; Subsidiaries. Each of
the Company and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and has the requisite corporate power and authority and any
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as it is now being conducted, except where the
failure to be so organized, existing and in good standing or to have such
power, authority and governmental approvals is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect (as
defined below) or prevent or materially delay the consummation of the Offer
or the Merger. Each of the Company and each of its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing as are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect or
prevent or materially delay the consummation of the Offer or the Merger.
When used in connection with the Company or any of its subsidiaries, the term
"Material Adverse Effect" means any change or effect that would be materially
adverse to the business, assets, financial condition, or results of
operations of the Company and its subsidiaries taken as a whole.
SECTION 3.2 Certificate of Incorporation and By-Laws. The Company
has heretofore furnished to Parent a complete and correct copy of the
Certificate of Incorporation and the By-Laws of the Company as currently in
effect. Such Certificate of Incorporation and By-Laws are in full force and
effect and no other organizational documents are applicable to or binding
upon the Company. The Company is not in violation of any of the provisions
of its Certificate of Incorporation or By-Laws.
SECTION 3.3 Capitalization. The authorized capital stock of the
Company consists of 90,000,000 shares of Company Common Stock and 750,000
shares of Preferred Stock, par value $20.00 per share ("Company Preferred
Stock"). As of April 16, 1997, (i) 21,381,593 shares of Company Common Stock
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable and were issued free of preemptive (or similar) rights, (ii) no
shares of Company Common Stock were held in the treasury of the Company and
(iii) an aggregate of 1,689,829 shares of Company Common Stock were reserved
for issuance and issuable upon or otherwise deliverable in connection with
the exercise of outstanding Options issued pursuant to the Company Plans (as
defined in Section 3.10) and the 1994 Stock Option Plan for Non-Employee
Directors. Since April 16, 1997, no options to purchase shares of Company
Common Stock have been granted and no shares of Company Common Stock have
been issued except for shares issued pursuant to the exercise of Options
outstanding as of April 16, 1997. As of the date hereof, no shares of
Company Preferred Stock are issued and outstanding. Except (i) as set forth
above, (ii) as a result of the exercise of Options outstanding as of April
16, 1997 and (iii) Rights issued pursuant to the Rights Plan referred to in
Section 6.13, there are outstanding (a) no shares of capital stock or other
voting securities of the Company, (b) no securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (c) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of the Company and (d) no equity equivalents, interests
in the ownership or earnings of the Company or other similar rights
(collectively, "Company Securities"). There are no outstanding obligations
of the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. There are no other options, calls, warrants
or other rights (other than Rights issued pursuant to the Rights Plan),
agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any of its subsidiaries to
which the Company or any of its subsidiaries is a party. All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive (or similar) rights. There are no
outstanding contractual obligations of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of Company Common Stock
or the capital stock of any subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity. Each of the outstanding shares of
capital stock of each of the Company's subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and all such shares are owned by
the Company or another wholly owned subsidiary of the Company and are owned
free and clear of all security interests, liens, claims, pledges, agreements,
limitations in voting rights, charges or other encumbrances of any nature
whatsoever, except where the failure to own such shares free and clear is
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect. The Company has delivered to Parent prior to the date hereof
a list of the subsidiaries and associated entities of the Company which
evidences, among other things, the percentage of capital stock or other
equity interests owned by the Company, directly or indirectly, in such
subsidiaries or associated entities. No entity in which the Company owns,
directly or indirectly, less than a 50% equity interest is, individually or
when taken together with all such other entities, material to the business of
the Company and its subsidiaries taken as a whole.
SECTION 3.4 Authority Relative to This Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than, with respect to the Merger, the
approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock if and to the extent required by applicable
law, and the filing of appropriate merger documents as required by the DGCL).
This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
Parent and Purchaser, constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
The Board of Directors of the Company has approved this Agreement and the
transactions contemplated hereby (including but not limited to the Offer and
the Merger) so as to render inapplicable hereto and thereto (a) the
limitation on business combinations contained in Section 203 of the DGCL (or
any similar provision) and (b) the supermajority stockholder voting
requirements of Article VII of the Certificate of Incorporation. As a result
of the foregoing actions, the only vote required to authorize the Merger is
the affirmative vote of a majority of the outstanding Shares.
SECTION 3.5 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by the Company do not
and will not: (i) conflict with or violate the Certificate of Incorporation
or By-Laws of the Company or the equivalent organizational documents of any
of its subsidiaries; (ii) assuming that all consents, approvals and
authorizations contemplated by clauses (i), (ii) and (iii) of subsection (b)
below have been obtained and all filings described in such clauses have been
made, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its
or any of their respective properties are bound or affected; or (iii) result
in any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both could become a default) or result in the loss
of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a
lien or encumbrance on any of the properties or assets of the Company or any
of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract (other than contracts terminable at will or upon 90 days' or less
notice by the terminating party), agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties are bound or
affected, except, in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which are not,
individually or in the aggregate, reasonably likely to have a Material
Adverse Effect or prevent or materially delay consummation of the Offer or
the Merger.
(b) The execution, delivery and performance of this Agreement by
the Company and the consummation of the Merger by the Company do not and will
not require any consent, approval, authorization or permit of, action by,
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except for (i) applicable requirements, if any, of the
Exchange Act and the rules and regulations promulgated thereunder, the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
or other foreign filings or approvals, state securities, takeover and "blue
sky" laws, (ii) the filing and recordation of appropriate merger or other
documents as required by the DGCL and (iii) such consents, approvals,
authorizations, permits, actions, filings or notifications the failure of
which to make or obtain are not, individually or in the aggregate, reasonably
likely to (x) prevent or materially delay consummation of the Offer or the
Merger, (y) otherwise prevent or materially delay the Company from performing
its obligations under this Agreement or (z) have a Material Adverse Effect.
SECTION 3.6 Compliance. Neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any
of its subsidiaries or by which its or any of their respective properties are
bound or affected, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their
respective properties are bound or affected, except for any such conflicts,
defaults or violations which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or prevent or materially
delay consummation of the Offer or the Merger.
SECTION 3.7 SEC Filings; Financial Statements. (a) The Company
and, to the extent applicable, each of its then or current subsidiaries, has
filed all forms, reports, statements and documents required to be filed with
the SEC since January 1, 1995 (collectively, the "SEC Reports"), each of
which has complied in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations promulgated thereunder, or the Exchange Act, and the
rules and regulations promulgated thereunder, each as in effect on the date
so filed. None of the SEC Reports (including but not limited to any
financial statements or schedules included or incorporated by reference
therein) contained when filed, or (except to the extent revised or superseded
by a subsequent filing with the SEC) contains, any untrue statement of a
material fact or omitted or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the audited and unaudited consolidated financial
statements of the Company (including any related notes thereto) included in
its Annual Reports on Form 10-K for each of the two fiscal years ended
December 31, 1995 and 1996 filed with the Commission has been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be indicated
in the notes thereto) and fairly presents the consolidated financial position
of the Company and its subsidiaries at the respective date thereof and the
consolidated results of its operations and changes in cash flows for the
periods indicated.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and its subsidiaries at December 31, 1996,
including the notes thereto, neither the Company nor any of its subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet or in the notes thereto prepared in accordance with generally accepted
accounting principles, except for liabilities or obligations incurred since
December 31, 1996 which are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect.
(d) The Company has heretofore furnished or made available to
Parent a complete and correct copy of any amendments or modifications which
have not yet been filed with the SEC to agreements, documents or other
instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act and the rules and regulations promulgated
thereunder or the Exchange Act and the rules and regulations promulgated
thereunder.
SECTION 3.8 Absence of Certain Changes or Events. Since December
31, 1996, except as contemplated by this Agreement, disclosed in the SEC
Reports filed and publicly available prior to the date of this Agreement, the
Company and its subsidiaries have conducted their businesses only in the
ordinary course and in a manner consistent with past practice and, since such
date, there has not been: (i) any changes in the financial condition, results
of operations, assets, business or operations of the Company or any of its
subsidiaries having or reasonably likely to have a Material Adverse Effect;
(ii) any condition, event or occurrence which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect; (iii) any
damage, destruction or loss (whether or not covered by insurance) with
respect to any assets of the Company or any of its subsidiaries which is
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect; (iv) any change by the Company in its accounting methods,
principles or practices; (v) any revaluation by the Company of any of its
material assets, including but not limited to writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (vi) any entry by the Company or any of its
subsidiaries into any commitment or transactions material to the Company and
its subsidiaries taken as a whole (other than commitments or transactions
entered into in the ordinary course of business); (vii) any declaration,
setting aside or payment of any dividends or distributions in respect of the
Shares other than the regular quarterly dividend in the amount of $.20 per
share; or (viii) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including without limitation the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan or agreement or arrangement, or any
other increase in the compensation payable or to become payable to any
present or former directors, officers or key employees of the Company or any
of its subsidiaries, except for increases in base compensation in the
ordinary course of business consistent with past practice, or any employment,
consulting or severance agreement or arrangement entered into with any such
present or former directors, officers or key employees.
SECTION 3.9 Absence of Litigation. Except as disclosed in the SEC
Reports filed and publicly available prior to the date of this Agreement,
there are no suits, claims, actions, proceedings or investigations pending
or, to the best knowledge of the Company, threatened against the Company or
any of its subsidiaries, or any properties or rights of the Company or any of
its subsidiaries, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, that,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect. As of the date hereof, neither the Company nor any of its
subsidiaries nor any of their respective properties is or are subject to any
order, writ, judgment, injunction, decree, determination or award having, or
which, insofar as can be reasonably foreseen, is reasonably likely to have a
Material Adverse Effect or prevent or materially delay consummation of the
transactions contemplated hereby.
SECTION 3.10 Employee Benefit Plans. Except (i) as set forth in
the SEC Reports filed and publicly available prior to the date of this
Agreement or (ii) as is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect or prevent or materially delay the
consummation of the Offer or the Merger:
(a) Schedule 3.10 to this Agreement contains a true and complete
list of each "employee benefit plan" (within the meaning of section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the
meaning of ERISA section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all other
employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA (including any funding
mechanism therefor now in effect or required in the future as a result
of the transaction contemplated by this Agreement or otherwise), whether
formal or informal, oral or written, legally binding or not, under which
any employee or former employee of the Company or any of its
subsidiaries, has any present or future right to benefits or under
which the Company or any of its subsidiaries has any present or future
liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans".
Company Plans which provide benefits to or which are participated in by,
non-U.S. employees and former employees ("Foreign Company Plans") shall
be listed in a separate schedule to be delivered as set forth in Section
6.8.
(b) With respect to each Company Plan (other than Foreign Company
Plans), the Company has delivered or made available to Parent a current,
accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable: (i) any
related trust agreement or other funding instrument; (ii) the most
recent determination letter, if applicable; (iii) any summary plan
description and other written communications by the Company or any of
its subsidiaries to their employees concerning the extent of the
benefits provided under a Company Plan; and (iv) for the three most
recent years (A) the Form 5500 and attached schedules, (B) audited
financial statements and (C) actuarial valuation reports.
(c) (i) Each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Internal Revenue Code of 1986, as amended (the
"Code"), and other applicable laws, rules and regulations; (ii) each
Company Plan which is intended to be qualified within the meaning of
Code section 401(a) is so qualified and has received a favorable
determination letter as to its qualification, and nothing has occurred,
whether by action or failure to act, that would cause the loss of such
qualification; (iii) no event has occurred and no condition exists that
would subject the Company or any of its subsidiaries, either directly or
by reason of their affiliation with any member of their "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code sections 414(b), (c),
(m) or (o)), to any tax, fine, lien or penalty imposed by ERISA, the
Code or other applicable laws, rules and regulations; (iv) for each
Company Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to the matters covered by the
most recent Form since the date thereof; and (v) no "reportable event"
(as such term is defined in ERISA section 4043), "prohibited
transaction" (as such term is defined in ERISA section 406 and Code
section 4975) or "accumulated funding deficiency" (as such term is
defined in ERISA section 302 and Code section 412 (whether or not
waived)) has occurred with respect to any Company Plan.
(d) With respect to each of the Company Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA but
is subject to Title IV of ERISA, as of the Effective Time, the assets of
each such Company Plan are at least equal in value to the present value
of the accrued benefits (vested and unvested) of the participants in
such Company Plan on a termination basis, based on the actuarial methods
and assumptions indicated in the most recent actuarial valuation
reports.
(e) With respect to any multiemployer plan (within the meaning of
ERISA section 4001(a)(3)): (i) none of the Company, any of its
subsidiaries or any member of their Controlled Group has incurred any
withdrawal liability under Title IV of ERISA or would be subject to such
liability if, as of the Effective Time, the Company, any of its
subsidiaries or any member of their Controlled Group were to engage in a
complete withdrawal (as defined in ERISA section 4203) or partial
withdrawal (as defined in ERISA section 4205) from any such
multiemployer plan; and (ii) no multiemployer plan to which the Company,
any of its subsidiaries or any member of their Controlled Group has any
liabilities or contributes, is in reorganization or insolvent (as those
terms are defined in ERISA sections 4241 and 4245, respectively).
(f) With respect to any Company Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
are pending or, to the knowledge of the Company, threatened, and (ii) no
facts or circumstances exist, to the knowledge of the Company, that
could give rise to any such actions, suits or claims.
(g) No Company Plan exists that could result in the payment to any
present or former employee of the Company or any of its subsidiaries of
any money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or any of its
subsidiaries as a result of the transaction contemplated by this
Agreement, whether or not such payment would constitute a parachute
payment within the meaning of Code section 280G.
SECTION 3.11 Tax Matters. The Company and each of its
subsidiaries, and any consolidated, combined, unitary or aggregate group for
tax purposes of which the Company or any of its subsidiaries is or has been a
member has timely filed all Tax Returns required to be filed by it in the
manner provided by law, has paid all Taxes (including interest and penalties)
shown thereon to be due and has provided adequate reserves in its financial
statements according to generally accepted accounting principles for any
Taxes that have not been paid, whether or not shown as being due on any
returns. All such Tax Returns were true, correct and complete in all
material respects. Except as has been disclosed to Parent in Schedule 3.11
to this Agreement: (i) no material claim for unpaid Taxes has become a lien
or encumbrance of any kind against the property of the Company or any of its
subsidiaries or is being asserted against the Company or any of its
subsidiaries; (ii) as of the date hereof no audit of any Tax Return of the
Company or any of its subsidiaries is being conducted by a Tax authority; and
(iii) no extension of the statute of limitations on the assessment of any
Taxes has been granted by the Company or any of its subsidiaries and is
currently in effect. As used herein, "Taxes" shall mean any taxes of any
kind, including but not limited to those on or measured by or referred to as
income, gross receipts, capital, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, property or windfall profits taxes,
customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or
foreign. As used herein, "Tax Return" shall mean any return, report or
statement required to be filed with any governmental authority with respect
to Taxes.
SECTION 3.12 Offer Documents; Proxy Statement. Neither the
Schedule 14D-9, nor any of the information supplied by the Company for
inclusion in the Offer Documents, shall, at the respective times such
Schedule 14D-9, the Offer Documents or any amendments or supplements thereto
are filed with the SEC or are first published, sent or given to stockholders,
as the case may be, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Neither the proxy statement to be sent
to the stockholders of the Company in connection with the Stockholders
Meeting (as defined in Section 6.1) or the information statement to be sent
to such stockholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, is herein referred to as the "Proxy
Statement"), shall, at the date the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to stockholders and at the time of the
Stockholders Meeting and at the Effective Time, be false or misleading with
respect to any material fact, or omit to state any material fact required to
be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they are made, not misleading
or necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Stockholders Meeting which has
become false or misleading. Notwithstanding the foregoing, the Company makes
no representation or warranty with respect to any information supplied by
Parent or Purchaser or any of their respective representatives which is
contained in the Schedule 14D-9 or the Proxy Statement. The Schedule 14D-9
and the Proxy Statement will comply in all material respects as to form with
the requirements of the Exchange Act and the rules and regulations
promulgated thereunder.
SECTION 3.13 Environmental Matters. (a) Except as disclosed in
SEC Reports filed and publicly available prior to the date of this Agreement
and to the extent that the inaccuracy of any of the following (or the
circumstances giving rise to such inaccuracy), individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect or
prevent or materially delay consummation of the Offer or the Merger:
(i) (A) the Company and its subsidiaries are, and within the
period of all applicable statutes of limitation have been, in compliance
with all applicable Environmental Laws; and (B) the Company and each of
its subsidiaries believes that each of them will, and will not incur
material expense in excess of the amounts reflected in the Company's
statements and capital budgets to, timely attain or maintain compliance
with any Environmental Laws applicable to any of their current
operations or properties or to any of their planned operations over the
next three years;
(ii) (A) the Company and its subsidiaries hold all Environmental
Permits (each of which is in full force and effect) required for any of
their current operations and for any property owned, leased, or
otherwise operated by any of them, and are, and within the period of all
applicable statutes of limitation have been, in compliance with all such
Environmental Permits; and (B) neither the Company nor any of its
subsidiaries has knowledge that over the next three years: any of their
Environmental Permits will not be, or will entail material expense to
be, timely renewed or complied with; any additional Environmental
Permits required of any of them for current operations or for any
property owned, leased, or otherwise operated by any of them, or for any
of their planned operations, will not be timely granted or complied
with; or any transfer or renewal of, or reapplication for, any
Environmental Permit required as a result of the Merger will not be,
timely effected;
(iii) (A) no review by, or approval of, any Governmental Authority
or other person is required under any Environmental Law in connection
with the execution or delivery of this Agreement; and (B) neither the
Company nor any of its subsidiaries has reason to believe that such
review or approval will not be timely obtained or granted;
(iv) neither the Company nor any of its subsidiaries has received
any Environmental Claim (as hereinafter defined) against any of them,
and neither the Company nor any of its subsidiaries has knowledge of any
such Environmental Claim being threatened;
(v) to the knowledge of the Company, Hazardous Materials are not
present on any property owned, leased, or operated by the Company or any
of its subsidiaries, that is reasonably likely to form the basis of any
Environmental Claim against any of them; and neither the Company nor any
of its subsidiaries has reason to believe that Hazardous Materials are
present on any other property that is reasonably likely to form the
basis of any Environmental Claim against any of them;
(vi) neither the Company nor any of its subsidiaries has knowledge
of any material Environment Claim pending or threatened, or of the
presence or suspected presence of any Hazardous Materials that is
reasonably likely to form the basis of any Environmental Claim, in any
case against any person or entity (including without limitation any
predecessor of the Company or any of its subsidiaries) whose liability
the Company or any of its subsidiaries has or may have retained or
assumed either contractually or by operation of law. or against any real
or personal property which the Company or any of its subsidiaries
formerly owned, leased, or operated, in whole or in part; and
(vii) to the knowledge of the Company, the Company has informed the
Parent and the Purchaser of: all material facts which the Company or
any of its subsidiaries reasonably believes could form the basis of a
material Environmental Claim against any of them arising out of the non-
compliance or alleged non-compliance with any Environmental Law, or the
presence or suspected presence of Hazardous Materials at any location;
all material costs the Company reasonably expects it and any of its
subsidiaries to incur to comply with Environmental Laws during the next
three years; all material costs the Company and any of its subsidiaries
expect to incur for ongoing, and reasonably anticipated, investigation
and remediation of Hazardous Materials (including, without limitation,
any payments to resolve any threatened or asserted Environmental Claim
for investigation and remediation costs); and any other material matter
affecting the Company or any of its subsidiaries relating to any
Environmental Law.
(b) For purposes of this Agreement, the terms below shall have the
following meanings:
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or
notice (written or oral) of noncompliance, violation, or liability, by
any person or entity asserting liability or potential liability
(including without limitation liability or potential liability for
enforcement, investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damage, personal injury, fines
or penalties) arising out of, based on or resulting from (i) the
presence, discharge, emission, release or threatened release of any
Hazardous Materials at any location, (ii) circumstances forming the
basis of any violation or alleged violation of any Environmental Laws or
Environmental Permits, or (iii) otherwise relating to obligations or
liabilities under any Environmental Law.
"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or other
legally enforceable requirement (including, without limitation, common
law) of any foreign government, the United States, or any state, local,
municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of
human health as affected by the environment or Hazardous Materials
(including without limitation employee health and safety) or the
environment (including without limitation indoor air, ambient air,
surface water, groundwater, land surface, subsurface strata, or plant or
animal species).
"Environmental Permits" means all permits, licenses, registrations,
approvals, exemptions and other filings with or authorizations by any
Governmental Authority under any Environmental Law.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity (including,
without limitation, a court) exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof), petroleum products, asbestos, asbestos-containing
materials, pollutants, contaminants, radioactivity, electromagnetic
fields and all other materials, whether or not defined as such, that are
regulated pursuant to any Environmental Laws or that could result in
liability under any applicable Environmental Laws.
SECTION 3.14 Brokers. No broker, finder or investment banker
(other than the Financial Adviser) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by and on behalf of the Company.
The Company has heretofore furnished to Parent a complete and correct copy of
all agreements between the Company and the Financial Adviser pursuant to
which such firm would be entitled to any payment relating to the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.1 Corporate Organization. Each of Parent and Purchaser
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated and has the
requisite corporate power and authority and any necessary governmental
authority to own, operate or lease its properties and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
governmental approvals is not, individually or in the aggregate, reasonably
likely to prevent the consummation of the Offer or the Merger.
SECTION 4.2 Authority Relative to This Agreement. Each of Parent
and Purchaser has all necessary corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Purchaser and the consummation by each
of Parent and Purchaser of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Parent and
Purchaser other than filing and recordation of appropriate merger documents
as required by the DGCL. This Agreement has been duly executed and delivered
by Parent and Purchaser and, assuming due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
each such corporation enforceable against such corporation in accordance with
its terms.
SECTION 4.3 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by Parent and Purchaser
do not and will not: (i) conflict with or violate the respective
certificates of incorporation or by-laws of Parent or Purchaser; (ii)
assuming that all consents, approvals and authorizations contemplated by
clauses (i), (ii) and (iii) of subsection (b) below have been obtained and
all filings described in such clauses have been made, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Parent or Purchaser or by which either of them or their respective properties
are bound or affected; or (iii) result in any breach or violation of or
constitute a default (or an event which with notice or lapse of time or both
could become a default) or result in the loss of a material benefit under, or
give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or assets of Parent or Purchaser pursuant to, any note, bond,
mortgage, indenture, contract (other than contracts terminable at will or
upon 90 days' or less notice by the terminating party), agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent
or Purchaser is a party or by which Parent or Purchaser or any of their
respective properties are bound or affected, except, in the case of clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or
other occurrences which are not, individually or in the aggregate, reasonably
likely to prevent or materially delay the consummation of the Offer or the
Merger.
(b) The execution, delivery and performance of this Agreement by
Parent and Purchaser do not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act and the rules and
regulations promulgated thereunder, the HSR Act or other foreign filings or
approvals, state securities, takeover and "blue sky" laws, (ii) the filing
and recordation of appropriate merger or other documents as required by the
DGCL, and (iii) such consents, approvals, authorizations, permits, actions,
filings or notifications the failure of which to make or obtain are not,
individually or in the aggregate, reasonably likely to prevent the
consummation of the Offer or the Merger.
SECTION 4.4 Offer Documents; Proxy Statement. The Offer
Documents, as filed pursuant to Section 1.1, will not, at the time such Offer
Documents are filed with the SEC or are first published, sent or given to
stockholders, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
information supplied by Parent for inclusion in the Proxy Statement shall
not, on the date the Proxy Statement is first mailed to stockholders, at the
time of the Stockholders Meeting (as defined in Section 6.1) or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with
respect to any material fact, or shall omit to state a material fact required
to be stated therein or necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. Notwithstanding
the foregoing, Parent and Purchaser make no representation or warranty with
respect to any information supplied by the Company or any of its
representatives which is contained in or incorporated by reference in any of
the foregoing documents or the Offer Documents. The Offer Documents, as
amended and supplemented, will comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder.
SECTION 4.5 Brokers. No broker, finder or investment banker
(other than Morgan Stanley & Co. Incorporated) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf
of Parent or Purchaser.
SECTION 4.6 Funds. Parent or Purchaser, at the expiration date of
the Offer and at the Effective Time, will have the funds necessary to
consummate the Offer and the Merger, respectively.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the Merger.
The Company covenants and agrees that, during the period from the date hereof
to the Effective Time, unless Parent shall otherwise agree in writing, the
businesses of the Company and its subsidiaries shall be conducted only in,
and the Company and its subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice;
and the Company and its subsidiaries shall each use its reasonable best
efforts to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries and
to preserve the present relationships of the Company and its subsidiaries
with customers, suppliers and other persons with which the Company or any of
its subsidiaries has significant business relations. By way of amplification
and not limitation, neither the Company nor any of its subsidiaries shall,
between the date of this Agreement and the Effective Time, directly or
indirectly do, or commit to do, any of the following without the prior
written consent of Parent:
(a) Amend or otherwise change its certificate of incorporation or
by-laws or equivalent organizational documents;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, (A) any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership interest
(including but not limited to stock appreciation rights or phantom
stock), of the Company or any of its subsidiaries (except for the
issuance of up to 1,749,829 shares of Company Common Stock required to
be issued pursuant to (1) the terms of Options outstanding as of
April 16, 1997, (2) the employment agreement effective July 1, 1996
between the Company and Thomas C. McDermott, and (3) the plan under
which non-employee directors are paid one-half of their annual retainer
in shares of Company Common Stock) or (B) any assets of the Company or
any of its subsidiaries, except for sales of products in the ordinary
course of business and in a manner consistent with past practice;
(c) Declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock (other than (1) regular quarterly
dividends consistent with past practice, in an amount not to exceed $.20
per share and (2) the distribution of Rights pursuant to the Rights
Plan);
(d) Reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) Acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization
or division thereof; (ii) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any
person, or make any loans, advances or capital contributions to, or
investments in, any other person (other than in the ordinary course of
business consistent with past practice); (iii) enter into any contract
or agreement other than in the ordinary course of business consistent
with past practice; or (iv) authorize any single capital expenditure
which is in excess of $1,500,000 or capital expenditures (during any
three month period) which are, in the aggregate, in excess of $7,500,000
for the Company and its subsidiaries taken as a whole;
(f) Except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the
date of this Agreement, increase the compensation or fringe benefits of
any of its directors, officers or employees, except for increases in
salary or wages of employees of the Company or its subsidiaries who are
not officers of the Company in the ordinary course of business in
accordance with past practice, or grant any severance or termination pay
not currently required to be paid under existing severance plans to or
enter into any employment, consulting or severance agreement or
arrangement with any present or former director, officer or other
employee of the Company or any of its subsidiaries, or establish, adopt,
enter into or amend or terminate any collective bargaining agreement or
Company Plan, including, but not limited to, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees;
(g) Except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(h) Make any material tax election or settle or compromise any
material federal, state, local or foreign tax liability;
(i) Settle or compromise any pending or threatened suit, action or
claim which is material or which relates to the transactions
contemplated hereby;
(j) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than the Merger);
(k) Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (1) in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and
consistent with past practice and (2) of liabilities required to be
paid, discharged or satisfied pursuant to the terms of any contract in
existence on the date hereof (including, without limitation, benefit
plans relating to directors); or
(l) Take, or offer or propose to take, or agree to take in writing
or otherwise, any of the actions described in Sections 5.1(a) through
5.1(k) or any action which would make any of the representations or
warranties of the Company contained in this Agreement untrue and
incorrect as of the date when made if such action had then been taken,
or would result in any of the conditions set forth in Annex A not being
satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meeting. (a) If required, the Company,
acting through its Board of Directors, shall in accordance with and subject
to applicable law and the Company's Certificate of Incorporation and By-Laws,
(i) duly call, give notice of, convene and hold a meeting of its stockholders
as soon as practicable following consummation of the Offer for the purpose of
considering and taking action on this Agreement and the transactions
contemplated hereby (the "Stockholders Meeting") and (ii) subject to its
fiduciary duties under applicable law, (A) include in the Proxy Statement the
unanimous recommendation of the Board of Directors that the stockholders of
the Company vote in favor of the approval of this Agreement and the
transactions contemplated hereby and the written opinion of the Financial
Adviser that the consideration to be received by the stockholders of the
Company pursuant to the Offer and the Merger is fair to such stockholders and
(B) use its reasonable best efforts to obtain the necessary approval of this
Agreement and the transactions contemplated hereby by its stockholders. At
the Stockholders Meeting, Parent and Purchaser shall cause all Shares then
owned by them and their subsidiaries to be voted in favor of approval of this
Agreement and the transactions contemplated hereby.
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the outstanding Shares, the Company agrees, at
the request of Purchaser, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as
reasonably practicable after such acquisition, without a meeting of the
Company's stockholders, in accordance with Section 253 of the DGCL.
SECTION 6.2 Proxy Statement. If required by applicable law, as
soon as practicable following Parent's request, the Company shall file with
the SEC under the Exchange Act and the rules and regulations promulgated
thereunder, and shall use its reasonable best efforts to have cleared by the
SEC, the Proxy Statement with respect to the Stockholders Meeting. Parent,
Purchaser and the Company will cooperate with each other in the preparation
of the Proxy Statement; without limiting the generality of the foregoing,
each of Parent and Purchaser will furnish to the Company the information
relating to it required by the Exchange Act and the rules and regulations
promulgated thereunder to be set forth in the Proxy Statement. The Company
agrees to use its reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to any comments made by the SEC with
respect to the Proxy Statement and any preliminary version thereof filed by
it and cause such Proxy Statement to be mailed to the Company's stockholders
at the earliest practicable time.
SECTION 6.3 Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and
from time to time thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board
of Directors of the Company as shall give Purchaser representation on the
Board of Directors equal to the product of the total number of directors on
such Board (giving effect to the directors elected pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Purchaser or any affiliate of Purchaser bears to the total number of
Shares then outstanding, and the Company shall, at such time, promptly take
all action necessary to cause Purchaser's designees to be so elected,
including either increasing the size of the Board of Directors or securing
the resignations of incumbent directors or both. At such times, the Company
will use its reasonable best efforts to cause persons designated by Purchaser
to constitute the same percentage as is on the board of (i) each committee of
the Board of Directors, (ii) each board of directors of each subsidiary of
the Company and (iii) each committee of each such board, in each case only to
the extent permitted by law. Until Purchaser acquires a majority of the
outstanding Shares on a fully diluted basis, the Company shall use its
reasonable best efforts to ensure that all the members of the Board of
Directors and such boards and committees as of the date hereof who are not
employees of the Company shall remain members of the Board of Directors and
such boards and committees.
(b) The Company's obligations to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-
1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 6.3 and shall include in the Schedule 14D-9 or
a separate Rule 14f-1 information statement provided to stockholders such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 to fulfill its obligations under
this Section 6.3. Parent or Purchaser will supply to the Company and be
solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
(c) Following the election or appointment of Purchaser's designees
pursuant to this Section 6.3 and prior to the Effective Time, any amendment,
or waiver of any term or condition, of this Agreement or the Certificate of
Incorporation or By-Laws of the Company, any termination of this Agreement by
the Company, any extension by the Company of the time for the performance of
any of the obligations or other acts of Purchaser or waiver or assertion of
any of the Company's rights hereunder, and any other consent or action by the
Board of Directors with respect to this Agreement, will require only the
concurrence of a majority of the directors of the Company then in office who
are neither designated by Purchaser nor are employees of the Company (the
"Disinterested Directors") and such concurrence shall constitute the
authorization of the Board of Directors of the Company and no other action by
the Company, including any action by any other director of the Company, shall
be required for purposes of this Agreement. The number of Disinterested
Directors shall be not less than two. Any person who is a director on the
date of this Agreement, but who, in order to carry out the provisions of this
Section 6.3, is not a director at the Effective Time, shall be entitled to
receive all payments at the time such director resigns as he or she otherwise
would have been entitled to receive if he or she had been a director as of
the Effective Time.
SECTION 6.4 Access to Information; Confidentiality. (a) From the
date hereof to the Effective Time, the Company shall, and shall cause its
subsidiaries, officers, directors, employees, auditors and other agents to,
afford the officers, employees, auditors and other agents of Parent, and
financing sources who shall agree to be bound by the provisions of this
Section 6.4 as though a party hereto, complete access, consistent with
applicable law, at all reasonable times to its officers, employees, agents,
properties, offices, plants and other facilities and to all books and
records, and shall furnish Parent and such financing sources with all
financial, operating and other data and information as Parent, through its
officers, employees or agents, or such financing sources may from time to
time reasonably request.
(b) Each of Parent and Purchaser will hold and will cause its
officers, employees, auditors and other agents to hold in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all documents and information concerning the Company and
its subsidiaries furnished to Parent or Purchaser in connection with the
transactions contemplated in this Agreement (except to the extent that such
information can be shown to have been generally available to you on a non-
confidential basis prior to the date hereof or becomes generally available to
you on a non-confidential basis after the date hereof; provided that the
source of such information was not known by you to be bound by a
confidentiality agreement and will not release or disclose such information
to any other person, except (1) the officers, directors, employees, counsel,
investment bankers and other representatives of Parent and the Purchaser who
need to know such information for the purposes of evaluating the Merger and
the other transactions contemplated by this Agreement and (2) any other
person after the Company has provided written consent to such disclosure. If
the transactions contemplated by this Agreement are not consummated, such
confidence shall be maintained for a period of two years from the date hereof
and, if requested by or on behalf of the Company, Parent and Purchaser will,
and will use all reasonable efforts to cause their auditors and other agents
to, return to the Company or destroy all copies of written information
furnished by the Company to Parent and Purchaser or their agents,
representatives or advisors. It is understood that Parent and Purchaser
shall be deemed to have satisfied their obligation to hold such information
confidential if they exercise the same care as they take to preserve
confidentiality for their own similar information.
(c) No investigation pursuant to this Section 6.4 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 6.5 No Solicitation of Transactions. The Company, its
affiliates and their respective officers, directors, employees,
representatives and agents shall immediately cease any existing discussions
or negotiations, if any, with any parties conducted heretofore with respect
to any acquisition or exchange of all or any material portion of the assets
of, or more than 20% of the equity interest in, the Company or any of its
subsidiaries or any business combination with or involving the Company or any
of its subsidiaries. The Company may, directly or indirectly, furnish
information and access, in each case only in response to a request for such
information or access to any person made after the date hereof which was not
encouraged, solicited or initiated by the Company or any of its affiliates or
any of its or their respective officers, directors, employees,
representatives or agents after the date hereof, pursuant to appropriate
confidentiality agreements, and may participate in discussions and negotiate
with such person concerning any merger, sale of assets, sale of shares of
capital stock or similar transaction (including an exchange of stock or
assets) involving the Company or any subsidiary or division of the Company,
if such person has submitted a written proposal to the Board of Directors of
the Company relating to any such transaction and the Board determines in good
faith, based upon the advice of outside counsel to the Company, that failing
to take such action would constitute a breach of the Board's fiduciary duty
under applicable law. The Board shall notify Parent immediately if any such
proposal is made and shall in such notice, indicate in reasonable detail the
identity of the offeror and the terms and conditions of any proposal and
shall keep Parent promptly advised of all developments which could reasonably
be expected to culminate in the Board of Directors withdrawing, modifying or
amending its recommendation of the Offer, the Merger and the other
transactions contemplated by this Agreement. Except as set forth in this
Section 6.5, neither the Company or any of its affiliates, nor any of its or
their respective officers, directors, employees, representatives or agents,
shall, directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent
and Purchaser, any affiliate or associate of Parent and Purchaser or any
designees of Parent or Purchaser) concerning any merger, sale of any material
portion or assets, sale of more than 20% of the shares of capital stock or
similar transactions (including an exchange of stock or assets) involving the
Company or any subsidiary of the Company; provided, however, that nothing
herein shall prevent the Board from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated
under the Exchange Act with regard to any tender offer; provided, further,
that the Board shall not recommend that the stockholders of the Company
tender their Shares in connection with any such tender offer unless the Board
shall have determined in good faith, based upon the advice of outside counsel
to the Company, that failing to take such action would constitute a breach of
the Board's fiduciary duty under applicable law. The Company agrees not to
release any third party from, or waive any provisions of, any confidentiality
or standstill agreement to which the Company is a party, unless the Board
shall have determined in good faith, based upon the advice of outside
counsel, that failing to release such third party or waive such provisions
would constitute a breach of the fiduciary duties of the Board of Directors
under applicable law.
SECTION 6.6 Employee Benefits Matters. (a) On and after the
Effective Time, Parent shall cause the Surviving Corporation and its
subsidiaries to promptly pay or provide when due all compensation and
benefits earned through or prior to the Effective Time as provided pursuant
to the terms of any compensation arrangements, employment agreements and
employee or director benefit plans (including, without limitation, deferred
compensation plans), programs and policies in existence as of the date hereof
for all employees (and former employees) and directors (and former directors)
of the Company and its subsidiaries. Parent and the Company agree that the
Surviving Corporation and its subsidiaries shall pay promptly or provide when
due all compensation and benefits required to be paid pursuant to the terms
of any individual agreement with any employee, former employee, director or
former director in effect as of the date hereof.
(b) Parent shall cause the Surviving Corporation, for the period
commencing at the Effective Time and ending on the first anniversary thereof,
to provide employee benefits under plans, programs and arrangements which, in
the aggregate, will provide benefits to the employees of the Surviving
Corporation and its subsidiaries (other than employees covered by a
collective bargaining agreement) which are no less favorable in the aggregate
than those provided pursuant to the plans, programs and arrangements (other
than those related to the equity securities of the Company) of the Company
and its subsidiaries in effect on the date hereof and employees covered by
collective bargaining agreements shall be provided with such benefits as
shall be required under the terms of any applicable collective bargaining
agreement; provided, however, that nothing herein shall prevent the amendment
or termination of any specific plan, program or arrangement, require that the
Surviving Corporation provide or permit investment in the securities of
Parent, the Company or the Surviving Corporation or interfere with the
Surviving Corporation's right or obligation to make such changes as are
necessary to conform with applicable law. Employees of the Surviving
Corporation shall be given credit for all service with the Company and its
subsidiaries, to the same extent as such service was credited for such
purpose by the Company, under each employee benefit plan, program, or
arrangement of the Parent in which such employees are eligible to participate
for purposes of eligibility and vesting; provided, however, that in no event
shall the employees be entitled to any credit to the extent that it would
result in a duplication of benefits with respect to the same period of
service.
(c) If employees of the Surviving Corporation and its subsidiaries
become eligible to participate in a medical, dental or health plan of Parent
or its subsidiaries, Parent shall cause such plan to (i) waive any
preexisting condition limitations for conditions covered under the applicable
medical, health or dental plans of the Company and its subsidiaries and (ii)
honor any deductible and out of pocket expenses incurred by the employees and
their beneficiaries under such plans during the portion of the calendar year
prior to such participation.
(d) Nothing in this Section 6.8 shall require the continued
employment of any person or, with respect to clauses (b) and (c) hereof,
prevent the Company and/or the Surviving Corporation and their subsidiaries
from taking any action or refraining from taking any action which the Company
and its subsidiaries prior to the Effective Time, could have taken or
refrained from taking.
SECTION 6.7 Directors' and Officers' Indemnification and
Insurance. (a) The By-Laws of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set
forth in Article 12 of the By-laws of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at the Effective Time were directors, officers
or employees of the Company.
(b) Parent shall use its reasonable best efforts to cause to be
maintained in effect for six years from the Effective Time the current
policies of the directors' and officers' liability insurance maintained by
the Company (provided that Parent may substitute therefor policies of at
least the same coverage containing terms and conditions which are not
materially less advantageous) with respect to matters occurring prior to the
Effective Time to the extent available; provided, however, that in no event
shall Parent or the Company be required to expend more than an amount per
year equal to 150% of current annual premiums paid by the Company (which the
Company represents and warrants to be not more than $250,000) to maintain or
procure insurance coverage pursuant hereto.
(c) For six years after the Effective Time, Parent agrees that it
will or will cause the Surviving Corporation to indemnify and hold harmless
each present and former director and officer of the Company, determined as of
the Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") (but only to the extent such
Costs are not otherwise covered by insurance and paid) incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent permitted under applicable law (and Parent shall ,or shall cause the
Surviving Corporation to, also advance expenses as incurred to the fullest
extent permitted under applicable law provided the person to whom expenses
are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification).
(d) Any Indemnified Party wishing to claim indemnification under
paragraph (c) of this Section 6.7, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent thereof, but
the failure to so notify shall not relieve Parent of any liability it may
have to such Indemnified Party if such failure does not materially prejudice
Parent. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i)
Parent or the Surviving Corporation shall have the right to assume the
defense thereof and Parent shall not be liable to such Indemnified Parties
for any legal expenses of other counsel or any other expenses subsequently
incurred by such Indemnified Parties in connection with the defense thereof,
except that if Parent or the Surviving Corporation elects not to assume such
defense or counsel for the Indemnified Parties advises that there are issues
that raise conflicts of interest between Parent or the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Parent or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that Parent
shall be obligated pursuant to this paragraph (d) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction unless the use of one
counsel for such Indemnified Parties would present such counsel with a
conflict of interest, (ii) the Indemnified Parties will cooperate in the
defense of any such matter and (iii) Parent shall not be liable for any
settlement effected without its prior written consent, which consent shall
not be unreasonably withheld; and provided, further, that Parent shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final, that the indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law.
SECTION 6.8 Delivery of Schedules. The Company shall deliver to
Parent, within ten business days after the date hereof, a schedule listing
all Foreign Company Plans. With respect to each Foreign Company Plan, the
Company will deliver or make available within ten business days after the
date hereof, to Parent a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the
extent applicable: (i) any related trust agreement or other funding
instrument; (ii) the most recent determination letter, if applicable;
(iii) any summary plan description and other written communications by the
Company or any of its subsidiaries to their employees concerning the extent
of the benefits provided under a Company Plan; and (iv) for the three most
recent years (A) the Form 5500 and attached schedules, (B) audited financial
statements and (C) actuarial valuation reports.
SECTION 6.9 Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would, if such representation or warranty were
required to be made at such time, be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate; provided,
however, that the delivery of any notice pursuant to this Section 6.9 shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 6.10 Further Action; Reasonable Best Efforts. (a) Upon
the terms and subject to the conditions hereof, each of the parties hereto
shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement as soon as
practicable, including but not limited to (i) cooperation in the preparation
and filing of the Offer Documents, the Schedule 14D-9, the Proxy Statement,
any required filings under the HSR Act or other foreign filings and any
amendments to any thereof and (ii) using its reasonable best efforts to
promptly make all required regulatory filings and applications including,
without limitation, responding promptly to requests for further information
and to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to
contracts with the Company and its subsidiaries as are necessary for the
consummation of the transactions contemplated by this Agreement and to
fulfill the conditions to the Offer and the Merger. In case at any time
after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall use their reasonable best efforts to
take all such necessary action.
(b) The Company and Parent each shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or
other communications received by Parent or the Company, as the case may be,
or any of their subsidiaries, from any Governmental Authority with respect to
the Offer or the Merger or any of the other transactions contemplated by this
Agreement. The parties hereto will consult and cooperate with one another,
and consider in good faith the views of one another in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted by or on behalf of any party hereto in
connection with proceedings under or relating to the HSR Act or any other
antitrust law.
(c) Without limiting the generality of the undertakings pursuant
to this Section 6.10: (i) Parent agrees to, if necessary to prevent any
Governmental Authority from taking steps to obtain, or from issuing, any
order, injunction, decree, judgment or ruling or the taking of any other
action restraining, enjoining or otherwise prohibiting the Offer or the
Merger, offer to accept an order to divest (or enter into a consent decree or
other agreement giving effect thereto) such of the Company's or Parent's
assets and business as may be necessary to forestall such order, decree,
ruling or action and to hold separate such assets and business pending such
divestiture, but only if the amount of such assets and businesses would not
be material (measured in relation to the combined assets or revenues of the
Company and its subsidiaries and Parent's fluid technology business, taken as
a whole); and (ii) the Company and Parent each agree to contest and resist
any action seeking to have imposed any order, decree, judgment, injunction,
ruling or other order (whether temporary, preliminary or permanent) (an
"Order") that would delay, restrain, enjoin or otherwise prohibit
consummation of the Offer or the Merger and in the event that any such
temporary or preliminary Order is entered in any proceeding that would make
consummation of the Offer or the Merger in accordance with the terms of this
Agreement unlawful or that would prevent or delay consummation of the Offer
or the Merger or the other transactions contemplated by this Agreement, to
use its reasonable best efforts to take promptly any and all steps (including
the appeal thereof, the posting of a bond or the taking of the steps
contemplated by clause (i) of this paragraph) necessary to vacate, modify or
suspend such Order so as to permit such consummation as promptly as
practicable after the date hereof.
SECTION 6.11 Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Offer or the Merger and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with
its securities exchange.
SECTION 6.12 Disposition of Litigation. The Company agrees that
it will not settle any litigation currently pending, or commenced after the
date hereof, against the Company or any of its directors by any stockholder
of the Company relating to the Offer or this Agreement, without the prior
written consent of Parent (which shall not be unreasonably withheld).
SECTION 6.13 Rights. The Company will promptly adopt a
Stockholder Rights Plan (the "Rights Plan") in the form delivered to Parent
on or prior to the date hereof. Immediately prior to the purchase of Shares
pursuant to the Offer, the Board of Directors of the Company shall take all
necessary action to terminate all of the outstanding Rights (as defined in
the Rights Plan), effective immediately prior thereto. The Company has
taken, or prior to the adoption of such Rights Plan, will take, all necessary
action so that none of the execution of this Agreement, the making of the
Offer, the acquisition of Shares pursuant to the Offer or the consummation of
the Merger will (i) cause the Rights issued pursuant to such Rights Plan to
become exercisable, (ii) cause any person to become an Acquiring Person (as
defined in the Rights Plan) or (iii) give rise to a Separation Time (as
defined in the Rights Plan) or a Flip-In Date (as defined in the Rights
Plan). The Company will not amend the Rights Plan.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) If required by the DGCL, this Agreement shall have been
approved by the affirmative vote of the stockholders of the Company by
the requisite vote in accordance with the Company's Certificate of
Incorporation and the DGCL (which the Company has represented shall be
solely the affirmative vote of a majority of the outstanding Shares).
(b) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any United
States, foreign, federal or state court or governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the
Merger.
(c) Purchaser shall have purchased Shares pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) By mutual written consent of Parent, Purchaser and the
Company;
(b) By Parent or the Company if any court of competent
jurisdiction or other governmental body located or having jurisdiction
within the United States or any country or economic region in which
either the Company or Parent, directly or indirectly, has material
assets or operations, shall have issued a final order, injunction,
decree, judgment or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Offer or the Merger and such
order, injunction, decree, judgment, ruling or other action is or shall
have become final and nonappealable;
(c) By Parent (only following the Outside Date (as defined below),
in the case of clause (ii) below) if due to an occurrence or
circumstance which resulted in a failure to satisfy any of the Offer
Conditions, Purchaser shall have (i) terminated the Offer in accordance
with the terms of this Agreement or (ii) failed to pay for Shares
pursuant to the Offer on or prior to the Outside Date;
(d) By the Company (only following the Outside Date, in the case
of clause (ii)(B) below) if (i) there shall have been a material breach
of any covenant or agreement on the part of Parent or the Purchaser
contained in this Agreement which materially adversely affects Parent's
or Purchaser's ability to consummate (or materially delays commencement
or consummation of) the Offer, and which shall not have been cured prior
to the earlier of (A) 10 business days following notice of such breach
and (B) two business days prior to the date on which the Offer expires,
(ii) Purchaser shall have (A) terminated the Offer or (B) failed to pay
for Shares pursuant to the Offer on or prior to the Outside Date (unless
such failure is caused by or results from the failure of any
representation or warranty of the Company to be true and correct in any
material respect or the failure of the Company to perform in any
material respect any of its covenants or agreements contained in this
Agreement) or (iii) prior to the purchase of Shares pursuant to the
Offer, any person shall have made a bona fide offer to acquire the
Company (A) that the Board of Directors of the Company determines in its
good faith judgment is more favorable to the Company's stockholders than
the Offer and the Merger and (B) as a result of which the Board of
Directors determines in good faith, based upon the advice of outside
counsel, that it is obligated by its fiduciary obligations under
applicable law to terminate this Agreement, provided that such
termination under this clause (iii) shall not be effective until the
Company has made payment of the full fee and expense reimbursement
required by Section 8.3; or
(e) By Parent prior to the purchase of Shares pursuant to the
Offer, if (i) there shall have been a breach of any covenant or
agreement on the part of the Company contained in this Agreement which
is reasonably likely to have a Material Adverse Effect on the Company or
which materially adversely affects (or materially delays) the
consummation of the Offer, which shall not have been cured prior to the
earlier of (A) 10 business days following notice of such breach and (B)
two business days prior to the date on which the Offer expires, (ii) the
Board shall have withdrawn or modified (including by amendment of the
Schedule 14D-9) in a manner adverse to Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger or shall have
recommended another offer or transaction, or shall have resolved to
effect any of the foregoing, or (iii) the Minimum Condition shall not
have been satisfied by the expiration date of the Offer as it may have
been extended pursuant hereto and on or prior to such date (A) any
person (including the Company but not including Parent or Purchaser)
shall have made a public announcement with respect to a Third Party
Acquisition that contemplates a direct or indirect consideration (or
implicit valuation) for Shares (including the value of any stub equity)
in excess of the per Share Merger Consideration or (B) any person
(including the Company or any of its affiliates or subsidiaries), other
than Parent or any of its affiliates shall have become (and remain at
the time of termination) the beneficial owner of 19.9% or more of the
Shares (unless such person shall have tendered and not withdrawn such
person's Shares pursuant to the Offer). As used herein, the "Outside
Date" shall mean the latest of (A) 70 days following the date hereof,
(B) the date that all conditions to the Offer set forth in paragraph (a)
and (h) of the Offer Conditions, the satisfaction of which involve
compliance with or otherwise relate to any United States antitrust or
competition laws or regulations (including any enforcement thereof),
have been satisfied for a period of 10 business days, or (C) 10 business
days following the conclusion of any ongoing proceedings before any
foreign Governmental Authority in connection with its review of the
transactions contemplated hereby pursuant to any foreign antitrust or
competition law or regulation; provided that in no event shall the
Outside Date be later than December 31, 1997.
SECTION 8.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any
party hereto except as set forth in Section 8.3 and Section 9.1; provided,
however, that nothing herein shall relieve any party from liability for any
wilful breach hereof.
SECTION 8.3 Fees and Expenses.
(a) If:
(i) Parent terminates this Agreement pursuant to Section 8.1(e)(i)
hereof, or if the Company terminates this Agreement pursuant to Section
8.1(d)(ii) hereof under circumstances that would have permitted Parent
to terminate this Agreement pursuant to Section 8.1(e)(i) hereof, and
within 15 months thereafter, the Company enters into an agreement with
respect to a Third Party Acquisition, or a Third Party Acquisition
occurs, involving any party (or any affiliate or associate thereof) (x)
with whom the Company (or its agents) had any discussions with respect
to a Third Party Acquisition, (y) to whom the Company (or its agents)
furnished information with respect to or with a view to a Third Party
Acquisition or (z) who had submitted a proposal or expressed any
interest publicly or to the Company in a Third Party Acquisition, in the
case of each of clauses (x), (y) and (z) prior to such termination; or
(ii) Parent terminates this Agreement pursuant to Section 8.1(e)(i)
hereof, or if the Company terminates this Agreement pursuant to Section
8.1(d)(ii) hereof under circumstances that would have permitted Parent
to terminate this Agreement pursuant to Section 8.1(e)(i) hereof and
within 15 months thereafter the Company enters into an agreement with
respect to a Third Party Acquisition that contemplates a direct or
indirect consideration (or implicit valuation) for Shares (including the
value of any stub equity) in excess of the per Share Merger
Consideration; or
(iii) (1) the Company terminates this Agreement pursuant to
8.1(d)(iii) or (2) the Company terminates this Agreement pursuant to
Section 8.1(d)(ii)(B) hereof and at such time Parent would have been
permitted to terminate this Agreement under Section 8.1(e)(ii) or (iii)
hereof or (3) Parent terminates this Agreement pursuant to Section
8.1(e)(ii) or (iii) hereof;
then the Company shall pay to Parent and Purchaser, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with any termination contemplated by
Section 8.3(a)(iii) above, a fee, in cash, of $22 million (less any amounts
previously paid pursuant to Section 8.3(b)), provided, however, that the
Company in no event shall be obligated to pay more than one such fee with
respect to all such agreements and occurrences and such termination.
"Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger or similar
business combination by any person other than Parent, Purchaser or any
affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party of
20.0% or more of the assets of the Company and its subsidiaries, taken as a
whole; or (iii) the acquisition by a Third Party of 20.0% or more of the
outstanding Shares.
(b) Upon the termination of this Agreement (i) under circumstances
in which Parent shall have been entitled to terminate this Agreement pursuant
to Section 8.1(e)(i) hereof (whether or not expressly terminated on such
basis) or (ii) if any of the representations and warranties of the Company
contained in this Agreement were untrue or incorrect in any material respect
when made and at the time of termination remained untrue or incorrect in any
material respect and such misrepresentation materially adversely affected the
consummation (or materially delayed commencement or consummation) of the
Offer, then the Company shall reimburse Parent, Purchaser and their
affiliates (not later than one business day after submission of statements
therefor) for all actual documented out-of-pocket fees and expenses actually
incurred by any of them or on their behalf in connection with the Offer and
the Merger and the consummation of all transactions contemplated by this
Agreement (including, without limitation, fees and disbursements payable to
financing sources, investment bankers, counsel to Purchaser or Parent or any
of the foregoing, and accountants) up to a maximum amount of $2 million;
provided, however, that in no circumstances shall any payment be made under
this Section 8.3(b) after a payment has been made under Section 8.3(a).
Unless required to be paid earlier pursuant to Section 8.1(d), the Company
shall in any event pay the amount requested within one business day of such
request, subject to the Company's right to demand a return of any portion as
to which invoices are not received in due course after request by the
Company.
(c) Upon the termination of this Agreement (i) under circumstances
in which the Company shall have been entitled to terminate this Agreement
pursuant to Section 8.1(d)(i) hereof (whether or not expressly terminated on
such basis) or (ii) if any of the representations and warranties of Parent or
Purchaser contained in this Agreement were untrue or incorrect in any
material respect when made and at the time of termination remained untrue or
incorrect in any material respect and such misrepresentation materially
adversely affected Parent's or Purchaser's ability to consummate (or
materially delayed commencement or consummation of) the Offer, then Parent
shall reimburse the Company and its affiliates (not later than one business
day after submission of statements therefor) for all actual documented out-
of-pocket fees and expenses actually incurred by any of them or on their
behalf in connection with the Offer and the Merger and the consummation of
all transactions contemplated by this Agreement (including, without
limitation, fees and disbursements payable to financing sources, investment
bankers, counsel to the Company or any of the foregoing, and accountants) up
to a maximum amount of $2 million.
(d) Except as otherwise specifically provided herein, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
SECTION 8.4 Amendment. Subject to Section 6.3, this Agreement may
be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of
the Company, no amendment may be made which would reduce the amount or change
the type of consideration into which each Share shall be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.5 Waiver. Subject to Section 6.3, at any time prior to
the Effective Time, any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 8.1, as the case may be, except that the
agreements set forth in Article II, Section 6.6, Section 6.7 and Article IX
shall survive the Effective Time and those set forth in Section 6.4, Section
8.3 and Article IX shall survive termination of this Agreement.
SECTION 9.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by cable, telecopy, telegram or telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
if to Parent or Purchaser:
ITT Industries, Inc.
4 West Red Oak Lane
White Plains, NY 10604
Attention: Vincent A. Maffeo, Esq.
with an additional copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: William E. Curbow, Esq.
if to the Company:
Goulds Pumps, Incorporated
300 Willow Brook Office Park
Fairport, NY 14450
Attention: Michael T. Tomaino, Esq.
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: James C. Morphy, Esq.
SECTION 9.3 Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any Shares means a person
who shall be deemed to be the beneficial owner of such Shares (i) which
such person or any of its affiliates or associates beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates
or associates (as such term is defined in Rule 12b-2 of the Exchange
Act) has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon
the exercise of consideration rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding or (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or person with whom such person or any
of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of any shares;
(c) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of
the management policies of a person, whether through the ownership of
stock, as trustee or executor, by contract or credit arrangement or
otherwise;
(d) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a
significant segment of the accounting profession in the United States,
in each case applied on a basis consistent with the manner in which the
audited financial statements for the fiscal year of the Company ended
December 31, 1994 were prepared;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company,
the Surviving Corporation, Parent or such other person, as the case may
be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the stock or other equity
interests the holder of which is generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
SECTION 9.5 Entire Agreement; Assignment. This Agreement
constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof. This Agreement shall not be assigned by operation of
law or otherwise, except that Parent and Purchaser may assign all or any of
their respective rights and obligations hereunder to any direct or indirect
wholly owned subsidiary or subsidiaries of Parent, provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
SECTION 9.6 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in
this Agreement, express or implied, except for the provisions of Section 6.7,
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 9.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
SECTION 9.8 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ITT INDUSTRIES, INC.
By:/s/ Lawrence J. Swire
-----------------------------------
Title: Authorized Person
GEORGE ACQUISITION, INC.
By:/s/ Lawrence J. Swire
-----------------------------------
Title: Vice President
GOULDS PUMPS, INCORPORATED
By:/s/ Thomas C. McDermott
-----------------------------------
Title: Chairman, Chief Executive
Officer and President
ANNEX A
Offer Conditions
The capitalized terms used in this Annex A have the meanings set
forth in the attached Agreement, except that the term "Merger Agreement"
shall be deemed to refer to the attached Agreement and the term "Commission"
shall be deemed to refer to the SEC.
Notwithstanding any other provision of the Offer, but subject to
the terms and conditions of the Merger Agreement, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment
or, subject to the restriction referred to above, payment for any Shares
tendered pursuant to the Offer, and may amend or terminate the Offer (whether
or not any Shares have theretofore been purchased or paid for) to the extent
permitted by the Merger Agreement if, (i) at the expiration of the Offer, a
number of shares of Company Common Stock which, together with any Shares
owned by Parent or Purchaser, constitutes more than 50% of the voting power
(determined on a fully-diluted basis), on the date of purchase, of all the
securities of the Company entitled to vote generally in the election of
directors or in a merger shall not have been validly tendered and not
properly withdrawn prior to the expiration of the Offer, the ("Minimum
Condition") or (ii) at any time on or after the date of this Agreement and
prior to the acceptance for payment of Shares, any of the following
conditions occurs or has occurred:
(a) there shall have been entered any order, preliminary or
permanent injunction, decree, judgment or ruling in any action or
proceeding before any court or governmental, administrative or
regulatory authority or agency, or any statute, rule or regulation
enacted, entered, enforced, promulgated, amended or issued that is
applicable to Parent, Purchaser, the Company or any subsidiary or
affiliate of Purchaser or the Company or the Offer or the Merger, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency that: (i) makes illegal or otherwise
directly or indirectly restrains or prohibits or makes materially more
costly the making of the Offer in accordance with the terms of the
Merger Agreement, the acceptance for payment of, or payment for, some of
or all the Shares by Purchaser or any of its affiliates or the
consummation of the Merger; (ii) prohibits the ownership or operation by
the Company or any of its subsidiaries, or Parent or any of its
subsidiaries, of all or any material portion of the business or assets
of the Company or any of its subsidiaries, taken as a whole, or Parent
or its subsidiaries, taken as a whole, or (iii) materially limits the
ownership or operation by the Company or any of its subsidiaries, or
Parent or any of its subsidiaries, of all or any material portion of the
business or assets of the Company or any of its subsidiaries, taken as a
whole, or Parent or its subsidiaries, taken as a whole (other than, in
either case, assets or businesses of the Company or its subsidiaries or
Parent's fluid technology business that are not material (measured in
relation to the combined assets or revenues of the Company and its
subsidiaries and Parent's fluid technology business, taken as a whole))
or compels Parent or any of its subsidiaries to dispose of or hold
separate all or any portion of the businesses or assets of the Company
or any of its subsidiaries or Parent or any of its subsidiaries (other
than, in either case, assets or businesses of the Company or its
subsidiaries or Parent's fluid technology business that are not material
(measured in relation to the combined assets or revenues of the Company
and its subsidiaries and Parent's fluid technology business, taken as a
whole)), as a result of the transactions contemplated by the Offer or
the Merger Agreement; (iii) imposes limitations on the ability of
Parent, Purchaser or any of Parent's affiliates effectively to acquire
or hold or to exercise full rights of ownership of Shares, including
without limitation the right to vote any Shares acquired or owned by
Parent or Purchaser or any of its affiliates on all matters properly
presented to the stockholders of the Company, including without
limitation the adoption and approval of the Merger Agreement and the
Merger or the right to vote any shares of capital stock of any
subsidiary directly or indirectly owned by the Company; or (iv) requires
divestiture by Parent or Purchaser or any of their affiliates of any
Shares;
(b) there shall have occurred any event that is reasonably likely
to have a Material Adverse Effect;
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices (other than suspensions or
limitations triggered on the New York Stock Exchange by price
fluctuations on a trading day) for, securities on any national
securities exchange or in the over-the-counter market in the United
States, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any material
limitation (whether or not mandatory) by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign,
on, the extension of credit by banks or other lending institutions, (iv)
a commencement of a war or armed hostilities or other national calamity
directly involving the United States or materially adversely affecting
(or material delaying) the consummation of the Offer or (v) in the case
of any of the foregoing existing at the time of commencement of the
Offer, a material acceleration or worsening thereof;
(d) (i) it shall have been publicly disclosed or Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of more than 25.0% of the outstanding Shares has been
acquired by any corporation (including the Company or any of its
subsidiaries or affiliates), partnership, person or other entity or
group (as defined in Section 13(d)(3) of the Exchange Act), other than
Parent or any of its affiliates, or (ii) (A) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified in
a manner adverse to Parent or Purchaser the approval or recommendation
of the Offer, the Merger or the Merger Agreement, or approved or
recommended any takeover proposal or any other acquisition of more than
5% of the outstanding Shares other than the Offer and the Merger, (B)
any such corporation, partnership, person or other entity or group shall
have entered into a definitive agreement or an agreement in principle
with the Company with respect to a tender offer or exchange offer for
any Shares or a merger, consolidation or other business combination with
or involving the Company or any of its subsidiaries, or (C) the Board of
Directors of the Company or any committee thereof shall have resolved to
do any of the foregoing;
(e) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified by reference to a
Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be
true and correct in any respect that is reasonably likely to have a
Material Adverse Effect, in each case as if such representations and
warranties were made at the time of such determination;
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it under the Merger Agreement;
(g) the Merger Agreement shall have been terminated in accordance
with its terms or the Offer shall have been terminated with the consent
of the Company; or
(h) any waiting periods under the HSR Act applicable to the
purchase of Shares pursuant to the Offer or the Merger, and any
applicable waiting periods under any foreign statutes or regulations,
shall not have expired or been terminated;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (except for any
action or inaction by Purchaser or any of its affiliates constituting a
breach of the Merger Agreement) giving rise to any such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment of
or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and
may be asserted by Purchaser regardless of the circumstances giving rise to
any such condition (except for any action or inaction by Purchaser or any of
its affiliates constituting a breach of the Merger Agreement) or (other than
the Minimum Condition) may be waived by Purchaser in whole or in part at any
time and from time to time in its sole discretion (subject to the terms of
the Merger Agreement). The failure by Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right that
may be asserted at any time and from time to time.