1
Exhibit (c)(1)
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SHARE PURCHASE AGREEMENT
between
II ACQUISITION CORP.
and
IMO INDUSTRIES INC.
Dated as of July 25, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I
THE OFFER
SECTION 1.01 The Offer.........................................................1
SECTION 1.02 Termination of Existing Offer.....................................2
SECTION 1.03 Company Action....................................................3
SECTION 1.04 Stock Options.....................................................5
ARTICLE II
[RESERVED].................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries......................5
SECTION 3.02 Certificate of Incorporation and Bylaws...........................6
SECTION 3.03 Capitalization....................................................6
SECTION 3.04 Authority Relative to this Agreement..............................7
SECTION 3.05 No Conflict; Required Filings and Consents........................7
SECTION 3.06 Compliance........................................................8
SECTION 3.07 SEC Filings; Financial Statements.................................8
SECTION 3.08 Absence of Certain Changes or Events.............................10
SECTION 3.09 Absence of Litigation............................................10
SECTION 3.10 Employee Benefit Plans...........................................11
SECTION 3.11 Labor Matters....................................................13
SECTION 3.12 Offer Documents; Schedule 14D-9..................................14
SECTION 3.13 Tangible Property; Real Property and Leases......................14
SECTION 3.14 Trademarks, Patents and Copyrights...............................15
SECTION 3.15 Taxes............................................................15
SECTION 3.16 Environmental Matters............................................17
SECTION 3.17 Material Contracts...............................................18
SECTION 3.18 Insurance; Workers' Compensation.................................18
SECTION 3.19 Certain Payments; Absence of Certain Business Practices..........19
SECTION 3.20 Licenses and Permits.............................................19
3
SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees......................20
SECTION 3.22 Brokers..........................................................20
SECTION 3.23 Rights Agreement.................................................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
SECTION 4.01 Corporate Organization...........................................20
SECTION 4.02 Authority Relative to This Agreement.............................20
SECTION 4.03 No Conflict; Required Filings and Consents.......................21
SECTION 4.04 Financing........................................................21
SECTION 4.05 Offer Documents..................................................22
ARTICLE V
CONDUCT OF BUSINESS PENDING CONSUMMATION OF THE OFFER
SECTION 5.01 Conduct of Business by the Company Pending the Consummation of
the Offer.......................................................22
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 [Reserved].......................................................25
SECTION 6.02 [Reserved].......................................................25
SECTION 6.03 Company Board Representation; Section 14(f)......................25
SECTION 6.04 Access to Information; Confidentiality...........................26
SECTION 6.05 No Solicitation of Transactions..................................27
SECTION 6.06 Employee Benefits Matters; Employment Agreements.................27
SECTION 6.07 Directors' and Officers' Indemnification and Insurance...........27
SECTION 6.08 Notification of Certain Matters..................................29
SECTION 6.09 Further Action; Reasonable Efforts...............................29
SECTION 6.10 Public Announcements.............................................30
SECTION 6.11 Confidentiality Agreement........................................30
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ARTICLE VII
[RESERVED]
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination......................................................31
SECTION 8.02 Effect of Termination............................................32
SECTION 8.03 Fees and Expenses................................................32
SECTION 8.04 Amendment........................................................34
SECTION 8.05 Waiver...........................................................34
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements.......35
SECTION 9.02 Notices..........................................................35
SECTION 9.03 Certain Definitions..............................................36
SECTION 9.04 Severability.....................................................37
SECTION 9.05 Entire Agreement, Assignment.....................................37
SECTION 9.06 Parties in Interest..............................................38
SECTION 9.07 Specific Performance.............................................38
SECTION 9.08 Governing Law....................................................38
SECTION 9.09 Headings.........................................................38
SECTION 9.10 Counterparts.....................................................38
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GLOSSARY OF DEFINED TERMS
Location of
Definitions
-----------
affiliate........................................................... ss. 9.03(a)
Agreement........................................................... Preamble
beneficial owner.................................................... ss. 9.03(b)
Blue Sky Laws....................................................... ss. 3.05(b)
Board............................................................... Recitals
business day........................................................ ss. 9.03(c)
Code................................................................ ss. 3.10(b)
Company............................................................. Preamble
Confidentiality Agreement........................................... ss. 6.04(b)
Constituent Documents............................................... ss. 3.02
Consummation Date................................................... ss. 6.07(a)
control............................................................. ss. 9.03(d)
controlled by....................................................... ss. 9.03(d)
Credit Agreement.................................................... ss. 4.04(b)
Credit Suisse First Boston.......................................... ss. 1.03(a)
Disclosure Schedule................................................. ss. 3.01
Environmental Law................................................... ss. 3.16(a)
ERISA............................................................... ss. 3.10(a)
ERISA Affiliate..................................................... ss. 3.10(c)
ERISA Plan.......................................................... ss. 3.10(b)
Exchange Act........................................................ ss. 1.03(b)
Expenses............................................................ ss. 8.03(c)
Fee................................................................. ss. 8.03(a)
GAAP................................................................ ss. 3.07(b)
Hazardous Substances................................................ ss. 3.16(a)
HSR Act............................................................. ss. 3.05(b)
Indemnified Parties................................................. ss. 6.07(b)
Inapplicable Option................................................. ss. 1.04
Information Statement............................................... ss. 3.12
IRS................................................................. ss. 3.10(a)
Material Adverse Effect............................................. ss. 3.01
Material Contracts.................................................. ss. 3.17
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Material Subsidiaries............................................... ss. 3.01
Minimum Condition................................................... ss. 1.01(a)
Multiemployer Plan.................................................. ss. 3.10(b)
1996 Balance Sheet.................................................. ss. 3.07(c)
Offer............................................................... Recitals
Offer Documents..................................................... ss. 1.01(b)
Offer to Purchase................................................... ss. 1.01(b)
Option Spread Amount................................................ ss.1.04
Pension Plan........................................................ ss. 3.10(b)
Per Share Amount.................................................... Recitals
person.............................................................. ss. 9.03(e)
Plans............................................................... ss. 3.10(a)
Purchaser........................................................... Preamble
Purchaser's Election Date........................................... ss. 5.01
Rights.............................................................. ss. 1.03(a)
Rights Agreement.................................................... ss. 1.03(a)
Schedule 14D-1...................................................... ss. 1.01(b)
Schedule 14D-9...................................................... ss. 1.03(b)
SEC................................................................. ss. 1.01(a)
SEC Reports......................................................... ss. 3.07(a)
Securities Act...................................................... ss. 3.07(a)
Shares.............................................................. Recitals
Stock Option Plans.................................................. ss. 3.03
Subsidiary.......................................................... ss. 3.01
subsidiary.......................................................... ss. 9.03(f)
Tax or Taxes........................................................ ss. 3.15(n)
Third Party......................................................... ss. 8.03(f)
Third Party Acquisition............................................. ss. 8.03(f)
Transactions........................................................ ss. 3.04
UDI................................................................. ss. 1.02
UDI Agreement....................................................... ss. 1.02
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SHARE PURCHASE AGREEMENT, dated as of July 25, 1997 (this
"Agreement"), between II ACQUISITION CORP., a Delaware corporation ("Purchaser")
and IMO INDUSTRIES INC., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Boards of Directors of Purchaser and the Company have
each determined that it is in the best interests of their respective
stockholders for Purchaser to acquire the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all the issued
and outstanding shares of common stock, par value U.S. $1.00 per share, of the
Company (the "Shares"), together with the associated Rights (as hereinafter
defined), for $7.05 per Share (such amount, or any greater amount per Share paid
pursuant to the Offer, being hereinafter referred to as the "Per Share Amount")
net to the seller in cash, subject to withholding of taxes, if applicable, upon
the terms and subject to the conditions of this Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the "Board"),
including all the disinterested directors on the Board, has unanimously approved
the making of the Offer and resolved and agreed to recommend that holders of
Shares tender their Shares pursuant to the Offer;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01 and none of the events or
circumstances set forth in Annex A hereto shall have occurred or be existing,
Purchaser agrees to commence the Offer as promptly as reasonably practicable
after the date hereof, but in no event later than five business days after the
first public announcement of the execution hereof. The obligation of Purchaser
to accept for payment and pay for Shares tendered pursuant to the Offer shall be
subject to the condition (the "Minimum
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Condition") that the number of Shares validly tendered and not withdrawn prior
to the expiration of the Offer, combined with any Shares already owned by
Purchaser or any of its affiliates, constitute more than 80% of the outstanding
Shares at the expiration of the Offer and also shall be subject to the
satisfaction of the other conditions set forth in Annex A. Purchaser expressly
reserves the right to waive any such condition, to increase the price per Share
payable in the Offer, and to make any other changes in the terms and conditions
of the Offer; provided, however, that Purchaser agrees that no change may be
made without the consent of the Company which decreases the price per Share
payable in the Offer, which changes the form of consideration to be paid in the
Offer, which reduces the maximum number of Shares to be purchased in the Offer,
which extends the expiration date of the Offer (except that Purchaser may extend
the expiration date of the Offer (a) as required to comply with any rule,
regulation or interpretation of the Securities and Exchange Commission (the
"SEC") or (b) for one or more times each for an aggregate period of up to 15
days (and not to exceed 60 days from the date of commencement) for any reason
other than those specified in the immediately preceding clause (a)) or which
imposes conditions to the Offer in addition to those set forth in Annex A
hereto. The Per Share Amount shall, subject to applicable withholding of taxes,
be net to the seller in cash, upon the terms and subject to the conditions of
the Offer. Subject to the terms and conditions of the Offer (including, without
limitation, the Minimum Condition), Purchaser agrees to pay, as promptly as
practicable after expiration of the Offer, for all Shares validly tendered and
not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Purchaser will file with the SEC a Tender Offer Statement on Schedule
14D-1 (together with all amendments and supplements thereto, the "Schedule
14D-1") with respect to the Offer, which shall have been provided to the Company
and to which the Company shall not have reasonably objected. The Schedule 14D-1
will contain or will incorporate by reference an offer to purchase (the "Offer
to Purchase") and forms of the related letter of transmittal and any related
summary advertisement (the Schedule 14D-1, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "Offer Documents"). Purchaser and the Company
agree to correct promptly any information provided by any of them for use in the
Offer Documents which shall have become false or misleading, and Purchaser
further agrees 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 1.02 Termination of Existing Offer. The Company has given or
is simultaneously herewith giving notice to United Dominion Industries Limited
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("UDI") of the termination of the Agreement and Plan of Merger, dated as of June
26, 1997, among UDI, UD Delaware Corp. and the Company (the "UDI Agreement") and
has effected payment to UDI of the $8 million fee contemplated by Section
8.03(a) of the UDI Agreement and the deposit in escrow of $2 million for payment
to UDI in reimbursement of "Expenses" (as defined in the UDI Agreement) by
Purchaser having deposited such sums in an account with a recognized commercial
or investment bank and providing irrevocable instructions for transmission of
such funds to UDI upon its request and, in the case of the funds for
reimbursement of Expenses, submission of evidence of the incurrence thereof.
Upon the happening of the foregoing, the termination of the UDI Agreement shall
have become effective. The Board of Directors of the Company has unanimously
withdrawn its recommendation of the UDI Agreement and the transactions
contemplated thereby and recommend that the Company's stockholders not tender
their Shares pursuant to the tender offer commenced by UDI pursuant to the UDI
Agreement. Within two business days of the date hereof, the Company shall amend
its existing Schedule 14D-9, filed with the SEC in response to the UDI tender
offer, to reflect the recommendations of the Company's Board of Directors
described above, and shall file such amendment with the SEC and distribute it to
the Company's stockholders.
SECTION 1.03 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that (i) the Board, at a meeting duly
called and held on July 25, 1997, has unanimously (A) determined that this
Agreement and the transactions contemplated hereby, including the Offer, are
fair to and in the best interests of the stockholders of the Company, (B)
approved and adopted this Agreement and the transactions contemplated hereby,
and such approval constitutes approval of the foregoing for purposes of Section
203 of Delaware Law, (C) taken all action to avoid the occurrence of a
"Distribution Date" or a "Triggering Event" (each as defined in the Rights
Agreement dated as of April 30, 1997, between the Company and First Chicago
Trust Company of New York, as Rights Agent (the "Rights Agreement")) with
respect to the purchase of Shares pursuant to the Offer, with respect to the
rights to purchase shares of Series B Junior Participating Preferred Stock, par
value $1.00 (the "Rights") issued pursuant to the Rights Agreement, (D)
recommended that the stockholders of the Company accept the Offer and approve
and adopt this Agreement and the transactions contemplated hereby and (E)
approved, for purposes of Article X of the Company's Certificate of
Incorporation, a Business Combination (as defined therein) between Purchaser (or
any affiliate of Purchaser) and the Company, whereby each Share (other than
dissenting Shares and Shares owned by Purchaser or its affiliates) outstanding
at the time of such Business Combination would be cancelled and the holder
thereof would be entitled to receive an amount in cash equal to, (I) if such
Business Combination occurs within one year of the date hereof, not less than
the Per Share Amount, or (II) if such Business Combination occurs after one year
from the date hereof, an amount that is not
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less than the Per Share Amount and that, in the opinion of a nationally
recognized investment bank addressed to the Board, is fair from a financial
point of view to such holders, and (ii) Credit Suisse First Boston Corporation
("Credit Suisse First Boston") has delivered to the Board a written opinion to
the effect that, as of the date of such opinion, the consideration to be
received by the holders of Shares (other than Purchaser and its affiliates)
pursuant to the Offer is fair to such holders of Shares from a financial point
of view. Subject only to the fiduciary duties of the Board under applicable law
as advised by the Company's counsel, the Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Board described in
the immediately preceding sentence. The Company represents to Purchaser that the
Company has been advised by each of its directors and executive officers that
they intend either to tender or cause to be tendered all Shares beneficially
owned by them to Purchaser pursuant to the Offer.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company agrees that it will file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing, subject
only to the fiduciary duties of the Board under applicable law as advised by the
Company's counsel, the recommendation of the Board described in Section 1.03(a)
and shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any other applicable federal securities laws. The Company and
Purchaser agree to correct promptly any information provided by any of them for
use in the Schedule 14D-9 which shall have become false or misleading, 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) The Company agrees to promptly furnish Purchaser with mailing
labels containing the names and addresses of all record holders of Shares and
with security position listings of Shares held in stock depositories, each as of
a recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company agrees to furnish Purchaser with such
additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Purchaser or its agents may reasonably request.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer, Purchaser and its affiliates shall hold in confidence
the information contained in such labels, listings and files, shall use such
information only in connection with the Offer and, if this Agreement shall be
terminated in
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accordance with Section 8.01, shall deliver to the Company all copies of such
information then in their possession.
SECTION 1.04 Stock Options. All stock options granted under the
Stock Option Plans (as hereinafter defined) shall, at the Consummation Date (as
hereinafter defined), to the extent permitted by the applicable Stock Option
Plan and stock option agreement (if any), be cancelled, and the holder thereof
shall be entitled to receive from the Company (or from Purchaser if payment by
the Company would not be permitted under the Credit Agreement or the Indenture
dated as of April 15, 1996, between the Company and IBJ Xxxxxxxx Bank & Trust
Company, as Trustee), on the Consummation Date after the purchase of Shares
pursuant to the Offer or as soon as practicable thereafter, in consideration for
the cancellation of such option, an amount in cash (subject to any applicable
withholding tax) equal to the product of (a) the number of Shares previously
subject to such option and (b) the excess, if any, of the Per Share Amount over
the exercise price per Share previously subject to such option (the "Option
Spread Amount"). To the extent the cancellation of any options described above
is not permitted by the Stock Option Plan or stock option agreement applicable
to such options (the "Inapplicable Options"), Purchaser agrees to pay to the
holders of such Inapplicable Options an amount in cash equal to the applicable
Option Spread Amount upon surrender of such Inapplicable Options by such
holders. Payment therefor shall be made at such time as payment is made in
respect of the Shares purchased in the Offer.
ARTICLE II
[RESERVED]
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser that:
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of
the Company and each subsidiary of the Company (a "Subsidiary") is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
all necessary governmental
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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 or in good standing or to have such power, authority and governmental
approvals would not, individually or in the aggregate, have a Material Adverse
Effect (as defined below). The Company and each Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have a
Material Adverse Effect. When used in connection with the Company or any
Subsidiary, the term "Material Adverse Effect" means any effect that is or is
reasonably likely to be materially adverse to the business, operations,
financial condition, assets or liabilities (including, without limitation,
contingent liabilities) of the Company and the Subsidiaries taken as a whole. A
true and complete list of all the Subsidiaries, together with the jurisdiction
of incorporation of each Subsidiary and the percentage of the outstanding
capital stock of each Subsidiary owned by the Company and each other Subsidiary,
is set forth in Section 3.01 of the Disclosure Schedule, which has been
delivered prior to the date of this Agreement by the Company to Purchaser (the
"Disclosure Schedule"). Except as disclosed in such Section 3.01, the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, limited liability company,
joint venture or other business association or entity. The term "Material
Subsidiaries" means the Subsidiaries identified as Material Subsidiaries in
Section 3.01 of the Disclosure Schedule. The Subsidiaries that are not Material
Subsidiaries are not, individually and in the aggregate, material to the
business, operations or financial condition of the Company and all of the
Subsidiaries taken as a whole and do not, individually and in the aggregate,
have any material assets or liabilities (including contingent liabilities) when
considered in relation to the Company and all of the Subsidiaries taken as a
whole.
SECTION 3.02 Certificate of Incorporation and Bylaws. The Company
has heretofore furnished or made available to Purchaser a complete and correct
copy of the Certificate of Incorporation and the Bylaws or equivalent
organizational documents, each as amended to date (the "Constituent Documents"),
of the Company and each Material Subsidiary. The Constituent Documents of the
Company and its Material Subsidiaries are in full force and effect. Neither the
Company nor any Material Subsidiary is in violation of any provision of its
Constituent Documents.
SECTION 3.03 Capitalization. The authorized capital stock of the
Company consists of 5,000,000 shares of preferred stock (none of which is issued
and outstanding) and 25,000,000 Shares. As of July 23, 1997, (i) 17,126,609
Shares are
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issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no Shares are held by the Subsidiaries, and (iii) 2,882,657
Shares are reserved for issuance pursuant to grants or awards under the
Company's Amended and Restated Equity Incentive Plan for Key Employees, the
Company's Amended and Restated 1988 Equity Incentive Plan for Outside Directors
or the Company's 1995 Equity Incentive Plan for Outside Directors (collectively,
the "Stock Option Plans"). Except as set forth in this Section 3.03 or Section
3.03 of the Disclosure Schedule, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character obligating the Company
or any Material Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Material Subsidiary. Section 3.03
of the Disclosure Schedule sets forth a list, as of the date hereof, of the
names of each person holding options under the Stock Option Plans, and the
number of shares purchasable under, the exercise price of such options and date
such options were granted. All Shares subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 3.03 of the Disclosure Schedule,
there are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any Shares or any 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 Subsidiary or any
other person. Each outstanding share of capital stock of each Material
Subsidiary is duly authorized, validly issued, fully paid and nonassessable,
and, except as set forth in Section 3.03 of the Disclosure Schedule, each such
share owned by the Company or another Subsidiary is owned free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever.
SECTION 3.04 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 "Transactions"). The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Transactions 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.
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by Purchaser,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
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SECTION 3.05 No Conflict; Required Filings and Consents. (a) Except
as set forth in Section 3.05(a) of the Disclosure Schedule, the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, (i) conflict with or violate the Constituent
Documents of the Company or any Material Subsidiary, (ii) assuming that required
filings under the HSR Act (as hereinafter defined) are made by the appropriate
parties, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or any Subsidiary or by which any property or
asset of the Company or any Subsidiary is bound or affected or (iii) result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance of any nature on any property or asset
of the Company or any Material Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Material Subsidiary is a
party or by which the Company or any Material Subsidiary or any property or
asset of the Company or any Material Subsidiary is bound or affected, except, in
cases of (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences which would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Except as set forth in Section 3.05(b) of the Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with, or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws and the pre-merger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"), and (ii) where failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not prevent or delay
consummation of the Offer, or otherwise prevent the Company from performing its
obligations under this Agreement, and would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.06 Compliance. Except as set forth in Section 3.06 of the
Disclosure Schedule, neither the Company nor any Subsidiary is in default or
violation of (i) any law, rule, regulation, order, judgment or decree applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or subject or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any
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Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of the Company or any Subsidiary is bound or affected, except for any
such defaults or violations that would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.07 SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since December 31, 1994, and has heretofore delivered or made available to
Purchaser, in the form filed with the SEC, (i) its Annual Reports on Form 10-K
for the fiscal years ended December 31, 1994, 1995 and 1996, respectively, (ii)
its Quarterly Report on Form 10-Q for the period ended Xxxxx 00, 0000, (xxx) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since December 31, 1994 and (iv) all other forms,
reports and other registration statements (other than Quarterly Reports on Form
10-Q not referred to in clause (ii) above) filed by the Company with the SEC
since December 31, 1994 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii) and (iv) above being referred to herein, collectively,
as the "SEC Reports"). The SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder and (ii) did not, at the time they were filed (or at the
effective date thereof with respect to registration statements under the
Securities Act), contain any untrue statement of a material fact or omit to
state a 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 were made, not misleading. No Subsidiary is required to file any form,
report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis ("GAAP") throughout the periods indicated (except as may
be indicated in the notes thereto) and each fairly presents the consolidated
financial position, results of operations and changes in stockholders equity and
cash flows of the Company and the consolidated Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the aggregate, to have a
Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as at December
31, 1996 including the notes thereto (the "1996 Balance Sheet"), in Section 3.07
of the Disclosure Schedule or in
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any SEC Report filed by the Company after December 31, 1996, neither the Company
nor any Subsidiary has any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet, or in the notes thereto, prepared in accordance
with GAAP, except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since December 31, 1996.
(d) The Company has heretofore furnished or made available to
Purchaser complete and correct copies of all amendments and modifications (if
any) that have not been filed by the Company with the SEC to all agreements,
documents and other instruments that previously had been filed by the Company
with the SEC and are currently in effect.
SECTION 3.08 Absence of Certain Changes or Events. Since December
31, 1996, except as set forth in Section 3.08 of the Disclosure Schedule or as
contemplated by this Agreement or disclosed in any SEC Report filed since
December 31, 1996 and prior to the date of this Agreement, the Company and the
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since December 31, 1996, there has
not been (i) any change in the business, operations, properties, financial
condition, assets or liabilities (including, without limitation, contingent
liabilities) of the Company or any Subsidiary having, individually or in the
aggregate, a Material Adverse Effect, (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any property or asset of
the Company or any Subsidiary having, individually or in the aggregate, a
Material Adverse Effect, (iii) any material change by the Company in its
accounting methods, principles or practices, (iv) any material revaluation by
the Company of any asset (including, without limitation, any writing down of the
value of inventory or writing off of notes or accounts receivable), (v) any
failure by the Company to revalue any asset in accordance with GAAP, (vi) any
entry by the Company or any Subsidiary into any commitment or transaction
material to the Company and the Subsidiaries taken as a whole, (vii) any
declaration, setting aside or payment of any dividend or distribution in respect
of any capital stock of the Company or any redemption, purchase or other
acquisition of any of its securities, (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 any other increase in
the compensation payable or to become payable to any officers or key employees
of the Company or any Subsidiary, except in the ordinary course of business
consistent with past practice, or (ix) any entering into, renewal, modification
or extension
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of, any contract, arrangement or agreement with any other party having,
individually or in the aggregate, a Material Adverse Effect.
SECTION 3.09 Absence of Litigation. Except as set forth in Section
3.09 of the Disclosure Schedule or as disclosed in the SEC Reports filed prior
to the date of this Agreement, (a) as of the date hereof, there is no claim,
action, proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary, or any property or asset of
the Company or any Subsidiary, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, which (i)
individually or in the aggregate, would have a Material Adverse Effect or (ii)
seeks to, or is reasonably likely to, delay or prevent the consummation of the
Offer and (b) as of the date hereof, neither the Company nor any Subsidiary nor
any property or asset of the Company or any Subsidiary is subject to any order,
writ, judgment, injunction, decree, determination or award having, individually
or in the aggregate, a Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. (a) Section 3.10(a) of the
Disclosure Schedule contains a true and complete list of (i) all employee
benefit plans (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement or severance plans, programs
or policies, and all employment, termination or severance contracts to which the
Company or any Subsidiary is a party, with respect to which the Company or any
Subsidiary has any obligation or which are maintained, contributed to or
sponsored by the Company or any Subsidiary for the benefit of any current or
former employee, officer or director of the Company or any Subsidiary
(collectively, the "Plans") and (ii) each employee benefit plan for which the
Company or any Subsidiary could incur liability under Section 4069 of ERISA in
the event such plan were terminated, or under Section 4212(c) of ERISA, or in
respect of which the Company or any Subsidiary remains secondarily liable under
Section 4204 of ERISA. Except as set forth in Section 3.10(a) of the Disclosure
Schedule, no Plan is a "defined benefit plan" within the meaning of Section
3(35) of ERISA and no Plan is subject to Part IV of ERISA. The Company has
previously furnished or made available to Purchaser a true and complete copy of
each Plan and a true and complete copy of each material document prepared in
connection with each Plan, including, without limitation, to the extent
applicable (i) a copy of each trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the most
recently filed Internal Revenue Service ("IRS") Form 5500, (iv) the most
recently received IRS determination letter for each such Plan, and (v) the most
recently prepared financial statement in connection with each such Plan. Except
as set forth in Section 3.10(a) of the Disclosure
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Schedule, neither the Company nor any Subsidiary has made a general written
announcement or entered into an agreement (i) to create or adopt a new benefit
plan or (ii) except in the ordinary course of business consistent with past
practice or as required by applicable law, to amend any Plan.
(b) All Plans subject to Parts 2, 3 and 4 of Subtitle A, Title I of
ERISA, other than "multiemployer plans" ("Multiemployer Plans"), within the
meaning of Section 3(37) of ERISA (the "ERISA Plans"), are in compliance with
ERISA, except for such non-compliance which would not have, individually or in
the aggregate, a Material Adverse Effect. Except as set forth in Section 3.10 of
the Disclosure Schedule, each ERISA Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code") has received a favorable determination letter from
the IRS, and there are no circumstances likely to result in revocation of any
such favorable determination letter which would have, individually or in the
aggregate, a Material Adverse Effect. There is no litigation pending or, to the
knowledge of the Company, threatened relating to the ERISA Plans which would
have, individually or in the aggregate, a Material Adverse Effect. Neither the
Company nor any of the Subsidiaries has engaged in a transaction with respect to
any ERISA Plan that, assuming the taxable period of such transaction expired as
of the date thereof, insofar as may be reasonably foreseen, is likely to subject
the Company or any of the Subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA in an amount which would
have, individually or in the aggregate, a Material Adverse Effect.
(c) Neither the Company nor any of the Subsidiaries has any
outstanding liability under Subtitle C or D of Title IV of ERISA with respect to
any ongoing, frozen or terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither the Company nor any of the Subsidiaries presently
contributes to a Multiemployer Plan, nor has it contributed to a Multiemployer
Plan within the past five calendar years. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30 day reporting
requirement has not been waived, has been required to be filed for any Pension
Plan within the 12-month period ending on the date hereof.
(d) All contributions required to be made under the terms of any
ERISA Plan have been timely made, except for such failures which, individually
or in the aggregate, would not have a Material Adverse Effect. No Pension Plan
has an
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"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA. Neither the Company nor any of
the Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
present value of all accrued "benefit liabilities", within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions and methods contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Plan.
(f) Except as set forth in Section 3.10(f) of the Disclosure
Schedule, neither the Company nor any of the Subsidiaries has any obligation for
retiree health and life benefits under any ERISA Plan.
(g) Except as set forth in Section 3.10(g) of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment of severance or unemployment compensation becoming due to any director
or any employee of the Company or any of the Subsidiaries under any Plan or
otherwise from the Company or any of the Subsidiaries, (ii) increase any
benefits otherwise payable under any Plan, or (iii) result in any acceleration
of the time of payment or vesting of any such benefit.
(h) Except as disclosed in Section 3.10(h) of the Disclosure
Schedule, the Company and the Material Subsidiaries do not have any unfunded
liabilities under pension, retirement or other employee benefit plans, programs
or arrangements maintained outside the United States by the Company or any of
the Material Subsidiaries for the employees thereof, the payment of which by the
Company or such Material Subsidiary, individually or in the aggregate, would
have a Material Adverse Effect.
SECTION 3.11 Labor Matters. Except as set forth in Section 3.11(a)
of the Disclosure Schedule and except for those matters that, individually or in
the aggregate, would not have a Material Adverse Effect, (i) there are no
controversies pending or, to the knowledge of the Company, threatened between
the Company or any Subsidiary and any of their respective employees; (ii)
neither the Company nor any Subsidiary has breached or otherwise failed to
comply with any provision of any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or any Subsidiary
and there are no grievances outstanding against the Company or any
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Subsidiary under any such agreement or contract; (iii) there are no unfair labor
practice complaints pending against the Company or any Subsidiary before the
National Labor Relations Board or any current union representation questions
involving employees of the Company or any Subsidiary; and (iv) there is no
strike, slowdown, work stoppage or lockout, or, to the knowledge of the Company,
threat thereof, by or with respect to any employees of the Company or any
Subsidiary. Section 3.11(b) of the Disclosure Schedule sets forth each
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or any domestic Subsidiary and any other
material collective bargaining agreement or labor contract applicable to persons
employed by any foreign Subsidiary. To the knowledge of the Company, there are
no activities or proceedings of any labor union to organize any employees of the
Company or any Subsidiary.
SECTION 3.12 Offer Documents; Schedule 14D-9. None of the Schedule
14D-9, the information supplied by the Company for inclusion in the Offer
Documents or the information to be filed by the Company in connection with the
Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement") shall, at the respective times the Schedule 14D-9, the
Offer Documents, the Information Statement or any amendments or supplements
thereto are filed with the SEC or are first published, sent or given to
stockholders of the Company, 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 made therein, in the light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Purchaser or any of its representatives which is
contained in any of the foregoing documents or the Offer Documents. The Schedule
14D-9 and the Information Statement shall comply in all material respects as to
form with the requirements of the Exchange Act and the rules and regulations
thereunder.
SECTION 3.13 Tangible Property; Real Property and Leases. (a) The
Company and the Subsidiaries have sufficient title to all their tangible
properties and assets to conduct their respective businesses as currently
conducted or as contemplated to be conducted, with only such exceptions as,
individually or in the aggregate, would not have a Material Adverse Effect.
(b) No parcel of real property owned or leased by the Company is
subject to any governmental decree or order to be sold nor is being condemned,
expropriated or otherwise taken by any public authority with or without payment
of compensation therefor, nor, to the knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
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(c) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring rental payments in excess of U.S. $100,000 during the period of the
lease and all amendments and modifications thereto are in full force and effect
and have not been modified or amended, and there exists no default under any
such lease by the Company or any Subsidiary, nor any event which with notice or
lapse of time or both would constitute a default thereunder by the Company or
any Subsidiary, except as, individually or in the aggregate, would not have a
Material Adverse Effect or as set forth in Section 3.13 of the Disclosure
Schedule.
SECTION 3.14 Trademarks, Patents and Copyrights. Except as set forth
in Section 3.14(a) of the Disclosure Schedule, the Company and the Subsidiaries
own or possess adequate licenses or other valid rights to use all patents,
patent rights, trademarks, trademark rights, trade names, trade dress, trade
name rights, copyrights, servicemarks, trade secrets, applications for
trademarks and for servicemarks, mask works, know-how and other proprietary
rights and information used or held for use in connection with the business of
the Company and the Subsidiaries as conducted since December 31, 1996, as
currently conducted or as contemplated to be conducted, and the Company is
unaware of any assertion or claim challenging the validity of any of the
foregoing which, individually or in the aggregate, would have a Material Adverse
Effect. Section 3.14(b) of the Disclosure Schedule lists each material patent
owned by the Company or any Subsidiary and specifies the number and date of each
such patent. Section 3.14(c) of the Disclosure Schedule lists each agreement
pursuant to which a material patent is licensed to the Company or any Material
Subsidiary as licensee for use in the business of the Company and the
Subsidiaries as currently conducted. The conduct of the business of the Company
and the Subsidiaries as conducted since December 31, 1996, as currently
conducted and as contemplated to be conducted did not, does not and will not
conflict in any way with any patent, patent right, license, trademark, trademark
right, trade dress, trade name, trade name right, service xxxx, mask work or
copyright of any third party except for conflicts that, individually or in the
aggregate, would not have a Material Adverse Effect.
SECTION 3.15 Taxes. Except as set forth in Section 3.15 of the
Disclosure Schedule or as otherwise previously disclosed to Purchaser:
(a) The Company and the Subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code")) or combined or unitary group of which the Company or any
Subsidiary is or has been a member, has timely filed all federal income Tax
Returns (as defined below), and all other material Tax Returns required to be
filed by them. All such Tax Returns are true and correct in all material
respects. Except to the extent adequately reserved for in
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accordance with GAAP, all material Taxes (as defined below) due and payable by
the Company and the Subsidiaries have been timely paid. The most recent
consolidated financial statements contained in the SEC Reports reflect an
adequate reserve in accordance with GAAP for all Taxes payable by the Company
and its Subsidiaries for all taxable periods and portions thereof through the
date of such financial statements.
(b) No material deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of the Subsidiaries that have
not been fully paid or adequately provided for in the appropriate financial
statements of the Company and its Subsidiaries, no waivers of the time to assess
any Taxes are outstanding, and no power of attorney granted by the Company or
any Subsidiary with respect to any Taxes is currently in force. No material
issues relating to Taxes have been raised in writing (or, in the case of the
presently pending Federal income tax audit of the Company and the Subsidiaries,
verbally to the knowledge of the Company's Vice President of Taxes) by any
governmental authority during any presently pending audit or examination.
(c) There are no material liens or encumbrances for Taxes on any of
the assets of the Company or the Subsidiaries (other than for current taxes not
yet due and payable).
(d) The Company and the Subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes.
(e) None of the Company or the Subsidiaries has filed a consent
under Section 341(f) of the Code.
(f) None of the Company or the Subsidiaries is a party to any
agreement that could obligate it to make any payments that would not be
deductible by reason of Section 280G of the Code.
(g) Neither the Company nor, since the date of its acquisition by
the Company, any Material Subsidiary is a party to any tax allocation, tax
sharing agreement, any closing agreement or similar agreement relating to Taxes
with any taxing authority of the Company.
(h) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any federal income or material state, local or foreign Taxes or Tax
Returns of the Company or any of the
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Subsidiaries and neither the Company nor any of the Subsidiaries has received a
written notice of any pending audit or proceeding.
(i) Neither the Company nor, since the date of its acquisition by
the Company, any Material Subsidiary has agreed to or is required to make any
material adjustment under Section 481(a) of the Code.
(j) To the knowledge of the Company, no property owned by the
Company or any Subsidiary (i) is property required to be treated as being owned
by another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986; or (ii) constitutes "tax exempt use
property" within the meaning of Section 168(h)(1) of the Code.
(k) The Company has not been (and will not be) a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the 5-year period ending on the consummation of the Offer.
(l) To the knowledge of the Company, neither the Company nor any
Subsidiary has participated in or cooperated with an international boycott
within the meaning of Section 999 of the Code.
(m) The Company estimates that, to its knowledge, the fair market
value of the assets of the Company and the Subsidiaries, in the aggregate, is
more than the aggregate adjusted basis of such assets, determined as of the date
of this Agreement.
(n) For the purpose of this Agreement, (A) the terms "Tax" or
"Taxes" shall mean all taxes, fees, duties, tariffs, levies, imposts, or other
charges of any kind (together with any interest, penalties, additions to tax or
additional amounts imposed by any taxing authority with respect thereto),
including, without limitation, taxes or other charges on or with respect to
income, franchise, gross receipts, property, sales, use, profits, capital stock,
payroll, employment, social security, workers compensation, unemployment
compensation or net worth, taxes or charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added or gains taxes; license
registration and documentation fees; and customs duties, tariffs and similar
charges of any kind whatsoever, and (B) the term "Tax Return" shall mean any
report, return, document, declaration or any other information or filing
required to be supplied to any taxing authority with respect to Taxes.
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SECTION 3.16 Environmental Matters. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i) "Hazardous
Substances" means (A) those substances defined as hazardous in or regulated as
hazardous under the following federal statutes and their state counterparts, as
each may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Federal Insecticide,
Fungicide, and Rodenticide Act and the Clean Air Act; (B) any asbestos or
asbestos-containing material, petroleum and petroleum products, including crude
oil and any fractions thereof, natural gas, natural gas liquids, synthetic gas,
polychlorinated biphenyls or radon; or (C) any substance with respect to which a
federal, state or local environmental agency requires environmental
investigation, monitoring, reporting or remediation; and (ii) "Environmental
Law" means any applicable federal, state or local law relating to (A) releases
or threatened releases of Hazardous Substances or materials containing Hazardous
Substances; (B) the manufacture, handling, transport, use, treatment, storage or
disposal of Hazardous Substances or materials containing Hazardous Substances;
or (C) otherwise relating to pollution of the environment.
(b) Except as described in Section 3.16 of the Disclosure Schedule:
(i) the Company and each Subsidiary is in compliance with all applicable
Environmental Laws, except for noncompliances that individually or in the
aggregate would not have a Material Adverse Effect; (ii) the Company and each
Subsidiary have obtained all permits, licenses and other material governmental
authorizations required under applicable Environmental Laws, and are in
compliance with the terms and conditions thereof, except for failures to obtain
or noncompliance that individually or in the aggregate would not have a Material
Adverse Effect; (iii) neither the Company nor any of its Subsidiaries has
received written notice of, or, to the knowledge of the Company, is the subject
of, any action, cause of action, claim, investigation, demand or notice by any
person or entity alleging liability under or noncompliance with any
Environmental Law that individually or in the aggregate would have a Material
Adverse Effect; and (iv) there is no environmental condition on any of the
properties currently or, to the knowledge of the Company, formerly owned or
leased by the Company or any Subsidiary that individually or in the aggregate
would have a Material Adverse Effect.
SECTION 3.17 Material Contracts. The SEC Reports reflect each
contract or agreement to which the Company or any of the Material Subsidiaries
is a party not made in the ordinary course of business which is material to the
Company and its Subsidiaries, taken as a whole, and that is to be performed in
whole or part after the date hereof (a "Material Contract"). No condition or
state of facts exists that, with notice or the
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passage of time, or both, would constitute a material default by the Company or
any Material Subsidiary or to the knowledge of the Company, any third party
under such Material Contracts. The Company or the applicable Material Subsidiary
has duly complied in all material respects with the provision of each Material
Contract to which it is a party.
SECTION 3.18 Insurance; Workers' Compensation. (a) Section 3.18 of
the Disclosure Schedule sets forth a true, complete and accurate list of each
currently effective material insurance policy issued in favor of the Company and
each Material Subsidiary, setting forth the identity of the respective insurance
carriers and a description of the policy. All premiums due and payable in
respect of such policies have been paid, such policies are in full force and
effect and free from any right granted by the Company of termination on the part
of the insurance carriers, except as provided in the respective policies.
Schedule 3.18 of the Disclosure Schedule sets forth a description, indicating
dates and nature of claims, of the workers' compensation experience as of March
31, 1997 of the Company and each domestic Material Subsidiary since December 31,
1994, or since the dates of their respective acquisition if later than December
31, 1994 in the case of the Material Subsidiaries.
(b) Neither the Company nor any Material Subsidiary has received any
notice of cancellation with respect to any of its insurance policies, and,
within the three years preceding the date hereof, neither the Company nor any
Material Subsidiary has been refused any insurance coverage sought or applied
for, in each case where such cancellation or refusal, individually or in the
aggregate, would have a Material Adverse Effect.
SECTION 3.19 Certain Payments; Absence of Certain Business
Practices. To the knowledge of the Company, except as set forth in Section 3.19
of the Disclosure Schedule, no employee or agent of the Company or any
Subsidiary, nor any other person acting on behalf of Company or any Subsidiary,
has within the past five years violated the Foreign Corrupt Practices Act or
made or caused to be made any payments to government officials in violation of
the laws of the United States or any other jurisdiction and, as of the date
hereof, neither the IRS nor any other federal, state, local or foreign
government agency or entity has notified the Company or any Subsidiary of any
pending or threatened investigation of any payment made by or on behalf of the
Company or any Subsidiary of, or alleged to be of, the type described in the
immediately preceding sentence.
SECTION 3.20 Licenses and Permits. The Company and each Material
Subsidiary have obtained all governmental licenses and permits necessary to
conduct
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their respective businesses in accordance with past practice, except for
failures that, individually or in the aggregate, would not have a Material
Adverse Effect. Such licenses and permits are valid and in full force and
effect, and no such licenses or permits will be terminated or materially
impaired or become terminable as a result of the Transactions, except for those
that, individually or in the aggregate, would not have a Material Adverse
Effect.
SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees. Section
3.21 of the Disclosure Schedule lists, as of the date hereof, all letters of
credit, performance or payment bonds, guaranty arrangements and surety bonds of
any nature involving amounts in excess of $100,000 relating to the Company or
any Subsidiary.
SECTION 3.22 Brokers. No broker, finder or investment banker (other
than Credit Suisse First Boston) is entitled to any brokerage, finder's or other
fee or commission in connection with the Transactions based upon arrangements
made by or on behalf of the Company. The Company has heretofore furnished to
Purchaser a complete and correct copy of all agreements between the Company and
Credit Suisse First Boston pursuant to which such firm would be entitled to any
payment relating to the Transactions.
SECTION 3.23 Rights Agreement. As a result of the Board's withdrawal
of its recommendation of the UDI Agreement and the transactions contemplated
thereby pursuant to Section 1.02, any acquisition of Shares (through the tender
offer commenced by UDI pursuant to the UDI Agreement or otherwise) that results
in UDI becoming an "Acquiring Person" (as defined in the Rights Agreement) shall
constitute a "Triggering Event" under the Rights and the Rights Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to the Company that:
SECTION 4.01 Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite power and authority and all 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 or in good standing or to
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have such power, authority and governmental approvals would not, individually or
in the aggregate, have a material adverse effect on the business, operations,
financial condition, assets or liabilities (including, without limitation,
contingent liabilities) of Purchaser.
SECTION 4.02 Authority Relative to This Agreement. Purchaser has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by Purchaser and the consummation by
Purchaser of the Transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Purchaser are necessary to authorize this Agreement or to consummate the
Transactions. This Agreement has been duly and validly executed and delivered by
Purchaser and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.
SECTION 4.03 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Purchaser do not, and the
performance of this Agreement by Purchaser will not, (i) conflict with or
violate the Certificate of Incorporation or Bylaws of Purchaser, (ii) assuming
that required filings under the HSR Act are made by the appropriate parties,
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Purchaser or by which any property or asset of Purchaser is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Purchaser pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Purchaser is a party or by which Purchaser or any property
or asset of Purchaser is bound or affected, except, in cases of (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
which would not, individually or in the aggregate, have a material adverse
effect on the business, operations, financial condition, assets or liabilities
(including, without limitation, contingent liabilities) of Purchaser.
(b) The execution and delivery of this Agreement by Purchaser do
not, and the performance of this Agreement by Purchaser will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, Blue Sky Laws and
state takeover laws and the HSR Act and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make
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such filings or notifications, would not prevent or delay consummation of the
Offer, or otherwise prevent Purchaser from performing its obligations under this
Agreement.
SECTION 4.04 Financing. (a) Purchaser has sufficient funds to permit
Purchaser to acquire all the outstanding Shares in the Offer, written evidence
of which has been provided to the Company. Such funds will remain in Purchaser,
available to be used to consummate the Offer, for so long as the Offer remains
outstanding and has not been terminated in accordance with the terms hereof or
of the Offer.
(b) Purchaser has received bank commitment letters and has entered
into a preferred stock subscription agreement with an affiliate relating to the
provision of sufficient funds (a) to satisfy the Company's obligations under
Section 4.10 of the Indenture dated as of April 15, 1996, between the Company
and IBJ Xxxxxxxx Bank & Trust Company, as Trustee, arising as a result of the
consummation of the Offer, and (b) to refinance the Credit Agreement, dated as
of April 29, 1996 (the "Credit Agreement"), among the Company, Varo Inc., Xxxxxx
Pumps Inc., the lenders from time to time party thereto, the issuing banks from
time to time party thereto and Citicorp USA, Inc., as Agent, as amended. In each
case, such funds will be provided to the Company substantially on the terms set
forth in the commitment letters and subscription agreement that have been
provided to the Company.
SECTION 4.05 Offer Documents. The Offer Documents will not, at the
time such documents are filed with the SEC or are first published, sent or given
to stockholders of the Company, 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 made therein, in the light of the circumstances
under which they are made, not misleading. The information supplied by Purchaser
for inclusion in the Schedule 14D-9 or the Information Statement will not, on
the date such document (or any amendment or supplement thereto) is first mailed
to stockholders of the Company and with respect to the Information Statement, at
the time Shares are accepted for payment in the Offer, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading. Notwithstanding the foregoing,
Purchaser makes no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in any
of the foregoing documents or the Offer Documents. The Offer Documents shall
comply in all material respects as to form with the requirements of the Exchange
Act and the rules and regulations thereunder.
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ARTICLE V
CONDUCT OF BUSINESS PENDING CONSUMMATION OF THE OFFER
SECTION 5.01 Conduct of Business by the Company Pending the
Consummation of the Offer. The Company covenants and agrees that, between the
date of this Agreement and the election or appointment of Purchaser's designees
to the Board pursuant to Section 6.03 upon the purchase by Purchaser of any
Shares pursuant to the Offer (the "Purchaser's Election Date"), unless Purchaser
shall otherwise agree in writing, the businesses of the Company and the
Subsidiaries shall be conducted only in, and the Company and the Subsidiaries
shall not take any action except in, the ordinary course of business consistent
with past practice and the Company shall use all reasonable efforts to preserve
substantially intact the business organization of the Company and the
Subsidiaries, to keep available the services of the current officers, employees
and consultants of the Company and the Subsidiaries and to preserve the current
relationships of the Company and the Subsidiaries with customers, suppliers and
other persons with which the Company or any Subsidiary has significant business
relations. By way of amplification and not limitation, except as contemplated by
this Agreement or by Section 5.01 of the Disclosure Schedule, the Company agrees
that neither the Company nor any Subsidiary shall, between the date of this
Agreement and the Purchaser's Election Date, directly or indirectly do, or
propose to do, any of the following without the prior written consent of
Purchaser:
(a) amend or otherwise change its Constituent Documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of capital stock of any class of the Company or any Subsidiary, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any Subsidiary
(except for the issuance of a maximum of 2,000,000 Shares issuable pursuant to
employee stock options outstanding on the date hereof and including up to 1,250
restricted Shares per quarter issuable to outside directors in accordance with
past practice pursuant to the Stock Option Plans) or (ii) any assets of the
Company or any Subsidiary, except for sales 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,
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except for such declarations, set asides dividends and other distributions made
by any Subsidiary to the Company;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or any
division thereof or any material amount of assets other than in the ordinary
course of business consistent with past practice; (ii) incur any indebtedness
for borrowed money or issue any debt securities or assume, guarantee or endorse,
pledge in respect of or otherwise as an accommodation become responsible for the
obligations of any person, or make any loans or advances, except in the ordinary
course of business consistent with past practice; (iii) enter into any contract
or agreement, other than any contract or agreement entered into in the ordinary
course of business consistent with past practice and which requires payments by
the Company or the Subsidiaries in an aggregate amount of less than U.S.
$250,000; (iv) terminate, cancel or request any material change in, or agree to
any material change in, any Material Contract, except in the ordinary course of
business consistent with past practice; or (v) authorize any single capital
expenditure (excluding software development activity) which is in excess of U.S.
$500,000 or capital expenditures which are, in the aggregate, in excess of U.S.
$2,500,000 for the Company and the Subsidiaries taken as a whole;
(f) increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past practices in
salaries or wages of employees of the Company or any Subsidiary who are not
officers of the Company, or grant any severance or termination pay to, or enter
into any employment or severance agreement with, any director, officer or other
employee of the Company or any Subsidiary (other than in connection with hiring
and terminating employees in the ordinary course of the Company's business), or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination or severance plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee or circulate to any employee any details of any proposal to
adopt or amend any such plan;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business consistent with past practice, with respect to
accounting policies or procedures (including, without limitation, procedures
with respect to the payment of accounts payable and collection of accounts
receivable);
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(h) make any material tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice, of liabilities reflected or reserved against in
the Balance Sheet included in the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997 or subsequently incurred in the ordinary course
of business consistent with past practice; or
(j) settle or comprise any pending or threatened suit, action or
claim that is material or which relates to any of the Transactions; or
(k) announce an intention, enter into any formal or informal
agreement, or otherwise make a commitment, to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 [Reserved]
SECTION 6.02 [Reserved]
SECTION 6.03 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 as
shall give Purchaser representation on the Board equal to the product of the
total number of directors on the 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
at such time bears to the total number of Shares then outstanding, and the
Company shall, at such time, promptly take all actions necessary to cause
Purchaser's designees to be elected as directors of the Company, including
increasing the size of the Board or securing the resignations of incumbent
directors or both. At such times, the Company shall use all reasonable efforts
to cause persons designated by Purchaser to constitute the same percentage as
persons designated by Purchaser shall constitute of the Board with respect to
(i) each committee of the Board (some of whom may be required to be independent
as required by applicable law or requirements of the New York Stock
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Exchange), (ii) each board of directors of each Subsidiary and (iii) each
committee of each such board, in each case only to the extent permitted by
applicable law. Notwithstanding the foregoing, until the time Purchaser acquires
a majority of the then outstanding Shares on a fully diluted basis, the Company
shall use all reasonable efforts to ensure that all the members of the Board and
each committee of the Board and such boards and committees of the Subsidiaries
as of the date hereof who are not employees of the Company shall remain members
of the Board and of such boards and committees.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include the
Information Statement containing such information with respect to the Company
and its officers and directors as is required under Section 14(f) and Rule 14f-1
as an annex to the Schedule 14D-9 to fulfill such obligations. Purchaser shall
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 such Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of designees of Purchaser
pursuant to this Section 6.03, any amendment of this Agreement or the
Constituent Documents 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 of any of the Company's
rights hereunder shall require the concurrence of a majority of the directors of
the Company then in office who neither were designated by Purchaser nor are
employees of the Company or if no such directors are then in office, no such
amendment, termination, extension or waiver shall be effected which is
materially adverse to the holders of Shares (other than Purchaser and its
affiliates).
SECTION 6.04 Access to Information; Confidentiality. (a) From the
date hereof to the consummation of the Offer, the Company shall, and shall cause
the Subsidiaries to, afford the officers, employees and agents of Purchaser and
persons providing or committing to provide Purchaser or its affiliates with
financing for the Transactions complete access at all reasonable times to the
officers, employees, agents, properties, offices, plants and other facilities,
books and records of the Company and each Subsidiary, and shall furnish
Purchaser and persons providing or committing to provide Purchaser or its
affiliates with financing for the Transactions with all financial, operating and
other data and information as Purchaser, through its officers, employees or
agents, may reasonably request.
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(b) Purchaser agrees that all information obtained by Purchaser or
its affiliates pursuant to this Section 6.04 shall be kept confidential, by
Purchaser and by any other party which is to be afforded access pursuant to
Section 6.04(a), in accordance with the confidentiality agreement, dated May 19,
1997 (the "Confidentiality Agreement"), between Constellation Capital Partners
LLC and the Company.
SECTION 6.05 No Solicitation of Transactions. Neither the Company
nor any Subsidiary shall, directly or indirectly, through any officer, director,
agent or otherwise, solicit, initiate or encourage the submission of any
proposal or offer from any person relating to any acquisition or purchase of all
or any material portion of the assets of, or any equity interest in, the Company
or any Material Subsidiary or any business combination with the Company or any
Material Subsidiary or participate in any negotiations regarding, or furnish to
any other person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing and the Company
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Notwithstanding the foregoing or any other provision hereof, nothing
shall prohibit the Board from furnishing information to, or entering into
discussions or negotiations with, any person in connection with an unsolicited
(from the date of this Agreement) proposal in writing by such person to acquire
the Company pursuant to a merger, consolidation, share exchange, business
combination or other similar transaction or to acquire all or substantially all
of the assets of the Company or any of its Subsidiaries, if, and only to the
extent that, (i) the Board, after consultation with independent legal counsel
(which may include its regularly engaged independent legal counsel), determines
in good faith that such action is required for the Board to comply with its
fiduciary duties to stockholders imposed by Delaware Law and (ii) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person the Company uses its reasonable efforts to obtain from such
person an executed confidentiality agreement on terms no less favorable to the
Company than those contained in the Confidentiality Agreement. The Company shall
notify Purchaser promptly if any such proposal or offer, or any inquiry or
contact with any person with respect thereto, is made, and shall inform
Purchaser of the terms and conditions of any such proposal or offer or the
details of any such inquiry or contact. The Company agrees not to release any
third party from, or waive any provision of, any confidentiality or, subject to
the fiduciary duties of the Board, standstill agreement to which the Company is
or may become a party.
SECTION 6.06 Employee Benefits Matters; Employment Agreements. Annex
B hereto sets forth certain agreements among the parties hereto with respect to
the Plans and other employee benefits matters.
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SECTION 6.07 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and Bylaws of the Company shall, for a
period of six years from the date of acceptance for payment by Purchaser of
Shares pursuant to the Offer (the "Consummation Date"), contain provisions no
less favorable with respect to indemnification than are currently set forth in
Article XIII of the Bylaws of the Company, which provisions shall not be
amended, repealed or otherwise modified for such period in any manner that would
affect adversely the rights thereunder of individuals who at any time from and
after the date of this Agreement and to and including the Consummation Date were
directors, officers, employees, fiduciaries or agents of the Company in respect
of acts or omissions occurring at or prior to the Consummation Date (including,
without limitation, the matters contemplated by this Agreement), unless such
modification shall be required by law. From and after the Purchaser's Election
Date, the Company shall not amend, repeal or otherwise modify the
indemnification and advancement of expenses provisions of Article XIII of the
Bylaws of the Company or the indemnification or advancement of expenses
provisions in the Constituent Documents of any of the Subsidiaries in any manner
that would adversely affect the rights thereunder of individuals who at any time
from and after the date of this Agreement and to and including the Consummation
Date were directors, officers, employees, fiduciaries or agents of the Company
or any of the Subsidiaries in respect of acts or omissions occurring at or prior
to the Consummation Date (including, without limitation, the matters
contemplated by this Agreement), unless such modification is required by law.
(b) The Company shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless each present and former director,
officer, employee, fiduciary and agent of the Company and each Subsidiary
(collectively, the "Indemnified Parties") against all costs and expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Consummation Date), whether civil, criminal, administrative or investigative,
arising out of or pertaining to any act or omission in their capacity as an
officer, director, employee, fiduciary or agent, whether occurring before or
after the Consummation Date, for a period of six years after the date hereof
(and shall pay any expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the fullest extent permitted
under Delaware Law, and, with respect to Indemnified Parties who are or were
directors or officers of the Company, upon receipt from the Indemnified Party to
whom expenses are advanced of any undertaking to repay such advances required
under Delaware Law). In the event of any such claim, action, suit, proceeding or
investigation, (i) the Company shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company and Purchaser promptly after statements therefor are
received (subject to the provision of an
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undertaking as set forth in the prior sentence, if applicable) and (ii) the
Company and Purchaser shall cooperate in the defense of any such matter;
provided, however, that neither the Company nor Purchaser (i) shall be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld); or (ii) shall be obligated pursuant to this Section
6.07(b) to pay the fees and expenses of more than one counsel for all
Indemnified Parties in any single action except to the extent that two or more
of such Indemnified Parties shall have conflicting interests in the outcome of
such action; and provided further that, in the event that any claim for
indemnification is asserted or made within such six-year period, all rights to
indemnification in respect of such claim shall continue until the disposition of
such claim.
(c) The Company shall maintain in effect for a period of six years
after the Consummation Date insurance coverage, if available, equivalent to that
provided by the directors' and officers' liability insurance policies currently
maintained by the Company with respect to matters occurring on or prior to the
Consummation Date; provided, however, that the Company may substitute therefor
policies of at least the same coverage containing terms and conditions which are
not materially less favorable; and provided further that, in no event shall the
Company be required to expend pursuant to this Section 6.07(c) more than an
amount per year equal to 250% of current annual premiums paid by the Company for
such insurance (which annual premiums the Company represents to be approximately
$300,000).
(d) In the event the Company, Purchaser or any of their respective
successors or assigns (i) consolidates with or merges into any other person
(including a merger or consolidation of the Company with or into Purchaser) and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or
Purchaser, as the case may be, shall assume the obligations set forth in this
Section 6.07.
SECTION 6.08 Notification of Certain Matters. The Company shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which causes any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect and (ii) any
failure of the Company or Purchaser, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.08 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
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SECTION 6.09 Further Action; Reasonable Efforts. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Transactions and (ii) use all
reasonable 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, including, without limitation, using all reasonable efforts to
obtain all licenses, permits (including, without limitation, environmental
permits), consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the Transactions and to
fulfill the conditions to the Offer (provided that neither Purchaser, its
stockholders nor its affiliates shall be required to dispose of any material
portion of its assets to obtain any such consents, approvals, authorizations,
qualifications or orders), and (iii) except as contemplated by this Agreement,
use all reasonable efforts not to take any action, or enter into any
transaction, which would cause any of its representations or warranties
contained in this Agreement to be untrue or result in a breach of any covenant
made by it in this Agreement. In case at any time after the Consummation Date
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of Purchaser and the Company shall
use all reasonable efforts to take all such action.
SECTION 6.10 Public Announcements. Purchaser and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any Transaction 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 a
national securities exchange or foreign securities exchange to which Purchaser
or the Company is a party.
SECTION 6.11 Confidentiality Agreement. Assuming the Minimum
Condition has been satisfied, the Confidentiality Agreement shall be deemed to
have terminated on the Consummation Date without further action by the parties
thereto.
ARTICLE VII
[RESERVED]
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Offer may be abandoned at any time prior to the Consummation Date,
notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated hereby by the stockholders of the Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Purchaser and the Company prior to Purchaser's Election Date; or
(b) By Purchaser or the Company if (i) the Consummation Date shall
not have occurred on or before December 31, 1997; provided, however, that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Consummation
Date to occur on or before such date or (ii) any court of competent jurisdiction
in the United States or other governmental authority shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Offer and such order, decree, ruling or other action shall have
become final and nonappealable; or
(c) By Purchaser if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A, as
applicable, Purchaser shall have (A) failed to commence the Offer within five
business days following the date of public announcement of the execution of this
Agreement, (B) terminated the Offer without having accepted any Shares for
payment thereunder or (C) failed to pay for Shares pursuant to the Offer within
90 days following the commencement thereof; unless such action or inaction under
(A), (B) or (C) shall have been caused by or resulted from the failure of
Purchaser to perform in any material respect any material covenant or agreement
applicable to it contained in this Agreement or the material breach by Purchaser
of any material representation or warranty applicable to it contained in this
Agreement or (ii) prior to the purchase of Shares pursuant to the Offer, the
Board or any committee thereof shall have withdrawn or modified in a manner
adverse to Purchaser its approval or recommendation of the Offer or this
Agreement or shall have recommended another merger, consolidation, business
combination with, or acquisition of, the Company or its assets or another tender
offer or exchange offer for Shares, or shall have resolved to do any of the
foregoing; or
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(d) By the Company, upon approval of the Board if (i) Purchaser
shall have (A) failed to commence the Offer within five business days following
the date of public announcement of the execution of this Agreement, (B)
terminated the Offer without having accepted any Shares for payment thereunder
or (C) failed to pay for Shares pursuant to the Offer within 90 days following
the commencement thereof; unless such action or inaction under (A), (B) or (C)
shall have been caused by or resulted from the failure of the Company to perform
in any material respect any material covenant or agreement of it contained in
this Agreement or the material breach by the Company of any material
representation or warranty of it contained in this Agreement or (ii) prior to
the purchase of Shares pursuant to the Offer, the Board shall have withdrawn or
modified in a manner adverse to Purchaser its approval or recommendation of the
Offer or this Agreement in order to approve the execution by the Company of a
definitive agreement providing for the acquisition of the Company or any of its
assets by a sale, merger or other business combination or in order to approve a
tender offer or exchange offer for Shares by a third party, in either case, as
the Board determines in good faith that such action is required for the Board to
comply with its fiduciary duties to stockholders, after consultation with its
independent legal counsel and financial advisers, and is on terms more favorable
to the Company's stockholders than the Offer; provided, however, that (x) the
Company shall have given notice to Purchaser advising Purchaser that the Company
has received a proposal for such a transaction from a third party, specifying
the material terms and conditions (including the identity of the third party)
and that the Company intends to terminate this Agreement in accordance with this
Section 8.01(d) and either (q) Purchaser shall not have revised the terms of its
offer to acquire the Company within two business days from the date on which
such notice is deemed to have been given to Purchaser or (r) if the Expiration
Date of the Offer would otherwise occur within the period in which the Company
is prohibited by this proviso from terminating this Agreement, the Purchaser
shall not have extended the Expiration Date of the Offer until 12 hours after
the end of such two business day period, and given the Company timely notice of
such extension or (s) if within such two business day period Purchaser shall
have revised such terms, the Board of the Company, after receiving advice from
the Company's financial adviser, shall have determined in good faith that the
third party's proposal
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is superior to Purchaser's revised terms and (y) such termination under this
clause (ii) shall not be effective until the Company has made payment to
Purchaser of the Fee (as hereinafter defined) required to be paid pursuant to
Section 8.03(a)(iv) and has deposited with a mutually acceptable escrow agent
$12.0 million for reimbursement of Expenses (as hereinafter defined).
SECTION 8.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void, and there shall be no liability on the part of any party hereto,
except as set forth in Sections 8.03 and 9.01, and nothing herein shall relieve
any party from liability for any breach hereof.
SECTION 8.03 Fees and Expenses. (a) In the event that
(i) any person (including, without limitation, the Company or any
affiliate thereof), other than Purchaser or any affiliate of Purchaser, shall
have become the beneficial owner of more than 20% of the then outstanding
Shares, this Agreement shall have been terminated pursuant to Section 8.01
(other than pursuant to Section 8.01(c)(ii) or 8.01(d)(ii)) and within 12 months
of such termination a Third Party Acquisition (as defined hereinafter) shall
occur; or
(ii) any person shall have commenced, publicly proposed or
communicated to the Company a proposal that is publicly disclosed for a tender
or exchange offer for 25% or more of the then outstanding Shares (or which,
assuming the maximum amount of securities that could be purchased, would result
in any person beneficially owning 25% or more of the then outstanding Shares) or
otherwise for the direct or indirect acquisition of the Company or all or
substantially all of its assets for per Share consideration having a value
greater than the Per Share Amount and (w) the Offer shall have remained open for
at least 20 business days, (x) the Minimum Condition shall not have been
satisfied, (y) this Agreement shall have been terminated pursuant to Section
8.01 (and other than pursuant to Section 8.01(c)(ii) or 8.01(d)(ii)) and (z)
within 12 months of such termination a Third Party Acquisition shall occur; or
(iii) if the Minimum Condition shall not have been satisfied on or prior to the
date that is 60 days from the date of commencement of the Offer, Purchaser
desires to extend the Offer beyond such 60 day period but the Company declines
to consent to such extension pursuant to Section 1.01, this Agreement is
terminated pursuant to Section 8.01 (and other than pursuant to Section
8.01(c)(ii) or 8.01(d)(ii)) and within 12 months of such termination a Third
Party Acquisition shall occur; or
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(iv) this Agreement is terminated pursuant to Section 8.01(c)(ii) or
8.01(d)(ii)
then, in any such event, provided that Purchaser is not in material breach of
its obligations under this Agreement, the Company shall pay Purchaser promptly
(but in no event later than one business day after (a) the consummation of the
Third Party Acquisition, with respect to the events described in clauses (i),
(ii) or (iii), or (b) such termination with respect to clause (iv)) a fee of $8
million (the "Fee"), which amount shall be payable in immediately available
funds, plus all Expenses.
(b) Provided that Purchaser is not in material breach of its
obligations under this Agreement and Purchaser is not entitled to the Fee
pursuant to Section 8.03(a), if (i) this Agreement is terminated pursuant to
Section 8.01(c) due to the occurrence of the condition set forth in paragraph
(g) of Annex A or (ii) this Agreement is terminated pursuant to Section 8.01(c)
because of the occurrence of the condition set forth in paragraph (f) of Annex
A, then, in either case (i) or (ii), the Company shall promptly reimburse
Purchaser for all Expenses.
(c) "Expenses" means the sum of (i) all reasonable out-of-pocket
expenses and fees up to $2 million in the aggregate (including, without
limitation, reasonable fees and expenses payable to all banks, investment
banking firms, other financial institutions and other persons and their
respective agents and counsel for arranging, committing to provide or providing
any financing for the Offer or structuring the Offer and all reasonable fees of
counsel, accountants, experts and consultants to Purchaser and its affiliates,
and all printing and advertising expenses) actually incurred by Purchaser or its
affiliates or on their behalf in connection with the Offer, including, without
limitation, the financing thereof, and actually incurred by banks, investment
banking firms, other financial institutions and other persons and assumed by
Purchaser and its affiliates in connection with the negotiation, preparation,
execution and performance of this Agreement, the structuring and financing of
the Offer and any financing commitments or agreements relating thereto and (ii)
all amounts paid by Purchaser to UDI or its affiliates on behalf of the Company
in connection with the termination of the UDI Agreement.
(d) Except as set forth in this Section 8.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
(e) In the event that the Company shall fail to pay the Fee or any
Expenses when due, the term "Expenses" shall be deemed to include the reasonable
costs and expenses actually incurred by Purchaser (including, without
limitation, reasonable fees
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and expenses of counsel) in connection with the collection under and enforcement
of this Section 8.03, together with interest on such unpaid Fee and Expenses,
commencing on the date that the Fee or such Expenses became due, at a per annum
rate equal to the rate of interest publicly announced by Xxxxxx Guaranty Trust
Company of New York, from time to time, in the City of New York, as such bank's
prime rate plus 1%.
(f) "Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger, consolidation or
other business combination transaction by any person other than Purchaser or any
of its affiliates (a "Third Party"); (ii) the acquisition by any Third Party of
all or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole; (iii) the acquisition by a Third Party of 50% or more of the
outstanding Shares whether by tender offer, exchange offer or otherwise; (iv)
the adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend; or (v) the repurchase by the Company or
any of its Subsidiaries of 50% or more of the outstanding Shares.
SECTION 8.04 Amendment. Subject to the limitations set forth in
Section 6.03(c), 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 Consummation Date. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.05 Waiver. Subject to the limitations set forth in Section
6.03(c), at any time prior to the Consummation Date, any party hereto may (i)
extend the time for the performance of any obligation or other act of any other
party hereto, (ii) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any agreement or condition 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 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Consummation Date or upon the termination of this
Agreement pursuant to Section 8.01, as the case may be, except that the
agreements set forth in Article IX and
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Section 6.07 shall survive the Consummation Date indefinitely and those set
forth in Sections 6.04(b), 8.03 and Article IX shall survive termination
indefinitely.
SECTION 9.02 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
telecopy 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 in a notice given in accordance
with this Section 9.02):
if to Purchaser:
II Acquisition Corp.
0000 00xx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Telecopy No.: 000-000-0000
Attn: Xxxxxxx X. Xxxx
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: 000-000-0000
Attn: Xxxxxxxx X. Xxxxx, Esq.
if to the Company:
Imo Industries Inc.
0000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000-0000
Telecopy No.: 000-000-0000
Attn: Xxxxxx X. Xxxx, Esq.
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with a copy to:
Weil, Gotshal and Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: 000-000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
SECTION 9.03 Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified 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) that such person
or any of its affiliates or associates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) beneficially owns, directly or indirectly,
(ii) that such person or any of its affiliates or associates 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) that are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates 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) "business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "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 and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
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(e) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government;
and
(f) "subsidiary" or "subsidiaries" of any person means an affiliate
controlled by such person, directly or indirectly, through one or more
intermediaries.
SECTION 9.04 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 is not affected in any manner materially 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 a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05 Entire Agreement, Assignment. This Agreement and the
undertaking dated the date hereof from Xxxxxxxx X. Xxxxx and Xxxxxx X. Xxxxx
addressed to the Company constitute the entire agreement among the parties with
respect to the subject matter hereof and supersedes, except as set forth in
Section 6.04(b), 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 Purchaser may assign all or any of its rights and obligations hereunder to
any entity that is directly or indirectly wholly owned by Xxxxxxxx X. Xxxxx and
Xxxxxx X. Xxxxx provided that no such assignment shall relieve the assigning
party of its obligations hereunder if such assignee does not perform such
obligations.
SECTION 9.06 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, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 6.07 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not
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performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 9.08 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
SECTION 9.09 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 9.10 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.
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IN WITNESS WHEREOF, 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.
II ACQUISITION CORP.
By: /s/ XXXXXX X. XXXXXXX
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
IMO INDUSTRIES INC.
By: /s/ X. X. XXXXX
---------------------------------------
Name: X. X. Xxxxx
Title: Chief Financial Officer
47
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall
not be required to accept for payment or pay for any Shares tendered pursuant to
the Offer, and may terminate or amend the Offer and may postpone the acceptance
for payment of and payment for Shares tendered, if (i) the Minimum Condition
shall not have been satisfied, (ii) any applicable waiting period under the HSR
Act shall not have expired or been terminated prior to the expiration of the
Offer or (iii) 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 shall
exist:
(a) there shall have been instituted or be pending any action or
proceeding brought by any governmental, administrative or regulatory authority
or agency, domestic or foreign, before any court or governmental, administrative
or regulatory authority or agency, domestic or foreign, (i) challenging or
seeking to make illegal, materially delay or otherwise directly or indirectly
restrain or prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Purchaser pursuant to
the Offer, or seeking to obtain material damages in connection with the Offer;
(ii) seeking to prohibit or limit materially the ownership or operation by the
Company, Purchaser or any of Purchaser's affiliates of all or any material
portion of its or their business or to compel the Company, Purchaser or any of
Purchaser's affiliates to dispose of or hold separate all or any material
portion of its or their business, in each case as a result of the Offer; (iii)
seeking to impose or confirm limitations on the ability of the Purchaser to
exercise effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to the
Offer, or otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of this
Agreement and the transactions contemplated hereby; or (iv) seeking to require
divestiture by Purchaser of any Shares; provided that Purchaser shall have used
all reasonable efforts to cause any such action or proceeding described in this
paragraph (a) to be dismissed or withdrawn;
(b) there shall have been issued any injunction, order or decree by
any court or governmental, administrative or regulatory authority or agency,
domestic or foreign, resulting from any action or proceeding brought by any
person other than any governmental, administrative or regulatory authority or
agency, domestic or foreign, that (i) restrains or prohibits the making of the
Offer; (ii) prohibits or limits ownership or operation by the Company, Purchaser
or any of Purchaser's affiliates of all or any material portion of its business
or assets or compels the Company, Purchaser or any of
A-1
48
Purchaser's affiliates to dispose of or hold separate all or any material
portion of its business or assets, in each case as a result of the Offer; (iii)
imposes limitations on the ability of Purchaser to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right to
vote any Shares acquired by Purchaser pursuant to the Offer, or otherwise on all
matters properly presented to the Company's stockholders or (iv) requires
divestiture by Purchaser of any Shares; provided that Purchaser shall have used
all reasonable efforts to cause any such injunction, order or decree described
in this paragraph (b) to be vacated or lifted;
(c) there shall have been any action taken, or any statute, rule,
regulation, order or injunction enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (i) Purchaser, the Company or any
subsidiary or affiliate of Purchaser or the Company or (ii) the Offer, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, in the case of both (i) and
(ii) other than the routine application of the waiting period provisions of the
HSR Act to the Offer, that results in any of the consequences referred to in
clauses (i) through (iv) of paragraph (b) above; provided that Purchaser shall
have used all reasonable efforts to cause any such action, order or injunction
described in this paragraph (c) to be vacated or lifted;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities of the Company on the New York
Stock Exchange, (ii) any decline, measured from the date hereof, in the Standard
& Poor's 500 Index by an amount in excess of 30%, (iii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iv) any 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, (v)
a commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or (vii) in the case
of any of the foregoing existing on the date hereof, a material acceleration or
worsening thereof;
(e) (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
20% or more of the then outstanding Shares has been acquired by any person,
other than Purchaser or (ii) (A) the Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Purchaser the approval or
recommendation of the Offer or the Agreement or approved or recommended any
takeover proposal or any other
A-2
49
acquisition of Shares other than the Offer or (B) the Board or any committee
thereof shall have resolved to do any of the foregoing;
(f) (i) any representation or warranty of the Company in the
Agreement shall not be true and correct; or
(ii) there shall have occurred, since the date of the Agreement, a
change in the business, operations, financial condition, assets or liabilities
of the Company or any Subsidiary with the effect that such failure of any such
representation or warranty to be true and correct or such change, when taken
together with all other such failures of such representations and warranties to
be true and correct (both favorable and adverse) and all other such changes
(both favorable and adverse), in the aggregate would have, a Material Adverse
Effect; provided, however that, for the purpose of the foregoing condition, in
determining whether any such representation or warranty is true or correct, any
qualification as to materiality or Material Adverse Effect contained in any such
representation and warranty shall be deemed not to apply;
(g) 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 Agreement;
(h) the Agreement shall have been terminated in accordance with its
terms; or
(i) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment for
Shares thereunder; which, in the sole judgment of Purchaser, in any such case,
and regardless of the circumstances (including any action or inaction by
Purchaser or any of its affiliates) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
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 or may be waived by Purchaser in whole or in part at any time and
from time to time in their sole discretion. 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.
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ANNEX B
For a period of one year from the Consummation Date, Purchaser
shall, or shall cause the Company to, maintain the Plans (other than the Stock
Option Plans) which the Company maintains for the benefit of, or which are open
to, a majority of the employees of the Company on the terms in effect on the
date hereof, or such other plans, arrangements or programs as will provide
employees with benefits that in the aggregate are substantially equivalent to,
and no less favorable than, those provided under the Plans (other than the Stock
Option Plans) as in effect on the date hereof. In addition, in the event of a
merger or consolidation between Purchaser or any affiliate of Purchaser and the
Company, Purchaser shall, or shall cause the surviving corporation of such
merger or consolidation to, assume and agree to perform those Change of Control
Agreements listed in Schedule 6.06 of the Disclosure Schedule in the same manner
and to the same extent that the Company is required to perform such agreements.
