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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------
Daniel Industries, Inc.
(Name of Subject Company)
Emersub LXXIV, Inc.
(Bidder)
a wholly-owned subsidiary of
Emerson Electric Co.
Common Stock, $1.25 Par Value
(Title of Class of Securities)
-----------------------
236235-10-7
(CUSIP Number of Class of Securities)
-----------------------
W. Wayne Withers, Esq.
Senior Vice President, General Counsel and Secretary
Emerson Electric Co.
8000 West Florissant Avenue
St. Louis, Missouri 63136-8506
(314) 553-2000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Bidder)
-----------------------
With Copies to:
Phillip R. Mills, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
(212) 450-4000
CALCULATION OF FILING FEE
Transaction Valuation* Amount of Filing Fee**
$457,203,440 $91,441
================================= ===================================
* Calculated by multiplying $21.25, the per share tender offer price, by
21,515,456, which represents (i) the sum of the number of shares of
common stock outstanding on May 11, 1999 plus (ii) the 2,032,868 shares
of common stock subject to stock options.
** Calculated as 1/50 of 1% of the transaction value.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
Amount Previously Paid: _____________ Filing Party: _____________________
Form or Registration No.: ___________ Date Filed: _______________________
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<PAGE>
CUSIP No. 236235-10-7 14D-1 Page 1 of 2 Pages
1. NAMES OF REPORTING PERSONS
IRS IDENTIFICATION NOS. ABOVE PERSONS (ENTITIES ONLY)
EMERSON ELECTRIC CO.
IRS IDENTIFICATION NO. 43-0259330
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC; OO; BK
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
MISSOURI
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
NONE
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
10. TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP No. 236235-10-7 14D-1 Page 2 of 2 Pages
1. NAMES OF REPORTING PERSONS
IRS IDENTIFICATION NOS. ABOVE PERSONS (ENTITIES ONLY)
EMERSUB LXXIV, INC.
IRS IDENTIFICATION NO. 43-1850428
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
NONE
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
10. TYPE OF REPORTING PERSON
CO
<PAGE>
Item 1. Security and Subject Company
(a) The name of the subject company is Daniel Industries, Inc., a
Delaware corporation (the "Company"), which has its principal executive offices
at 9753 Pine Lake Drive, Houston, Texas 77055.
(b) This statement relates to the offer by Emersub LXXIV, Inc.
("Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Emerson
Electric Co., a Missouri Corporation ("Parent"), to purchase all outstanding
shares of Common Stock, $1.25 par value (the "Common Stock"), of the Company,
including the related right as to each share to purchase one one-hundredth of
a share of Series A Junior Participating Preferred Stock, $1.00 par value, of
the Company (singularly, a "Right" and collectively, the "Rights")
(singularly, a share of such Common Stock, including the related Right, a
"Share" and collectively, the "Shares"), at $21.25 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated as of May 18, 1999 ("Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer"), copies
of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The
information set forth under "Introduction" in the Offer to Purchase is
incorporated herein by reference.
(c) The information concerning the principal market in which the Shares
are traded and certain high and low sales prices for the Shares in such
principal market is set forth in Section 6 "Price Range of Shares; Dividends"
of the Offer to Purchase and is incorporated herein by reference.
Item 2. Identity and Background
(a)-(d) and (g) This Statement is filed by Parent and Purchaser. The
information set forth under "Introduction", Section 8 "Certain Information
Concerning Purchaser and Parent" and Schedule I of the Offer to Purchase is
incorporated herein by reference.
(e) and (f) Neither Parent, Purchaser, nor, to the best knowledge of
Purchaser, any of the persons listed in Schedule I of the Offer to Purchase,
has during the last five years, been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations With the Subject Company
(a) and (b) The information set forth in the Introduction, Section 8
"Certain Information Concerning Purchaser and Parent", Section 10
"Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company" and Section 11 "Purpose of the Offer; Plans for the Company; Merger
Agreement and Other Arrangements" in the Offer to Purchase is incorporated
herein by reference.
Item 4. Source and Amount of Funds or Other Consideration
(a) and (b) The information set forth under Section 9 "Source and Amount
of Funds" in the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
<PAGE>
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder
(a)-(e) The information set forth under "Introduction", Section 10
"Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company" and Section 11 "Purpose of the Offer; Plans for the Company; Merger
Agreement and Other Arrangements" in the Offer to Purchase is incorporated
herein by reference.
(f) and (g) The information set forth under Section 12 "Effect of the
Offer on the Market for the Shares; Stock Exchange Listing; Registration under
the Exchange Act" in the Offer to Purchase is incorporated herein by
reference.
Item 6. Interest in Securities of the Subject Company
(a)-(b) The information set forth under "Introduction" and Section 8 "Certain
Information Concerning Purchaser and Parent" and Schedule I of the Offer to
Purchase is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities
The information set forth under "Introduction", Section 7 "Certain
Information Concerning the Company", Section 8 "Certain Information Concerning
Purchaser and Parent", Section 10 "Background of the Offer; Past Contacts,
Transactions or Negotiations with the Company" and Section 11 "Purpose of the
Offer; Plans for the Company; Merger Agreement and Other Arrangements" in the
Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to Be Compensated
The information set forth under "Introduction" and Section 17 "Fees and
Expenses" in the Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders
The information set forth in Section 8 "Certain Information Concerning
Purchaser and Parent" of the Offer to Purchase is incorporated herein by
reference.
Item 10. Additional Information
(a) Not applicable.
(b)-(c) The information set forth under Section 16 "Certain Legal Matters;
Regulatory Approvals" in the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth under Section 12 "Effect of the Offer on the
Market for the Shares; Stock Exchange Listing; Registration under the Exchange
Act" in the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in the Introduction and Section 16 "Certain
Legal Matters; Regulatory Approvals" of the Offer to Purchase is incorporated
herein by reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Agreement and Plan of Merger dated as of May 12, 1999
among Parent, Purchaser and the Company, copies of which appear as Exhibits
(a)(1), (a)(2) and (c)(1), respectively, hereto, is incorporated herein by
reference.
<PAGE>
Item 11. Material to Be Filed as Exhibits
(a)(1) Offer to Purchase dated May 18, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from Morgan Stanley Dean Witter to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal on
May 18, 1999.
(a)(8) Text of Press Release issued by Emerson Electric Co. on May 13, 1999.
(a)(9) Text of Press Release issued by Emerson Electric Co. on May 18, 1999.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger dated as of May 12, 1999 by and among
Emerson Electric Co., Emersub LXXIV, Inc. and Daniel Industries, Inc.
(c)(2) Stock Option Agreement dated as of May 12, 1999 between Daniel
Industries, Inc. and Emerson Electric Co.
(c)(3) Confidentiality Agreement dated as of April 1, 1999 between Daniel
Industries, Inc. and Emerson Electric Co.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
<PAGE>
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
May 18, 1999 EMERSON ELECTRIC CO.
By: /s/ Robert M. Cox, Jr.
-------------------------------------
Name: Robert M. Cox, Jr.
Title: Senior Vice President - Acquisitions
and Development
EMERSUB LXXIV, INC.
By: /s/ Robert M. Cox, Jr.
-------------------------------------
Name: Robert M. Cox, Jr.
Title: Vice President
<PAGE>
EXHIBIT INDEX
Exhibit No.
(a)(1) Offer to Purchase dated May 18, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from Morgan Stanley Dean Witter to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal on
May 18, 1999.
(a)(8) Text of Press Release issued by Emerson Electric Co. on May 13, 1999.
(a)(9) Text of Press Release issued by Emerson Electric Co. on May 18, 1999.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger dated as of May 12, 1999 by and among
Emerson Electric Co., Emersub LXXIV, Inc. and Daniel Industries, Inc.
(c)(2) Stock Option Agreement dated as of May 12, 1999 between Daniel
Industries, Inc. and Emerson Electric Co.
(c)(3) Confidentiality Agreement dated as of April 1 1999, between Daniel
Industries, Inc. and Emerson Electric Co.
Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Related Rights)
of
Daniel Industries, Inc.
at
$21.25 Net Per Share
by
Emersub LXXIV, Inc.
a wholly-owned subsidiary of
Emerson Electric Co.
-----------------------
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY JUNE 15,
1999, UNLESS THE OFFER IS EXTENDED.
-----------------------
THE OFFER IS CONDITIONED UPON THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES OF COMMON
STOCK OF DANIEL INDUSTRIES, INC. THAT WOULD REPRESENT AT LEAST 66 2/3% OF THE
FULLY DILUTED SHARES. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS.
SEE SECTION 15.
THE BOARD OF DIRECTORS OF DANIEL INDUSTRIES, INC. HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER DESCRIBED HEREIN, UNANIMOUSLY DETERMINED
THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS
OF, THE STOCKHOLDERS OF DANIEL INDUSTRIES, INC. AND UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS TENDER THEIR SHARES PURSUANT TO THE OFFER.
-----------------------
IMPORTANT
Any stockholder desiring to tender Shares should either (1) complete and
sign the Letter of Transmittal (or facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and deliver it with the
certificate(s) representing tendered Shares and all other required documents
to the Depositary or tender such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3 or (2) request his or her broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for him or her. A stockholder having Shares registered in the name
of a broker, dealer, commercial bank, trust company or other nominee must
contact such person if he or she desires to tender such Shares.
Any stockholder who desires to tender Shares and cannot deliver such
Shares and all other required documents to the Depositary by the expiration of
the Offer or who cannot comply with the procedures for book-entry transfer on
a timely basis must tender such Shares pursuant to the guaranteed delivery
procedure set forth in Section 3. The Rights are presently evidenced by the
certificates for the Common Stock of Daniel Industries, Inc. and a tender of
such stockholder's Common Stock of Daniel Industries, Inc. will also constitute
a tender of the Rights.
Questions and requests for assistance may be directed to Georgeson &
Company Inc. (the "Information Agent") or Morgan Stanley & Co. Incorporated
(the "Dealer Manager") at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent or from brokers,
dealers, commercial banks or trust companies.
-----------------------
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
May 18, 1999
<PAGE>
Simmons & Company International ("Simmons"), financial advisor to Daniel
Industries, Inc., has delivered to the Board of Directors of Daniel
Industries, Inc. its written opinion to the effect that, as of May 12, 1999,
the $21.25 in cash to be received by the holders of Shares in the Offer and
the Merger described below is fair to such holders from a financial point of
view. The full text of the written opinion of Simmons containing the
assumptions made, the matters considered and the scope of the review
undertaken in rendering such opinion as well as the limitations of such
opinion is included with Daniel Industries, Inc.'s solicitation/recommendation
statement on Schedule 14D-9, which is being mailed to stockholders
concurrently herewith. Stockholders are urged to read the full text of such
opinion in conjunction with this Offer.
-----------------------
TABLE OF CONTENTS
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Page
----
1. Terms of the Offer; Expiration Date.....................................2
2. Acceptance for Payment and Payment......................................3
3. Procedure for Tendering Shares..........................................4
4. Withdrawal Rights.......................................................6
5. Certain Tax Considerations..............................................6
6. Price Range of Shares; Dividends........................................7
7. Certain Information Concerning the Company..............................8
8. Certain Information Concerning Purchaser and Parent....................11
9. Source and Amount of Funds.............................................13
10. Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company.......................................................13
11. Purpose of the Offer; Plans for the Company; Merger Agreement..........14
12. Effect of the Offer on the Market for the Shares; Stock Exchange
Listing; Registration under the Exchange Act...........................26
13. Dividends and Distributions............................................27
14. Extension of Tender Period; Termination; Amendment.....................27
15. Certain Conditions of the Offer........................................28
16. Certain Legal Matters; Regulatory Approvals............................30
17. Fees and Expenses......................................................32
18. Miscellaneous..........................................................32
Schedule I Directors and Executive Officers of Parent
i
<PAGE>
INTRODUCTION
To the Holders of Common Stock of
DANIEL INDUSTRIES, INC.
Emersub LXXIV, Inc., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Emerson Electric Co., a Missouri corporation
("Parent"), hereby offers to purchase all outstanding shares of Common Stock,
$1.25 par value (the "Common Stock"), of Daniel Industries, Inc., a Delaware
corporation (the "Company"), including the related right as to each share to
purchase one one-hundredth of a share of Series A Junior Participating
Preferred Stock, $1.00 par value, of the Company (singularly, a "Right" and
collectively, the "Rights") (singularly, a share of such Common Stock,
including the related Right, a "Share" and collectively, the "Shares"), at
$21.25 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer"). Tendering stockholders
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer. Purchaser will pay all charges and
expenses of Morgan Stanley & Co. Incorporated (the "Dealer Manager"), The Bank
of New York (the "Depositary") and Georgeson & Company Inc. (the "Information
Agent") incurred in connection with the Offer. See Section 17.
The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the expiration date of the Offer
that number of Shares that would represent at least 662/3% of the Fully
Diluted Shares (the "Minimum Tender Condition"), (2) any waiting period under
the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), having expired or terminated (the "HSR Condition") and (3) any
filings or approvals under applicable foreign antitrust laws and regulations
having been made or obtained, as the case may be, and any related waiting
periods having expired (the "Foreign Antitrust Approvals Condition"). "Fully
Diluted Shares" means all shares, on a fully diluted basis, after giving
effect to the exercise or conversion of all options, warrants, rights and
securities exercisable or convertible into common stock, other than potential
issuances attributable to the Rights unless such Rights shall be exercisable
pursuant to the Rights Agreement dated May 31, 1990, as amended, between the
Company and Equiserve Trust Company, N.A., as rights agent (the "Rights
Agreement").
According to the Company as of May 11, 1999, there were outstanding (i)
19,482,588 Shares and (ii) stock options to purchase an aggregate of 2,032,868
Shares. Based upon the foregoing, there were approximately 21,515,456 Fully
Diluted Shares outstanding. Neither Parent nor Purchaser or any person listed
on Schedule I beneficially owns any Shares. Accordingly, Purchaser believes
that the Minimum Tender Condition would be satisfied if approximately
14,343,638 Shares are validly tendered pursuant to the Offer and not
withdrawn.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of May 12, 1999 (the "Merger Agreement") among the Company, Parent and
Purchaser. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer, Purchaser will be merged with
and into the Company (the "Merger"), with the Company continuing as the
surviving corporation (the "Surviving Corporation"). Pursuant to the Merger,
each outstanding Share (other than Shares (i) owned by Parent, Purchaser or
any other wholly-owned subsidiary of Parent or by the Company or any
wholly-owned subsidiary of the Company and (ii) held by stockholders properly
exercising appraisal rights under the laws of the State of Delaware ("Delaware
Law")) will be converted into the right to receive from the Surviving
Corporation $21.25 in cash, or any higher price that may be paid per Share in
the Offer, without interest. For a discussion of the treatment of stock
options and stock awards in the Merger, see Section 11.
Purchaser reserves the right to waive any conditions to the Offer other
than the Minimum Tender Condition which requires the consent of the Company
and to modify the terms of the Offer, except that, without the consent of the
Company, Purchaser shall not (a) reduce the number of Shares subject to the
Offer; (b) reduce the price per Share to be paid pursuant to the Offer; (c)
modify or add to the conditions to the Offer; (d) except as provided
1
<PAGE>
below, extend the Offer; (e) change the form of consideration payable in the
Offer; or (f) otherwise amend the Offer in any manner materially adverse to
the Company's stockholders. Notwithstanding the foregoing, Purchaser may,
without the consent of the Company (i) extend the Offer if at the scheduled
expiration date of the Offer any of the conditions to Purchaser's obligation
to purchase Shares shall not be satisfied, (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "Commission") or the staff thereof
applicable to the Offer or for any period required by applicable law and (iii)
extend the Offer on one or more occasions for an aggregate period of not more
than 10 business days beyond the latest expiration date that would otherwise
be permitted under clause (i) or (ii) of this sentence, if, on such expiration
date, the number of Shares tendered (and not withdrawn) pursuant to the Offer
represents less than 90% of the Fully Diluted Shares. Purchaser and Parent
have agreed that if at any scheduled expiration date of the Offer the HSR
Condition has not been satisfied, but at such scheduled expiration date all
the other conditions to the Offer described in Section 15 shall have been
satisfied (other than the Minimum Tender Condition), Purchaser may (and at the
request of the Company (confirmed in writing) shall) extend the Offer (a
"Special Extension") from time to time until the HSR Condition has been
satisfied. In no event may the Company or Purchaser (without the consent of
the other) require that the Offer be extended to a date later than 270 days
following the date of the Merger Agreement (i.e., February 6, 2000) by Special
Extensions or to a date later than 180 days following the date of the Merger
Agreement (i.e., November 8, 1999) for any other reason. See Section 11.
Subject to the requirements of the Merger Agreement and applicable law, the
Purchaser reserves the right to amend the Offer at any time prior to payment
for the Shares tendered pursuant to the Offer.
The Merger Agreement provides that effective upon the acceptance for
payment of, and payment by Purchaser for, any Shares pursuant to the Offer,
Purchaser shall be entitled to designate the number of directors, rounded up
to the next whole number, on the Company's Board of Directors that equals the
product of (a) the total number of directors on the Company's Board of
Directors (giving effect to the directors elected pursuant to this provision)
multiplied by (b) the percentage that the number of Shares owned by the
Purchaser or any other subsidiary of Parent (including the Shares accepted for
payment and paid for by the Purchaser) bears to the number of Shares
outstanding. Notwithstanding the foregoing, in the event that Purchaser's
designees are appointed or elected to the Board of Directors of the Company,
until the Effective Time of the Merger such Board of Directors shall have at
least three directors who are directors on the date hereof and who are not
officers of the Company. See Section 11.
On May 12, 1999, the Company's Board of Directors declared a regular
quarterly cash dividend of $0.045 per Share, payable on June 22, 1999 to
holders of record as of June 8, 1999. Stockholders of record as of June 8,
1999 will be entitled to receive such dividend, regardless of whether or when
their Shares are tendered or purchased pursuant to the Offer. The next regular
quarterly dividend cannot be declared or paid until on or after August 14,
1999. After the consummation of the Offer, the Company will make no further
dividends.
Under the Company's Certificate of Incorporation, the Merger requires the
approval of the holders of 66 2/3% of the outstanding Shares. If the Minimum
Tender Condition is satisfied, Purchaser would have sufficient voting power to
approve the Merger without the affirmative vote of any other stockholder of
the Company. However, there can be no assurance that Purchaser will acquire at
least 66 2/3% of the outstanding Shares.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE OFFER.
1. Terms of the Offer; Expiration Date. Upon the terms and subject to
the conditions set forth in the Offer, Purchaser will accept for payment and
pay for all Shares that are validly tendered by the Expiration Date and not
withdrawn as provided in Section 4. The term "Expiration Date" shall mean
12:00 Midnight, New York City time, on Tuesday, June 15, 1999, unless
Purchaser shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date
at which the Offer, as so extended by Purchaser, shall expire.
2
<PAGE>
The Offer is subject to certain conditions set forth in Section 15,
including satisfaction of the Minimum Tender Condition, the HSR Condition and
the Foreign Antitrust Approvals Condition. If any such condition is not
satisfied, Purchaser may (I) refuse to accept for payment, or to pay for, any
Shares tendered pursuant to the Offer, and (a) subject to the Company's right
to require Purchaser to extend the offer up to February 6, 2000 if the HSR
Condition is not satisfied and no other condition (other than the Minimum
Tender Condition) is unsatisfied, terminate the Offer and return all tendered
Shares to tendering stockholders, (b) extend the Offer and, subject to
withdrawal rights as set forth in Section 4, may retain all such Shares until
the expiration of the Offer as so extended; provided that any extension of the
Offer beyond November 8, 1999 will require the consent of the Company, except
that Purchaser may extend the Offer up to February 6, 2000 without the
Company's consent if the HSR Condition is not satisfied and no other condition
(other than the Minimum Tender Condition) is unsatisfied, or (c) waive such
condition (other than the Minimum Tender Condition, which requires the
Company's consent) and purchase all Shares validly tendered by the Expiration
Date and not withdrawn or (II) delay acceptance for payment or payment for
Shares, subject to applicable law, until satisfaction or waiver of the
conditions to the Offer. For a further description of Purchaser's right to
extend the period of time during which the Offer is open and to amend, delay
or terminate the Offer, see Sections 14 and 15.
The Company has provided Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, banks and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. Acceptance for Payment and Payment. Upon the terms and subject to
the conditions of the Offer, Purchaser will accept for payment and pay for all
Shares validly tendered by the Expiration Date and not withdrawn as soon as
practicable after the later of the Expiration Date and the satisfaction or
waiver of the conditions set forth in Section 15. In addition, Purchaser
reserves the right, in its sole discretion and subject to applicable law, to
delay the acceptance for payment or payment for Shares in order to comply in
whole or in part with any applicable law. For a description of Purchaser's
right to terminate the Offer and not accept for payment or pay for Shares or
to delay acceptance for payment or payment for Shares, see Section 14.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment tendered Shares when, as and if Purchaser gives oral or written notice
to the Depositary of its acceptance of the tenders of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price with the Depositary, which will act as agent for the
tendering stockholders for the purpose of receiving payments from Purchaser
and transmitting such payments to tendering stockholders. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of certificates for such Shares
(or of a confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined
in Section 3)), a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents. For a description of
the procedure for tendering Shares pursuant to the Offer, see Section 3.
Accordingly, payment may be made to tendering stockholders at different times
if delivery of the Shares and other required documents occur at different
times. Under no circumstances will interest be paid by Purchaser on the
consideration paid for Shares pursuant to the Offer, regardless of any delay
in making such payment.
If Purchaser increases the consideration to be paid for Shares pursuant
to the Offer, Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer or prejudice the rights
of tendering shareholders to receive payment for Shares validly tendered and
accepted for payment.
3
<PAGE>
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased or untendered Shares will be returned (or,
in the case of Shares tendered by book-entry transfer, such Shares will be
credited to the account maintained at the Book-Entry Transfer Facility),
without expense to the tendering stockholder, as promptly as practicable
following the expiration or termination of the Offer.
3. Procedure for Tendering Shares. To tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase and either certificates for
the Shares to be tendered must be received by the Depositary at one of such
addresses or such Shares must be delivered pursuant to the procedures for
book-entry transfer described below (and a confirmation of such delivery
received by the Depositary including an Agent's Message (as defined below) if
the tendering stockholder has not delivered a Letter of Transmittal), in each
case by the Expiration Date, or (b) the guaranteed delivery procedure
described below must be complied with.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility (as hereinafter defined) to and received by the Depositary
and forming a part of a Book-Entry Confirmation (as hereinafter defined) that
states that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Shares that are the subject of such book-entry confirmation that
such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that the Company may enforce such agreement against
such participant.
Book Entry Delivery. The Depositary will establish an account with
respect to the Shares at The Depository Trust Company (the "Book-Entry
Transfer Facility") for purposes of the Offer within two business days after
the date of this Offer to Purchase. Any financial institution that is a
participant in the system of the Book-Entry Transfer Facility may make
delivery of Shares by causing such Book-Entry Transfer Facility to transfer
such Shares into the Depositary's account in accordance with the procedures of
such Book-Entry Transfer Facility. However, although delivery of Shares may be
effected through book-entry transfer, the Letter of Transmittal (or facsimile
thereof) properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message, and any other required documents
must, in any case, be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase by the Expiration Date, or
the guaranteed delivery procedure described below must be complied with. The
confirmation of a book-entry transfer of Shares into the Depository's account
at the Book-Entry Transfer Facility as described above is referred to herein
as a "Book-Entry Confirmation". Delivery of the Letter of Transmittal and any
other required documents to the Book-Entry Transfer Facility in accordance
with such Book-Entry Transfer Facility's procedures does not constitute
delivery to the Depositary.
Signature Guarantees. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by an Eligible Institution.
"Eligible Institution" means a financial institution (including most banks,
savings and loan associations and brokerage houses) which is a member of a
recognized Medallion Program approved by The Securities Transfer Association
Inc., including the Securities Transfer Agents Medallion Program (STAMP), the
Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange, Inc.
Medallion Signature Program (MSP). Signatures on a Letter of Transmittal need
not be guaranteed (a) if the Letter of Transmittal is signed by the registered
holder of the Shares tendered therewith and such holder has not completed the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of an Eligible Institution. See Instructions 1 and 5
of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant
to the Offer and cannot deliver certificate(s) representing such Shares and
all other required documents to the Depositary by the Expiration Date, or such
stockholder cannot complete the procedure for delivery by book-entry transfer
on a timely basis, such Shares may nevertheless be tendered if all of the
following conditions are met:
4
<PAGE>
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by Purchaser is received by
the Depositary (as provided below) by the Expiration Date; and
(iii) the certificates for such Shares (or a confirmation of a
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facility), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantee or an Agent's Message and any other
documents required by the Letter of Transmittal, are received by the
Depositary within three New York Stock Exchange, Inc. ("NYSE") trading
days after the date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
The method of delivery of Shares and all other required documents,
including through the Book-Entry Transfer Facility, is at the option and risk
of the tendering stockholder and the delivery will be deemed made only when
actually received by the Depositary. If certificates for Shares are sent by
mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
Under the federal income tax laws, the Depositary will be required to
withhold 31% of the amount of any payments made to certain stockholders
pursuant to the Offer. In order to avoid such backup withholding, each
tendering stockholder must provide the Depositary with such stockholder's
correct taxpayer identification number and certify that such stockholder is
not subject to such backup withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. If a stockholder is a non-resident
alien or foreign entity not subject to back-up withholding, the stockholder
must give the Depositary a completed Form W-8 Certificate of Foreign Status
prior to receipt of any payment.
By executing a Letter of Transmittal, a tendering stockholder irrevocably
appoints designees of Purchaser as such stockholder's proxies in the manner
set forth in the Letter of Transmittal to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder
and accepted for payment by Purchaser (and any and all other Shares or other
securities issued or issuable in respect of such Shares on or after May 12,
1999). All such proxies shall be irrevocable and coupled with an interest in
the tendered Shares. Such appointment is effective only upon the acceptance
for payment of such Shares by Purchaser. Upon such acceptance for payment, all
prior proxies and consents granted by such stockholder with respect to such
Shares and other securities will, without further action, be revoked, and no
subsequent proxies may be given nor subsequent written consents executed by
such stockholder (and, if given or executed, will not be deemed to be
effective). Such designees of Purchaser will be empowered to exercise all
voting and other rights of such stockholder as they, in their sole discretion,
may deem proper at any annual, special or adjourned meeting of the Company's
stockholders, by written consent or otherwise. Purchaser reserves the right to
require that, in order for Shares to be validly tendered, immediately upon
Purchaser's acceptance for payment of such Shares, Purchaser is able to
exercise full voting rights with respect to such Shares and other securities
(including voting at any meeting of stockholders then scheduled or acting by
written consent without a meeting).
The tender of Shares pursuant to any one of the procedures described
above will constitute the tendering stockholder's acceptance of the Offer, as
well as the tendering stockholder's representation and warranty that (a) such
stockholder owns the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (b) the tender of such Shares complies with Rule 14e-4, and
(c) such stockholder has the full power and authority to tender and assign the
Shares tendered, as specified in the Letter of Transmittal. Purchaser's
acceptance for payment of Shares tendered pursuant to the Offer
5
<PAGE>
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by Purchaser, in its sole discretion, which determination
shall be final and binding. Purchaser reserves the absolute right to reject
any or all tenders of Shares determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right
to waive any defect or irregularity in any tender of Shares whether or not
similar defects or irregularities are waived in the case of other Shares. None
of Parent, Purchaser, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defect or irregularity in tenders or incur any liability for failure to give
any such notification.
4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date. Thereafter, such
tenders are irrevocable, except that they may be withdrawn after July 16, 1999
unless theretofore accepted for payment as provided in this Offer to Purchase.
If Purchaser extends the period of time during which the Offer is open, is
delayed in accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to Purchaser's rights under the Offer, the Depositary may,
on behalf of Purchaser, retain all Shares tendered, and such Shares may not be
withdrawn except as otherwise provided in this Section 4.
To be effective, a written, telegraphic, telex or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must
specify the name of the person who tendered the Shares to be withdrawn and the
number of Shares to be withdrawn and the name of the registered holder of
Shares, if different from that of the person who tendered such Shares. If the
Shares to be withdrawn have been delivered to the Depositary, a signed notice
of withdrawal with (except in the case of Shares tendered by an Eligible
Institution) signatures guaranteed by an Eligible Institution must be
submitted prior to the release of such Shares. In addition, such notice must
specify, in the case of Shares tendered by delivery of certificates, the name
of the registered holder (if different from that of the tendering stockholder)
and the serial numbers shown on the particular certificates evidencing the
Shares to be withdrawn or, in the case of Shares tendered by book-entry
transfer, the name and number of the account at one of the Book-Entry Transfer
Facilities to be credited with the withdrawn Shares. Withdrawals may not be
rescinded, and Shares withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, withdrawn Shares may be retendered by
again following one of the procedures described in Section 3 at any time prior
to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, which determination shall be final and binding. None of Parent,
Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defect or
irregularity in any notice of withdrawal or incur any liability for failure to
give any such notification.
5. Certain Tax Considerations. The following discussion may not be
applicable with respect to Shares received pursuant to the exercise of
employee stock options or otherwise as compensation or to stockholders who
perfect their appraisal rights under the Delaware General Corporation Law or
with respect to holders of Shares who are subject to special tax treatment
under the Internal Revenue Code of 1986, as amended (the "Code"), such as
non-U.S. persons, life insurance companies, dealers in securities, tax-exempt
organizations and financial institutions, and may not apply to a holder of
Shares in light of its individual circumstances.
The receipt of cash pursuant to the Offer or the Merger will constitute a
taxable transaction for Federal income tax purposes under the Code, and may
also constitute a taxable transaction under applicable state, local, foreign
and other tax laws. As a result, a tendering stockholder will generally
recognize gain or loss for federal income tax purposes in an amount equal to
the difference between the amount of cash received by the stockholder pursuant
to
6
<PAGE>
the Offer or the Merger and such stockholder's aggregate adjusted tax basis in
the Shares tendered and purchased pursuant to the Offer (or surrendered
pursuant to the Merger). If tendered Shares are held by a tendering
stockholder as capital assets (within the meaning of Section 1221 of the
Code), any gain or loss recognized by the tendering stockholder will
constitute capital gain or loss, and will constitute long-term capital gain or
loss if the tendering stockholder held the underlying Shares for more than 12
months as of the date of disposition. There are limits on the deductibility of
capital losses.
THE SUMMARY OF TAX CONSEQUENCES SET FORTH ABOVE IS FOR GENERAL
INFORMATION ONLY AND IS BASED ON THE LAW AS CURRENTLY IN EFFECT. STOCKHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
6. Price Range of Shares; Dividends. The Shares are listed and
principally traded on the NYSE under the symbol "DAN". The following table
sets forth for the periods indicated the high and low sales prices per Share
on the NYSE Composite Tape and the cash dividends paid per Share, as reported
in the Company's Annual Report on Form 10-K for the year ended 1998 (the
"Company 10-K") with respect to the years 1998 and 1997, and thereafter as
reported in the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999 (the "Company 10-Q") and in published financial sources:
<TABLE>
High Low Dividends
----- ---- ---------
<S> <C> <C> <C>
Fiscal 1997 Quarter Ended
First Quarter......................................... $21 15/16 $17 1/2 $0.045
Second Quarter........................................ 19 3/4 15 1/8 0.045
Third Quarter......................................... 15 5/8 12 3/8 0.045
Fourth Quarter........................................ 15 1/8 11 1/2 0.045
Fiscal 1998 Quarter Ended
First Quarter......................................... $15 3/4 $ 9 1/2 $0.045
Second Quarter........................................ 20 1/16 10 7/8 0.045
Third Quarter......................................... 22 1/4 17 1/4 0.045
Fourth Quarter........................................ 20 1/4 16 1/4 0.045
1999
First Quarter......................................... $15 3/4 $10 $0.045
Second Quarter (through May 12, 1999)................. 20 5/8 14 1/4 0.045
</TABLE>
On March 15, 1999, the last day of trading prior to the Company's
announcement that it had received and rejected an unsolicited proposal to
acquire all of the Company's outstanding Common Stock for cash and stock
aggregating $15 per share and had decided instead to evaluate its options for
maximizing stockholder value, the reported closing sales price per Share on
the NYSE Composite Tape was $11 1/2. On May 12, 1999, the last day of trading
prior to the announcement of the Merger Agreement and the transactions
contemplated thereby (including the Offer), the reported closing sales price
per Share on the NYSE Composite Tape was $19 9/16. On May 17, 1999, the last
full day of trading prior to the commencement of the Offer, the reported
closing sales price per Share on the NYSE Composite Tape was $20 13/16.
SHAREHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
On May 12, 1999, the Company's Board of Directors declared a regular
quarterly cash dividend of $0.045 per Share, payable on June 22, 1999 to
holders of record as of June 8, 1999. Stockholders of record as of June 8,
1999 will be entitled to receive such dividend, regardless of whether or when
their Shares are tendered or purchased pursuant to the Offer. The next regular
quarterly dividend cannot be declared or paid until on or after August 14,
1999. After the consummation of the offer, the Company will make no further
dividends.
7
<PAGE>
7. Certain Information Concerning the Company. The Company is a
Delaware corporation with its principal executive offices located at 9753 Pine
Lake Drive, Houston, Texas 77055.
According to the Company 10-K, the Company is principally engaged in
providing products and services used primarily by transporters, refiners and
processors of oil and natural gas. The Company manufactures a variety of
measurement devices including orifice, turbine and ultrasonic meters and a
wide range of electronic instruments used in conjunction with flow measurement
products. The Company also designs, fabricates and assembles automated flow
measurement systems to meet specific needs and applications. The Company
manufactures and sells valves, primarily for pipeline use, as well as valve
actuators and control systems, which are used to remotely and automatically
open and close quarter-turn and linear valves for any industry that uses pipes
to transport liquids and gases in supply, manufacture or distribution
operations.
The Company was incorporated in 1988 under the laws of Delaware as the
successor to a business started in 1930. The Company's active subsidiaries*
are as follows:
Daniel Measurement and Control, Inc. (Delaware)
Daniel Industries Canada Inc. (Canada)
Daniel Measurement Services, Inc. (Delaware)
Metco Services, Ltd. (United Kingdom)
Daniel Industries Foreign Sales Corporation (Virgin Islands)
Daniel Valve Company (Delaware)
Oilfield Fabricating & Machine, Inc. (Texas)
Bettis Corporation (Delaware)
Bettis Holdings, Ltd. (United Kingdom)
Bettis UK Ltd. (United Kingdom)
Prime Actuator Control Systems UK Ltd. (United Kingdom)
Bettis Canada Ltd. (Canada)
Bettis GmbH (Germany)
Bettis France SARL (France)
Dantorque A/S (Denmark)
Shafer Valve Company (Ohio)
Bettis Electric Actuator Corporation (Delaware)
Bettis Foreign Sales Corp. (Barbados)
Bettis Controls Pvt. Ltd. (50%) (India)
Daniel International Ltd. (United Kingdom)
Daniel Europe Ltd. (United Kingdom)
Spectra-Tek International Ltd. (United Kingdom)
Daniel Asia Pacific Ltd. (Singapore)
Spectra-Tek Holdings Ltd. (United Kingdom)
Spectra-Tek UK Ltd. (United Kingdom)
Advanced Spectra-Tek Private Ltd. (40%) (India)
------------
* Ownership at 100% unless otherwise specified.
Recent Acquisitions
On May 11, 1999, the Company acquired all of the issued share capital of
Hytork International Plc. Based in the United Kingdom, Hytork International
Plc is a designer, manufacturer and marketer of rack and pinion actuators for
a broad range of industrial applications. Pursuant to this acquisition, the
Company acquired the following entities, all of which are now 100% owned,
directly or indirectly:
Hytork International plc (UK company)
8
<PAGE>
Hytork Controls Ltd (UK company)
Hytork Services Limited (UK company)
Hytork Controls, Inc. (Florida corporation)
Valcon Limited (UK company)
Hytork Controls (Australia) Pty Ltd. (Australian company)
Effective October 31, 1998, the Company acquired all of the outstanding
stock of Metco Services Ltd. Based in Aberdeen, Scotland, Metco Services Ltd.
is a United Kingdom provider of flow measurement services to the international
energy industry.
On December 12, 1996, Daniel issued 4,920,392 shares of its Common Stock
in exchange for all of the outstanding common stock of Bettis Corporation.
Bettis Corporation acquired all of the outstanding stock of the following
businesses prior to December 12, 1996: Shafer Valve Company, a manufacturer of
gas hydraulic rotary vane actuators and hydraulic power units; Prime Actuator
Control Systems, a manufacturer of hydraulic and pneumatic scotch actuators;
and Dantorque A/S, a manufacturer of helical spline hydraulic double action
and spring return actuators.
Selected Consolidated Financial Data. The following selected consolidated
financial data relating to the Company and its subsidiaries has been taken or
derived from the audited financial statements contained in the Company 10-K
and the unaudited financial statements contained in the Company 10-Q. More
comprehensive financial information is included in such 10-K and 10-Q and the
other documents filed by the Company with the Commission, and the financial
data set forth below is qualified in its entirety by reference to such reports
and other documents including the financial statements contained therein. Such
reports and other documents may be examined and copies may be obtained from
the offices of the Commission in the manner set forth below.
DANIEL INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per Share amounts)
<TABLE>
Year Ended Three Months Ended Year Ended
December 31,(1) December 31, September 30 Three Months Ended
-------------------- ----------------------- ------------ --------------------
1998 1997 1996 1995 1996(2) 1999 1998
--------- --------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................... $ 283,159 $ 268,861 $ 53,764 $ 54,154 $ 233,611 $ 62,013 $ 67,210
Net income (loss)...................... 15,237 10,574 (17,944)(3) 2,810 2,677(4) 612 3,742
Total assets........................... 236,424 233,954 233,575 205,534 248,769 236,460 235,972
Long-term debt......................... 30,639 37,283 30,233 15,613 34,702 33,304 38,019
Basic earnings (loss) per share........ 0.87 0.62 (1.05) 0.16 0.74 0.03 0.22
Diluted earnings (loss) per share...... 0.86 0.61 (1.05) 0.16 0.73 0.03 0.21
Cash dividends per share............... 0.18 0.18 0.045 0.045 0.18 0.045 0.045
Average shares outstanding............. 17,435 17,146 17,061 17,002 17,027 17,530 17,331
Average diluted shares outstanding..... 17,690 17,483 17,249 17,154 17,281 17,678 18,053
</TABLE>
- -----------
(1) In December 1996, the Company's Board of Directors approved a change in
the fiscal year-end from September 30 to December 31. The Company filed a
Transition Report on Form 10-Q for the three-month transition period
ended December 31, 1996.
(2) Includes Bettis' results for the nine months ended September 30, 1996 and
three months ended December 31, 1995.
(3) Net loss for the period includes $16,663 in restructuring and other
charges.
(4) Net income for the year includes $3,267 in gains on sales of non-core
assets.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or is based upon
reports and other documents on file with the Commission or otherwise publicly
available. Although neither Purchaser nor Parent has any knowledge that would
indicate that any statements contained herein based upon such reports and
documents are untrue, neither Purchaser nor Parent takes any responsibility
for the accuracy or completeness of the information contained in such reports
and other documents or for any failure by the Company to disclose events that
may have occurred and may affect the significance or accuracy of any such
information but that are unknown to Purchaser or Parent.
9
<PAGE>
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company. Such reports, proxy
statements and other information may be inspected at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and should also be available for inspection and
copying at the regional offices of the Commission in New York (Seven World
Trade Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661). Such
material may also be obtained from the Commission's web site at
http://www.sec.gov. Copies of such material should be obtainable by mail, upon
payment of the Commission's customary charges, by writing to the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
material should also be available for inspection at the library of the NYSE,
20 Broad Street, New York, New York 10005.
In the course of the discussions between representatives of Parent and
the Company (see Section 10), certain projections of future operating
performance were furnished to Parent's representatives. These projections, and
the assumptions underlying such projections, were not prepared with a view to
public disclosure or compliance with published guidelines of the Commission or
the guidelines established by the American Institute of Certified Public
Accountants regarding projections, and are included in this Offer to Purchase
only because they were provided to Parent. None of Parent, Purchaser, the
Company, any of their financial advisors or the Dealer Manager assumes any
responsibility for the accuracy of these projections. While presented with
numerical specificity, these projections are based upon a variety of
assumptions relating to the businesses of the Company which may not be
realized and are subject to significant uncertainties and contingencies beyond
the control of the Company. There can be no assurance that the projections
will be realized, and actual results may vary materially from those shown.
None of the Company, Parent or Purchaser intends to update, revise or correct
such projections if they become inaccurate (even in the short term). These
projections need to be considered in light of the Company recently announced
results for the first quarter of 1999 (see above).
Set forth below is a summary of the projections. These projections should
be read together with the financial statements of the Company referred to
herein.
Projected Income Statement Summary
(U.S. dollar amounts in millions, except per Share)
<TABLE>
Projected Year Ending Decwember 31,(1)(2)(3) CAGR
---------------------------------------------- ---------------------------
1998(4) 1999(5) 2000 2001 2002 2003 1996 To 1993 1998 to 2003
------- ------- ------ ------ ------ ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.......................... $287.7 $285.1 $305.9 $328.2 $356.7 $392.2 +11.7% + 6.4
EBITDA......................... 37.9 32.3 42.2 52.7 66.7 85.4 +19.6% +17.7%
EBITDA Margin.................. 13.2% 11.3% 13.8% 16.1% 18.7% 21.8%
Net Income........................ $15.3 $ 12.2 $20.8 $29.1 $39.9 $54.1 +31.8% +28.7%
Cash Flow(6)................... $26.0 $ 22.9 $31.1 $39.3 $50.0 $64.4 +19.3% +19.9%
Average Diluted Shares (Millions). 17.7 18.0 18.0 18.0 18.0 18.0
Earnings Per Share ("EPS")..... $0.86 $ 0.68 $1.15 $1.61 $2.22 $3.01 +29.3% +28.3
====== ====== ======= ====== ====== ======
Cash Flow Per Share............ $1.47 $ 1.27 $1.73 $2.19 $2.78 $3.58 +17.1% +19.5%
</TABLE>
- ----------------
(1) Projected 1999 to 2003 from Daniel's Five-Year Strategic Business Plan.
Projected results do not include Hytork or other potential strategic
acquisitions or joint ventures.
(2) The Hytork acquisition was projected to add $23.2 million in revenues and
$4.9 million in EBITDA (with projected synergies) in the year ending
April 30, 2000.
(3) The Company has engaged in preliminary discussions regarding a potential
joint venture relating to its measurement products business. Such
discussions have ceased as a result of the Merger Agreement. Assuming the
Company obtained one-half of projected cost savings (excluding any
10
<PAGE>
costs associated with the formation of the joint venture), the Company's
projected 1999 EBITDA, net income and EPS would be $48 million, $22
million and $1.24, respectively, increasing to $103 million, $65 million
and $3.63, respectively, in 2003.
(4) Includes a full year of Metco (acquired effective October 31, 1998) which
increases 1998 reported revenues by approximately $5 million but has no
significant effect on reported EBITDA.
(5) These projections were included in the Company's Offering Memorandum
dated April, 1999 and subsequent management presentation. However, the
Company's results for the first quarter of 1999 (see above) were below
those anticipated in the above projections due to a decline in business
activity associated with lower energy prices. The Company has also
announced that it expects results for the second quarter and the year to
continue to be adversely affected by this reduction in business activity.
It is therefore now expected that actual 1999 performance will be
significantly below that projected above.
(6) Net income plus depreciation expense.
8. Certain Information Concerning Purchaser and Parent. Purchaser is a
Delaware corporation incorporated on May 11, 1999 and to date has engaged in
no activities other than those incident to its formation, the execution and
delivery of the Merger Agreement and the commencement of the Offer. Purchaser
is a wholly-owned subsidiary of Parent. The principal executive offices of
Purchaser are located at 8000 W. Florissant Ave., St. Louis, Missouri 63136.
Parent is a Missouri corporation. Incorporated in 1890, Parent was
originally engaged in the manufacture and sale of electric motors and fans. It
subsequently expanded its product lines through internal growth and
acquisitions. Parent is now engaged principally in the worldwide design,
manufacture and sale of a broad range of electrical, electromechanical and
electronic products and systems. The principal executive offices of Parent are
located at 8000 W. Florissant Ave., St. Louis, Missouri 63136.
The name, business address, principal occupation or employment, five year
employment history and citizenship of each director and executive officer of
Parent and Purchaser and certain other information are set forth on Schedule I
hereto.
The following selected consolidated financial data relating to Parent and
its subsidiaries has been taken or derived from the audited financial
statements contained in Parent's Annual Report on Form 10-K for the year ended
September 30, 1998, and the unaudited financial statements contained in
Parent's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
More comprehensive financial information is included in such Annual Report and
Quarterly Report and the other documents filed by Parent with the Commission,
and the financial data set forth below is qualified in its entirety by
reference to such reports and other documents including the financial
statements contained therein. Such reports and other documents may be examined
and copies may be obtained from the offices of the Commission in the same
manner as set forth with respect to the Company in Section 7.
11
<PAGE>
EMERSON ELECTRIC CO.
SELECTED CONSOLIDATED FINANCIAL DATA
(In millions, except per Share amounts)
<TABLE>
Six Months Ended
Year Ended March 31,
September 30, (unaudited)
------------------------------------ -----------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales.................................. $11,149.9 $12,298.6 $13,447.2 $ 6,553.9 $ 7,015.4
Net earnings............................... 1,018.5 1,121.9 1,228.6 589.9 628.3
Basic earnings per share................... 2.27 2.52 2.80 1.34 1.44
Diluted earnings per share................. 2.25 2.50 2.77 1.33 1.43
Cash dividends per share................... 0.98 1.08 1.18 0.59 0.65
Balance Sheet Data:
Working capital............................ $ 1,166.1 $ 874.4 $ 979.6 $ 1,020.5 $ 799.5
Total assets............................... 10,481.0 11,463.3 12,659.8 12,110.6 13,255.8
Long-term debt............................. 772.6 570.7 1,056.6 601.9 1,286.3
Stockholders' equity....................... 5,353.4 5,420.7 5,803.3 5,730.9 5,947.1
</TABLE>
-----------------------
Parent is subject to the informational requirements of the Exchange Act
and in accordance therewith files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. Parent is required to disclose in such proxy statements
certain information, as of particular dates, concerning its directors and
officers, their remuneration, stock options granted to them, the principal
holders of its securities and any material interests of such persons in
transactions with Parent. Such reports, proxy statements and other information
should be available for inspection and copying from the Commission and the
library of the NYSE in the same manner as set forth with respect to the
Company in Section 7.
Except as described in this Offer to Purchase, (i) neither Parent nor
Purchaser nor, to the best knowledge of Purchaser, any of the persons listed
in Schedule I to this Offer to Purchase or any associate or majority-owned
subsidiary of Parent or any of the persons so listed beneficially owns or has
any right to acquire, directly or indirectly, any Shares and (ii) neither
Parent nor Purchaser nor, to the best knowledge of the Purchaser, any of the
persons or entities referred to above nor any director, executive officer or
subsidiary of any of the foregoing has effected any transaction in the Shares
during the past 60 days.
Except as described in this Offer to Purchase, neither Parent nor
Purchaser nor, to the best knowledge of Purchaser, any of the persons listed
in Schedule I hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or voting of such
securities, finder's fees, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees of profits, guarantees against loss,
division of profits or loss or the giving or withholding of proxies. Except as
set forth in this Offer to Purchase, since January 1, 1996, neither Parent,
Purchaser nor, to the best knowledge of Purchaser, any of the persons listed
in Schedule I hereto, has had any business relationship or transaction with
the Company or any of its executive officers, directors, or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
January 1, 1996, there have been no contracts, negotiations or transactions
between Parent, Purchaser or any of their subsidiaries or, to the best
knowledge of Parent and Purchaser, any of the persons listed in Schedule I
hereto, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
12
<PAGE>
9. Source and Amount of Funds. The maximum potential amount of funds
required by Purchaser to purchase Shares pursuant to the Offer is estimated to
be approximately $457.2 million. Purchaser will obtain such funds from Parent
which in turn is expected to utilize available general corporate funds and
funds provided by the issuance of short term commercial paper. Were it
necessary, Parent would also be able to draw upon lines of credit at various
U.S. and foreign banks totaling approximately $2.1 billion, of which
substantially all was available at May 17, 1999. The interest rates of such
commercial paper and lines of credit have not been determined because they
will depend upon market conditions and other factors prevailing at the time of
such issuance or borrowings. There are no conditions to drawdown under such
lines of credit which Parent believes are not or cannot be satisfied at or
prior to the Expiration Date. Parent expects that any such commercial paper or
borrowings would be repaid from general corporate funds, from proceeds of
other new debt issues of Parent (the interest rates and other terms of which
would depend upon market conditions and other factors prevailing at such time
or times as such issues may be undertaken) or from other sources. Parent can
issue up to $460 million of debt securities under its shelf registration with
the Commission. Parent's long-term debt is currently rated Aa1 and AA+ by
Moody's and Standard & Poors, respectively.
10. Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company.
On March 16, 1999, the Company announced that its Board of Directors had
received and rejected an unsolicited proposal for the acquisition of all of
the outstanding Common Stock of the Company for cash and stock aggregating $15
per Share. The Company's Board of Directors considered such proposal to be
inadequate and decided to initiate a strategic review to evaluate its options
for maximizing the value of the Company to its stockholders. The Company
retained the services of Simmons & Company International ("Simmons") to assist
the Company in such a strategic review.
A representative of Simmons contacted Parent, on March 23 or March 24,
1999, indicating that the Board of Directors of the Company had decided to
review all strategic alternatives to maximize shareholder value, which
included seeking buyers for the Company and inquiring as to Parent's interest.
A representative of Parent indicated a strong interest on Parent's part in
exploring a transaction. Thereupon, Parent was provided with a draft
confidentiality and standstill agreement (the "Confidentiality Agreement").
Discussions between representatives of Parent and the Company ensued
relating to agreeing on a final form of Confidentiality Agreement which was
executed on April 1, 1999. Parent subsequently received the Company's
Confidential Descriptive Memorandum.
Parent was invited to attend a presentation by the Company's management
and to tour the Company's plant and office facilities in Houston, Texas, on
April 26, 1999, and to review selected due diligence materials in a data room
at the Company on April 26 and 27, 1999 as were other potential bidders for
the Company's business. Parent was subsequently provided with two versions of
the Company's proposed merger agreement, one for use with a stock for stock
acquisition and the other for use in a cash acquisition. Between April 26,
1999 and May 7, 1999 there were regular contacts between Parent and the
Company relating to Parent's due diligence investigation of the Company.
At the request of Parent, C.F. Knight, Chairman & CEO of Parent, and D.N.
Farr, Senior Executive Vice President of Parent responsible for the Process
Control business of Parent, met on May 7, 1999 with key managers of the
Company, including R.C. Lassiter, the Chairman of the Board and Chief
Executive Officer of the Company. Following that meeting, Mr. Knight, Mr.
Lassiter and Mr. Farr discussed and tentatively agreed on an acquisition price
acceptable to both parties, subject to the approval of Boards of Directors of
the Company, Parent and Purchaser, negotiation of definitive agreements and
receipt by the Company of a fairness opinion from Simmons.
Between May 7, 1999 and May 12, 1999, representatives of the Company and
Parent (including financial and legal advisors) met to negotiate the terms of
the definitive agreements.
13
<PAGE>
On Wednesday, May 12, 1999, the Board of Directors of each of the
Company, Parent and Purchaser approved the transaction, including the
execution of the Merger Agreement and the stock option agreement dated as of
May 12, 1998 between the Company and Parent (the "Stock Option Agreement").
Such agreements were executed and delivered by the parties thereto.
11. Purpose of the Offer; Plans for the Company; Merger Agreement and
Other Arrangements.
Purpose of the Offer
The purpose of the Offer is to acquire control of, and at least a
two-thirds equity interest in, the Company. The purpose of the Merger is to
acquire all outstanding Shares not tendered and purchased pursuant to the
Offer. The Offer is being made pursuant to the Merger Agreement and the
purchase of the Shares pursuant to the Offer will increase the likelihood that
the Merger will be effected. If the Offer is successful, the Shares not
acquired by the Purchaser pursuant to the Offer will be converted, subject to
the terms of the Merger Agreement, into the right to receive cash in an amount
equal to the price per share paid pursuant to the Offer.
The Board of Directors of the Company has unanimously approved the Merger
and adopted the Merger Agreement. Depending upon the number of Shares
purchased by Purchaser pursuant to the Offer, the Board may be required to
submit the Merger Agreement to the Company's stockholders for approval at a
stockholder's meeting convened for that purpose in accordance with Delaware
Law. If stockholder approval is required, the Merger Agreement must be
approved by 66 2/3% of all votes entitled to be cast at such meeting.
If the Minimum Tender Condition is satisfied, Purchaser will have
sufficient voting power to approve the Merger Agreement at the stockholders'
meeting without the affirmative vote of any other stockholder.
If Purchaser acquires at least 90% of the Shares pursuant to the Offer,
the Merger may be consummated without a stockholders' meeting and without the
approval of the Company's stockholders. The Merger Agreement provides that
Purchaser will be merged with and into the Company following the Offer, and
that the certificate of incorporation and by-laws of Purchaser will be the
certificate of incorporation and by-laws of the Surviving Corporation
following the Merger.
Under Delaware Law, holders of Shares do not have appraisal rights as a
result of the Offer. In connection with the Merger, however, stockholders of
the Company may have the right to dissent and demand appraisal of their Shares
under Delaware Law. Dissenting stockholders who comply with the applicable
statutory procedures under Delaware Law will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of such merger or similar
business combination) and to receive payment of such fair value in cash. Any
such judicial determination of the fair value of the Shares could be based
upon considerations other than or in addition to the price paid in the Merger
and the market value of the Shares. In Weinberger v. UOP, Inc., the Delaware
Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court" should be considered in
an appraisal proceeding. Stockholders should recognize that the value so
determined could be higher or lower than the price per Share paid pursuant to
the Offer or the consideration per Share paid in such a merger or other
similar business combination. Moreover, Purchaser may argue in an appraisal
proceeding that, for purposes of such a proceeding, the fair value of the
Shares is less than the price paid in the Offer.
If Purchaser purchases Shares pursuant to the Offer and the Merger is
consummated more than one year after the completion of the Offer or if an
alternative merger transaction were to provide for the payment of
consideration less than that paid pursuant to the Offer, compliance by
Purchaser with Rule 13e-3 under the Exchange Act would be required, unless the
Shares were to be deregistered under the Exchange Act prior to such
transaction. Rule 13e- 3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed merger transaction and the consideration offered to
minority stockholders
14
<PAGE>
therein be filed with the Commission and disclosed to minority stockholders
prior to consummation of the merger transaction.
Plans for the Company
Pursuant to the terms of the Merger Agreement, effective upon the
acceptance for payment by the Purchaser of any Shares, the Purchaser currently
intends to seek maximum representation on the Board of Directors of the
Company, subject to the Company's right to maintain through the effective time
of the Merger at least three directors who are currently directors of the
Company. Purchaser currently intends, as soon as practicable after
consummation of the Offer, to consummate the Merger.
In connection with its consideration of the Offer, Parent, in
consultation with the Company's management, has made a preliminary review, and
will continue to review, on the basis of available information, various
possible business strategies that it might consider in the event that it
acquires control of the Company. Such strategies are expected to include the
integration of certain assets or lines of business of the Company with those
of Parent. If Purchaser acquires Shares pursuant to the Offer, Parent intends
to conduct a detailed review of the Company and its assets, businesses,
operations, properties, policies, corporate structure, capitalization and the
responsibilities and qualifications of the Company's management and personnel
and consider what, if any, changes Parent and the Company's management deem
desirable in light of the circumstances which then exist.
Except as described above or elsewhere in this Offer to Purchase, Parent
has no present plans or proposals that would relate to or result in an
extraordinary corporate transaction involving the Company or any of its
subsidiaries (such as a merger, reorganization, liquidation, relocation of any
operations), any sale or transfer of a material amount of assets of the
Company or any of its subsidiaries, any change in the Company's Board of
Directors or management, any material change in the Company's capitalization
or dividend policy or any other material change in the Company's corporate
structure or business.
The Merger Agreement and Other Arrangements
The following is a summary of the Merger Agreement, the Stock Option
Agreement and the Confidentiality Agreement, a copy of each of which is filed
as an Exhibit to Purchaser's Tender Offer Statement on Schedule 14D- 1 dated
May 18, 1999 (the "Schedule 14D-1"). Such summary is qualified in its entirety
by reference to the Merger Agreement, the Stock Option Agreement and the
Confidentiality Agreement.
The Offer. The Merger Agreement provides for the making of the Offer. The
obligation of Purchaser to accept for payment or pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Tender
Condition and certain other conditions that are described in Section 15.
Purchaser has agreed that no change in the Offer may be made which changes the
form of consideration to be paid, decreases the price per Share or the number
of Shares sought in the Offer, modifies or imposes conditions to the Offer in
addition to the Minimum Tender Condition and those conditions described in
Section 15, amends the Offer in any manner materially adverse to the Company's
stockholders or extends the expiration date of the Offer, in each case,
without the consent of the Company. Notwithstanding the foregoing, Purchaser
may, without the consent of the Company, (i) extend the Offer, if at any
scheduled expiration date of the Offer any of the conditions set forth in
Section 15 is not satisfied, (ii) extend the Offer for any period required by
any rule, regulation, interpretation or position of the Commission or the
staff thereof applicable to the Offer or any period required by applicable law
and (iii) extend the Offer on one or more occasions for an aggregate period of
not more than 10 business days beyond the latest expiration date that would
otherwise be permitted under clause (i) or (ii) of this sentence, if, on such
expiration date, the number of Shares tendered (and not withdrawn) pursuant to
the Offer represents less than 90% of the Fully Diluted Shares. Purchaser and
Parent have agreed that if at any scheduled expiration date of the Offer the
HSR Condition has not been satisfied, but at such scheduled expiration date
all the other conditions described in Section 15 shall have been satisfied
(other than the Minimum Tender Condition), Purchaser may (and at the request
of the Company (confirmed in writing) shall) extend the Offer (a "Special
Extension") from time to time until the HSR
15
<PAGE>
Condition has been satisfied. In no event may the Company or Purchaser require
that the Offer be extended to a date later than 270 days following the date of
the Merger Agreement (i.e., February 6, 2000) by Special Extensions or to a
date later than 180 days following the date of the Merger Agreement (i.e.,
November 8, 1999) for any other reason. For a description of Purchaser's right
to extend the period of time during which the Offer is open and to amend,
delay or terminate the Offer, see Sections 14 and 15.
Recommendation. The Company's Board of Directors has (i) unanimously
determined that the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, are fair to and in the best
interest of the Company's stockholders, (ii) unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and
the Merger and (iii) unanimously resolved, subject to its fiduciary duties as
determined in good faith by a majority of the disinterested directors on the
Company's Board of Directors, on the basis of consultations with its financial
advisors and the advice of outside legal counsel to the Company, to recommend
acceptance of the Offer and approval and adoption of the Merger Agreement and
the Merger by the Company's stockholders.
The Merger. The Merger Agreement provides that, upon the terms and
subject to the conditions thereof, at the time at which the Company and
Purchaser file a certificate of merger with the Secretary of State of the
State of Delaware and make all other filings or recordings required by
Delaware Law in connection with the Merger, Purchaser shall be merged with and
into the Company in accordance with Delaware Law (the "Effective Time"). As a
result of the Merger, the separate corporate existence of the Purchaser will
cease and the Company will continue as the surviving corporation (the
"Surviving Corporation"). The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware or at such later time as is specified in the Certificate of
Merger (the "Effective Time"). The Merger will have the effects set forth in
Delaware Law.
At the Effective Time, (i) each Share held in the treasury of the Company
or owned by any wholly-owned subsidiary of the Company or owned by Parent or
any wholly-owned subsidiary thereof (including Purchaser) shall be canceled,
and no payment shall be made with respect thereto; (ii) each share of capital
stock of Purchaser then outstanding shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights,
powers ands privileges as the shares so converted and shall constitute the
only outstanding shares of capital stock of the Surviving Corporation; and
(iii) each Share outstanding immediately prior to the Effective Time shall,
except as otherwise provided in (i) above and except Shares as to which
appraisal rights have been properly exercised under Delaware Law, be converted
into the right to receive $21.25 per Share in cash, without interest.
At the Effective Time, the Certificate of Incorporation of Purchaser in
effect at the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with applicable law. The
By-laws of Purchaser in effect at the Effective Time shall be the By-laws of
the Surviving Corporation until amended in accordance with applicable law.
From and after the Effective Time, until successors are duly elected or
appointed and qualified in accordance with applicable law, (a) the directors
of Purchaser at the Effective Time shall be the directors of the Surviving
Corporation and (b) the officers of the Company at the Effective Time shall be
the officers of the Surviving Corporation.
Stock Options and Stock Awards. At or immediately prior to the Effective
Time, each outstanding stock option to purchase Shares and award of Shares
granted under any stock option or stock award or compensation plan or
arrangement of the Company, whether or not vested or exercisable, shall be
canceled, and promptly after the Effective Time, the Company will pay (i) each
holder of any such option or award an amount in cash (net of applicable
withholding taxes) determined by multiplying the excess, if any, of $21.25 per
Share over the applicable exercise price of such Share under such option by
the number of Shares subject to the option or award (whether or not vested or
exercisable) and (ii) each holder of any such award of Shares an amount in
cash (net of applicable withholding taxes) determined by multiplying $21.25
times the number of Shares subject to such award (whether or not vested).
Notwithstanding the foregoing, the amount of any payment pursuant to this
provision shall be subject
16
<PAGE>
to any relevant limit or cap under any employment or change in control
agreement between the Company and the applicable individual.
Dissenting Shares. Notwithstanding any provision of the Merger Agreement
to the contrary, Shares that are outstanding immediately prior to the
Effective Time and which are held by a stockholder who has not voted in favor
of the Merger or consented thereto in writing and who has demanded appraisal
for such Shares in accordance with Delaware Law shall not be converted into
the right to receive the consideration otherwise payable in the Merger, unless
such stockholder fails to perfect or withdraws or otherwise loses his right to
appraisal. If after the Effective Time such stockholder fails to perfect or
withdraws or loses his right to appraisal, such Shares shall be treated as if
they had been converted as of the Effective Time into a right to receive the
consideration otherwise payable in the Merger. The Company is required to give
Parent prompt notice of any demands received by the Company for the appraisal
of Shares, and Parent shall have the right to direct all negotiations and
proceedings with respect to such demands. The Company shall not, except with
the prior written consent of Parent, make any payment with respect to, or
settle or offer to settle, any such demands.
Agreements of Parent, Purchaser and the Company. The Merger Agreement
provides that effective upon the acceptance for payment of, and payment by
Purchaser for, any Shares pursuant to the Offer, Purchaser shall be entitled
to designate such number of directors on the Board of Directors of the Company
as will give Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on such Board of Directors equal to at least that
number of directors, rounded up to the next whole number, which is the product
of (a) the total number of directors on such Board of Directors (giving effect
to the directors elected pursuant to this sentence) multiplied by (b) the
percentage that (i) such number of Shares so accepted for payment and paid for
by Purchaser plus the number of Shares otherwise owned by Purchaser or any
other subsidiary of Parent bears to (ii) the number of Shares outstanding, and
the Company shall, at such time, cause Purchaser's designees to be so elected.
The Merger Agreement further provides that in the event that Purchaser's
designees are appointed or elected to the Board of Directors of the Company,
until the Effective Time of the Merger such Board of Directors shall have at
least three directors who are directors on the date hereof and who are not
officers of the Company.
If Purchaser exercises its right to designate directors, Purchaser
currently intends to designate one or more of the following persons to serve
as directors of the Company: D.N. Farr, J.M. Berra, D.G. Perkins, W.J. Galvin,
W.W. Withers, J.D. Switzer, R.M. Cox, Jr., H.M. Smith and F.J. Dellaquila. The
foregoing information and certain other information contained in this Offer to
Purchase and Schedule I hereto and in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
being mailed to stockholders herewith are being provided in accordance with
the requirements of Section 14(f) of the Exchange Act and Rule 14f-1
thereunder.
Company Stockholder Meeting. Pursuant to the Merger Agreement, the
Company shall cause a meeting of its stockholders (the "Company Stockholder
Meeting") to be duly called and held as soon as reasonably practicable after
consummation of the Offer for the purpose of voting on the approval and
adoption of the Merger Agreement and the Merger unless a vote shall not be
required under Delaware Law.
The Merger Agreement provides that if required by applicable law the
Company will, as soon as practicable following the consummation of the Offer,
prepare and file with the Commission under the Exchange Act a proxy statement
relating to the Company Stockholder Meeting.
The Company, Parent, and Purchaser agree that each party shall file a
premerger notification and report form under the HSR Act (and any other
applicable foreign antitrust law or regulation) with respect to the Merger.
Each of the parties agrees to use reasonable efforts to promptly respond to
any request for additional information that may be received from any
governmental entity in connection with the HSR filing or any filings under
applicable foreign antitrust laws and regulations.
17
<PAGE>
The Company has agreed that, prior to the Effective Time, the Company
will not, and will not permit any of its subsidiaries, to:
(i) (A) except as otherwise described herein with respect to the
regular quarterly dividends declared on May 12, 1999, declare, set aside
or pay any dividends (other than the Company's regular quarterly
dividends payable to stockholders on or after August 14, 1999, and
quarterly thereafter) on, or make any other distributions in respect of,
any of its capital stock, other than dividends and distributions by any
direct or indirect wholly owned subsidiary of the Company to the Company
or a wholly owned subsidiary of the Company, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or
any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities; provided, however, with
respect to clause (A) above after the consummation of the Offer the
Company will make no further dividends or distributions;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than, in the
case of the Company, the issuance of Shares upon the exercise of options
outstanding on the date of the Merger Agreement (as identified and
described in the Merger Agreement) in accordance with their current
terms), purchase, redeem or otherwise acquire or agree to acquire any
shares of capital stock or other securities of the Company or any of its
subsidiaries;
(iii) amend any material term of any of its outstanding securities;
(iv) amend its Certificate of Incorporation, By-laws or other
comparable
charter or organizational document;
(v) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of,
or by any other manner, any business or any corporation, partnership,
association, joint venture, limited liability company or other entity or
division thereof or (B) any assets that would be material, individually
or in the aggregate, to the Company and its subsidiaries taken as a
whole, except purchases of supplies and inventory in the ordinary course
of business consistent with past practice;
(vi) form any joint venture with any other person under
circumstances wherein the Company and its subsidiaries would have any
liability or obligation for a contribution to be evidenced by debt or
equity of such venture in excess of $100,000;
(vii) sell, lease, mortgage, pledge, grant a Lien on or otherwise
encumber or dispose of any of its properties or assets, except (A) sales
of inventory in the ordinary course of business consistent with past
practice and (B) other transactions involving not in excess of $1,000,000
in the aggregate;
(viii) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
the Company or any of its subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except
for working capital borrowings under currently existing revolving credit
facilities incurred in the ordinary course of business and except for
indebtedness incurred to refund, refinance or replace indebtedness for
borrowed money outstanding on the date hereof, or (B) make any loans,
advances or capital contributions to, or investments in, any other
person, other than to the Company or any direct or indirect wholly owned
subsidiary of the Company;
18
<PAGE>
(ix) make or incur any new capital expenditure not included in the
Company's approved capital expenditure budget for 1999, which, singly or
in the aggregate with all other expenditures, would exceed $1,000,000;
(x) make or change any Tax election not required by law, other than
consistent with past practice, make any change in any method of Tax
accounting, except as described in the Company Disclosure Document, enter
into any settlement or compromise with respect to any Tax liability, or
make any material change in reserves for Tax items other than any change
in such reserves relating to the ordinary course operation of the
respective businesses of the Company and its subsidiaries during current
taxable periods;
(xi) pay, discharge or satisfy any claims, liabilities or
obligations (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 or in
accordance with their terms, of liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated financial statements
(or the notes thereto) of the Company included in the SEC Documents or
incurred in the ordinary course of business consistent with past
practice;
(xii) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or
any of its subsidiaries is a party;
(xiii) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization;
(xiv) enter into any new collective bargaining agreement;
(xv) change any material accounting principle used by it, except as
required by regulations promulgated by the SEC or the Financial
Accounting Standards Board;
(xvi) settle or compromise any litigation (whether or not commenced
prior to the date of the Merger Agreement) other than settlements or
compromises: (A) of litigation where the amount paid in settlement or
compromise does not exceed $250,000, or (B) in consultation and
cooperation with Parent, and, with respect to any such settlement, with
the prior written consent of Parent;
(xvii) adopt or amend (except as may be required by law) any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement,
trust, fund or other arrangement (including any Company Benefit Plan) for
the benefit of any employee, director or former director or employee,
increase the compensation or fringe benefits of any officer of the
Company or any of its subsidiaries, or, except as provided in an existing
Company Benefit Plan or in the ordinary course of business consistent
with past practice, increase the compensation or fringe benefits of any
employee or former employee or pay any benefit not required by any
existing plan, arrangement or agreement;
(xviii) grant any new or modified severance or termination
arrangement or increase or, except as required under the existing terms
of a Company Benefit Plan, accelerate any benefits payable under its
severance or termination pay policies in effect on the date of the Merger
Agreement;
(xix) make any transaction or commitment, or enter into any contract
or agreement relating to its assets or business (including the
acquisition or disposition of any assets) or relinquish any contract or
other right, in either case, material to the Company and its
subsidiaries, taken as a whole, other than transactions and commitments
made or entered into in the ordinary course of business consistent with
past practices and those contemplated by the Merger Agreement; or
(xx) authorize any of, or commit or agree to take any of, the
foregoing actions.
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Non-solicitation. Pursuant to the Merger Agreement, the Company has
agreed that from the date of the Merger Agreement until the termination
thereof, the Company will not, and will cause its subsidiaries and the
officers, directors, employees or other agents of the Company and its
subsidiaries not to, directly or indirectly, (i) take any action to solicit,
initiate, facilitate or encourage the submission of any Acquisition Proposal
(as defined below), (ii) engage in discussions or negotiations with, or
disclose any nonpublic information relating to the Company or any of its
subsidiaries or afford access to the properties, books or records of the
Company or any of its subsidiaries to, any person who may be considering
making, or has made, an Acquisition Proposal, (iii) grant any waiver or
release under any standstill or similar agreement with respect to any class of
equity securities of the Company, (iv) to the fullest extent permitted by
Delaware Law, amend or grant any waiver or release or approve any transaction
or redeem rights under the Rights Agreement or (v) enter into any agreement
with respect to an Acquisition Proposal (other than the confidentiality and
standstill agreement described below).
The Company has agreed to notify Parent promptly (but in no event later
than 24 hours) after receipt by the Company (or any of its advisors) of any
Acquisition Proposal or any request for nonpublic information relating to the
Company or any of its subsidiaries or for access to the properties, books or
records of the Company or any of its subsidiaries by any person who may be
considering making, or has made, an Acquisition Proposal. The Company shall
provide such notice orally and in writing and shall identify the person
making, and the price, terms and conditions of, any such Acquisition Proposal
or request. The Company shall keep Parent fully informed, on a current basis,
of the status and details of any such Acquisition Proposal or request. The
Company shall, and shall cause its subsidiaries and the directors, employees
and other agents of the Company and its subsidiaries to, (i) cease immediately
and cause to be terminated all activities, discussions and negotiations, if
any, with any persons conducted prior to the date hereof with respect to any
Acquisition Proposal and (ii) require all such persons to return to the
Company all confidential information provided by or on behalf of the Company
and to destroy any materials prepared by such persons based upon such
confidential information.
Notwithstanding the foregoing, the Company may negotiate or otherwise
engage in substantive discussions with, and furnish nonpublic information to,
any person who delivers a Superior Proposal (as defined below) if (i) the
Company has complied with the terms of the Merger Agreement, including,
without limitation, the requirement to notify Parent promptly after its
receipt of any Acquisition Proposal, (ii) the Board of Directors of the
Company determines in good faith by a majority of the disinterested members
thereof, on the basis of advice from outside legal counsel to the Company,
that it should take such action to comply with its fiduciary duties under
applicable law, (iii) such person executes a confidentiality and standstill
agreement with terms no less favorable to the Company than those contained in
the Confidentiality Agreement, and (iv) the Company shall have delivered to
Parent a prior written notice advising Parent that it intends to take such
action. In furtherance and not in limitation of the foregoing, the Company
shall give Parent at least 24 hours' advance notice of any information to be
supplied to any person making such Superior Proposal.
Except as provided in the next sentence, the Board of Directors of the
Company has agreed to recommend approval and adoption of the Merger Agreement
and that the holders of the Shares tender their Shares pursuant to the Offer
and vote to approve the Merger and the transactions contemplated thereby and
to advise the stockholders of the determination by the Board of Directors that
the transactions contemplated hereby, including the Offer and the Merger, are
fair to and in the best interests of the stockholders of the Company. The
Board of Directors of the Company is permitted to withdraw, or modify in a
manner adverse to Parent or Purchaser, its recommendation to its stockholders,
but only if (x) the Company has complied with the terms of the
non-solicitation provisions in the Merger Agreement, including, without
limitation, the requirement in the Merger Agreement that it notify Parent
promptly after its receipt of any Acquisition Proposal and that it provide
Parent with an opportunity to respond to any Superior Proposal, (y) a Superior
Proposal is pending at the time the Company's Board of Directors determines to
take any such action and (z) the Company's Board of Directors determines in
good faith by a majority of the disinterested members thereof, on the basis of
consultations with its financial advisors and the advice of outside legal
counsel to the Company, that it should take such action to comply with its
fiduciary duties under applicable law.
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Prior to exercising the right of the Company's Board of Directors
pursuant to the immediately preceding paragraph to withdraw or modify its
recommendation, the Company has agreed to (i) notify Parent in writing that it
intends to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal, attaching the most current version of
such agreement to such notice (which version is required to be updated on a
current basis) and (ii) provide Parent with an opportunity to respond to such
Superior Proposal within two business days of receipt of such written notice
by making an offer that the Company's Board of Directors determines in good
faith, after consultation with its financial advisors, by a majority of the
disinterested members thereof, is more favorable to the stockholders of the
Company than the Superior Proposal. The Company has agreed to notify Parent
promptly if its intention to enter into a written agreement referred to in its
notification shall change at any time after giving such notification.
"Acquisition Proposal" means (i) any offer or proposal for, other than a
proposal by Parent or any of its affiliates, a merger or other business
combination involving the Company or any of its subsidiaries, (ii) any
proposal or offer, other than a proposal or offer by Parent or any of its
affiliates, to acquire from the Company or any of its affiliates in any
manner, directly or indirectly, an equity interest in the Company or any
subsidiary, any voting securities of the Company or any subsidiary or a
material amount of the assets of the Company and its subsidiaries, taken as a
whole, or (iii) any proposal or offer, other than a proposal or offer by
Parent or any of its affiliates, to acquire from the stockholders of the
Company by tender offer, exchange offer or otherwise more than 20% of the
outstanding Shares.
"Superior Proposal" means any bona fide, written Acquisition Proposal to
acquire, directly or indirectly, for consideration consisting of cash,
securities or a combination thereof, at least a majority of the Shares then
outstanding or all or substantially all the assets of the Company, and
otherwise on terms which a majority of disinterested members of the Board of
Directors of the Company determines in its good faith reasonable judgment
(based on the written advice of its financial advisor, a copy of which shall
be provided to Parent, and taking into account all the terms and conditions of
the takeover proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation) to be more favorable and provide
greater value to all the Company's stockholders than the Offer, the Merger and
the transactions contemplated thereby and for which the financing, to the
extent required, is then committed or in the judgment of such majority of
disinterested members of the Board of Directors of the Company is reasonably
obtainable.
Indemnification. Parent, Purchaser and the Company have agreed that after
the Effective Time, Parent and the Surviving Corporation will indemnify,
defend and hold harmless the present and former officers and directors of the
Company or any of its subsidiaries or an employee of the Company or any of its
subsidiaries who acts as a fiduciary under any Company Benefit Plan against
all losses, claims, damages, costs, expenses (including attorney's fees),
liabilities or judgments or amounts that are paid in settlement with the
approval of the indemnifying party (which approval shall not be unreasonably
withheld) of or in connection with any threatened or actual claim, action,
suit, proceeding or investigation based in whole or in part out of the fact
that such person is or was a director, officer or such employee of the Company
or any subsidiary whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time. In addition, Parent has agreed that for six years
after the Effective Time, Parent or the Surviving Corporation will provide
officers' and directors' liability insurance in respect of acts or omissions
occurring prior to the Effective Time covering each such person currently
covered by the Company's officers' and directors' liability insurance policy
on terms with respect to coverage and amount no less favorable than those of
such policy in effect on the date of the Merger Agreement. Parent will not be
obligated to pay premiums in excess of two times the last annual premium paid
by the Company prior to the date of the Merger Agreement.
Representations and Warranties. The Merger Agreement contains customary
representations and warranties of the parties thereto including
representations by the Company as to its corporate existence and power,
subsidiaries, capitalization, corporate authorizations, non-contravention,
governmental authorizations, Commission filings, information supplied, absence
of certain changes, state takeover statutes, broker fees, litigation, employee
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benefit matters, taxes, environmental matters, material contracts, title to
properties, intellectual property, labor matters, absence of undisclosed
liabilities and Board recommendation.
Takeover Defenses. Pursuant to the Merger Agreement, the Company
represented that it had taken all action necessary to (i) render the Rights
issued pursuant to the terms of the Rights Agreement inapplicable to the
Offer, the Merger, the Agreement and the transactions contemplated thereby and
(ii) ensure that (A) neither Parent, Purchaser nor any of their affiliates is
an Acquiring Person (as defined in the Rights Agreement) and (B) no
Distribution Date (as defined in the Rights Agreement) shall occur by reason
of the approval or execution of the Agreement, the announcement or
consummation of the Offer or Merger or the consummation of any of the other
transactions contemplated thereby. The Company also represented that it has
taken all action to assure that no state takeover statute or similar statute
or regulation, including Section 203 of the Delaware Law, shall apply to the
Offer or the Merger and that except for the approval of the Merger by the
holders of two-thirds of the outstanding Shares, no other stockholder action
on the part of the Company is required for approval of the Merger and the
transactions contemplated by the Merger Agreement.
Conditions to Certain Obligations. The obligations of the Company, Parent
and Purchaser to consummate the Merger are subject to the satisfaction of the
following conditions: (i) if required by Delaware Law, the approval and
adoption by the stockholders of the Company of the Merger Agreement in
accordance with such law; (ii) all authorizations and consents, or
terminations or expirations of waiting periods imposed by any government
entity, shall have occurred or shall have been obtained; and (iii) no
provision of any applicable law or regulation and no judgment, injunction,
order or decree shall prohibit the consummation of the Merger.
In addition, the obligations of Parent and Purchaser to consummate the
Merger are subject to the satisfaction of the following conditions: (i) the
Company shall have performed in all material respects all of its obligations
under the Merger Agreement required to be performed by it at or prior to the
Effective Time; and (ii) the representations and warranties of the Company
contained in the Merger Agreement and in any certificate or other writing
delivered by the Company pursuant thereto, disregarding all qualifications and
exceptions contained therein relating to materiality or material adverse
effect or any similar standard or qualification, shall be true in all material
respects at and as of the Effective Time as if made at and as of such time.
The obligation of the Company to consummate the Merger is subject to the
satisfaction of the following conditions: (i) Parent and Purchaser shall have
performed in all material respects all obligations under the Merger Agreement
required to be performed by them at or prior to the Effective Time of the
Merger; and (ii) the representations and warranties of Parent and Purchaser
contained in the Merger Agreement and in any certificate or other writing
delivered by Parent or Purchaser pursuant thereto, disregarding all
qualifications and exceptions contained therein relating to materiality or
material adverse effect or any similar standard or qualification, shall be
true in all material respects at and as of the Effective Time as if made at
and as of such time.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, notwithstanding any
approval of the Merger Agreement by the stockholders of the Company, under the
following circumstances:
(i) by mutual written consent of Parent and Company;
(ii) by either Parent or the Company, if
(A) the stockholders of the Company fail to approve the Merger
at a duly held meeting of stockholders of the Company;
(B) (x) if as a result of the failure of any of the conditions
set forth in Section 15, Purchaser fails to commence the Offer
within five business days from the public announcement of the Merger
Agreement or (y) as a result of the failure of any of the conditions
set forth therein the Offer shall have been
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terminated or expired in accordance with its terms without
Purchaser having purchased any Shares pursuant to the Offer or (z)
Purchaser shall not have purchased any Shares pursuant to the Offer
within 180 days following the date of the Merger Agreement;
provided, however, that the passage of the period referred to in
clause (z) shall be tolled for any part thereof during which the
Offer shall have been extended pursuant to one or more Special
Extensions but in no event shall such period be tolled for more than
90 days; and provided further that the right to terminate the Merger
Agreement pursuant to this provision shall not be available to any
party whose failure to perform any of its obligations under the
Merger Agreement results in the failure of any such condition;
(C) if the Merger has not been consummated on or before the
date one year following the purchase of Shares pursuant to the
Offer; or
(D) if any court of competent jurisdiction or any governmental
entity shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise
prohibiting the purchase of Shares pursuant to the Offer or the
Merger and such order, decree or ruling shall have become final and
non-appealable;
(iii) by the Company, if
(A) the Company notifies Parent that it intends to enter into
an agreement concerning a transaction that constitutes a Superior
Proposal and Parent fails to make an offer within two business days
of receipt of such notice which the Company's Board of Directors
determines in good faith, after consultation and its financial
advisors, by a majority of its disinterested directors to be more
favorable to the stockholders of the Company than the Superior
Proposal; or
(B) Parent or Purchaser breaches in any material respect any of
its representations or warranties in the Merger Agreement or fails
to perform in any material respect any of its covenants, agreements
or obligations under the Merger Agreement; or
(iv) by Parent, if
(A) (x) the Board of Directors of the Company or any committee
thereof shall (1) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Purchaser such Board of
Director's approval or recommendation of the Offer or the Merger, or
to take any action having such effect or (2) approve or recommend,
or propose to approve or recommend, any Acquisition Proposal; (y)
the Company shall provide Parent with notice that it intends to
enter into an agreement concerning a Superior Proposal; or (z) the
Company shall have entered into any agreement (other than any
confidentiality and standstill agreement entered into in accordance
with the Merger Agreement) with respect to any Acquisition Proposal;
(B) Parent shall have received any communication from the
Department of Justice or Federal Trade Commission (each an "HSR
Authority") that causes Parent to reasonably believe that any HSR
Authority has authorized the institution of litigation challenging
the transactions contemplated by this Agreement under the U.S.
antitrust laws, which litigation will include a motion seeking an
order or injunction prohibiting the consummation of any of the
transactions contemplated by this Agreement; or
(C) the Company breaches in any material respect any of its
representations or warranties in the Merger Agreement or fails to
perform in any material respect any of its covenants, agreements or
obligations under the Merger Agreement.
If the Merger Agreement is terminated, the Merger Agreement will become
void and of no effect with no liability on the part of the Company, Parent or
the Purchaser except that (a) the provisions of the Merger
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Agreement related to fees and expenses (as described below under "Fees and
Expenses") and certain other provisions of the Merger Agreement shall survive
termination and (b) no such termination shall relieve any party of any
liability or damages resulting from any breach by that party of the Merger
Agreement. Notwithstanding any termination of the Merger Agreement, the Stock
Option Agreement shall continue in effect.
Fees and Expenses. The Company has agreed that if the Merger Agreement is
terminated pursuant to clauses (iii)(A) or (iv)(A) of the Termination section
above, the Company shall pay to Parent a termination fee in immediately
available funds of $15,000,000 (the "Termination Fee").
In the event that (i) an Acquisition Proposal is made by any person
during the pendency of the Offer, other than by Parent or Purchaser, (ii) the
Offer shall have terminated or expired without the Minimum Tender Condition
being satisfied and (iii) within one year after the Offer shall have
terminated or expired, either (A) the Company enters into an agreement (which
is subsequently consummated, whether before or after the expiration of such
one year period) with any person, other than Parent or Purchaser, with respect
to an Acquisition Proposal which provides for (1) the transfer or issuance of
securities representing more than 50% of the equity or voting interests in the
Company, or (2) transfer of assets, securities or ownership interests
representing more than 50% of the consolidated assets or earning power of the
Company, or (B) any person acquires a majority of the Shares, then the Company
shall pay to Parent the Termination Fee. Any payment of such Termination Fee
shall be paid within one business day after it becomes payable.
In the event that the Merger Agreement is terminated by Parent or Company
pursuant to clauses (ii)(A), (iii)(A), (iv)(A) or (iv)(C) of the Termination
section above or the Company shall be required to pay the Termination Fee
pursuant to the preceding paragraph, the Company has agreed to pay Parent for
all reasonable fees and expenses incurred by Parent or Purchaser in connection
with the transactions contemplated by the Merger Agreement (but not in excess
of $2,500,000).
Except as described in the preceding paragraph, the Merger Agreement
provides that the Company, Parent and Purchaser shall each bear all costs and
expenses incurred by it in connection with the Merger Agreement and the
transactions contemplated thereby.
Amendment and Waivers. Any provision of the Merger Agreement may be
amended or waived prior to the Effective Time if, and only if, such amendment
or waiver is in writing and signed, (i) in the case of an amendment, by the
Company, Parent and Purchaser or (ii) in the case of a waiver, by the party
against whom the waiver is to be effective. A termination or amendment of the
Merger Agreement requires, in the case of the Company, action by a majority of
the members of the Company's Board of Directors who were members thereof on
the date of the Merger Agreement or the duly authorized designee of such
member. In the event that Parent's designees are appointed or elected to the
Board of Directors of the Company after the consummation of the Offer and
prior to the Effective Time, the affirmative vote of at least a majority of
the Independent Directors will be required for the Company to agree to amend,
waive compliance with or terminate the Merger Agreement.
Stock Option Agreement. On May 12, 1999, Parent and the Company entered
into a Stock Option Agreement containing provisions granting Parent, subject
to certain conditions, an irrevocable option (the "Company Stock Option") to
purchase up to 3,877,035 shares of its common stock (the "Common Stock") at a
price of $21.25 per share in cash, but not to exceed 19.9% of the Company's
outstanding Common Stock. Parent may exercise the Company Stock Option after
the occurrence of one of the following events: (i) any person (other than
Parent or any of its subsidiaries) shall have acquired beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act) or the right to
acquire beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, shares of Common Stock aggregating
25 percent or more of the then outstanding Common Stock; (ii) in the event (A)
at any time during the pendency of the Offer, an Acquisition Proposal shall
have been made to the Company or any of its subsidiaries or any of its
stockholders or any person shall have publicly announced an intention to make
an Acquisition Proposal with respect to the Company or any of its
subsidiaries, (B) the Offer shall have terminated
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<PAGE>
or expired without the Minimum Tender Condition (as defined in the Merger
Agreement) being satisfied and (C) within one year after the Offer shall have
terminated or expired, either (x) the Company enters into an agreement (which
is subsequently consummated, whether before or after the expiration of such
one-year period) with any person, other than Purchaser or Parent, with respect
to an Acquisition Proposal which provides for (1) transfer or issuance of
securities representing more than 50% of the equity or voting interests in the
Company, or (2) transfer of assets, securities or ownership interests
representing more than 50% of the consolidated assets or earning power of the
Company, or (y) any person acquires a majority of the Shares; (iii) Parent or
the Company shall have terminated (or shall have the right to terminate) the
Merger Agreement pursuant to clauses (iii)(A) or (iv)(A) of the Termination
section above; or (iv) the Company shall have delivered to Parent the written
notification referred to in clause (iii)(A) of the Termination section above
and Parent shall have notified the Company in writing that Parent does not
intend to match the Superior Proposal referred to in such notification.
The Stock Option Agreement further provides that at any time the Company
Stock Option is then exercisable, Parent may elect, in lieu of exercising the
Company Stock Option to purchase Shares as provided above, to receive payment
of an amount equal to the Spread (as defined hereinafter) multiplied by all or
such portion of the shares subject to the Company Stock Option as Parent shall
specify. The "Spread" means the excess, if any, over the price of $21.25 per
share of the higher of (i) if applicable, highest price per share paid or
proposed to be paid by any person pursuant to any Acquisition Proposal or (ii)
the closing price of shares of the Company's Common Stock on the NYSE
Composite Tape on the last trading day immediately prior to the date Parent
notified the Company in writing of its intention to elect to accept cash
payment on the Spread.
Parent has the right to sell to the Company any of the shares acquired
upon exercise of the Company Stock Option at the price and during the period
specified in the Stock Option Agreement. In addition, if at any time after the
first purchase of Shares under the Stock Option Agreement, neither the
Purchaser nor any other person or group has acquired more than 50% of the
shares of outstanding Common Stock, the Company has the right to purchase all
shares then owned by Parent and its subsidiaries.
Notwithstanding any other provision of the Stock Option Agreement or the
Merger Agreement, in no event shall Parent's Total Profit (as hereinafter
defined) exceed $20 million (the "Maximum Total Profit") and, if it otherwise
would exceed such amount, Parent shall repay such excess amount to the Company
in cash (or the purchase price for purpose of the immediately preceding
paragraph, as applicable, shall be reduced) so that Parent's Total Profit
shall not exceed the Maximum Total Profit after taking into account the
foregoing actions. "Parent's Total Profit" means the aggregate amount (before
taxes) of the following: (i)(x) the amount of cash received by Parent pursuant
to the first two paragraphs of the Fees and Expenses section above and the
second paragraph of this section, less (y) any repayment of such cash to the
Company, (ii)(x) the amount received by Parent pursuant to the Company's
repurchase of Shares pursuant to the immediately preceding paragraph, less (y)
Parent's purchase price for such Shares, and (iii)(x) the net cash amounts
received by Parent pursuant to the sale of Shares (or any other securities
into or for which such Shares are converted or exchanged) to any unaffiliated
party on arms-length terms, less (y) Parent's purchase price for such Shares.
Confidentiality Agreement. On April 1, 1999, Parent and the Company
entered into a Confidentiality Agreement containing customary provisions
pursuant to which, among other matters, Parent agreed to keep confidential all
non-public, confidential or proprietary information furnished to it by the
Company relating to the Company, subject to certain exceptions (the
"Evaluation Material"), and to use the Evaluation Material solely in
connection with evaluating a possible transaction involving the Company and
Parent and not in any manner detrimental or disadvantageous to the Company.
Parent had agreed in the Confidentiality Agreement to certain restrictions on
its ability to acquire, or offer to acquire, Shares or take certain other
actions. However, pursuant to the Merger Agreement these restrictions were
waived. Parent further agreed that, prior to April 15, 2001, neither Parent
nor any of its affiliates will, without the written consent of the Company,
solicit the employment of any employee who the Parent or any of its affiliates
had contact with, and at the time of such solicitation is, employed by the
Company, subject to certain exceptions.
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12. Effect of the Offer on the Market for the Shares; Stock Exchange
Listing; Registration under the Exchange Act. The purchase of Shares pursuant
to the Offer will reduce the number of Shares that might otherwise trade
publicly and may reduce the number of holders of Shares, which could adversely
affect the liquidity and market value of the remaining Shares held by
stockholders other than Purchaser. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or marketability
of, the Shares or whether such reduction would cause future market prices to
be greater or less than the Offer price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing
and may, therefore, be delisted from such exchange. According to the NYSE's
published guidelines, the NYSE would consider delisting the Shares if, among
other things, the number of publicly-held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings
of 10% or more) were less than 600,000, there were less than 1,200 holders of
at least 100 shares or the aggregate market value of the publicly-held Shares
were less than $5 million. According to the Company 10-K, there were
approximately 2,260 holders of record of Shares as of March 15, 1999. If, as a
result of the purchase of Shares pursuant to the Offer, the Shares no longer
meet the requirements of the NYSE for continued listing and the listing of
Shares is discontinued, the market for the Shares could be adversely affected.
If the NYSE were to delist the Shares (which Purchaser intends to cause
the Company to seek if it acquires control of the Company and the Shares no
longer meet the NYSE listing requirements), it is possible that the Shares
would trade on another securities exchange or in the over-the-counter market
and that price quotations for the Shares would be reported by such exchange or
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other sources. The extent of the public market for the
Shares and availability of such quotations would, however, depend upon such
factors as the number of holders and/or the aggregate market value of the
publicly-held Shares at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act and other factors.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of such Shares. Depending upon factors similar
to those described above regarding listing and market quotations, the Shares
might no longer constitute "margin securities" for the purposes of the Federal
Reserve Board's margin regulations and, therefore, could no longer be used as
collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the
Commission if the Shares are neither listed on a national securities exchange
nor held by 300 or more holders of record. Termination of the registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Shares and to the
Commission and would make certain of the provisions of the Exchange Act, such
as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with a shareholder's meeting and the related requirement of an
annual report to shareholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares. Furthermore, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability
to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933 (the "Securities Act"). If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be "margin
securities" or eligible for listing or NASDAQ reporting. Purchaser intends to
seek to cause the Company to terminate registration of the Shares under the
Exchange Act as soon after consummation of the Offer as the requirements for
termination of registration of the Shares are met.
13. Dividends and Distributions. If on or after May 12, 1999 the Company
should split, combine or otherwise change the Shares or its capitalization,
acquire or otherwise cause a reduction in the number of outstanding Shares or
issue or sell any additional Shares (other than Shares issued pursuant to and
in accordance
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with the terms in effect on May 12, 1999 of stock options and stock awards
outstanding prior to such date), shares of any other class or series of
capital stock, other voting securities or any securities convertible into, or
options, rights, or warrants, conditional or otherwise, to acquire, any of the
foregoing, then, without prejudice to Purchaser's rights under Sections 14 and
15, Purchaser may, in its sole discretion, make such adjustments in the
purchase price and other terms of the Offer as it deems appropriate including
the number or type of securities to be purchased.
If, on or after May 12, 1999, the Company should declare or pay any
dividend on the Shares (other than regular quarterly cash dividends not in
excess of $.045 per Share having customary and usual record and payment dates)
or any distribution with respect to the Shares (including the issuance of
additional Shares or other securities or rights to purchase of any securities)
that is payable or distributable to stockholders of record on a date prior to
the transfer to the name of Purchaser or its nominee or transferee on the
Company's stock transfer records of the Shares purchased pursuant to the
Offer, then, without prejudice to Purchaser's rights under Sections 14 and 15,
(i) the purchase price per Share payable by Purchaser pursuant to the Offer
will be reduced to the extent of any such cash dividend or distribution and
(ii) the whole of any such non-cash dividend or distribution to be received by
the tendering stockholders will (a) be received and held by the tendering
stockholders for the account of Purchaser and will be required to be promptly
remitted and transferred by each tendering stockholder to the Depositary for
the account of Purchaser, accompanied by appropriate documentation of
transfer, or (b) at the direction of Purchaser, be exercised for the benefit
of Purchaser, in which case the proceeds of such exercise will promptly be
remitted to Purchaser. Pending such remittance and subject to applicable law,
Purchaser will be entitled to all rights and privileges as owner of any such
non-cash dividend or distribution or proceeds thereof and may withhold the
entire purchase price or deduct from the purchase price the amount or value
thereof, as determined by Purchaser in its sole discretion.
14. Extension of Tender Period; Termination; Amendment. Purchaser
reserves the right (A) to extend the period of time during which the Offer is
open (i) without the consent of the Company (w) if, at the scheduled
expiration date of the Offer, any of the conditions to the Offer have not been
satisfied, (x) for any period required by any rule, regulation, interpretation
or position of the Commission or the staff thereof applicable to the Offer or
for any period required by applicable law, (y) on one or more occasions for an
aggregate period of not more than 10 business days beyond the latest
expiration date that would otherwise be permitted under clause (w) or (x)
above, if, on such expiration date, the number of Shares tendered (and not
withdrawn) represents less than 90% of the Fully Diluted Shares, and (z) from
time to time if, at any scheduled expiration date of the Offer, the HSR
Condition has not been satisfied until such HSR Condition has been satisfied;
provided that, at such scheduled expiration date, all other conditions to the
Offer described in Section 15 herein, other than the Minimum Tender Condition,
have been satisfied; and (ii) with the consent of the Company at any other
time, in either instance by giving oral or written notice of such extension to
the Depositary and by making a public announcement of such extension, (B) to
waive any conditions to the Offer other than the Minimum Tender Condition
which requires the consent of the Company and (C) to amend the Offer (i) with
the consent of the Company in order to (a) reduce the number of Shares subject
to the Offer; (b) reduce the price per Share to be paid in the Offer; (c)
modify the existing, or impose additional, conditions to the Offer; (d) extend
the Offer except as provided in (A)(i) above; (e) change the form of
consideration payable in the Offer; or (g) otherwise amend the Offer in any
manner materially adverse to the Company's stockholders; and (ii) without the
consent of the Company in any other manner, in either instance by making a
public announcement of such amendment. There can be no assurance that
Purchaser will exercise its right to extend, waive or amend the Offer. The
Company may require Purchaser to extend the Offer in the circumstances
described in clause (A)(i)(z) above. In no event may the Company or Purchaser
require the Offer to be extended (I) pursuant to clause (A)(i)(z) above, to a
date later than February 6, 2000 by Special Extensions or (II) otherwise to a
date later than November 8, 1999.
If, with the Company's consent, Purchaser decreases the percentage of
Shares being sought or increases or decreases the consideration to be paid for
Shares pursuant to the Offer and the Offer is scheduled to expire at any time
before the expiration of a period of 10 business days from, and including, the
date that notice of such increase or decrease is first published, sent or
given in the manner specified below, the Offer will be extended until the
expiration of such period of 10 business days. If, with the Company's consent,
Purchaser makes a material change
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<PAGE>
in the terms of the Offer (other than a change in price or percentage of
securities sought) or in the information concerning the Offer, or if Purchaser
waives a material condition of the Offer, Purchaser will extend the Offer, if
required by applicable law, for a period sufficient to allow shareholders to
consider the amended terms of the Offer. In a published release, the
Commission has stated that in its view an offer must remain open for a minimum
period of time following a material change in the terms of such offer and that
the waiver of a condition such as the Minimum Tender Condition is a material
change in the terms of an offer. The release states that an offer should
remain open for a minimum of five business days from the date the material
change is first published, sent or given to securityholders, and that if
material changes are made with respect to information that approaches the
significance of price and share levels, a minimum of 10 business days may be
required to allow adequate dissemination and investor response. The term
"business day" shall mean any day other than Saturday, Sunday or a federal
holiday and shall consist of the time period from 12:01 A.M. through 12:00
Midnight, New York City time.
Purchaser also reserves the right, in its sole discretion, in the event
any of the conditions specified in Section 16 shall not have been satisfied
and so long as Shares have not theretofore been accepted for payment, to delay
(except as otherwise required by applicable law) acceptance for payment of or
payment for Shares or, except as otherwise provided in the Merger Agreement,
to terminate the Offer and not accept for payment or pay for Shares.
If Purchaser extends the period of time during which the Offer is open,
is delayed in accepting for payment or paying for Shares or is unable to
accept for payment or pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may, on behalf of Purchaser, retain all Shares tendered, and such Shares may
not be withdrawn except as otherwise provided in Section 4. The reservation by
Purchaser of the right to delay acceptance for payment of or payment for
Shares is subject to applicable law, which requires that Purchaser pay the
consideration offered or return the Shares deposited by or on behalf of
shareholders promptly after the termination or withdrawal of the Offer.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which Purchaser may choose to make any public announcement,
Purchaser will have no obligation (except as otherwise required by applicable
law) to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service. In
the case of an extension of the Offer, Purchaser will make a public
announcement of such extension no later than 9:00 A.M., New York City time, on
the next business day after the previously scheduled Expiration Date.
15. Certain Conditions of the Offer. Notwithstanding any other term of
the Offer or the Merger Agreement, Purchaser shall not be required to accept
for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to
Purchaser's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer, and may terminate the Offer as provided in Section 14,
unless (i) prior to the Expiration Date the Minimum Tender Condition shall
have been satisfied, (ii) the HSR Condition shall have been satisfied and
(iii) the Foreign Antitrust Approvals Condition shall have been satisfied.
Notwithstanding any other term of the Offer or the Merger Agreement, Purchaser
shall not be required to accept for payment or, subject as aforesaid, to pay
for any Shares not theretofore accepted for payment or paid for, and may
terminate or amend the Offer, with the consent of the Company (except as
otherwise provided in the Merger Agreement) or if, at any time on or after May
12, 1999 and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists:
(a) there shall be any action taken, or any statute, rule,
regulation, decree, order or injunction enacted, enforced, promulgated,
issued or deemed applicable to the Offer or the Merger, by any court,
government or governmental authority or agency, domestic or foreign,
other than the application of the waiting period provisions of the HSR
Act to the Offer or the Merger, that is likely to (i) make illegal, delay
materially or restrain or prohibit the making or consummation of the
Offer or the Merger or restrains or prohibits the performance of this
Agreement and the transactions contemplated hereby, (ii) in connection
with the
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transactions contemplated by this Agreement, prohibit or limit the
ownership or operation by Parent or Purchaser of all or any material
portion of the business or assets of the Company, Parent or any of their
respective subsidiaries, or compel Parent or any of its subsidiaries to
dispose of or to hold separate all or any material portion of the
business or assets of the Company, Parent or any of their subsidiaries
(taken as a whole for purposes of materiality), or imposes any material
limitation on the ability of the Company, Parent or any of their
respective subsidiaries to conduct such business or own such assets,
(iii) impose material limitations on the ability of Parent or Purchaser
(or any other affiliate of Parent or Purchaser) to acquire or hold or to
exercise full rights of ownership of the Shares, including, but not
limited to, the right to vote the Shares purchased by Purchaser on all
matters properly presented to the stockholders of the Company, or (iv)
require divestiture by Parent, Purchaser or any of Parent's other
subsidiaries or affiliates of any Shares;
(b) there shall be instituted or pending any action or any
investigation or other inquiry by any Governmental Entity that is likely
to result in any of the consequences referred to in clauses (i) through
(iv) of paragraph (a) above;
(c) it shall have been publicly disclosed or Parent shall have
otherwise learned that (i) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act) shall have acquired beneficial ownership of
more than 25% of any class or series of capital stock of the Company
(including the Shares), through the acquisition of stock, the formation
of a group or otherwise, or shall have been granted any option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of
more than 25% of any class or series of capital stock of the Company
(including the Shares); or (ii) any person or group shall have entered
into a definitive agreement or an agreement in principle with the Company
regarding an acquisition of 25% or more of the Shares or a merger,
consolidation or other business combination;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any takeover proposal, (ii) the
Company shall have recommended or entered into any agreement (other than
any confidentiality and standstill agreement entered into in accordance
with the Merger Agreement) with respect to any takeover proposal, (iii)
the Company shall have delivered to Parent a notice of superior proposal,
or (iv) the Board of Directors of the Company or any committee thereof
shall have resolved to do any of the foregoing;
(e) there shall have occurred a material adverse change in the
Company and its subsidiaries, taken as a whole, or a material adverse
effect on the Company and its subsidiaries, taken as a whole, it being
understood, however, that no such change or effect shall be deemed to
have occurred to the extent such change or effect arises from conditions
generally affecting the Company's industry or from the United States or
global economies;
(f) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in
each case (i) as of the date of this Agreement or any other date as of
which such representations and warranties expressly speak or (ii) at any
time prior to the consummation of the Offer as if made at and as of such
time, it being understood, however, that with respect to clause (ii) no
representation or warranty shall be deemed to be not true and correct to
the extent that the failure to be so arises from conditions generally
affecting the Company's industry or from the United States or global
economies and further that the consequence of such failure to be true and
correct (disregarding all references to materiality or material adverse
effect therein) is a material adverse change or effect on the Company and
its subsidiaries, taken as a whole;
(g) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement which failure has not been cured; or
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<PAGE>
(h) the Merger Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Purchaser and
Parent, and subject to the terms and conditions of this Agreement, may be
waived by Purchaser and Parent in whole or in part at any time and from time
to time in their sole discretion.
16. Certain Legal Matters; Regulatory Approvals.
General. Purchaser is not aware of any material pending legal proceeding
relating to the Offer. Based on its examination of publicly available
information filed by the Company with the Commission and other publicly
available information concerning the Company, Purchaser is not aware of any
governmental license or regulatory permit that appears to be material to the
Company's business that might be adversely affected by Purchaser's acquisition
of Shares as contemplated herein or, except as set forth below, of any
approval or other action by any government or governmental administrative or
regulatory authority or agency, domestic or foreign, that would be required
for the acquisition or ownership of Shares by Purchaser as contemplated
herein. Should any such approval or other action be required, Purchaser
currently contemplates that, except as described below under "State Takeover
Statutes", such approval or other action will be sought. Except as described
under "Antitrust" and "Other" below, there is, however, no current intent to
delay the purchase of Shares tendered pursuant to the Offer pending the
outcome of any such matter. Purchaser is unable to predict whether it may
determine that it is required to delay the acceptance for payment of or
payment for Shares tendered pursuant to the Offer pending the outcome of any
such matter. There can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial
conditions or that if such approvals were not obtained or such other actions
were not taken adverse consequences might not result to the Company's business
or certain parts of the Company's business might not have to be disposed of,
any of which could cause Purchaser to elect to terminate the Offer without the
purchase of Shares thereunder. Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions. See
Section 15.
State Takeover Statutes. A number of states have adopted laws which
purport, to varying degrees, to apply to attempts to acquire corporations that
are incorporated in, or which have substantial assets, shareholders, principal
executive offices or principal places of business or whose business operations
otherwise have substantial economic effects in, such states. The Company,
directly or through subsidiaries, conducts business in a number of states
throughout the United States, some of which have enacted such laws. Except as
described herein, Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer or any merger or other business combination
between Purchaser or any of its affiliates and the Company and has not
complied with any such laws. The Company has represented to Parent and
Purchaser that it has taken all action to assure that no state takeover
statutes or similar laws apply to the Offer or the Merger. See Section 11. To
the extent that certain provisions of these laws purport to apply to the Offer
or any such merger or other business combination, Purchaser believes that
there are reasonable bases for contesting such laws.
In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Statute
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana
could, as a matter of corporate law, constitutionally disqualify a potential
acquiror from voting shares of a target corporation without the prior approval
of the remaining stockholders where, among other things, the corporation is
incorporated in, and has a substantial number of stockholders in, the state.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District
Court in Oklahoma ruled that the Oklahoma statutes were unconstitutional
insofar as they apply to corporations incorporated outside Oklahoma in that
they would subject such corporations to inconsistent regulations. Similarly,
in Tyson Foods, Inc. v. McReynolds, a Federal District Court in Tennessee
ruled that four Tennessee takeover statutes were unconstitutional as applied
to corporations incorporated outside Tennessee. This decision was affirmed by
the United States Court of Appeals for the Sixth Circuit. In December 1988, a
Federal District Court in Florida held in Grand Metropolitan PLC v.
Butterworth, that the provisions of the Florida Affiliated Transactions Act
and the
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Florida Control Share Acquisition Act were unconstitutional as applied to
corporations incorporated outside of Florida.
If any government official or third party should seek to apply any state
takeover law to the Offer or any merger or other business combination between
Purchaser or any of its affiliates and the Company, Purchaser will take such
action as then appears desirable, which action may include challenging the
applicability or validity of such statute in appropriate court proceedings. In
the event it is asserted that one or more state takeover statutes is
applicable to the Offer or any such merger or other business combination and
an appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or any such merger or other business combination,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities or holders of Shares, and
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer
or any such merger or other business combination. In such case, Purchaser may
not be obligated to accept for payment or pay for any tendered Shares.
See Section 15.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer is subject to
such requirements.
Pursuant to the requirements of the HSR Act, Purchaser will file a
Notification and Report Form with respect to the Offer with the Antitrust
Division and the FTC. The waiting period applicable to the purchase of Shares
pursuant to the Offer is expected to expire prior to June 15, 1999,
unless the Antitrust Division or the FTC extends the waiting period by
requesting additional information or documentary material relevant to the
Offer from Purchaser. If such a request is made, the waiting period will be
extended until 11:59 P.M., New York City time, on the tenth day after
substantial compliance by Purchaser with such request. Thereafter, such
waiting period can be extended only by court order.
A request is being made pursuant to the HSR Act for early termination of
the waiting period applicable to the Offer. There can be no assurance,
however, that the 15-day HSR Act waiting period will be terminated early.
Shares will not be accepted for payment or paid for pursuant to the Offer
until the expiration or earlier termination of the applicable waiting period
under the HSR Act. See Section 15. Except as described in Section 4, any
extension of the waiting period will not give rise to any withdrawal rights
not otherwise provided for by applicable law. If Purchaser's acquisition of
Shares is delayed pursuant to a request by the Antitrust Division or the FTC
for additional information or documentary material pursuant to the HSR Act,
the Offer may, but need not, be extended. However, Purchaser and Parent have
agreed that if at any scheduled expiration date of the Offer the HSR Condition
has not been satisfied, but at such scheduled expiration date all the other
conditions to the Offer described in Section 15 shall have been satisfied
(other than the Minimum Tender Condition), Purchaser may (and at the request
of the Company (confirmed in writing) shall) extend the Offer (a "Special
Extension") from time to time until the HSR Condition has been satisfied. In
no event may the Company or Purchaser (without the consent of the other)
require that the Offer be extended to a date later than 270 days following the
date of the Merger Agreement (i.e., February 6, 2000) by Special Extensions.
The Antitrust Division and the FTC frequently scrutinize the legality
under the antitrust laws of transactions such as the acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer or seeking divestiture of the Shares so acquired or divestiture
of substantial assets of Purchaser or the Company. Private parties (including
individual states) may also bring legal actions under the antitrust laws.
Purchaser does not believe that the consummation of the Offer will result in a
violation of any applicable antitrust laws. However, there can be no assurance
that a challenge to the Offer on antitrust grounds will not be made, or if
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such a challenge is made, what the result will be. See Section 15 for certain
conditions to the Offer, including conditions with respect to litigation and
certain governmental actions and Section 10 for certain termination rights in
connection with antitrust suits.
Other. Based upon Purchaser's examination of publicly available
information concerning the Company, it appears that the Company and its
subsidiaries own property and conduct business in a number of foreign
countries. In connection with the acquisition of Shares pursuant to the Offer,
the laws of certain of these foreign countries may require the filing of
information with, or the obtaining of the approval of, governmental
authorities therein. After commencement of the Offer, Purchaser will seek
further information regarding the applicability of any such laws and currently
intends to take such action as they may require, but no assurance can be given
that such approvals will be obtained. If any action is taken prior to
completion of the Offer by any such government or governmental authority,
Purchaser may not be obligated to accept for payment or pay for any tendered
Shares. See Section 15.
17. Fees and Expenses. Morgan Stanley & Co. Incorporated ("Morgan
Stanley") is acting as Dealer Manager in connection with the Offer. Purchaser
has agreed to pay Morgan Stanley customary compensation, which is not material
to Parent or the Company, for its services as Dealer Manager in connection
with the Offer pursuant to customary dealer manager terms of engagement.
Purchaser has also agreed to reimburse Morgan Stanley for certain reasonable
out-of-pocket expenses incurred in connection with the Offer (including the
fees and disbursements of outside counsel) and to indemnify Morgan Stanley
against certain liabilities, including certain liabilities under the federal
securities laws.
Purchaser has retained Georgeson & Company Inc. to act as the Information
Agent and The Bank of New York to act as the Depositary in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telex, telegraph and personal interviews and may request brokers, dealers and
other nominee shareholders to forward materials relating to the Offer to
beneficial owners. The Information Agent and the Depositary each will receive
reasonable and customary compensation for their respective services, will be
reimbursed for certain out-of-pocket expenses and will be indemnified against
certain liabilities in connection therewith, including certain liabilities
under the federal securities laws.
Neither Parent nor Purchaser will pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager, the
Information Agent and the Depositary) for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will, upon request, be reimbursed by Purchaser for reasonable and necessary
costs and expenses incurred by them in forwarding materials to their
customers.
18. Miscellaneous. The Offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of Shares in any jurisdiction in which
the making of the Offer or acceptance thereof would not be in compliance with
the laws of such jurisdiction. However, Purchaser may, in its discretion, take
such action as it may deem necessary to make the Offer in any such
jurisdiction and extend the Offer to holders of Shares in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE
OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 of the General
Rules and Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer. The Schedule 14D-1 and any amendments
thereto, including exhibits, may be examined and copies may be obtained from
the offices of the Commission in the manner set forth in Section 7 of
32
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this Offer to Purchase (except that such information will not be available at
the regional offices of the Commission).
EMERSUB LXXIV, INC.
May 18, 1999
33
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
1. Directors and Executive Officers of Parent. The name, business
address, present principal occupation or employment and five-year employment
history of each director and executive officer of Parent and certain other
information are set forth below. Unless otherwise indicated below, the address
of each director and officer is 8000 West Florissant Avenue, St. Louis,
Missouri 63136-8506. Where no date is shown, the individual has occupied the
position indicated or a similar position for the past five years. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Parent. All directors and officers listed below are
citizens of United States of America, except for Sir Robert Horton who is a
citizen of the United Kingdom. Directors are identified by an asterisk.
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
- ------------------------- -----------------------------------------
D.C. Farrell*........................ Director since 1989. Retired Chairman
and Chief Executive Officer of The May
Department Stores Company, operator of
department stores. He is also a Director
of Ralston Purina Company.
J.A. Frates*......................... Director since 1966. Private investor.
2642 East 21st Street
Suite 105
Tulsa, Oklahoma 74114
C.F. Knight*......................... Director since 1972. Chairman of the
Board and Chief Executive Officer. He
is also a Director of Anheuser-Busch
Companies, Inc., BP Amoco Plc,
International Business Machines Corp.,
Morgan Stanley Dean Witter & Co. and
SBC Communications Inc.
R.B. Loynd*.......................... Director since 1987. Chairman of the
Furniture Brands International, Inc. Executive Committee of Furniture Brands
101 South Hanley Road International, Inc., manufacturer and
Suite 1900 marketer of furniture products. He is
St. Louis, Missouri 63105 also a Director of Converse Inc.
R.W. Staley*......................... Director since 1987.1 Vice Chairman.
He is also a Director of ACE Limited.
J.G. Berges*......................... Director since 1997. President since
May 1999; various executive positions
with Parent prior thereto. He is also
a Director of MCN Energy Group Inc.
R.L. Ridgway*........................ Director since 1995. Former Assistant
Secretary of State for Europe and
Canada. She is also a Director of Bell
Atlantic Corporation, The Boeing
Company, Minnesota Mining and
Manufacturing Company, RJR Nabisco
Holdings Corp., Sara Lee Corporation,
and Union Carbide Corporation.
A.E. Suter*........................... Director since 1989.2 Senior Vice
Chairman and Chief Administrative
Officer. He is also a Director of
Furniture Brands International, Inc.
W.M. Van Cleve*...................... Director since 1984. Partner of Bryan
Bryan Cave, LLP Cave LLP, attorneys-at-law.
One Metropolitan Square,
Suite 3600 211 North Broadway St.
Louis, Missouri 63102-2750
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Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
- ------------------------- -----------------------------------------
E.E. Whitacre, Jr.*................ Director since 1990. Chairman and Chief
SBC Communications, Inc. Executive Officer of SBC Communications
175 East Houston, Suite 1300 Inc., a diversified communications holding
San Antonio, Texas 78205 company. He is also a Director of
Anheuser-Busch Companies, Inc., Burlington
Northern Santa Fe Corporation, and The May
Department Stores Company.
L.L. Browning, Jr.*................. Director since 1969. Former Vice
Chairman. He is also a Director of
Firstar Corporation.
A.A. Busch III*..................... Director since 1985. Chairman of the
Anheuser-Busch Companies, Inc. Board and President of Anheuser-Busch
One Busch Place Companies, Inc., brewery, container
St. Louis, Missouri 63118 manufacturer and theme park operator. He
is also a Director of General American
Life InsuranceCompany, and SBC
Communications Inc.
R.B. Horton*........................ Director since 1987. Chairman of
Railtrack Group PLC Railtrack Group plc, which owns and
Stoke Abbas operates the infrastructure formerly owned
South Stoke by British Railways. He is also a Director
Reading RG8JT of Premier Farnell plc, and PartnerRe Ltd.
ENGLAND
G.A. Lodge*......................... Director since 1974. President of InnoCal
InnoCal Management, Inc. Management, Inc., a venture capital
Park 80 West/Plaza One management company.
Saddle Brook, New Jersey 07662
V.R. Loucks, Jr.*................... Director since 1979.3 Chairman and Chief
Baxter International, Inc. Executive Officer of Baxter International
One Baxter Parkway Inc., a global manufacturer and marketer
Deerfield, Illinois 60015 of health care products. He is also a
Director of Affymetrix, Inc.,
Anheuser-Busch Companies, Inc., Dun &
Bradstreet Corporation, and The Quaker
Oats Company.
G.W. Tamke*......................... Director since 1977. Vice Chairman and
Co-Chief Executive Officer since May
1999; various executive positions with
Parent prior thereto.
W.J. Galvin......................... Senior Vice President - Finance and Chief
Financial Officer.
W.W. Withers........................ Senior Vice President, Secretary and
General Counsel.
D.N. Farr........................... Senior Executive Vice President and Chief
Operating Officer since May 1999;
various executive positions with Parent or
an affiliate of Parent prior thereto.
- -------------------
1. Mr. Staley also served as a Director from April 1978 to February 1982.
2. Mr. Suter also served as a Director from February to June 1987.
3. Mr. Loucks also served as a Director from April 1974 to December 1975.
2. Directors and Executive Officers of Purchaser. The name, business
address, present principal occupation or employment and five-year employment
history of each director and executive officer of Purchaser and certain other
information are set forth below. Unless otherwise indicated below, the address
of each director and officer is 8000 W. Florissant, St. Louis, Missouri 63136.
Where no date is shown, the individual has occupied the position or a similar
position indicated for the past five years. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Parent. All directors and officers listed below are citizens of the United
States. Directors are identified by an asterisk.
2
<PAGE>
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
- ------------------------- -----------------------------------------
D.N. Farr President of Purchaser since the company was
founded. Senior Executive Vice President and
Chief Operating Officer since May 1999;
Executive Vice President, 1997-1999; Chief
Executive Officer of Astec (BSR) plc, a
subsidiary or affiliate of Parent,
1993-1997.
R.M. Cox, Jr.* Vice President and Director of Purchaser since
the company was founded. Senior Vice
President--Acquisitions and Development since
October 1997; Senior Vice President--
Administration, October 1994-October 1997;
Executive Vice President and Chief
Administrative Officer of Fisher-Rosemount
Systems, a subsidiary of Parent, 1992-1994.
J.D. Switzer* Vice President and Director of Purchaser since
the company was founded. Senior Vice
President--Development since 1997; Vice
President--Development, 1990-1997.
H.M. Smith* Secretary and Director of Purchaser since the
company was founded. Assistant General Counsel
and Assistant Secretary.
F.J. Dellaquila Treasurer of Purchaser since the company was
founded. Vice President--Treasury and Tax and
Treasurer since October 1996; Vice President
and Treasurer, September 1991-October 1996.
3
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The
Letter of Transmittal and certificates for Shares and any other required
documents should be sent to the Depositary at one of the addresses set forth
below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
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By Mail: Facimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1048 New York, New York 10286
For Confirmation Telephone:
(800) 507-9357
</TABLE>
Questions or requests for assistance or additional copies of this Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth below. Shareholders may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10036
(212) 761-7257
4
Exhibit (a)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
(Including the Related Rights)
of
Daniel Industries, Inc.
at
$21.25 Net Per Share
Pursuant to the Offer to Purchase
dated May 18, 1999
by
Emersub LXXIV, Inc.
a wholly-owned subsidiary of
Emerson Electric Co.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 15, 1999,
UNLESS THE OFFER IS EXTENDED.
To: The Bank of New York, Depositary
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By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
</TABLE>
For Confirmation Telephone:
(800) 507-9357
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of instructions via facsimile to a number other
than as set forth above will not constitute a valid delivery to the
Depositary.
This Letter of Transmittal is to be used if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if delivery of Shares (as defined below) is to be made
by book-entry transfer to the Depositary's account at The Depository Trust
Company (the "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3 of the Offer to Purchase.
Stockholders who cannot deliver their Shares and all other documents
required hereby to the Depositary by the Expiration Date (as defined in the
Offer to Purchase) must tender their Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2.
1
<PAGE>
DESCRIPTION OF SHARES TENDERED
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Name(s) and Address(es) of Registered Holder(s) Shares Tendered
(Please fill in, if blank) (Attach additional list if necessary)
- -------------------------------------------------------------- -------------------------------------------------
Total Number of Shares Number of
Certificate Represented by Shares
Number(s)* Certificate(s)* Tendered**
----------- ---------------------- -----------
Total Shares
</TABLE>
- -------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depositary are being
tendered. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________________________________________
Account No. ____________________________________________________________ at
[ ] The Depository Trust Company
Transaction Code No. _____________________________________________________
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s) ______________________________________
Date of Execution of Notice of Guaranteed Delivery _______________________
Name of Institution which Guaranteed Delivery ____________________________
If delivery is by book-entry transfer:
Name of Tendering Institution _______________________________________
Account No. ___________________________________________________________ at
[ ] The Depository Trust Company
Transaction Code No. _____________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Emersub LXXIV, Inc., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Emerson
Electric Co., the above-described shares of Common Stock, $1.25 par value (the
"Common Stock"), of Daniel Industries, Inc., a Delaware corporation (the
"Company"), including the related right as to each share to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock,
$1.00 par value, of the Company (singularly, a "Right" and collectively, the
"Rights") (singularly, a share of such Common Stock, including the related
Right, a "Share" and collectively, the "Shares") pursuant to the Purchaser's
offer to purchase all outstanding Shares at a price of $21.25 per Share, net
to the seller in cash, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated May 18, 1999, receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer"). Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Purchaser and Parent will pay all charges and expenses of Morgan Stanley Dean
Witter (the "Dealer Manager"), The Bank of New York (the "Depositary") and
Georgeson & Company Inc. (the "Information Agent") incurred in connection with
the Offer. Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, to one or more of its affiliates the right to
purchase Shares tendered pursuant to the Offer.
Upon the terms and subject to the terms and conditions of the Offer and
effective upon acceptance for payment of and payment for the Shares tendered
herewith, the undersigned hereby sells, assigns and transfers to or upon the
order of Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby (and any and all other Shares or other securities
issued or issuable in respect thereof on or after May 12, 1999) and appoints
the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and all such other Shares or
securities), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares (and all such other Shares or securities), or
transfer ownership of such Shares (and all such other Shares or securities) on
the account books maintained by the Book-Entry Transfer Facility, together, in
any such case, with all accompanying evidences of transfer and authenticity,
to or upon the order of the Purchaser, (b) present such Shares (and all such
other Shares or securities) for transfer on the books of the Company and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares (and all such other Shares or securities), all in accordance
with the terms of the Offer.
The undersigned hereby irrevocably appoints J.D. Switzer, W.W. Withers
and H.M. Smith and each of them, the attorneys and proxies of the undersigned,
each with full power of substitution, to exercise all voting and other rights
of the undersigned in such manner as each such attorney and proxy or his
substitute shall in his sole discretion deem proper, with respect to all of
the Shares tendered hereby which have been accepted for payment by the
Purchaser prior to the time of any vote or other action (and any and all other
Shares or other securities issued or issuable in respect thereof on or after
May 12, 1999), at any meeting of stockholders of the Company (whether annual
or special and whether or not an adjourned meeting), by written consent or
otherwise. This proxy is irrevocable and is granted in consideration of, and
is effective upon, the acceptance for payment of such Shares by the Purchaser
in accordance with the terms of the Offer. Such acceptance for payment shall
revoke any other proxy or written consent granted by the undersigned at any
time with respect to such Shares (and all such other Shares or securities),
and no subsequent proxies will be given or written consents will be executed
by the undersigned (and if given or executed, will not be deemed to be
effective).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares or other securities issued or
issuable in respect thereof on or after May 12, 1999) and that when the same
are accepted for payment by the Purchaser, the Purchaser will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claims. The undersigned will,
upon request, execute and deliver any
3
<PAGE>
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and all such other Shares or securities).
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as stated
in the Offer, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions", please
issue the check for the purchase price of any Shares purchased, and return any
Shares not tendered or not purchased, in the name(s) of the undersigned (and,
in the case of Shares tendered by book-entry transfer, by credit to the
account at the Book-Entry Transfer Facility). Similarly, unless otherwise
indicated under "Special Delivery Instructions", please mail the check for the
purchase price of any Shares purchased and any certificates for Shares not
tendered or not purchased (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the check for the purchase price of
any Shares purchased and return any Shares not tendered or not purchased in
the name(s) of, and mail said check and any certificates to, the person(s) so
indicated. The undersigned recognizes that the Purchaser has no obligation,
pursuant to the "Special Payment Instructions", to transfer any Shares from
the name of the registered holder(s) thereof if the Purchaser does not accept
for payment any of the Shares so tendered.
4
<PAGE>
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SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5, 6 and 7) (See Instructions 5 and 7)
To be completed ONLY if the check for the purchase To be completed ONLY if the check for the purchase
price of Shares purchased (less the amount of any price of Shares purchased (less the amount of any
federal income and backup withholding tax required to federal income and backup withholding tax required to
be withheld) or certificates for Shares not tendered or be withheld) or certificates of Shares not tendered or
not purchased are to be issued in the name of someone not purchased are to be mailed to someone other than
other than other than the undersigned. the undersigned or to the undersigned at an address
other than that shown below the undersigned's
signature(s).
Mail |_| check Mail |_| check
|_| certificate(s) to: |_| certificate(s) to:
Name Name
.................................................... ....................................................
(Please Print) (Please Print)
Address Address
................................................. .................................................
........................................................ ........................................................
(Zip Code) (Zip Code)
........................................................ ........................................................
(Taxpayer Identification No.) (Taxpayer Identification No.)
</TABLE>
5
<PAGE>
SIGN HERE
(Please complete Substitute Form W-9 below)
.......................................................
.......................................................
Signature(s) of Owners
Dated.........................................., 1999
Name(s)................................................
.......................................................
(Please Print)
Capacity (full title)..................................
Address................................................
arrow ....................................................... arrow
(Include Zip Code)
Area Code and Telephone Number.........................
(Must be signed by registered holder(s) exactly
as name(s) appear(s) on stock certificate(s) or
on a security position listing or by person(s)
authorized to become registered holder(s) by
certificates and documents transmitted herewith.
If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact,
agent, officer of a corporation or other person
acting in a fiduciary or representative
capacity, please set forth full title and see
Instruction 5.)
Guarantee of Signatures(s)
(If required; see Instructions 1 and 5)
Name of Firm...........................................
Authorized Signature...................................
Dated............................................, 1999
6
<PAGE>
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SUBSTITUTE
FORM W-9 Part I Taxpayer Identification No.-- For All Accounts Part II For Payees Exempt
From Backup With-
holding (see enclosed
Guidelines)
.......................................................
Department of the Treasury Enter your taxpayer identification
Internal Revenue Service number in the appropriate box. For [ ]
most individuals and sole proprietors, Social Security Number
this is your Social Security Number.
Payer's Request for For other entities, it is your Employer
Taxpayer Identification No. Identification Number. If you do not OR
have a number, see "How to Obtain a
TIN" in the enclosed Guidelines
Note: If the account is in more than [ ]
one name, see the chart on page 2 of Employee Idendificaiton Number
the enclosed Guidelines to determine
what number to enter.
- -----------------------------------------------------------------------------------------------------------------------------------
Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and either (a)
I have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service Center
or Social Security Administration Office or (b) I intend to mail or
deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I
provide a number;
(2) I am not subject to backup withholding either because (a) I am exempt
from backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding; and
(3) Any information provided on this form is true, correct and complete.
You must cross out item 2 above if you have been notified by the IRS that you
are currently subject to backup withholding because you have failed to report all
interests and dividends on your tax return and you have not received a notice from
the IRS advising you that backup withholding has terminated.
- -----------------------------------------------------------------------------------------
SIGNATURE____________________________________________ DATE ________________________, 1999
- -----------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
</TABLE>
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is
a member of a recognized Medallion Program approved by The Securities Transfer
Associations, Inc. (an "Eligible Institution"). Signatures on this Letter of
Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed
by the registered holder(s) of the Shares (which term, for purposes of this
document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares)
tendered herewith and such holder(s) have not completed the instruction
entitled "Special Payment Instructions" on this Letter of Transmittal or (b)
if such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of
Transmittal is to be used either if certificates are to be forwarded herewith
or, unless an Agent's Message is utilized, if delivery of Shares is to be made
by book-entry transfer pursuant to the procedures set forth in Section 3 of
the Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, as well
as a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or, in the case of a book-entry transfer, an Agent's Message) and any
other documents required by this Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the front page of this
Letter of Transmittal by the Expiration Date. Stockholders who cannot deliver
their Shares and all other required documents to the Depositary by the
Expiration Date must tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser must be received by the
Depositary by the Expiration Date and (c) the certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or facsimile thereof or, in the case of a book-entry
delivery, an Agent's Message) and any other documents required by this Letter
of Transmittal, must be received by the Depositary within three New York Stock
Exchange, Inc. trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
The method of delivery of Shares and all other required documents is at
the option and risk of the tendering stockholder. If certificates for Shares
are sent by mail, registered mail with return receipt requested, properly
insured, is recommended.
No alternative, conditional or contingent tenders will be accepted, and
no fractional Shares will be purchased. By executing this Letter of
Transmittal (or facsimile thereof), the tendering stockholder waives any right
to receive any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares represented by any
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares which are to be tendered in the box entitled "Number of Shares
Tendered". In such case, a new certificate for the remainder of the Shares
represented by the old certificate will be sent to the person(s) signing this
Letter of Transmittal, unless otherwise provided in the appropriate box on
this Letter of Transmittal, as promptly as practicable following the
expiration or termination of the Offer. All Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
8
<PAGE>
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificates without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby is held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s). Signatures on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificates for such Shares. Signature(s) on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of
a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of the authority of such person so to act must
be submitted.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer
taxes with respect to the sale and transfer of any Shares to it or its order
pursuant to the Offer. If, however, payment of the purchase price is to be
made to, or Shares not tendered or not purchased are to be returned in the
name of, any person other than the registered holder(s), or if a transfer tax
is imposed for any reason other than the sale or transfer of Shares to the
Purchaser pursuant to the Offer, then the amount of any stock transfer taxes
(whether imposed on the registered holder(s), such other person or otherwise)
will be deducted from the purchase price unless satisfactory evidence of the
payment of such taxes, or exemption therefrom, is submitted herewith.
7. Special Payment and Delivery Instructions. If the check for the
purchase price of any Shares purchased is to be issued, or any Shares not
tendered or not purchased are to be returned, in the name of a person other
than the person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Stockholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account at the Book-Entry
Transfer Facility as such stockholder may designate under "Special Payment
Instructions". If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility.
8. Substitute Form W-9. Under the federal income tax laws, the
Depositary will be required to withhold 31% of the amount of any payments made
to certain stockholders pursuant to the Offer. In order to avoid such backup
withholding, each tendering stockholder, and, if applicable, each other payee,
must provide the Depositary with such stockholder's or payee's correct
taxpayer identification number and certify that such stockholder or payee is
not subject to such backup withholding by completing the Substitute Form W-9
set forth above. In general, if a stockholder or payee is an individual, the
taxpayer identification number is the Social Security number of such
individual. If the Depositary is not provided with the correct taxpayer
identification number, the stockholder or payee may be subject to a $50
penalty imposed by the Internal Revenue Service. Certain stockholders or
payees (including, among others, all corporations) are not subject to these
backup withholding and reporting requirements. Exempt holders, however,
9
<PAGE>
should indicate their exempt status on the Substitute Form W-9. Stockholders
who are non-resident aliens or foreign entities not subject to backup
withholding must complete a Form W-8 Certificate of Foreign Status (and not a
Form W-9) and give the Depositary a completed Form W-8 prior to the receipt of
any payments to avoid backup withholding. Such Form W-8 can be obtained from
the Depositary. For further information concerning backup withholding and
instructions for completing the Substitute Form W-9 (including how to obtain a
taxpayer identification number if you do not have one and how to complete the
Substitute Form W-9 if Shares are held in more than one name), consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Failure to complete the Substitute Form W-9 or Form W-8 will not, by
itself, cause Shares to be deemed invalidly tendered, but may require the
Depositary to withhold 31% of the amount of any payments made pursuant to the
Offer. Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained provided that the required
information is furnished to the Internal Revenue Service.
NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 OR FORM W-8 MAY
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO
THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
9. Requests for Assistance or Additional Copies. Requests for
assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal may be obtained from the Information Agent or the Dealer Manager
at their respective addresses or telephone numbers set forth below.
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(DO NOT WRITE IN SPACES BELOW)
- --------------------------------------------------------------------------------------------------
Date Received______________________ Accepted By________________________ Checked By________________
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares Shares Shares Amount Shares Certificate
Surrendered Tendered Accepted Check No. Check Returned No. Block No.
- ----------- -------- -------- --------- ------ -------- ----------- ---------
Gr_________
Net________
- --------------------------------------------------------------------------------------------------
Delivery Prepared By________________________Checked By______________________Date__________________
- --------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
The Information Agent for the Offer is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10036
(212) 761-7257
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
To Tender Shares of Common Stock
(Including the Related Rights)
of
Daniel Industries, Inc.
at
$21.25 Net Per Share
Pursuant to the Offer to Purchase
dated May 18, 1999
by
Emersub LXXIV, Inc.
a wholly-owned subsidiary of
Emerson Electric Co.
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if the Shares of Common
Stock, par value $1.25 per share, of Daniel Industries, Inc. and all other
documents required by the Letter of Transmittal cannot be delivered to the
Depositary by the expiration of the Offer. This Notice of Guaranteed Delivery
may be delivered by hand or facsimile transmission, telex or mail to the
Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
The Bank of New York
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
</TABLE>
For Confirmation Telephone:
(800) 507-9357
Delivery of this Letter of Transmittal to an address other than as set forth
above or transmissions of instructions via facsimile to a number other than
the one set forth above will not constitute valid delivery.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Emersub LXXIV, Inc., a Delaware
corporation and a wholly-owned subsidiary of Emerson Electric Co., upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
May 18, 1999 and the related Letter of Transmittal (which together constitute
the "Offer"), receipt of which is hereby acknowledged, the number of Shares
specified below of Common Stock, $1.25 par value per share, of Daniel
Industries, Inc., a Delaware corporation (the "Company"), including the
related right as to each share to purchase one one-hundredth of a share of
Series A Junior Participating Preferred Stock, $1.00 par value, of the Company
(singularly, a "Right" and collectively, the "Rights") (singularly, a share of
such Common Stock, including the related Right, a "Share" and collectively,
the "Shares"), pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase.
Number of Shares________________________
Share Certificate Nos. (if available) SIGN HERE
- ---------------------------------------- --------------------------------
Signature(s)
- ---------------------------------------- --------------------------------
(Name(s)) (Please Print or Type)
If Shares will be tendered by book-entry transfer:
--------------------------------
(Address)
Name of Tendering Institution
- ---------------------------------------- --------------------------------
(Zip Code)
Account No. _________________________ at
The Depositary Trust Company --------------------------------
(Area Code and Telephone No.)
2
<PAGE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
The undersigned, a firm which is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office or correspondent in the
United States, guarantees (a) that the above named person(s) "own(s)" the
Shares tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, (b) that such tender of Shares complies with Rule 14e-4
and (c) to deliver to the Depositary the Shares tendered hereby, together with
a properly completed and duly executed Letter(s) of Transmittal (or
facsimile(s) thereof) or an Agent's Message (as defined in the Offer to
Purchase) in the case of a book-entry delivery and any other required
documents, all within three New York Stock Exchange, Inc. trading days of the
date hereof.
- ------------------------------------- -------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- Name:________________________________
Address (Please print or type)
- ------------------------------------- Title:________________________________
Zip Code (Please print or type)
Area Code and
Telephone Number:____________________ Dated:__________________________, 1999
Note: Do not send Share Certificate with this Notice of Guaranteed Delivery.
Share certificates should be sent with your Letter of Transmittal.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED FOR SIGNATURE GUARANTEE.
Exhibit (a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Related Rights)
of
Daniel Industries, Inc.
at
$21.25 Net Per Share
by
Emersub LXXIV, Inc.
a wholly-owned subsidiary of
Emerson Electric Co.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 15, 1999,
UNLESS THE OFFER IS EXTENDED.
May 18, 1999
To Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees:
We have been appointed by Emersub LXXIV, Inc., a Delaware corporation
(the "Purchaser") and a wholly-owned subsidiary of Emerson Electric Co., to
act as Dealer Manager in connection with its offer to purchase all outstanding
shares of Common Stock, $1.25 par value (the "Common Stock"), of Daniel
Industries, Inc., a Delaware corporation (the "Company"), including the
related right as to each share to purchase one one-hundredth of a share of
Series A Junior Participating Preferred Stock, $1.00 par value, of the Company
(singularly, a "Right" and collectively, the "Rights") (singularly, a share of
such Common Stock, including the related Right, a "Share" and collectively,
the "Shares"), at $21.25 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase and in the
related Letter of Transmittal (which together constitute the "Offer").
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase dated May 18, 1999;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to
Purchase);
1
<PAGE>
4. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer; and
5. Return envelope addressed to The Bank of New York, the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
The Purchaser will not pay any fees or commissions to any broker or
dealer or other person (other than the Dealer Manager, the Information Agent
or the Depositary as described in the Offer to Purchase) for soliciting
tenders of Shares pursuant to the Offer. The Purchaser will, however, upon
request, reimburse brokers, dealers, commercial banks and trust companies for
reasonable and necessary costs and expenses incurred by them in forwarding
materials to their customers. The Purchaser will pay all stock transfer taxes
applicable to its purchase of Shares pursuant to the Offer, subject to
Instruction 6 of the Letter of Transmittal.
In order to accept the Offer a duly executed and properly completed
Letter of Transmittal and any required signature guarantees, or an Agent's
Message (as defined in the Offer to Purchase) in connection with a book-entry
delivery of Shares, and any other required documents, should be sent to the
Depositary by 12:00 midnight, New York City time, on Tuesday, June 15, 1999.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover of the Offer to Purchase.
Very truly yours,
MORGAN STANLEY DEAN WITTER
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU, OR ANY OTHER PERSON, THE AGENT OF EMERSUB LXXIV, INC., EMERSON ELECTRIC
CO., THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
Exhibit (a)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Related Rights)
of
Daniel Industries, Inc.
at
$21.25 Net Per Share
by
Emersub LXXIV, Inc.
a wholly-owned subsidiary of
Emerson Electric Co.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated May 18,
1999 and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the offer by Emersub LXXIV, Inc., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Emerson
Electric Co., to purchase all outstanding shares of Common Stock, $1.25 par
value (the "Common Stock"), of Daniel Industries, Inc., a Delaware corporation
(the "Company"), including the related right as to each share to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock,
$1.00 par value, of the Company (singularly, a "Right" and collectively, the
"Rights") (singularly, a share of such Common Stock, including the related
Right, a "Share" and collectively, the "Shares"), at $21.25 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase and in the related Letter of Transmittal. We are the
holder of record of Shares held for your account. A tender of such Shares can
be made only by us as the holder of record and pursuant to your instructions.
The Letter of Transmittal is furnished to you for your information only and
cannot be used by you to tender Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the Letter of Transmittal.
Your attention is invited to the following:
1. The tender price is $21.25 per Share, net to you in cash.
2. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Tuesday, June 15, 1999, unless the Offer is extended.
1
<PAGE>
3. The Offer is conditioned upon, among other things, there being
validly tendered by the Expiration Date (as defined in the Offer to
Purchase) and not withdrawn a number of Shares which represents at
least 662/3% of the Fully Diluted Shares (as defined in the Offer
to Purchase).
4. Any stock transfer taxes applicable to the sale of Shares to the
Purchaser pursuant to the Offer will be paid by the Purchaser,
except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
If you wish to have us tender any or all of your Shares, please so
instruct us by completing, executing, detaching and returning to us the
instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all
such Shares will be tendered unless otherwise specified on the detachable part
hereof. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf by the expiration of the Offer.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction.
Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by The Bank of New York (the "Depositary") of:
(a) Share certificates or timely confirmation of the book-entry transfer
of such Shares into the account maintained by the Depositary at The Depository
Trust Company (the "Book-Entry Transfer Facility"), pursuant to the procedures
set forth in Section 3 of the Offer to Purchase;
(b) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase), in connection with a
book-entry delivery; and
(c) any other documents required by the Letter of Transmittal.
Accordingly, payment may not be made to all tendering shareholders at the
same time depending upon when certificates for or confirmations of book-entry
transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility are actually received by the Depositary.
2
<PAGE>
Instructions with Respect to
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Related Rights)
of
Daniel Industries, Inc.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated May 18, 1999, and the related Letter of Transmittal, in
connection with the offer by Emersub LXXIV, Inc., to purchase all outstanding
shares of Common Stock, $1.25 par value (the "Common Stock"), of Daniel
Industries, Inc., including the related right as to each share to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock,
$1.00 par value, of the Company, at $21.25 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer.
This will instruct you to tender the number of Shares indicated below held by
you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
Number of Shares to be Tendered: SIGN HERE
- ---------------------------------- Shares* --------------------------------
Signature(s)
Dated ---------------------------, 1999 --------------------------------
--------------------------------
--------------------------------
Please print name(s) and
addresses here
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
For this type of account: Give the TAXPAYER
IDENTIFICATION
number of--
- ------------------------------- -------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, the first
individual on the
account(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for incompetent
a designated ward, minor, person(3)
or incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
8. Sole proprietorship The owner(4)
account
1
<PAGE>
- ------------------------------- -------------------------
For this type of account: Give the TAXPAYER
IDENTIFICATION
number of--
- ------------------------------- -------------------------
9. A valid trust, estate, or The Legal entity (Do not furnish the
pension trust identifying number of
the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title.) (5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the
business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
- -----------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security Number or Employer Identification Number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
2
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), or Form W-7 (for U.S. resident
alients), Application for International Taxpayer Identification Number, at the
local office or Website of the Social Security Administration or the Internal
Revenue Service and apply for a number.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except those identified in item (9). For broker
transactions, payees listed in items (1) through (13) and a person registered
under the Investment Advisors Act of 1940 who regularly acts as a broker are
exempt. Payments subject to reporting under Sections 6041 and 6041A of the
Internal Revenue Code (the "Code") are generally exempt from backup
withholding only if made to payees described in items (1) through (7), except
a corporation that provides medical and health care services or bills and
collects payments for such services is not exempt from backup withholding or
information reporting. Only payees described in items (2) through (6) are
exempt from backup withholding for barter exchange transactions, patronage
dividends, and payments by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a) of the Code, an
IRA, or a custodial account under Section 403(b)(7) of the Code if the
account satisfies the requirements of Section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all items during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under Section 584(a) of the Code.
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of
Corporation Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under Section 664 of the Code or described in
Section 4947 of the Code.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under U.C.
Section 1441.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid
in money.
o Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
3
<PAGE>
o Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends
under U.C. Section 852).
o Payments described in U.C. Section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under U.C. Section 1451.
o Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under U.C. Sections 6041,
6041A(a), 6045, and 6050A.
Privacy Act Notice.--Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers
to payers who must report the payments to the IRS. The IRS uses the numbers
for identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
4
Exhibit (a)(7)
This announcement is not an offer to purchase or a solicitation of an offer to
sell Shares. The Offer is made solely by the Offer to Purchase dated May 18,
1999 and the related Letter of Transmittal and is not being made to, nor will
tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making of the Offer or acceptance thereof would not
be in compliance with the laws of such jurisdiction. In those jurisdictions
where the applicable laws require that the Offer be made by a licensed broker
or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by
Morgan Stanley & Co. Incorporated, the Dealer Manager for the Offer, or by one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Notice of Offer To Purchase For Cash
All Outstanding Shares Of Common Stock
(Including the Related Rights)
of
Daniel Industries, Inc.
at
$21.25 Net Per Share
by
Emersub LXXIV, Inc.
a wholly-owned subsidiary of
Emerson Electric Co.
Emersub LXXIV, Inc., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Emerson Electric Co., a Missouri corporation (the
iParenti), is offering to purchase all outstanding shares of Common Stock,
$1.25 par value (the "Common Stock"), of Daniel Industries, Inc., a Delaware
corporation (the "Company"), including the related right as to each share to
purchase one one-hundredth of a share of Series A Junior Participating
Preferred Stock, $1.00 par value, of the Company (singularly, a "Right" and
collectively, the "Rights") (singularly, a share of such Common Stock,
including the related Right, a "Share" and collectively, the "Shares"), at
$21.25 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated May 18, 1999 (the "Offer
to Purchase") and in the related Letter of Transmittal (which together
constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of May 12, 1999 (the "Merger Agreement") among the Company, the Parent and
the Purchaser. The Merger Agreement provides, among other things, that as soon
as practicable after the consummation of the Offer and satisfaction or waiver
of all conditions to the Merger, the Purchaser will be merged with and into
the Company (the "Merger"), with the Company surviving. Pursuant to the
Merger, each outstanding Share (other than Shares owned by Parent, the Company
or any wholly-owned subsidiary of Parent or the Company and Shares held by
stockholders properly exercising appraisal rights under Delaware law (as
described in the Offer to Purchase)) will be converted into and represent the
right to receive $21.25 in cash, without interest.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the Expiration Date of the Offer that
number of Shares that would represent at least 66 2/3% of all Shares on a fully
diluted basis, (2) any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended having expired or terminated, and (3) any
filings and approvals under applicable foreign antitrust laws and regulations
having been made or obtained, as the case may be, and any related waiting
periods having expired.
The Board of Directors of the Company has unanimously approved the Offer
and the Merger, unanimously determined that the Offer and the Merger are fair
to, and in the best interests of, the Company's stockholders, and unanimously
recommends that the Company's stockholders accept the Offer and tender their
Shares pursuant to the Offer.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. The Offer is subject to certain conditions set forth
in the Offer to Purchase. If any such condition is not satisfied, the
Purchaser may, except as provided in the Merger Agreement, (i) terminate the
Offer and return all tendered Shares to tendering stockholders, (ii) extend
the Offer and, subject to withdrawal rights as set forth below, retain all
such Shares until the expiration of the Offer as so extended, (iii) waive such
condition and purchase all Shares validly tendered prior to the Expiration
Date and not withdrawn or (iv) delay acceptance for payment or payment for
Shares, subject to applicable law, until satisfaction or waiver of the
conditions to the Offer.
Subject to the terms of the Merger Agreement, the Purchaser reserves the
right, at any time or from time to time, to extend the period of time during
which the Offer is open by giving oral or written notice of such extension to
The Bank of New York (the "Depositary"). Any such extension will be followed
as promptly as practicable by public announcement thereof.
<PAGE>
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment tendered Shares when, as and if the Purchaser gives oral or
written notice to the Depositary of its acceptance of the tenders of such
Shares. Payment for Shares accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of certificates for such
Shares (or a confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined
in the Offer to Purchase)), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after July 16, 1999 unless theretofore accepted for
payment as provided in the Offer to Purchase. To be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth in the
Offer to Purchase and must specify the name of the person who tendered the
Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares
to be withdrawn have been delivered to the Depositary, a signed notice of
withdrawal with (except in the case of Shares tendered by an Eligible
Institution (as defined in the Offer to Purchase)) signatures guaranteed by an
Eligible Institution must be submitted prior to the release of such Shares. In
addition, such notice must specify, in the case of Shares tendered by delivery
of certificates, the name of the registered holder (if different from that of
the tendering stockholder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear
on the stockholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase and Letter of Transmittal contain important
information which should be read before any decision is made with respect to
the Offer.
Requests for copies of the Offer to Purchase and the related Letter of
Transmittal and other tender offer materials may be directed to the
Information Agent or the Dealer Manager as set forth below, and copies will be
furnished promptly at the Purchaser's expense.
The Information Agent for the Offer is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
Morgan Stanley Dean Witter
1585 Broadway
New York, New York 10036
(212) 761-7257
May 18, 1999
Exhibit (a)(8)
Emerson contact:
William K. Anderson
or Carter L. Dunkin
314-982-1700
Daniel contact:
Sean P. O'Neill
713-827-3892
FOR IMMEDIATE RELEASE
EMERSON ELECTRIC CO. REACHES AGREEMENT
TO ACQUIRE DANIEL INDUSTRIES, INC.
COMBINATION STRENGTHENS BOTH COMPANIES' PRESENCE
IN OIL AND GAS INDUSTRY
ST. LOUIS, May 13, 1999 - Emerson Electric Co. (NYSE:EMR) and Daniel
Industries, Inc. (NYSE:DAN), have reached agreement for Emerson to acquire
Daniel for approximately $460 million, the two companies announced today.
Daniel's board unanimously supported the agreement, under which
Emerson will make a cash tender offer of $21.25 a share for each outstanding
share of Daniel's common stock. The transaction is subject to regulatory and
other customary conditions and is expected to be completed within the current
quarter, with Daniel ultimately becoming a wholly owned subsidiary of Emerson.
Charles F. Knight, Emerson's chairman and chief executive officer,
said, "Daniel's leading market position and advanced technology in the oil and
gas industry will expand Emerson's product leadership and strengthen our
ability to provide services and solutions in this important market segment,
especially natural gas. In addition, Daniel's excellent reputation, strong
customer relationships and broad distribution network present the opportunity
to sell more products, systems and services from other Emerson divisions."
Ronald C. Lassiter, chairman and chief executive officer of Daniel
Industries, said the combination with Emerson will strengthen Daniel's
competitive position. "Emerson is a leading provider of process control
instrumentation, and our product lines fit hand-in-glove with theirs. In
addition to building a stronger base in our primary market, oil and
- more -
<PAGE>
Add One
gas, we expect the innovative technologies of Emerson's Fisher-Rosemount
companies will accelerate our own product development. Emerson's expanding
services and solutions business also provides a valuable foundation for the
continued growth of Daniel's measurement service business."
Based in Houston, Texas, Daniel is a leading provider of measurement
and control equipment, systems and services for the oil and gas industry:
o Daniel's measurement and control products, comprising the
company's largest segment, include flowmeters, metering
systems and gas chromatographs.
o Daniel is one of the world's largest producers of measurement
products for custody transfer of natural gas flows delivered via
pipeline.
o Daniel's Bettis actuation business is a worldwide leader in
pneumatic and hydraulic actuators for valves in oil and gas
production, pipelines, refining and other industrial
applications.
o The company also is a leader in the production of large-diameter
gate valves, which are used primarily in pipelines transporting
crude oil and refined products.
o Daniel Measurement Services builds on Daniel's reputation for
providing metering solutions with unsurpassed accuracy, quality
and reliability. This business has grown rapidly as more oil and
gas companies have outsourced the management of custody
transfer.
David N. Farr, senior executive vice president with responsibility
for Emerson's process business, said, "Daniel's long-standing reputation and
strength in the oil and gas industry, particularly in natural gas, will
greatly enhance the leadership of Emerson and our Fisher-Rosemount companies.
Daniel broadens the market penetration of our process business and provides
significant potential for increased sales of our existing products and systems
into this important segment. For our flow business, Daniel complements our
traditional strength in liquids with an increased presence in gas; in
actuators, Daniel substantially broadens the range of applications we can
offer our customers; and the addition of Daniel's services business expands
Emerson's growing services and solutions capability."
- more -
<PAGE>
Add Two
Emerson Electric, based in St. Louis, Mo., is a global manufacturer
with market and technology leadership in the areas of process control,
industrial automation, electronics, HVAC, appliance components, electric
motors, tools and storage products. Fiscal 1998 sales totaled $13.4 billion.
Daniel Industries is an international leader in fluid measurement and
flow control products and services for the oil and gas industry. Daniel
provides a wide variety of flowmeters, valves, actuators, control systems and
engineered solutions, primarily for producers, transporters, refiners and
processors of oil and natural gas. The company reported revenues of $283.2
million in 1998.
# # #
Exhibit (a)(9)
Press Release
EMERSON ELECTRIC CO. COMMENCES TENDER OFFER
TO PURCHASE ALL OUTSTANDING SHARES OF
DANIEL INDUSTRIES, INC. AT $21.25 PER SHARE
St. Louis, May 18, 1999 -- Emerson Electric Co. (NYSE: EMR)
announced today that a wholly owned subsidiary has commenced a tender offer to
acquire all outstanding shares of common stock of Daniel Industries, Inc.
(NYSE: DAN) for $21.25 per share upon the terms and subject to the conditions
set forth in the offer to purchase and the related letter of transmittal, both
dated today. The offer and withdrawal rights will expire at 12:00 midnight, EDT
on Tuesday, June 15, 1999, unless the offer is extended.
As announced on May 13, the tender offer is being made pursuant to an
agreement providing for the acquisition of Daniel by Emerson. Daniel's board
of directors has unanimously approved the tender offer and recommends
Daniel shareholders tender their shares pursuant to the offer.
Based in Houston, Texas, Daniel is a leading provider of measurement
and control equipment, systems and services for the oil and gas industry.
Daniel's measurement and control products, comprising the company's largest
segment, include flowmeters, metering systems and gas chromatographs. Daniel
is one of the world's largest producers of measurement products for custody
transfer of natural gas flows delivered via pipeline. Daniel's Bettis
actuation business is a worldwide leader in pneumatic and hydraulic actuators
for valves in oil and gas production, pipelines, refining and other industrial
applications. The company also is a leader in the production of large-diameter
gate valves, which are used primarily in pipelines transporting crude oil and
refined products.
"Daniel's long-standing reputation and strength in the oil and gas
industry, particularly in natural gas, will greatly enhance the leadership of
Emerson and our Fisher-Rosemount companies," said David N. Farr, senior
executive vice president with responsibility for Emerson's process business,
in last week's announcement. "Daniel broadens the market penetration of our
process business and provides significant potential for increased sales of our
existing products and systems into this important segment."
The necessary filings with the Securities and Exchange Commission in
connection with the tender offer are being made today, and the offer documents
will be mailed to Daniel shareholders promptly. Morgan Stanley & Co.
Incorporated is acting as dealer manager in connection with the tender offer,
and Georgeson & Company, Inc. is acting as information agent.
Requests for copies of the offer to purchase, the related letter of
transmittal and the other tender offer materials may be directed either to the
information agent in writing at Wall Street Plaza, New York, N.Y. 10005 or
by telephone at 212-223-2064 (for banks and brokers) and 800-223-2064
(for all other callers) or to the dealer manager in writing at 1585 Broadway,
New York, N.Y. 10036 or by telephone at 212-761-7257. Copies will be
furnished promptly at Emerson's expense. The offer to purchase and the letter
of transmittal contain important information that should be read before any
decision is made with respect to the tender offer.
Emerson Electric, based in St. Louis, is a global manufacturer with
market and technology leadership in the areas of process control, industrial
automation, electronics, HVAC, appliance components, electric motors, tools
and storage products. Fiscal 1998 sales totaled $13.4 billion.
###
Exhibit (C)(1)
AGREEMENT AND PLAN OF MERGER
By and Among
EMERSON ELECTRIC CO.
EMERSUB LXXIV, INC.
and
DANIEL INDUSTRIES, INC.
May 12, 1999
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER............................................................2
SECTION 1.1. The Offer.......................................................2
SECTION 1.2. Company Actions.................................................3
ARTICLE II
THE MERGER...........................................................5
SECTION 2.1. The Merger......................................................5
SECTION 2.2. Effective Time..................................................5
SECTION 2.3. Effects of the Merger...........................................5
SECTION 2.4. Certificate of Incorporation and By-laws........................5
SECTION 2.5. Directors.......................................................5
SECTION 2.6. Officers........................................................5
SECTION 2.7. Effect on Capital Stock.........................................5
(a) Capital Stock of Sub.................................................6
(b) Cancellation of Treasury Stock and Parent Owned Stock................6
(c) Conversion of Shares.................................................6
(d) Shares of Dissenting Stockholders....................................6
SECTION 2.8. Exchange of Certificates........................................6
(a) Paying Agent.........................................................6
(b) Parent to Provide Funds..............................................6
(c) Exchange Procedure...................................................7
(d) No Further Ownership Rights in Shares................................7
SECTION 2.9. Withholding Rights..............................................8
SECTION 2.10. Lost Certificates..............................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES.......................................8
SECTION 3.1. Representations and Warranties of the Company...................8
(a) Organization, Standing and Power.....................................8
(b) Subsidiaries.........................................................9
(c) Capital Structure....................................................9
(d) Authority; Non-contravention........................................10
(e) SEC Documents.......................................................11
(f) Information Supplied................................................12
(g) Absence of Certain Changes or Events................................12
(h) State Takeover Statutes; Absence of Supermajority Provision.........13
(i) Brokers.............................................................13
(j) Litigation..........................................................13
(k) Employee Benefit Matters............................................14
(l) Taxes...............................................................16
(m) No Excess Parachute Payments........................................17
(n) Environmental Matters...............................................17
(o) Compliance with Laws................................................18
(p) Material Contracts and Agreements...................................18
(q) Title to Properties.................................................19
(r) Intellectual Property...............................................19
(s) Labor Matters.......................................................20
(t) Undisclosed Liabilities.............................................20
(u) Board Recommendation................................................20
SECTION 3.2. Representations and Warranties of Parent and Sub...............20
(a) Organization; Standing and Power....................................20
(b) Authority; Non-contravention........................................21
(c) Information Supplied................................................22
(d) Brokers. ...........................................................22
(e) Litigation..........................................................22
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS...........................22
SECTION 4.1. Conduct of Business of the Company.............................22
(a) Ordinary Course.....................................................22
(b) Changes in Employment Arrangements..................................25
(c) Severance...........................................................25
(d) Other Actions.......................................................25
ARTICLE V
ADDITIONAL AGREEMENTS...............................................26
SECTION 5.1. Stockholder Approval; Preparation of Proxy Statement...........26
SECTION 5.2. Access to Information..........................................26
SECTION 5.3. Reasonable Efforts; Notification...............................28
SECTION 5.4. Employee Benefit Matters.......................................30
SECTION 5.5. Indemnification................................................31
SECTION 5.6. Fees and Expenses..............................................32
SECTION 5.7. Public Announcements...........................................32
SECTION 5.8. Stockholder Litigation.........................................33
SECTION 5.9. Directors......................................................33
SECTION 5.10. Tax Certification..............................................34
ARTICLE VI
CONDITIONS PRECEDENT................................................34
SECTION 6.1. Conditions to Each Party's Obligation to Effect the Merger.....34
(a) Stockholder Approval................................................34
(b) Other Approvals.....................................................34
(c) No Injunctions or Restraints........................................34
SECTION 6.2. Conditions to Obligation of Parent and Sub.....................34
SECTION 6.3. Condition to Obligation of the Company.........................35
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER...................................35
SECTION 7.1. Termination....................................................35
SECTION 7.2. Procedure for Termination, Amendment, Extension or Waiver......36
SECTION 7.3. Effect of Termination..........................................37
SECTION 7.4. Amendment......................................................37
SECTION 7.5. Extension; Waiver..............................................37
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS............................38
SECTION 8.1. Takeover Defenses of the Company and Standstill Agreements.....38
SECTION 8.2. No Solicitation................................................38
SECTION 8.3. Fee and Expense Reimbursements.................................40
ARTICLE IX
GENERAL PROVISIONS..................................................41
SECTION 9.1. Nonsurvival of Representations and Warranties..................41
SECTION 9.2. Notices........................................................41
SECTION 9.3. Definitions....................................................43
SECTION 9.4. Interpretation.................................................44
SECTION 9.5. Counterparts...................................................44
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries.................44
SECTION 9.7. Governing Law..................................................44
SECTION 9.8. Assignment.....................................................44
SECTION 9.9. Enforcement of the Agreement...................................44
SECTION 9.10. WAIVER OF JURY TRIAL..........................................45
SECTION 9.11. Performance by Sub............................................45
SECTION 9.12. Severability..................................................45
AGREEMENT AND PLAN OF MERGER dated as of May 12, 1999, among
EMERSON ELECTRIC CO., a Missouri corporation ("Parent"), EMERSUB LXXIV,
INC., a Delaware corporation ("Sub") and a wholly owned subsidiary of
Parent, and DANIEL INDUSTRIES, INC., a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions of this Agreement and Plan of Merger (this
"Agreement");
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause Sub to make a tender offer (as it may be amended from time to time as
permitted hereunder, the "Offer") to purchase all the issued and outstanding
shares of Common Stock, par value $1.25 per share, of the Company, including the
related right as to each Share to purchase one one-hundredth of a share of
Series A Junior Participating Preferred Stock, $1.00 par value, of the Company
(singularly a "Right" and collectively, the "Rights") (singularly, a share of
such Common Stock including the related Right, a "Share" and collectively, the
"Shares"), at a price per Share of $21.25 net to the seller in cash, upon the
terms and subject to the conditions of this Agreement; and the Board of
Directors of the Company has adopted resolutions approving the Offer and the
Merger (as hereinafter defined) and recommending that the Company's stockholders
accept the Offer;
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions of this Agreement,
whereby each issued and outstanding Share not owned directly or indirectly by
Parent or the Company, except Shares held by persons who object to the Merger
and comply with all the provisions of Delaware law concerning the right of
holders of Shares to dissent from the Merger and require appraisal of their
Shares ("Dissenting Stockholders"), will be converted into the right to receive
the per share consideration paid to holders of Shares pursuant to the Offer; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Offer and the
Merger and also to prescribe various conditions to the Offer and the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreement herein contained, the parties agree as
follows:
ARTICLE I
THE OFFER
SECTION 1.1. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than the fifth
business day from and including the date of public announcement of the terms of
this Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer.
Unless earlier terminated in accordance with the provisions of this Agreement,
the Offer shall not expire before 12:00 midnight on the date that is 20 business
days from and including the date the Offer is commenced. The obligation of Sub
to, and of Parent to cause Sub to, commence the Offer shall be subject to the
conditions set forth in clauses (a) through (h) set forth in Exhibit A (any of
which may be waived by Sub in its sole discretion, and it being understood for
all purposes of this Agreement that the fact that any condition specified in the
first paragraph of Exhibit A shall not have been satisfied shall not, without
more, constitute a failure of any other condition set forth in Exhibit A) and to
the terms and conditions of this Agreement. The obligation of Sub to accept for
payment, and pay for, any Shares tendered pursuant to the Offer shall be subject
to the conditions set forth in Exhibit A (any of which may be waived by Sub in
its sole discretion, provided that, without the consent of the Company, Sub
shall not waive the Minimum Tender Condition (as defined in Exhibit A)) and to
the terms and conditions of this Agreement. Sub expressly reserves the right to
modify the terms of the Offer, except that, without the consent of the Company,
Sub shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce
the price per Share to be paid pursuant to the Offer, (iii) modify or add to the
conditions set forth in Exhibit A, (iv) except as provided in the next two
sentences, extend the Offer, (v) change the form of consideration payable in the
Offer or (vi) otherwise amend the Offer in any manner materially adverse to the
Company's stockholders. Notwithstanding the foregoing, Sub may, without the
consent of the Company, (i) extend the Offer if at the scheduled expiration date
of the Offer any of the conditions to Sub's obligation to purchase Shares (as
set forth in Exhibit A) shall not be satisfied, (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
to the Offer or for any period required by applicable law and (iii) extend the
Offer on one or more occasions for an aggregate period of not more than 10
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence, if, on such expiration
date, the number of Shares tendered (and not withdrawn) pursuant to the Offer
represents less than 90% of the Fully Diluted Shares (as defined in Exhibit A).
Sub and Parent agree that if at any scheduled expiration date of the Offer the
HSR Condition (as defined in Exhibit A) has not been satisfied, but at such
scheduled expiration date all the other conditions set forth in Exhibit A shall
have been satisfied (other than the Minimum Tender Condition), Sub may (and at
the request of the Company (confirmed in writing) shall) extend the Offer (a
"Special Extension") from time to time until the HSR Condition has been
satisfied. In no event may the Company or Sub require that the Offer be extended
to a date later than 270 days following the date hereof by Special Extensions or
to a date later than 180 days following the date hereof for any other reason.
Subject to the terms and conditions of the Offer and this Agreement, Sub shall,
and Parent shall cause Sub to, pay for all Shares validly tendered and not
withdrawn pursuant to the Offer that Sub becomes obligated to purchase pursuant
to the Offer as promptly as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
therein pursuant to which the Offer will be made, together with any supplements
or amendments thereto, the "Offer Documents"). The Offer Documents shall comply
as to form in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder and the Offer Documents, on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by Parent or Sub with respect to information
supplied by the Company for inclusion in the Offer Documents. Each of Parent,
Sub and the Company agrees promptly to amend or supplement any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect, and
each of Parent and Sub further agrees to take all steps necessary to amend or
supplement the Offer Documents and to cause the Offer Documents as so amended or
supplemented to be filed with the SEC and to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable Federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents and all amendments and
supplements thereto prior to their filing with the SEC or dissemination to
stockholders of the Company. Parent and Sub agree to provide the Company and its
counsel with any comments Parent, Sub or their counsel may have received from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to purchase any Shares that Sub becomes
obligated to purchase pursuant to the Offer.
SECTION 1.2. Company Actions. (a) The Company hereby approves
of and consents to the Offer and represents that the Board of Directors of the
Company, at a meeting duly called and held, has duly adopted resolutions
approving this Agreement, the Offer and the Merger, determining that the terms
of the Agreement, the Offer and the Merger are fair to, and in the best
interests of, the Company's stockholders and recommending that the Company's
stockholders accept the Offer and tender their Shares pursuant to the Offer and
approve and adopt this Agreement and the Merger. The Company represents that its
Board of Directors has received the written opinion of Simmons & Company
International ("Simmons") that the proposed consideration to be received by the
holders of Shares pursuant to the Offer and in the Merger is fair to such
holders from a financial point of view, and a complete and correct copy of such
opinion has been delivered by the Company to Parent.
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendations described in
paragraph (a) above and shall mail the Schedule 14D-9 to the stockholders of the
Company. The Schedule 14D-9 shall comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or Sub for inclusion in the Schedule 14D-9. Each of the
Company, Parent and Sub agrees promptly to amend or supplement any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. Parent
and its counsel shall be given a reasonable opportunity to review and comment on
the Schedule 14D-9 and all amendments and supplements thereto prior to their
filing with the SEC or dissemination to stockholders of the Company. The Company
agrees to provide Parent and its counsel in writing with any comments the
Company or its counsel may have received from the SEC or its staff with respect
to the Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Shares as of a recent date and of those
persons becoming record holders subsequent to such date, together with copies of
all lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Shares, in each case true and correct as of the most recent
practicable date, and shall furnish to Sub such information and assistance
(including updated lists of stockholders, security position listings and
computer files) as Parent may reasonably request in communicating the Offer to
the Company's stockholders. 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 Merger, Parent and Sub shall
hold in confidence the information contained in any such labels, listings and
files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request, deliver
to the Company all copies of such information then in their possession or
control.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. Upon the terms and subject to the
conditions hereof and in accordance with the Delaware General Corporation Law
(the "DGCL"), Sub shall be merged with and into the Company at the Effective
Time of the Merger (as hereinafter defined). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub and the Company in accordance with
the DGCL.
SECTION 2.2. Effective Time. As soon as practicable following
the satisfaction or waiver of the conditions to the Merger, the parties shall
file a certificate of merger or other appropriate documents (in any such case,
the "Certificate of Merger") executed in accordance with the relevant provisions
of the DGCL. The Merger shall become effective at such time as the Certificate
of Merger is duly filed with the Delaware Secretary of State, or at such other
time as Sub and the Company shall agree should be specified in the Certificate
of Merger (the time the Merger becomes effective being the "Effective Time of
the Merger").
SECTION 2.3. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 2.4. Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of Sub, as in effect at the Effective Time of the
Merger, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub as in effect at the Effective Time of
the Merger shall be the By-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
SECTION 2.5. Directors. The directors of Sub at the Effective
Time of the Merger shall be the directors of the Surviving Corporation and shall
hold office until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified in accordance with
applicable law, as the case may be.
SECTION 2.6. Officers. The officers of the Company at the
Effective Time of the Merger shall be the officers of the Surviving Corporation
and shall hold office until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, in accordance with
applicable law, as the case may be.
SECTION 2.7. Effect on Capital Stock. As of the Effective
Time of the Merger, by virtue of the Merger and without any action on the part
of the holder of any Shares:
(a) Capital Stock of Sub. Subject to Section 2.7(b) below,
each issued and outstanding share of the capital stock of Sub shall be
converted into and become one fully paid and nonassessable share of
Common Stock, par value $1.00 per share, of the Surviving Corporation
with the same rights, powers and privileges as the shares so converted
and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. All
Shares that are owned directly or indirectly by the Company as treasury
stock or by any wholly owned subsidiary of the Company and any Shares
owned by Parent, Sub or any other wholly owned subsidiary of Parent
shall be canceled, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Shares. Subject to Section 2.7(d), each
issued and outstanding Share (other than Shares to be canceled in
accordance with Section 2.7(b)) shall be converted into the right to
receive from the Surviving Corporation in cash, without interest, the
price per Share paid pursuant to the Offer (the "Merger
Consideration").
(d) Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding
Shares held by a Dissenting Stockholder shall not be converted as
described in Section 2.7(c) but shall become the right to receive such
consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the DGCL; provided, however, that Shares
outstanding immediately prior to the Effective Time of the Merger and
held by a Dissenting Stockholder who shall, after the Effective Time of
the Merger, withdraw his demand for appraisal or lose his right of
appraisal, in either case pursuant to the DGCL, shall be deemed to be
converted, as of the Effective Time of the Merger, into the right to
receive the Merger Consideration. The Company shall give Parent (i)
prompt notice of any written demands for appraisal of Shares received
by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
SECTION 2.8. Exchange of Certificates. (a) Paying Agent. Prior
to the Effective Time of the Merger, Parent shall select a bank or trust company
to act as paying agent (the "Paying Agent") for the payment of the Merger
Consideration upon surrender of certificates representing Shares.
(b) Parent to Provide Funds. Parent shall take all steps
necessary to enable and cause the Surviving Corporation to provide the Paying
Agent on a timely basis, as and when needed after the Effective Time of the
Merger, funds necessary to pay for the Shares pursuant to Section 2.7.
(c) Exchange Procedure. Promptly after the Effective Time of
the Merger, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time of the
Merger represented outstanding Shares (the "Certificates"), other than the
Company, Parent and any subsidiary of the Company or Parent, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and which shall be in a form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by the Surviving
Corporation, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration into which the Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 2.7, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or will accrue
on the Merger Consideration payable upon the surrender of any Certificate. If
payment is to be made to a person other than the person in whose name the
Certificate so surrendered is registered, it shall be a condition of payment
that such Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment shall pay to the Paying
Agent any transfer or other taxes required by reason of the payment to a person
other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.8, each
Certificate shall be deemed at any time after the Effective Time of the Merger
to represent only the right to receive upon such surrender the Merger
Consideration, without interest, into which the Shares theretofore represented
by such Certificate shall have been converted pursuant to Section 2.7(c). Any
portion of the Merger Consideration made available to the Paying Agent pursuant
to Section 2.8(b) (and any interest or other income earned thereon) that remains
unclaimed by the holders of Shares six months after the Effective Time of the
Merger shall be returned to Parent, upon demand, and any such holder who has not
exchanged them for the Merger Consideration in accordance with this Section
prior to that time shall thereafter look only to Parent for payment of the
Merger Consideration in respect of such Shares without any interest thereon.
Notwithstanding the foregoing, neither the Paying Agent nor any party shall be
liable to a former stockholder of the Company for any cash or interest delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws. If any Certificates shall not have been surrendered prior to seven
years after the Effective Time of the Merger (or immediately prior to such
earlier date on which any payment pursuant to this Section 2.8 would otherwise
escheat to or become the property of any governmental body or agency) the
payment in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of Parent, free and clear of all claims or
interest of any person previously entitled thereto.
(d) No Further Ownership Rights in Shares. All Merger
Consideration paid upon the surrender of Certificates in accordance with the
terms of this Article II shall be deemed to have been paid in full satisfaction
of all rights pertaining to the Shares theretofore represented by such
Certificates and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares that were out-
standing immediately prior to the Effective Time of the Merger. If, after the
Effective Time of the Merger, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article II.
SECTION 2.9. Withholding Rights. Each of the Surviving
Corporation and Parent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable to any person pursuant to this Article such
amounts as it is required to deduct and withhold with respect to the making of
such payment under any provision of federal, state, local or foreign tax law. If
the Surviving Corporation or Parent, as the case may be, so withholds amounts,
such amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the Shares in respect of which the Surviving Corporation
or Parent, as the case may be, made such deduction and withholding.
SECTION 2.10. Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent will pay, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, Parent and Sub as
follows, subject to any exceptions specified in the Company Disclosure Document
in the form attached hereto as Schedule I:
(a) Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the law
of the jurisdiction in which it is incorporated and has the requisite corporate
power and governmental licenses, authorizations, permits, consents and approvals
(except where the failure to have such licenses, authorizations, permits,
consents and approvals, individually or in the aggregate, would not have a
material adverse effect on the Company and its subsidiaries taken as a whole) to
carry on its business as now being conducted. The Company is duly qualified to
do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure to
be so qualified to do business or in good standing (individually or in the
aggregate) would not have a material adverse effect (as defined in Section 9.3)
on the Company and its subsidiaries, taken as a whole.
(b) Subsidiaries. The Company's subsidiaries that are
corporations are corporations duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation and
have the requisite corporate power and authority to carry on their respective
businesses as they are now being conducted and to own, operate and lease the
assets they now own, operate or hold under lease. The Company's subsidiaries are
duly qualified to do business and are in good standing in each jurisdiction in
which the nature of their respective businesses or the ownership or leasing of
their respective properties makes such qualification necessary, other than in
such jurisdictions where the failure to be so qualified or in good standing
would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole. All subsidiaries of the Company and their respective
jurisdictions of incorporation are identified in the Company 10-K. All the
outstanding shares of capital stock of the Company's subsidiaries that are
corporations have been duly authorized and validly issued and are fully paid and
non-assessable and were not issued in violation of any preemptive rights or
other preferential rights of subscription or purchase of any person. Except as
disclosed in the SEC Documents (as defined in Section 3.1(e)) filed on or prior
to the date hereof, all such stock and ownership interests are owned of record
and beneficially by the Company or by a wholly owned subsidiary of the Company,
free and clear of all liens, pledges, security interests, charges, claims and
other encumbrances of any kind or nature ("Liens"). Except for the capital stock
of, or ownership interests in, its subsidiaries, the Company does not own,
directly or indirectly, any capital stock, equity interest or other ownership
interest in any corporation, partnership, association, joint venture, limited
liability company or other entity.
(c) Capital Structure. The authorized capital stock of the
Company consists of 40,000,000 shares of common stock, $1.25 par value ("Company
Common Stock"), and 1,000,000 shares of preferred stock, $1 par value
("Preferred Stock"), of which 150,000 shares have been designated Series A
Junior Participating Preferred Stock and reserved for issuance pursuant to the
Rights Agreement dated May 31, 1990 (as amended) between the Company and
Equiserve Trust Company, N.A., as rights agent (the "Company Rights Agreement").
At the close of business on May 11, 1999, (i) 19,482,588 Shares were issued and
outstanding; (ii) 10,000, 10,956, 20,000 and 18,368 shares were reserved for
issuance pursuant to options not yet granted under the Company's 1997
Non-Employee Directors' Stock Option Plan, 1997 Stock Option Plan, 1995
Non-Employee Directors' Stock Plan and 1977 Stock Option Plan, respectively,
(iii) 9,416 Shares were reserved for issuance under the Company's Stock Award
Plan, (iv) 110,000, 716,857, 135,000, 33,000, 567,543, 385,468 and 10,000 Shares
were reserved for issuance pursuant to outstanding options granted under the
Company's 1997 Non-Employee Director Stock Option Plan, 1997 Stock Option Plan,
1995 Non-Employee Directors' Stock Option Plan, 1981 Stock Option Plan, 1977
Stock Option Plan, options assumed in connection with the acquisition of Bettis
Corporation and a stock option agreement with a director of the Company and (v)
75,000 Shares were reserved for issuance pursuant to stock options granted in
connection with the acquisition of Hytork International Plc. Except as set forth
above, no shares of capital stock or other equity or voting securities of the
Company are reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are, and all such shares issuable upon the exercise
of stock options will be when issued thereunder, validly issued, fully paid and
nonassessable and not subject to preemptive rights. No capital stock has been
issued by the Company since May 11, 1999, other than Shares issued pursuant to
options, referred to in (iv) and (v) above, outstanding on or prior to such
date in accordance with their terms at such date. Except for options referred
to in (iv) and (v) above, there are no outstanding or authorized securities,
options, warrants, calls, rights, commitments, preemptive rights, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party, or by which any of them is bound, obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, any shares of capital stock or other equity or voting
securities of, or other ownership interests in, the Company or of any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking.
(d) Authority; Non-contravention. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to Company Stockholder Approval (as defined in Section 3.1(h)), to
consummate the transactions contemplated hereby and to take such actions, if
any, as shall have been taken with respect to the matters referred to in Section
3.1(h). The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company, subject to Company Stockholder Approval. This Agreement has been duly
and validly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws or judicial
decisions now or hereafter in effect relating to creditors' rights generally and
(ii) the remedy of specific performance and injunctive relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution, delivery and performance of
this Agreement by the Company do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its subsidiaries under, any provision of (i) the Certificate
of Incorporation or By-laws of the Company or any provision of the comparable
organizational documents of its subsidiaries, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease, or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iii) subject to
governmental filing and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation or
arbitration award applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of clause (ii), any
such conflicts, violations, defaults, rights or liens, security interests,
charges or encumbrances that individually or in the aggregate would not have a
material adverse effect on the Company or would not materially impair the
ability of the Company to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or agency, domestic or foreign, including local authorities (a
"Governmental Entity"), is required by or with respect to the Company or any of
its subsidiaries in connection with the execution, delivery and performance of
this Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except for (i) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and any required
filings or approvals under applicable foreign antitrust laws and regulations,
(ii) the filing with the Securities and Exchange Commission (the "SEC") of (A)
a proxy statement relating to the Company Stockholder Approval (such proxy
statement as amended or supplemented from time to time, the "Proxy Statement")
and (B) the Schedule 14D-9; and (C) such reports under Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
filed in connection with this Agreement and the transactions contemplated
hereby, and (iii) the filing of the Certificate of Merger with the Delaware
Secretary of State with respect to the Merger as provided in the DGCL and
appropriate documents with the relevant authorities of other jurisdictions in
which the Company is qualified to do business and such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not have a material adverse
effect on the Company.
(e) SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since January 1,
1996 (such documents, together with all exhibits and schedules thereto and
documents incorporated by reference therein, collectively referred to herein as
the "SEC Documents"). No subsidiary of the Company is required to file any
reports, schedules, forms, statements or other documents with the SEC. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the rules and regulations of
the SEC promulgated thereunder applicable to such SEC Documents, and none of
such SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and other adjustments
described therein).
(f) Information Supplied. (i) None of the information supplied
or to be supplied by the Company or its subsidiaries for inclusion or
incorporation by reference in the Offer Documents, the Schedule 14D-9 or the
Information Statement referred to in Section 5.9 will, at the time they are
filed with the SEC, at any time they are amended or supplemented, at the time of
any distribution or dissemination thereof and at the time of the consummation of
the Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and (ii) the Proxy Statement will not, at the date the
Proxy Statement is first mailed to the Company's stockholders, at the time of
the Company Stockholders Meeting and at the Effective Time of the Merger, and
each document required to be filed by the Company with the SEC or required to be
distributed or otherwise disseminated to the Company's stockholders in
connection with the transactions contemplated by this Agreement (the "Company
Disclosure Documents") will not, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement, as it relates to the Company
Stockholders Meeting, and the Company Disclosure Documents, when filed,
distributed or disseminated, as applicable, will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty contained in
this Section 3.1(f)(ii) is made by the Company with respect to statements made
or incorporated by reference in the Company Disclosure Documents based on
information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed
in the SEC Documents filed on or prior to the date hereof, since December 31,
1998, the Company has conducted its business only in the ordinary course
consistent with past practice, and there has not been (i) any material adverse
change with respect to the Company, (ii) any declaration, setting aside or
payment of any dividend (whether in cash, stock or property) with respect to any
of the Company's capital stock other than the regular quarterly dividends on
Shares in the amount of $.045 per Share (the "Company's regular dividend"),
(iii) (A) any granting by the Company or any of its subsidiaries to any officer,
director or employee of the Company or any of its subsidiaries of any increase
in compensation, bonus or other benefits, except in the ordinary course of
business consistent with prior practice or as was required under employment
agreements in effect as of December 31, 1998, (B) any granting by the Company or
any of its subsidiaries to any such officer, director or employee of, or any
increase in, severance or termination pay, except as was required under
employment, severance or termination agreements in effect as of December 31,
1998, or any amendment to any existing arrangement with such officer, director
or employee, (C) except in accordance with past practice as to officers,
directors or employees of the Company or any of its subsidiaries, any entry by
the Company or any of its subsidiaries into any employment, deferred
compensation, severance, termination or other similar agreement (or any
amendment to such existing agreement) with any such officer, director or
employee, or (D) any establishment, adoption or amendment (except as required by
applicable law) of any collective bargaining, bonus, profit-sharing, thrift,
pension, retirement, deferred compensation, compensation, stock option,
restricted stock or other benefit plan or arrangement covering any director,
officer or employee of the Company or any of its subsidiaries, (iv) any
damage, destruction or loss, whether or not covered by insurance, affecting the
business or assets of the Company or any of its subsidiaries that has or
reasonably could be expected to have a material adverse effect on the Company,
(v) any change in accounting methods, principles or practices or any change in
any method of tax accounting by the Company materially affecting the assets,
liabilities or business of the Company and its subsidiaries, taken as a whole,
except insofar as may have been required by a change in generally accepted
accounting principles, or (vi) any event which, if it had taken place following
the execution of this Agreement, would not have been permitted by Section 4.1.
(h) State Takeover Statutes; Absence of Supermajority
Provision. The Company has taken all action to assure that no state takeover
statute or similar statute or regulation, including, without limitation ss.203
of the DGCL, shall apply to the Offer or the Merger or any of the other
transactions contemplated hereby. Except for the approval of the Merger by the
holders of two-thirds of the outstanding Shares ("Company Stockholder
Approval"), no other stockholder action on the part of the Company is required
for approval of the Merger and the transactions contemplated hereby. The Company
has taken all action necessary to (i) render the rights issued pursuant to the
terms of the Company Rights Agreement inapplicable to the Offer, the Merger,
this Agreement and the transactions contemplated hereby and (ii) ensure that (A)
neither Parent, Sub nor any of their affiliates is an Acquiring Person (as
defined in the Company Rights Agreement) and (B) no Distribution Date (as
defined in the Company's Rights Agreement dated May 31, 1990, as amended and
supplemented to the date hereof (the "Company Rights Agreement")) shall occur by
reason of the approval or execution of this Agreement, the announcement or
consummation of the Offer or Merger or the consummation of any of the other
transactions contemplated hereby.
(i) Brokers. Except for Simmons, which has rendered the
opinion referred to in Section 1.2 and whose fees are to be paid by the Company,
no broker, investment banker or other person is entitled to receive from the
Company or any of its subsidiaries any investment banking, brokerage or finder's
fees in connection with this Agreement or the transactions contemplated hereby,
including any fee for any opinion rendered by any investment banker. The
engagement letter between the Company and Simmons provided to Parent on or prior
to the date of this Agreement constitutes the entire understanding of the
Company and Simmons with respect to the matters referred to therein, and has not
been amended or modified, nor will it be amended or modified prior to the
Effective Time of the Merger.
(j) Litigation. Except as disclosed in the SEC Documents filed
on or prior to the date hereof, there is no suit, action, proceeding or
investigation (or any basis therefor as to which the Company has knowledge)
pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or any of its subsidiaries (or any present or former
officer, director or employee of the Company or any of its subsidiaries or any
other person, in each case for whom the Company or any of such subsidiaries may
be liable) before any court or arbitrator or before or by any governmental body,
agency or official, domestic or foreign, as of the date hereof and after the
date hereof there will be no such suits, actions, proceedings or investigations
or any such bases that could reasonably be expected to have a material adverse
effect on the Company or prevent, hinder or materially delay the ability of the
Company to consummate the transactions contemplated by this Agreement; nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its subsidiaries having,
or which, insofar as reasonably can be foreseen, in the future could have, any
such effect.
(k) Employee Benefit Matters. As used in this Section 3.1(l),
the term "Employer" shall mean the Company as defined in the preamble of this
Agreement and any member of a controlled group or affiliated service group, as
defined in sections 414(b), (c), (m) and (o) of the Internal Revenue Code of
1986, as amended ("Code") of which the Company is a member.
(i) Except for the terminated Shafer Valve Company Pension
Plan and Trust, all liabilities (including administrative
responsibilities) with respect to which were retained by Shiloh
Industries, Inc., with respect to each employee welfare benefit plan,
employee pension benefit plan and employee benefit plan as defined in
sections 3(1), 3(2), and 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which have been or are
sponsored by, participated in, or contributed to by the Employer at any
time during the three-year period ending on the date of this Agreement,
or with respect to which the Employer may have any liability, and
except for any matter that would not individually or in the aggregate
have a material adverse effect on the Company, to the extent
applicable: (A) the plan is in substantial compliance with the Code and
ERISA, including all reporting and disclosure requirements of Part 1 of
Subtitle B of Title I of ERISA; (B) the appropriate Form 5500 has been
timely filed for each year of its existence; (C) there has been no
transaction described in section 406 or section 407 of ERISA or section
4975 of the Code unless exempt under section 408 of ERISA or section
4975 of the Code, as applicable; (D) the bonding requirements of
section 412 of ERISA have been satisfied; (E) there is no issue pending
nor any issue resolved adversely to the Employer which may subject the
Company to the payment of a penalty, interest, tax or other amount, (F)
the plan can be unilaterally terminated or amended on no more than 90
days notice; (G) all contributions or other amounts payable by the
Employer as of the Effective Time of the Merger with respect to the
plan have either been paid or accrued in the Employer's most recent
financial statements included in the SEC Documents and (H) no notice
has been received by the Employer of an increase or proposed increase
in the cost of any such plan or any other employee benefit agreement or
arrangement, including deferred compensation plans, incentive plans,
bonus plans or arrangements, stock option plans, stock purchase plans,
golden parachute agreements, severance pay plans or agreements,
dependent care plans, cafeteria plans, employee assistance programs,
scholarship programs, employment contracts and other similar plans,
agreements and arrangements that are currently in effect or were
maintained within three years of the date hereof, or have been approved
before this date but are not yet effective, for the benefit of
directors, officers or employees, or former directors, officers or
employees (or their beneficiaries) of the Employer (each, a "Company
Benefit Plan"). There are no pending or, to the Company's knowledge,
threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any Company Benefit Plan or
their related trusts. A complete list of all material Company Benefit
Plans that are currently in existence, or with respect to which the
Company or any of its subsidiaries may have any liability (other than
Foreign Plans, as defined below) is set forth in Schedule I. Copies of
all Company Benefit Plans have been furnished or made available to
Parent.
(ii) Except for the terminated Shafer Valve Company Pension
Plan and Trust, all liabilities (including administrative
responsibilities) with respect to which were retained by Shiloh
Industries, Inc., neither the Company nor any entity (whether or not
incorporated) that was at any time during the six years before the date
of this Agreement treated as a single employer together with the
Company under section 414 of the Code has ever maintained, had any
obligation to contribute to or incurred any liability with respect to a
pension plan that is or was subject to the provisions of Title IV of
ERISA or section 412 of the Code. Neither the Company nor any entity
(whether or not incorporated) that was at any time during the six years
before the date of this Agreement treated as a single employer together
with the Company under section 414 of the Code has ever maintained, had
an obligation to contribute to, or incurred any liability with respect
to a multiemployer pension plan as defined in section 3(37) of ERISA.
During the last six years, the Company has not maintained, had an
obligation to contribute to or incurred any liability with respect to a
voluntary employees beneficiary association that is or was intended to
satisfy the requirements of section 501(c)(9) of the Code. No plan,
arrangement or agreement with any one or more employees will cause the
Employer to have liability for severance pay as a result of the Merger,
except as otherwise set forth in the Change-in-Control Agreements and
Severance Agreements between the Company and each of the persons named
on Schedule II hereto (the "Severance Agreements"). The Employer does
not provide employee benefits, including without limitation, death,
post-retirement medical or health coverage (whether or not insured) or
contribute to or maintain any employee benefit plan which provides for
benefit coverage following termination of employment except (A) as is
required by section 4980B(f) of the Code or other applicable statute,
(B) death benefits or retirement benefits under any employee pension
benefit plan as defined in section 3(2) of ERISA, (C) benefits the full
cost of which is borne by the current or former employee (or his
beneficiary), nor has it made any representations, agreements,
covenants or commitments to provide that coverage, or (D) deferred
compensation benefits which have been accrued as liabilities on the
books of the Employer and disclosed on its financial statements
included in the SEC Documents. All group health plans maintained by the
Employer have been operated in material compliance with section
4980B(f) of the Code.
(iii) All Company Benefit Plans that are intended to qualify
under section 401(a) of the Code have been submitted to and approved as
qualifying under section 401(a) of the Code by the Internal Revenue
Service ("IRS") or the applicable remedial amendment period will not
have ended prior to the Effective Time of the Merger. Except for the
terminated Shafer Valve Company Pension Plan and Trust, all
liabilities (including administrative responsibilities) with respect to
which were retained by Shiloh Industries, Inc., the Company knows of no
fact or circumstance giving rise to a material likelihood that any such
Company Benefit Plan would not be treated as qualified by the IRS.
(iv) Except as expressly provided in this Agreement or the
Severance Agreements and except pursuant to certain options described
in section 3.1(c), the transactions contemplated by this Agreement will
not accelerate the time of payment or vesting, or increase the amount,
of compensation due any director, officer or employee or former
director, officer or employee (including any beneficiary) from the
Company.
(v) Schedule I separately identifies each material Company
Benefit Plan that is primarily intended to benefit individuals whose
principal place of employment is located outside the United States
(each, a "Foreign Plan"). With respect to each Foreign Plan, the
Company has either made available to Parent a copy of the Foreign Plan
or there are no material liabilities associated with the Foreign Plan
that are not disclosed on the SEC Documents. Each Foreign Plan has been
maintained in substantial compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders,
rules and regulations (including any special provisions that the Plan
was intended to so satisfy) and has been maintained in good standing
with applicable regulatory authorities.
(l) Taxes. Each of the Company and each of its subsidiaries,
and any consolidated, combined, unitary or aggregate group for Tax (as defined
below) purposes of which the Company or any of its subsidiaries is or has been a
member, has timely filed all Tax Returns (as defined below) required to be filed
by it on or before the Effective Time of the Merger and has timely paid or
deposited (or the Company has paid or deposited on its behalf) all Taxes which
are required to be paid or deposited on or before the Effective Time of the
Merger. Each of the Tax Returns filed by the Company or any of its subsidiaries
is accurate and complete in all material respects. The most recent consolidated
financial statements of the Company contained in the filed SEC Documents reflect
an adequate reserve for all Taxes payable by the Company and its subsidiaries
for all taxable periods and portions thereof through the date of such financial
statements. The books and records of the Company and its subsidiaries reflect
adequate reserves for Taxes. No deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries. No
unexpired requests for waivers of the time to assess any Taxes have been granted
or are pending and there are no tax liens upon any assets of the Company or any
of its subsidiaries other than liens for Taxes which are not yet delinquent. The
Federal income Tax Returns of the Company and its subsidiaries consolidated in
such Tax Returns have been examined by and settled with the IRS through the year
ended September 30, 1990. There are no current examinations of any Tax Return of
the Company or any of its subsidiaries being conducted. There are no settlements
of any prior examinations that could reasonably be expected to adversely affect
any taxable period for which the statute of limitations has not run or have not
been paid in full. Since January 1, 1995, neither the Company nor any of its
subsidiaries has been a member of an affiliated, consolidated, combined or
unitary group other than one of which the Company was the common parent. Neither
the Company nor any of its subsidiaries has any obligation under any Tax sharing
agreement, Tax allocation agreement, Tax indemnification agreement or any other
agreement or arrangement pursuant to which the Company or any subsidiary is or
might be required to make any payment in respect of any Tax of any person
(other than the Company or any of its subsidiaries). Neither the Company nor any
of its subsidiaries has entered into any agreement or arrangement with any
governmental authority with regard to liabilities for Taxes other than
settlements or compromises with respect to asserted Tax liabilities for prior
taxable years. There are no requests for rulings or determinations in respect
of any tax or tax asset pending between the Company or any subsidiary and any
taxing authority. Neither the Company nor any subsidiary will be required to
include any adjustment in taxable income for any post-closing tax period under
Section 481(c) of the Code (or any similar provision of the tax laws of any
jurisdiction) as a result of a change in method of accounting for a pre-closing
tax period or pursuant to the provisions of any agreement entered into with any
taxing authority with regard to the Tax liability of the Company or any
subsidiary for any pre-closing tax period that has continuing effect. Other
than the acquisition of Bettis Corporation, since January 1, 1995, neither the
Company nor any of its subsidiaries is a party to a transaction intended to be
treated as a reorganization under Section 368 or a distribution under Section
355 of the Code. As used herein, "Tax" or "Taxes" shall mean all taxes of any
kind, including, without limitation, those on or measured by or referred to as
income, gross receipts, unemployment, sales, use, ad valorem, franchise,
capital, earned surplus, profits, license, withholding, payroll, employment,
estimated, excise, severance, stamp, occupation, premium, value added, property
or windfall profits taxes, customs, duties or similar fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any Governmental Entity,
domestic or foreign. As used herein, "Tax Return" shall mean any return, report,
statement or information required to be filed with any governmental authority
with respect to Taxes.
(m) No Excess Parachute Payments. Except with respect to
remuneration that could be received by Ronald C. Lassiter under his deferred
compensation arrangement relating to Shares granted under the Company's Stock
Award Plan, and his change in control agreement, and in connection with the
acceleration of any unvested options, any amount that could be received (whether
in cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer or director
of the Company or any of its affiliates who is a "disqualified individual" (as
such term is defined in proposed Treasury Regulation section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or Company Benefit Plan currently in effect would not be characterized as an
"excess parachute payment" (as such term is defined in section 280G(b)(1) of the
Code).
(n) Environmental Matters. Except as would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole, (i) the
business operations of the Company and its subsidiaries have been and are being
conducted in compliance with all limitations, restrictions, standards and
requirements established under Environmental Laws, (ii) no facts or
circumstances exist that impose or could reasonably be expected to impose on the
Company or any of its subsidiaries an obligation under Environmental Laws to
conduct any removal, remediation, or similar response action, or to pay any
fines, penalties or other expenses, (iii) there is no obligation, undertaking
or liability arising out of or relating to Environmental Laws that the Company
or any of its subsidiaries has agreed to, assumed or retained, by contract or
otherwise, or that has been or could reasonably be expected to be imposed on the
Company or any of its subsidiaries by any Environmental Law, writ, injunction,
decree, order or judgment, and (iv) there are no lawsuits, claims or proceedings
and no notice, notification, demand, request for information, citations,
summons, complaint or order has been received by, or, to the knowledge of the
Company or any of its subsidiaries, is threatened or pending against the Company
or any of its subsidiaries that arise out of or relate to Environmental Laws.
There has been no environmental investigation, study, audit, test, review or
other analysis conducted by or on behalf of or in the possession of the Company
or any of its subsidiaries that discusses, reveals, or discloses any material
liabilities (whether accrued, absolute, contingent or otherwise) in relation to
the current or prior business of the Company or any of its subsidiaries or any
property or facility now or previously owned, leased or operated by the Company
or any of its subsidiaries which has not been delivered to Parent at least five
days prior to the date hereof. Neither the Company nor any of its subsidiaries
owns or leases or, to the Company's knowledge, has owned or leased any real
property in New Jersey or Connecticut.
For purposes of this section 3.1(n), "Environmental Laws" means any applicable
federal, state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, licenses, agreements or governmental restrictions relating
to human health, the environment or to the use, manufacture, treatment, storage,
transport, clean-up or other remediation of pollutants, contaminants or other
hazardous substances or wastes or to the emissions, discharges or releases of
pollutants, contaminants or other hazardous substances or wastes into the
environment.
(o) Compliance with Laws. The Company and its subsidiaries
hold all required, necessary or applicable permits, licenses, variances,
exemptions, orders, franchises and approvals of all Governmental Entities,
except where the failure to so hold would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole (the "Company Permits"). The
Company and its subsidiaries are in compliance with the terms of the Company
Permits except where the failure to so comply would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole. Neither the
Company nor any of its subsidiaries has violated or failed to comply with any
statute, law, ordinance, regulation, rule, permit or order of any Federal, state
or local government, domestic or foreign, or any Governmental Entity, any
arbitration award or any judgment, decree or order of any court or other
Governmental Entity, applicable to the Company or any of its subsidiaries or
their respective business, assets or operations, except for violations and
failures to comply that could not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(p) Material Contracts and Agreements. All material contracts
of the Company or its subsidiaries have been included in the SEC Documents filed
on or prior to the date hereof, except for those contracts not required to be
filed pursuant to the rules and regulations of the SEC. Neither the Company nor
any subsidiary is a party to any joint venture agreement or agreement to form
any joint venture nor does the Company or any of its subsidiaries have any
liability if it fails to pursue any contemplated joint ventures.
(q) Title to Properties.
(i) Each of the Company and each of its subsidiaries has good
and defensible title to, or valid leasehold interests in, all its
material assets and properties purported to be owned by it in the SEC
Documents, except for such as are no longer used or useful in the
conduct of its businesses or as have been disposed of in the ordinary
course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances or impediments that, in
the aggregate, do not and will not materially interfere with its
ability to conduct its business as currently conducted or as reasonably
expected to be conducted. All such assets and properties, other than
assets and properties in which the Company or any of the subsidiaries
has leasehold interests, are free and clear of all Liens, other than
those set forth in the SEC Documents filed on or prior to the date
hereof, and except for Liens, that, in the aggregate, do not and will
not materially interfere with the ability of the Company or any of its
subsidiaries to conduct business as currently conducted or as
reasonably expected to be conducted.
(ii) Except as would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, each of the Company and
each of its subsidiaries has complied in all material respects with the
terms of all leases to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect. Each of
the Company and each of its subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
(r) Intellectual Property. The Company and its subsidiaries
own, or are licensed or otherwise have the right to use, all Intellectual
Property that is material to the condition (financial or otherwise) or conduct
of the business and operations of the Company and its subsidiaries taken as a
whole. The Company and its subsidiaries have not infringed or misappropriated
and do not infringe or misappropriate any item of Intellectual Property of any
person, except for infringement or misappropriation that could not, in the
aggregate, have a material adverse effect with respect to the Company and its
subsidiaries, taken as a whole. No person has infringed or misappropriated, or
is infringing or misappropriating, any item of Intellectual Property that is
owned by or licensed to the Company or its subsidiaries, except for infringement
or misappropriation that could not have a material adverse effect with respect
to the Company and its subsidiaries taken as a whole. There are no pending or,
to the knowledge of the Company, threatened claims relating to infringement,
misappropriation, unenforceability, invalidity, misuse, ownership, right to use,
or other violation asserted by or against the Company or its subsidiaries
relating to any item of Intellectual Property. For purposes of this Section
3.1(r), "Intellectual Property" means domestic and foreign patents, trademarks,
service marks, trade names, copyrights, trade secrets, know-how, utility models,
mask works, rights in inventions, discoveries, processes, formulae, and
registrations and applications for any of the foregoing, and any other
intellectual property and proprietary information, including rights in software,
firmware, computer programs and data.
(s) Labor Matters. There are no collective bargaining
agreements or other labor union agreements or understandings to which the
Company or any of its subsidiaries is a party or by which any of them is bound,
nor is it or any of its subsidiaries the subject of any proceeding asserting
that it or any subsidiary has committed an unfair labor practice or seeking to
compel it to bargain with any labor organization as to wages or conditions. To
the Company's knowledge, since December 31, 1997, neither the Company nor any of
its subsidiaries has encountered any labor union organizing activity, or had any
actual or threatened employee strikes, work stoppages, slowdowns or lockouts.
(t) Undisclosed Liabilities. Except as set forth in the SEC
Documents filed on or prior to the date hereof, at the date of the most recent
audited financial statements of the Company included in such SEC Documents,
neither the Company nor any of its subsidiaries had, and since such date neither
the Company nor any of such subsidiaries has incurred, any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise
other than those attributable to purchase orders issued, accounts payable
incurred or contracts entered into with customers in each case in the ordinary
course of the Company's business consistent with past practices), and there is
no existing condition, situation or set of circumstances that could reasonably
be expected to result in such a liability or obligation, which liabilities or
obligations in all such cases, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(u) Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by vote of those directors
present (i) determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger and the transactions contemplated
thereby, are fair to and in the best interests of the stockholders of the
Company, and (ii) resolved to recommend to the holders of the Shares that they
tender their Shares pursuant to the Offer and/or approve the Merger and the
transactions contemplated thereby.
SECTION 3.2. Representations and Warranties of Parent and
Sub. Parent and Sub represent and warrant to, and agree with, the Company
as follows:
(a) Organization; Standing and Power. Parent and Sub are
corporations duly organized, validly existing and in good standing under laws of
their states of incorporation and have the requisite corporate power and
governmental licenses, authorizations, permits, consents and approvals (except
where the failure to have such licenses, authorizations, permits, consents and
approvals, individually or in the aggregate, would not have a material adverse
effect on Parent and its subsidiaries taken as a whole) to carry on their
business as now being conducted. Parent and Sub are duly qualified to do
business and in good standing in each jurisdiction in which the nature of their
business or the ownership or leasing of their properties makes such
qualification necessary, other than in such jurisdictions where the failure to
be so qualified to do business (individually or in the aggregate) would not have
a material adverse effect on Parent and its subsidiaries, taken as a whole.
(b) Authority; Non-contravention. Parent and Sub have the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and Sub and the consummation by Parent
and Sub of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This Agreement has
been duly executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub, enforceable against Parent and Sub in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
judicial decisions now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and injunctive relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. The execution, delivery and performance
of this Agreement by Parent and Sub do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of or "put" right with respect to any obligation or
to loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Parent or Sub or any of their subsidiaries under, any provision of (i) the
Certificate of Incorporation or By-laws of Sub or of Parent or any comparable
organizational documents of their subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent or Sub
or any of their subsidiaries or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation or arbitration account applicable to Parent or Sub or any of their
subsidiaries or their respective properties or assets, other than, in the case
of clause (ii), any such conflicts, violations or defaults that individually or
in the aggregate would not be reasonably expected to have, individually or in
the aggregate, a material adverse effect on Parent or materially impair the
ability of Parent and Sub to perform their respective obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Parent or
Sub or any of their subsidiaries in connection with the execution, delivery and
performance of this Agreement by Parent and Sub or the consummation by Parent
and Sub of the transactions contemplated hereby, except for (i) the filing by
Parent of a premerger notification and report form under the HSR Act and any
filings or approvals required under applicable foreign antitrust laws and
regulations, (ii) the filing with the SEC of the Offer Documents and such
reports under Sections 13 and 16 of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby and
(iii) filings in Delaware by Sub in connection with the Merger.
(c) Information Supplied. None of the information supplied or
to be supplied by Parent in writing for inclusion or incorporation by reference
in (i) the Offer Documents, the Schedule 14D-9, the Information Statement
referred to in Section 5.9, or the Proxy Statement will, in the case of the
Offer Documents and the Schedule 14D-9 and the Information Statement at the
respective times they are filed with the SEC or first published, sent or given
to the Company's stockholders, and at any time they are amended or supplemented,
or in the case of the Proxy Statement at the date the Proxy Statement is first
mailed to the Company's stockholders and at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
(d) Brokers. No broker, investment banker or other person, is
entitled to any broker's, finder's or other similar fee or commission from the
Company or any of its subsidiaries in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub, including any fee for any opinion rendered by any investment
banker, and the Company shall have no liability for any fees to any such broker,
investment banker or other person.
(e) Litigation. There is no suit, action, proceeding or
investigation pending or, to the knowledge of Parent, threatened against or
affecting Parent or any of its subsidiaries that could reasonably be expected to
prevent, hinder or materially delay the ability of Parent to consummate the
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Parent or any of its subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future could have, any such effect.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business of the Company.
(a) Ordinary Course. During the period from the date of this
Agreement to the Effective Time of the Merger (except as otherwise specifically
contemplated by the terms of this Agreement or as described in the Company
Disclosure Document), the Company shall and shall cause its subsidiaries to
carry on their respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them, in each case consistent with past practice, to the end that
their goodwill and ongoing businesses shall be unimpaired to the fullest extent
possible at the Effective Time of the Merger. Without limiting the generality
of the foregoing, and except as otherwise expressly contemplated by this
Agreement, the Company shall not, and shall not permit any of its subsidiaries
to:
(i) (A) declare, set aside or pay any dividends (other than
the Company's regular quarterly dividends payable to stockholders on or
after August 14, 1999, and quarterly thereafter) on, or make any other
distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly owned
subsidiary of the Company to the Company or a wholly owned subsidiary
of the Company, (B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any
such shares or other securities; provided, however, with respect to
clause (A) above after the consummation of the Offer the Company will
make no further dividends or distributions;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than, in the case of the Company, the issuance of Shares upon
the exercise of options outstanding on the date of this Agreement (as
identified and described in Section 3.1(c)(iv) and (v)) in accordance
with their current terms), purchase, redeem or otherwise acquire or
agree to acquire any shares of capital stock or other securities of the
Company or any of its subsidiaries;
(iii) amend any material term of any of its outstanding
securities;
(iv) amend its Certificate of Incorporation, By-laws or other
comparable charter or organizational document;
(v) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the stock
or assets of, or by any other manner, any business or any corporation,
partnership, association, joint venture, limited liability company or
other entity or division thereof or (B) any assets that would be
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, except purchases of supplies and
inventory in the ordinary course of business consistent with past
practice;
(vi) form any joint venture with any other person under
circumstances wherein the Company and its subsidiaries would have any
liability or obligation for a contribution to be evidenced by debt or
equity of such venture in excess of $100,000;
(vii) sell, lease, mortgage, pledge, grant a Lien on or
otherwise encumber or dispose of any of its properties or assets,
except (A) sales of inventory in the ordinary course of business
consistent with past practice and (B) other transactions involving not
in excess of $1,000,000 in the aggregate;
(viii) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except for working capital borrowings under currently
existing revolving credit facilities incurred in the ordinary course of
business and except for indebtedness incurred to refund, refinance or
replace indebtedness for borrowed money outstanding on the date hereof,
or (B) make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any
direct or indirect wholly owned subsidiary of the Company;
(ix) make or incur any new capital expenditure not included in
the Company's approved capital expenditure budget for 1999, which,
singly or in the aggregate with all other expenditures, would exceed
$1,000,000;
(x) make or change any Tax election not required by law, other
than consistent with past practice, make any change in any method of
Tax accounting, except as described in the Company Disclosure Document,
enter into any settlement or compromise with respect to any Tax
liability, or make any material change in reserves for Tax items other
than any change in such reserves relating to the ordinary course
operation of the respective businesses of the Company and its
subsidiaries during current taxable periods;
(xi) pay, discharge or satisfy any claims, liabilities or
obligations (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 or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the SEC
Documents or incurred in the ordinary course of business consistent
with past practice;
(xii) waive the benefits of, or agree to modify in any manner,
any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party;
(xiii) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization;
(xiv) enter into any new collective bargaining agreement;
(xv) change any material accounting principle used by it,
except as required by regulations promulgated by the SEC or the
Financial Accounting Standards Board;
(xvi) settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement) other than settlements
or compromises: (A) of litigation where the amount paid in settlement
or compromise does not exceed $250,000, or (B) in consultation and
cooperation with Parent, and, with respect to any such settlement, with
the prior written consent of Parent;
(xvii) make any transaction or commitment, or enter into any
contract or agreement relating to its assets or business (including the
acquisition or disposition of any assets) or relinquish any contract or
other right, in either case, material to the Company and its
subsidiaries, taken as a whole, other than transactions and commitments
made or entered into in the ordinary course of business consistent with
past practices and those contemplated by this Agreement; or
(xviii) authorize any of, or commit or agree to take any of,
the foregoing actions.
(b) Changes in Employment Arrangements. Neither the Company
nor any of its subsidiaries shall adopt or amend (except as may be required by
law) any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund or other arrangement (including any Company Benefit Plan) for the
benefit of any employee, director or former director or employee, increase the
compensation or fringe benefits of any officer of the Company or any of its
subsidiaries, or, except as provided in an existing Company Benefit Plan or in
the ordinary course of business consistent with past practice, increase the
compensation or fringe benefits of any employee or former employee or pay any
benefit not required by any existing plan, arrangement or agreement.
(c) Severance. Neither the Company nor any of its subsidiaries
shall grant any new or modified severance or termination arrangement or increase
or, except as required under the existing terms of a Company Benefit Plan,
accelerate any benefits payable under its severance or termination pay policies
in effect on the date hereof.
(d) Other Actions. The Company shall not, and shall not permit
any of its subsidiaries to, take any action that would, or that could reasonably
be expected to, result in any of the representations and warranties of the
Company set forth in this Agreement becoming untrue.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Stockholder Approval; Preparation of Proxy
Statement. (a) The Company will, as soon as practicable following the
consummation of the Offer, duly call, give notice of, convene and hold a meeting
of its stockholders for the purpose of approving and adopting this Agreement and
the Merger and approving related matters, unless the DGCL does not require a
vote of stockholders of the Company for the consummation of the Merger. The
Company will, through its Board of Directors, recommend to its stockholders
approval and adoption of this Agreement and the Merger, except to the extent
that the Board of Directors of the Company shall have withdrawn its approval or
recommendation of this Agreement or the Merger as permitted by Section 8.2.
(b) If required by applicable law, the Company will, as soon
as practicable following the consummation of the Offer, prepare and file a
preliminary Proxy Statement with the SEC and will use its best efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
and all other proxy materials to be mailed to the Company's stockholders. The
Company will notify Parent promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will supply
Parent with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger. If at any time prior to the
approval of this Agreement and the Merger by the Company's stockholders there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company will promptly prepare and mail to its
stockholders such an amendment or supplement. The Company will not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects.
(c) Parent agrees to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Sub or any other subsidiary of Parent to
be voted in favor of the approval and adoption of this Agreement.
SECTION 5.2. Access to Information.
(a) During the period from the date hereof to the Effective
Time of the Merger, except to the extent otherwise required by applicable law,
(i) the Company shall, and shall cause each of its
subsidiaries, officers, employees, counsel, financial advisors and
other representatives to, afford to Parent, and to Parent's
accountants, counsel, financial advisors and other representatives,
reasonable access to the Company's and its subsidiaries' respective
offices, officers, employees, properties, books, Tax Returns and
related documents and work papers, contracts, commitments and records
and, during such period, the Company shall, and shall cause
each of its subsidiaries, officers, employees, counsel, financial
advisors and other representatives to, furnish promptly to Parent:
(A) a copy of each report, schedule, registration
statement and other document filed by the Company during such
period pursuant to the requirements of Federal or state
securities laws and
(B) all other information concerning its business,
properties, financial condition, operations and personnel as
Parent may from time to time reasonably request so as to
afford Parent a reasonable opportunity to make such review,
examination and investigation of the Company and its
subsidiaries as Parent may reasonably desire to make. The
Company agrees to advise Parent of all material developments
with respect to the Company, its subsidiaries and their
respective assets and liabilities.
(ii) the Company agrees to request PricewaterhouseCoopers to
permit KPMG Peat Marwick to review and examine the work papers of
PricewaterhouseCoopers with respect to the Company and its
subsidiaries, and the officers of the Company will furnish to Parent
such financial and operating data and other information with respect to
the business and properties of the Company and its subsidiaries as
Parent shall from time to time reasonably request,
(iii) the Company shall instruct the officers, employees,
counsel, financial advisors and other representatives of the Company
and its subsidiaries to cooperate with Parent in its investigation of
the Company and its subsidiaries. Any investigation pursuant to this
Section shall be conducted in such a manner as not to interfere
unreasonably with the conduct of the business of the Company and its
subsidiaries,
(iv) the Company shall promptly notify Parent of any notices
from or investigations by Governmental Entities that could, to the
knowledge of the Company, affect the Company's business or assets or
the consummation of the Merger. Parent will promptly notify the Company
of any notices from or investigations by Governmental Entities that
could materially affect Parent's consummation of the Merger; and
(v) the Company shall promptly notify Parent of any notice or
other communication from any person alleging that the consent of such
person is or may be required in connection with the transactions
contemplated by this Agreement.
(b) Except as required by law and without limiting in any way
the continued efficacy of the Confidentiality and Standstill Agreement referred
to in Section 8.1, prior to the Effective Time of the Merger and after any
termination of this Agreement, each of the Company and Parent shall, and shall
cause its respective directors, officers, employees, accountants, counsel,
financial advisors and representatives and affiliates to, (i) hold in
confidence, unless compelled to disclose by judicial or administrative process,
or, in the opinion of its counsel, by other requirements of law, all nonpublic
information concerning the other party furnished in connection with the
transactions contemplated by this Agreement except to the extent that such
information can be shown to have been previously known on a nonconfidential
basis by Parent or later lawfully acquired by Parent from sources other than
the Company, or until such time as such information becomes publicly available
(otherwise than through the wrongful act of such person), (ii) not release or
disclose such information to any other person, except in connection with this
Agreement to its auditors, attorneys, financial advisors, other consultants and
advisors, and (iii) not use such information for any competitive or other
purpose other than with respect to its consideration and evaluation of the
transactions contemplated by this Agreement. Any investigation by any party of
the assets and business of the other party and its subsidiaries shall not affect
any representations and warranties hereunder or either party's right to
terminate this Agreement as provided in Article VII.
(c) In the event of the termination of this Agreement, each
party promptly will deliver to the other party (and destroy all electronic data
reflecting the same) all documents, work papers and other material (and any
reproductions or extracts thereof and any notes or summaries thereto) obtained
by such party or on its behalf from such other party or its subsidiaries as a
result of this Agreement or in connection therewith so obtained before or after
the execution hereof.
SECTION 5.3. Reasonable Efforts; Notification. (a) Upon the
terms and subject to the conditions set forth in this Agreement, except to the
extent otherwise required by applicable law and otherwise provided in this
Section 5.3, each of the parties agrees to use reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger, and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, and (iii) the execution and delivery of any
additional instruments (including any required supplemental indentures)
necessary to consummate the transactions contemplated by this Agreement. In
connection with and without limiting the foregoing, each of the Company and
Parent shall (i) take all action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to the Merger,
the Offer, this Agreement and the other transactions contemplated by this
Agreement, (ii) if any state takeover statute or similar statute or regulation
becomes applicable to the Merger, the Offer, this Agreement and the other
transactions contemplated by this Agreement, take all action necessary to ensure
that the Merger, the Offer and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger, the Offer, this Agreement and the other
transactions contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent, and Parent
or Sub shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate in
any respect or (ii) the failure by it to comply with or satisfy in any respect
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement; provided, however, that no such notification shall affect
the representations or warranties or covenants or agreements of the parties or
the conditions to the obligations of the parties hereunder.
(c) (i) Each of the parties hereto shall file a premerger
notification and report form under the HSR Act (and any other
applicable foreign antitrust law or regulation) with respect to the
Merger as promptly as reasonably possible following execution and
delivery of this Agreement. Each of the parties agrees to use
reasonable efforts to promptly respond to any request for additional
information that may be received from any Governmental Entity in
connection with the HSR filing or any filings under applicable foreign
antitrust laws and regulations.
(ii) The Company will furnish to Parent and Sub copies of all
correspondence, filings or communications (or memoranda setting forth
the substance thereof (collectively, "Company HSR Documents")) between
the Company, or any of its respective representatives, on the one hand,
and any Governmental Entity, or members of the staff of such agency or
authority, on the other hand, with respect to this Agreement or the
Merger; provided, however, that (x) with respect to documents and other
materials filed by or on behalf of the Company with the Antitrust
Division of the Department of Justice, the Federal Trade Commission, or
any state attorneys general that are available for review by Parent and
Sub, copies will not be required to be provided to Parent and Sub and
(y) with respect to any Company HSR Documents (1) that contain any
information which, in the reasonable judgment of Fulbright & Jaworski
L.L.P., should not be furnished to Parent or Sub because of antitrust
considerations or (2) relating to a request for additional information
pursuant to Section (e)(1) of the HSR Act, the obligation of the
Company to furnish any such Company HSR Documents to Parent and Sub
shall be satisfied by the delivery of such Company HSR Documents on a
confidential basis to Davis Polk & Wardwell pursuant to a
confidentiality agreement in form and substance reasonably satisfactory
to Parent. Except as otherwise required by United States regulatory
considerations, Parent and Sub will furnish to the Company copies of
all correspondence, filings or communications (or memoranda setting
forth the substance thereof (collectively, "Parent HSR Documents"))
between Parent, Sub or any of their respective representatives, on the
one hand, and any Governmental Entity, or member of the staff of such
agency or authority, on the other hand, with respect to this Agreement
or the Merger; provided, however, that (x) with respect to documents
and other materials filed by or on behalf of Parent or Sub with the
Antitrust Division of the Department of Justice, the Federal Trade
Commission, or any state attorneys general that are available for
review by the Company, copies will not be required to be provided to
the Company, and (y) with respect to any Parent HSR Documents (1) that
contain information which, in the reasonable judgment of Davis Polk &
Wardwell, should not be furnished to the Company because of antitrust
considerations or (2) relating to a request for additional information
pursuant to Section (e)(1) of the HSR Act, the obligation of Parent
and Sub to furnish any such Parent HSR Documents to the Company shall
be satisfied by the delivery of such Parent HSR Documents on a
confidential basis to Fulbright & Jaworski L.L.P. pursuant to a
confidentiality agreement in form and substance reasonably satisfactory
to the Company.
(iii) Notwithstanding the foregoing, nothing contained in this
Agreement shall be construed so as to require Parent, Sub or the
Company, or any of their respective subsidiaries or affiliates, to
sell, license, dispose of, or hold separate, or to operate in any
specified manner, any assets or businesses of Parent, Sub, the Company
or the Surviving Corporation or to defend any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby,
or to seek and to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed (or to
require Parent, Sub, the Company or any of their respective
subsidiaries or affiliates to agree to any of the foregoing). The
obligations of each party under Section 5.3(a) to use reasonable
efforts with respect to antitrust matters shall be limited to
compliance with the reporting provisions of the HSR Act and with its
obligations under this Section 5.3(c).
SECTION 5.4. Employee Benefit Matters.
(a) Replacement Plans. Parent may cause any Company Benefit
Plan to be terminated or discontinued at or after the Effective Time of the
Merger, provided that, to the extent Parent or its affiliates maintain a Parent
Benefit Plan of the same type for employees of Parent or any of its affiliates,
Parent shall use its best efforts to permit the Company Employees participating
in such Company Benefit Plan (other than any stock option or other stock based
incentive plan) to immediately thereafter participate in a Parent Benefit Plan
of the same type maintained by Parent or any of its affiliates for their
employees generally (a "Replacement Plan"); provided, however, that if the
Company Benefit Plan that is so terminated or discontinued is a group health
plan, then Parent shall permit each Company Employee participating in such group
health plan and his or her eligible dependents to be covered under a Replacement
Plan under the terms and conditions of the Replacement Plan as modified to the
extent necessary to (i) provide medical and dental benefits to each such Company
Employee and such eligible dependents effective immediately upon the cessation
of coverage of such individuals under such group health plan, (ii) credit to
such Company Employee, for the year during which such coverage under such
Replacement Plan begins, with any deductibles and copayments already incurred
during such year under such group health plan, and (iii) waive any preexisting
condition restrictions to the extent that the preexisting condition restrictions
were satisfied under such group health plan. Parent, the Surviving Corporation,
their affiliates, and the Parent Benefit Plans (including, without limitation,
the Replacement Plans) shall recognize each Company Employee's years of service
and level of seniority with the Company and its subsidiaries for purposes of
terms of employment, eligibility and vesting under the Parent Benefit Plans.
Nothing in this Agreement shall be construed to require Parent to provide any
particular type or amount of benefits for any person under any Parent Benefit
Plan.
(b) Stock Options and Stock Awards. (1) At or immediately
prior to the Effective Time of the Merger, each outstanding stock option to
purchase Shares and award of Shares granted under any stock option or
compensation plan or arrangement of the Company, whether or not vested or
exercisable, shall be canceled, and promptly after the Effective Time of the
Merger the Company shall pay (i) each holder of any such option for each such
option an amount in cash (net of applicable withholding taxes) determined by
multiplying the excess, if any, of $21.25 per Share over the applicable exercise
price of such Share under such option by the number of Shares subject to such
option (whether or not vested or exercisable), and (ii) each holder of any such
award of Shares an amount in cash (net of applicable withholding taxes)
determined by multiplying $21.25 times the number of Shares subject to such
award (whether or not vested). Notwithstanding the foregoing, the amount of any
payment pursuant to this Section 5.4(b) shall be subject to any relevant limit
or cap under any employment or change in control agreement between the Company
and the applicable individual.
(2) Prior to the Effective Time of the Merger,
the Company shall (i) use its best efforts to obtain any consents from holders
of options to purchase Shares and awards of Shares granted under the Company's
employee stock option or compensation plans or arrangements and (ii) make any
amendments to the terms of such stock option or compensation plans or
arrangements that, in the case of either clauses (i) or (ii), are necessary to
give effect to the transactions contemplated by Section 5.4(b)(1).
Notwithstanding any other provision of this Section 5.4(b), payment may be
withheld in respect of an employee stock option or award of Shares until such
necessary consents are obtained with respect to such option or award of Shares.
(3) The parties hereto expressly acknowledge
and agree that for purposes of the change of control agreements listed on
Schedule II, such payment of consideration upon the cancellation of a stock
option pursuant to this Section 5.4(b) shall be treated as attributable to the
exercise of such stock options.
SECTION 5.5. Indemnification. (a) The Company shall, and from and after
the Effective Time of the Merger, Parent and the Surviving Corporation shall,
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time of the
Merger, an officer or director of the Company or any of its subsidiaries or an
employee of the Company or any of its subsidiaries who acts as a fiduciary under
any Company Benefit Plans (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including attorneys' fees), liabilities or
judgments or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld) of or in
connection with any threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer or such employee of the
Company or any subsidiary whether pertaining to any matter existing or occurring
at or prior to the Effective Time of the Merger and whether asserted or claimed
prior to, or at or after, the Effective Time of the Merger (including arising
out of or relating to the Merger, the consummation of the transactions
contemplated herein, and any action taken in connection therewith)
("Indemnified Liabilities"). Any Indemnified Party wishing to claim
indemnification under this Section 5.5, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify the Company (or after the
Effective Time of the Merger, Parent and the Surviving Corporation), but the
failure so to notify shall not relieve a party from any liability that it may
have under this Section 5.5, except to the extent such failure materially
prejudices such party. The Indemnified Parties as a group may retain only one
law firm to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict between the
positions of any two or more Indemnified Parties.
(b) Parent shall purchase and maintain in effect, or the Company shall
be permitted to purchase and maintain in effect, for the benefit of the
Indemnified Parties for a period of six years after the Effective Time,
directors' and officers' liability insurance of at least the same coverage and
amounts containing terms and conditions that are no less advantageous in any
material respect to the Indemnified Parties than that maintained by the Company
and its Subsidiaries as of the date of this Merger Agreement with respect to
matters arising before the Effective Time, provided that Parent shall not be
required to pay an annual premium of such insurance in excess of two times the
last annual premium paid by the Company prior to the date hereof, but in such
case shall purchase as much coverage as possible for such amounts.
(c) All rights to indemnification for acts or omissions occurring prior
to the Effective Time of the Merger now existing in favor of the Indemnified
Parties as provided in the Certificate of Incorporation or by-laws of the
Company or its subsidiaries and in any indemnification agreements existing as of
the date hereof to which they are parties shall survive the Merger, and the
Surviving Corporation shall continue such indemnification rights for acts or
omissions occurring prior to the Effective Time of the Merger in full force and
effect in accordance with their terms and Parent shall be financially
responsible therefor.
(d) The provisions of this Section 5.5 are intended to be for the
benefit of, and shall be enforceable by, each indemnified party, his heirs and
representatives.
SECTION 5.6. Fees and Expenses. Except as provided in Article VIII, all
fees and expenses incurred in connection with the Offer, the Merger, this
Agreement and the other transactions contemplated hereby shall be paid by the
party incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
SECTION 5.7. Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, will consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement and the transactions contemplated by this Agreement and shall not
issue any such press release or make any such public statement prior to such
consultation, except that each party may respond to questions from stockholders
and Parent may respond to inquiries from financial analysts and media
representatives in a manner consistent with its past practice and each party may
make such disclosure as may be required by applicable law or by obligations
pursuant to any listing agreement with any national securities exchange without
prior consultation to the extent such consultation is not reasonably
practicable. The parties agree that the initial press release or releases to be
issued in connection with the execution of this Agreement shall be mutually
agreed upon prior to the issuance thereof.
SECTION 5.8. Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors as of the date hereof or as of
immediately prior to the Effective Time of the Merger relating to the
transactions contemplated by this Agreement until the Effective Time of the
Merger, and thereafter, shall give Parent the opportunity to control the defense
of such litigation and, if Parent so chooses to control such litigation, Parent
shall give the Company and such directors an opportunity to participate in such
litigation; provided, however, that no settlement of such litigation shall be
agreed to without the consent of Parent, the Company and such directors, which
consent shall not be unreasonably withheld.
SECTION 5.9. Directors. Effective upon the acceptance for payment of,
and payment by Sub for, any Shares pursuant to the Offer, Sub shall be entitled
to designate such number of directors on the Board of Directors of the Company
as will give Sub, subject to compliance with Section 14(f) of the Exchange Act,
representation on such Board of Directors equal to at least that number of
directors, rounded up to the next whole number, which is the product of (a) the
total number of directors on such Board of Directors (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) the percentage
that (i) such number of Shares so accepted for payment and paid for by Sub plus
the number of Shares otherwise owned by Sub or any other subsidiary of Parent
bears to (ii) the number of Shares outstanding, and the Company shall, at such
time, cause Sub's designees to be so elected; provided, however, that in the
event that Sub's designees are appointed or elected to the Board of Directors of
the Company, until the Effective Time of the Merger such Board of Directors
shall have at least three directors who are directors on the date hereof and who
are not officers of the Company (the "Independent Directors") and provided
further that, in such event, if the number of Independent Directors shall be
reduced below three for any reason whatsoever, any remaining Independent
Directors (or Independent Director, if there shall be only one remaining) shall
be entitled to designate persons to fill such vacancies who shall be deemed to
be Independent Directors for purposes of this Agreement or, if no Independent
Directors then remain, the other directors shall designate three persons to fill
such vacancies who shall not be officers, stockholders or affiliates of the
Company, Parent or Sub, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. Subject to applicable law, the Company
shall promptly take all action necessary to effect any such election, including
mailing to its stockholders the Information Statement (the "Information
Statement") containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, and the Company agrees to make such
mailing with the mailing of Schedule 14D-9 (provided that Sub shall have
provided to the Company on a timely basis all information required to be
included in the Information Statement with respect to Sub's designees). In
connection with the foregoing, the Company will promptly, at the option of Sub,
either increase the size of the Company's Board of Directors or obtain the
resignation of such number of its current directors as is necessary to enable
Sub's designees to be elected or appointed to the Company's Board of Directors
as provided above.
SECTION 5.10. Tax Certification. At any time during the period
beginning on the date hereof and ending on the Effective Time of the Merger, the
Company shall provide to Parent, within two business days of a request by
Parent, a certificate meeting the requirements of Treas. Reg. ss. 1.897-2(h) to
the effect that the Company is not, nor has it been within 5 years of the date
thereof, a "United States real property holding corporation" as defined in
Section 897 of the Code.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction prior to the Effective Time of the Merger of the following
conditions:
(a) Stockholder Approval. If required by the DGCL, this
Agreement shall have been approved and adopted by the affirmative vote
or consent of the stockholders of the Company by the requisite vote in
accordance with the DGCL and the Company's Certificate of
Incorporation.
(b) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or terminations or
expirations of waiting periods imposed by, any Governmental Entity
necessary for the consummation of the transactions contemplated by this
Agreement shall have been filed, shall have occurred or shall have been
obtained.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
Governmental Entity or court of competent jurisdiction or statute, rule
or regulation restraining or prohibiting the consummation of the Merger
shall be in effect; provided, however, that each of the parties shall
have used reasonable efforts, subject to the limitations set forth in
Section 5.3 hereof, to prevent the entry of any such injunction or
other order.
SECTION 6.2. Conditions to Obligation of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are subject to the condition
that (i) the Company shall have performed in all material respects all
obligations to be performed by it under this Agreement at or prior to the
Effective Time of the Merger and (ii) the representations and warranties of the
Company contained in this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto, disregarding all qualifications and
exceptions contained herein and therein relating to materiality or material
adverse effect or any similar standard or qualification, shall be true in all
material respects at and as of the Effective Time of the Merger as if made at
and as of such time.
SECTION 6.3. Condition to Obligation of the Company. The
obligation of the Company to effect the Merger is subject to the condition that
(i) Parent and Sub shall have performed in all material respects all obligations
to be performed by them under this Agreement at or prior to the Effective Time
of the Merger and (ii) the representations and warranties of Parent and Sub
contained in this Agreement and in any certificate or other writing delivered by
Parent or Sub pursuant hereto, disregarding all qualifications and exceptions
contained herein and therein relating to materiality or material adverse effect
or any similar standard or qualification, shall be true in all material respects
at and as of the Effective Time of the Merger as if made at and as of such time.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated at
any time prior to the Effective Time of the Merger, whether before or after
approval of matters presented in connection with the Merger by the stockholders
of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the stockholders of the Company fail to give
any required approval of the Merger and the transactions
contemplated hereby upon a vote at a duly held meeting of
stockholders of the Company or at any adjournment thereof;
(ii) if (w) as a result of the failure of any of the
conditions set forth in paragraphs (a) through (h) of Exhibit
A hereto, Sub shall have failed to commence the Offer within 5
business days of the date hereof or (x) as a result of the
failure of any of the conditions set forth in Exhibit A hereto
the Offer shall have been terminated or expired in accordance
with its terms without Sub having purchased any Shares
pursuant to the Offer or (y) Sub shall not have purchased any
Shares pursuant to the Offer within 180 days following the
date hereof; provided, however, that the passage of the period
referred to in clause (y) shall be tolled for any part thereof
during which the Offer shall have been extended pursuant to
one or more Special Extensions but in no event shall such
period be tolled for more than 90 days; and provided further
that the right to terminate this Agreement pursuant to this
Section 7.1(b)(ii) shall not be available to any party whose
failure to perform any of its obligations under this Agreement
results in the failure of any such condition;
(iii) if the Merger shall not have been consummated
on or before the date one year following the purchase of
Shares pursuant to the Offer, unless the failure to consummate
the Merger is the result of a material breach of this
Agreement by the party seeking to terminate this Agreement;
provided, however, that the passage of such period shall be
tolled for any part thereof during which any party shall be
subject to a nonfinal order, decree or ruling or action
restraining, enjoining or otherwise prohibiting the
consummation of the Merger or the calling or holding of a
meeting of the stockholders of the Company called to approve,
inter alia, the Merger; or
(iv) if any court of competent jurisdiction or any
Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the purchase of Shares
pursuant to the Offer or the Merger and such order, decree,
ruling or other action shall have become final and
nonappealable.
(c) by the Company in accordance with the provisions of
Section 8.2;
(d) by Parent in accordance with the provisions of
Section 8.2;
(e) by Parent, if the Company breaches in any material respect
any of its representations or warranties herein or fails to perform in any
material respect any of its covenants, agreements or obligations under this
Agreement;
(f) by the Company, if Parent or Sub breaches in any material
respect any of its representations or warranties herein or fails to perform in
any material respect any of its covenants, agreements or obligations under this
Agreement; or
(g) by Parent, if Parent shall have received any communication
from the Department of Justice or Federal Trade Commission (each an "HSR
Authority") (which communication shall be confirmed to the Company by the HSR
Authority) that causes Parent to reasonably believe that any HSR Authority has
authorized the institution of litigation challenging the transactions
contemplated by this Agreement under the U.S. antitrust laws, which litigation
will include a motion seeking an order or injunction prohibiting the
consummation of any of the transactions contemplated by this Agreement.
The party desiring to terminate this Agreement pursuant to
this Section 7.1 (other than pursuant to Section 7.1(a)) shall give notice of
such termination to the other party.
SECTION 7.2. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 7.1, an
amendment of this Agreement pursuant to Section 7.4 or an extension or waiver
pursuant to Section 7.5 shall, in order to be effective, require action by a
majority of the members of the Board of Directors of the Company who were
members thereof on the date of this Agreement and remain as such hereafter or
the duly authorized designees of such members; provided, however, that in the
event that Sub's designees are appointed or elected to the Board of Directors of
the Company as provided in Section 5.9, after the acceptance for payment of
Shares pursuant to the Offer and prior to the Effective Time of the Merger, the
affirmative vote of a majority of the Independent Directors, in lieu of the
vote required pursuant to this Section, shall be required to (i) amend or
terminate this Agreement by the Company, (ii) exercise or waive any of the
Company's rights or remedies under this Agreement or (iii) extend the time for
performance of Parent's and Sub's respective obligations under this Agreement.
SECTION 7.3. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Sub or the Company,
except that no such termination shall relieve any party of any liability or
damages resulting from any willful breach by such party of this Agreement. The
confidentiality provisions of Sections 5.2(b) and (c) and the provisions of
Sections 3.1(h), 3.1(i), 3.2(d), 5.6, 7.3, 8.1, 8.2, 8.3 and Article IX shall
survive any termination hereof.
SECTION 7.4. Amendment. This Agreement may be amended by the
parties at any time before or after any required approval of matters presented
in connection with the Merger by the stockholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such stockholders without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of all of the parties hereto.
SECTION 7.5. Extension; Waiver. At any time prior to the
Effective Time of the Merger, the parties may, to the extent legally allowed,
(a) extend the time for the performance of any of the obligations or the other
acts of the other parties, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or (c)
subject to the proviso of Section 7.4, waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS
SECTION 8.1. Takeover Defenses of the Company and Standstill
Agreements. The Company shall take such action with respect to any anti-takeover
provisions in its charter or afforded it by statute to the extent necessary to
facilitate the Offer and consummate the Merger on the terms set forth in this
Agreement. The Company hereby waives the provisions of the letter agreement
dated April 1, 1999 (the "Confidentiality and Standstill Agreement"), between
the Company and Parent, prohibiting the purchase of Shares or acting to
influence or control the Company.
SECTION 8.2. No Solicitation. (a) From the date hereof until
the termination hereof, the Company will not, and will cause its subsidiaries
and the officers, directors, employees, investment bankers, attorneys,
accountants, consultants or other agents or advisors of the Company and its
subsidiaries not to, directly or indirectly, (i) take any action to solicit,
initiate, facilitate or encourage the submission of any takeover proposal, (ii)
engage in discussions or negotiations with, or disclose any nonpublic
information relating to the Company or any of its subsidiaries or afford access
to the properties, books or records of the Company or any of its subsidiaries
to, any person who may be considering making, or has made, a takeover proposal,
(iii) grant any waiver or release under any standstill or similar agreement with
respect to any class of equity securities of the Company, (iv) to the fullest
extent permitted by the DGCL, amend or grant any waiver or release or approve
any transaction or redeem rights under the Company Rights Agreement or (v) enter
into any agreement with respect to a takeover proposal (other than the
confidentiality and standstill agreement described in (c)(iii) below).
(b) The Company will notify Parent promptly (but in no event
later than 24 hours) after receipt by the Company (or any of its advisors) of
any takeover proposal or any request for nonpublic information relating to the
Company or any of its subsidiaries or for access to the properties, books or
records of the Company or any of its subsidiaries by any person who may be
considering making, or has made, a takeover proposal. The Company shall provide
such notice orally and in writing and shall identify the person making, and the
price, terms and conditions of, any such takeover proposal or request. The
Company shall keep Parent fully informed, on a current basis, of the status and
details of any such takeover proposal or request. The Company shall, and shall
cause its subsidiaries and the directors, employees and other agents of the
Company and its subsidiaries to, (i) cease immediately and cause to be
terminated all activities, discussions and negotiations, if any, with any
persons conducted prior to the date hereof with respect to any takeover proposal
and (ii) require all such persons to return to the Company all confidential
information provided by or on behalf of the Company and to destroy any materials
prepared by such persons based upon such confidential information. Nothing
contained in this Agreement shall prevent the Board of Directors of the Company
from complying with Rule 14e-2 under the Exchange Act with respect to any
takeover proposal. For purposes of this Agreement, "takeover proposal" means (i)
any offer or proposal for, other than a proposal by Parent or any of its
affiliates, a merger or other business combination involving the Company or any
of its subsidiaries, (ii) any proposal or offer, other than a proposal or offer
by Parent or any of its affiliates, to acquire from the Company or any of its
affiliates in any manner, directly or indirectly, an equity interest in the
Company or any subsidiary, any voting securities of the Company or any
subsidiary or a material amount of the assets of the Company and its
subsidiaries, taken as a whole, or (iii) any proposal or offer, other than a
proposal or offer by Parent or any of its affiliates, to acquire from the
stockholders of the Company by tender offer, exchange offer or otherwise more
than 20% of the outstanding Shares.
(c) Notwithstanding the foregoing, the Company may negotiate
or otherwise engage in substantive discussions with, and furnish nonpublic
information to, any person who delivers a superior proposal if (i) the Company
has complied with the terms of this Section 8.2, including, without limitation,
the requirement in Section 8.2(b) that it notify Parent promptly after its
receipt of any takeover proposal, (ii) the Board of Directors of the Company
determines in good faith by a majority of the disinterested members thereof, on
the basis of advice from outside legal counsel to the Company, that it should
take such action to comply with its fiduciary duties under applicable law, (iii)
such person executes a confidentiality and standstill agreement with terms no
less favorable to the Company than those contained in the Confidentiality and
Standstill Agreement, and (iv) the Company shall have delivered to Parent a
prior written notice advising Parent that it intends to take such action. In
furtherance and not in limitation of the foregoing, the Company shall give
Parent at least 24 hours' advance notice of any information to be supplied to
any person making such superior proposal. For purposes of this Agreement,
"superior proposal" means any bona fide, written takeover proposal to acquire,
directly or indirectly, for consideration consisting of cash, securities or a
combination thereof, at least a majority of the Shares then outstanding or all
or substantially all the assets of the Company, and otherwise on terms which a
majority of disinterested members of the Board of Directors of the Company
determines in its good faith reasonable judgment (based on the written advice of
its financial advisor, a copy of which shall be provided to Parent, and taking
into account all the terms and conditions of the takeover proposal, including
any break-up fees, expense reimbursement provisions and conditions to
consummation) to be more favorable and provide greater value to all the
Company's stockholders than the Offer, the Merger and the transactions
contemplated hereby and for which the financing, to the extent required, is then
committed or in the judgment of such majority of disinterested members of the
Board of Directors of the Company is reasonably obtainable.
(d) Except as provided in the next sentence, the Board of
Directors of the Company shall recommend approval and adoption of this Agreement
and that the holders of the Shares tender their Shares pursuant to the Offer and
vote to approve the Merger and the transactions contemplated hereby and shall
advise the stockholders of the determination by the Board of Directors that the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interests of the stockholders of the Company. The Board of
Directors of the Company shall be permitted to withdraw, or modify in a manner
adverse to Parent or Sub, its recommendation to its stockholders, but only if
(x) the Company has complied with the terms of this Section 8.2, including,
without limitation, the requirement in Section 8.2(b) that it notify Parent
promptly after its receipt of any takeover proposal and in Section 8.2(e) that
it provide Parent with an opportunity to respond to any superior proposal, (y) a
superior proposal is pending at the time the Company's Board of Directors
determines to take any such action and (z) the Company's Board of Directors
determines in good faith by a majority of the disinterested members thereof, on
the basis of consultations with its financial advisors and the advice of outside
legal counsel to the Company, that it should take such action to comply with its
fiduciary duties under applicable law.
(e) Prior to exercising the right of the Company's Board of
Directors pursuant to Section 8.2(d) to withdraw or modify its recommendation,
the Company shall (i) notify Parent in writing that it intends to enter into a
binding written agreement concerning a transaction that constitutes a superior
proposal, attaching the most current version of such agreement to such notice
(which version shall be updated on a current basis) and (ii) provide Parent with
an opportunity to respond to such superior proposal within two business days of
receipt of such written notice by making an offer that the Company's Board of
Directors determines in good faith, after consultation with its financial
advisors, by a majority of the disinterested members thereof, is more favorable
to the stockholders of the Company than the superior proposal. The Company
agrees to notify Parent promptly if its intention to enter into a written
agreement referred to in its notification shall change at any time after giving
such notification.
(f) In the event that Parent shall not make an offer described
in (e)(ii) above, the Company may terminate this Agreement; provided that the
Company shall pay to Parent the Termination Fee (as defined below) prior to such
termination.
(g) In the event that (i) the Board of Directors of the
Company or any committee thereof shall (A) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub the approval or
recommendation by the Board of Directors of the Company or any such committee of
this Agreement, the transactions contemplated hereby, and the Offer or the
Merger, or take any action having such effect or (B) approve or recommend, or
propose to approve or recommend, any takeover proposal; (ii) the Company shall
provide Parent with any notice described in (e)(i) above; or (iii) the Company
shall have entered into any agreement (other than any confidentiality and
standstill agreement entered into in accordance with this Section 8.2) with
respect to any takeover proposal, Parent may terminate this Agreement
immediately.
(h) Any breach of the provisions of this Section 8.2 shall be
deemed a material breach of this Agreement.
SECTION 8.3. Fee and Expense Reimbursements.
(a) If this Agreement is terminated pursuant to Section
7.1(c), 7.1(d), 8.2(f) or 8.2(g), the Company shall pay to Parent a termination
fee in immediately available funds of $15 million in cash (the "Termination
Fee"). The Company shall pay to Parent the Termination Fee (i) immediately prior
to the termination of this Agreement in the event this Agreement is
terminated pursuant to Section 7.1(c) or 8.2(f) or (ii) promptly upon
termination of this Agreement in the event this Agreement is terminated pursuant
to Section 7.1(d) or 8.2(g).
(b) In the event that (i) a takeover proposal is made by any
person during the pendency of the Offer, other than by Parent or Sub, (ii) the
Offer shall have terminated or expired without the Minimum Tender Condition
being satisfied and (iii) within one year after the Offer shall have terminated
or expired, either (A) the Company enters into an agreement (which is
subsequently consummated, whether before or after the expiration of such one
year period) with any person, other than Parent or Sub, with respect to a
takeover proposal which provides for (1) the transfer or issuance of securities
representing more than 50% of the equity or voting interests in the Company, or
(2) transfer of assets, securities or ownership interests representing more than
50% of the consolidated assets or earning power of the Company, or (B) any
person acquires a majority of the Shares, then the Company shall pay to Parent
the Termination Fee (as defined above). Any payment of such Termination Fee
shall be paid within one business day after it becomes payable.
(c) In the event (i) this Agreement is terminated by Parent or
the Company pursuant to Sections 7.1(b)(i) 7.1(c), 7.1(d), 7.1(e), 8.2(f) or
8.2(g) or (ii) the Company shall be required to pay the Termination Fee pursuant
to Section 8.3(b), the Company shall assume and pay, or reimburse Parent for,
all reasonable fees and expenses incurred by Parent or Sub (including the fees
and expenses of its counsel, accountants and financial advisors) through the
date of termination of this Agreement or, in the case of clause (ii) above, the
Offer, and which are specifically related to the Offer, the Merger, this
Agreement and the matters contemplated by this Agreement, but not to exceed
$2,500,000 in the aggregate, promptly, but in no event later than five business
days after submission of a request for payment of the same.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Nonsurvival of Representations and Warranties.
None of the representations, warranties, covenants or agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time of the Merger. This Section 9.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time of the Merger.
SECTION 9.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by facsimile or sent by overnight courier to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
<PAGE>
(a) if to Parent or Sub, to
Emerson Electric Co.
8000 West Florissant Avenue
St. Louis, Missouri 63136
Telephone: (314) 553-2000
Facsimile: (314) 553-3527
Attention: Robert M. Cox, Jr.
Senior Vice President
with a copy to
Emerson Electric Co.
8000 West Florissant Avenue
St. Louis, Missouri 63136
Telephone: (314) 553-2000
Facsimile: (314) 553-3527
Attention: W. Wayne Withers
Senior Vice President, General
Counsel and Secretary
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
Facsimile: (212) 450-4800
Attention: Phillip R. Mills, Esq.
(b) if to the Company, to
Daniel Industries, Inc.
9753 Pine Lake Drive
Houston, Texas 77055
Telephone: (713) 467-6000
Facsimile: (713 827-4805
Confirmation: (713) 827-4870
Attention: R. C. Lassiter
Chairman, President and Chief
Executive Officer
with a copy to
Daniel Industries, Inc.
9753 Pine Lake Drive
Houston, Texas 77055
Telephone: (713) 467-6000
Facsimile: (713) 827-4805
Confirmation: (713) 827-4870
Attention: Katie-Pat Bowman
General Counsel
with a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Telephone: (713) 651-5151
Facsimile: (713) 651-5246
Confirm: (713) 651-5496
Attention: Charles H. Still, Esq.
SECTION 9.3. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "knowledge" means, with respect to any matter stated
herein to be "to the Company's knowledge," or similar language, the actual
knowledge (including without limitation, any matter which a person holding the
office and performing the functions of such person, should reasonably be
expected to know) of the Chairman of the Board, the Chief Executive Officer,
President, any Vice President or Chief Financial Officer of the Company or the
president at each division of the Company, and with respect to any matter stated
herein to be "to Parent's knowledge," or similar language, the actual knowledge
of the Chairman of the Board, the Chief Executive Officer, President, any Vice
President, Chief Financial Officer or General Counsel of Parent.
(c) "material adverse effect" or "material adverse change"
means, when used in connection with any person, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to result in
any change or effect) that is materially adverse to the business, properties,
assets, condition (financial or otherwise) or results of operations of that
person and its subsidiaries, taken as a whole.
(d) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other entity; and
(e) a "subsidiary" of any person means any corporation,
partnership, association, joint venture, limited liability company or other
entity in which such person owns over 50% of the stock or other equity
interests, the holders of which are generally entitled to vote for the election
of directors or other governing body of such other legal entity.
SECTION 9.4. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
SECTION 9.5. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to herein), the
Stock Option Agreement dated the date hereof between Parent and the Company and
the Confidentiality and Standstill Agreement (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and (b) except for
the provisions of Section 5.5, are not intended to confer upon any person other
than the parties any rights or remedies hereunder.
SECTION 9.7. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 9.8. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 9.9. Enforcement of the Agreement. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any district
court of the United States located in the State of Delaware or in any Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal or state
court sitting in the State of Delaware in the event any dispute between the
parties hereto arises out of this Agreement solely in connection with such a
suit between the parties, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such
court and (c) agrees that it will not bring any action relating to this
Agreement in any court other than such a Federal or state court.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 9.11. Performance by Sub. Parent hereby agrees to
cause Sub to comply with its obligations under this Agreement and the Offer.
SECTION 9.12. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
EMERSON ELECTRIC CO.
By /s/ Robert M. Cox, Jr.
--------------------------------
Name: Robert M. Cox, Jr.
Title: Senior Vice President--
Acquisitions and Development
EMERSUB LXXIV, INC.
By /s/ Robert M. Cox, Jr.
--------------------------------
Name: Robert M. Cox, Jr.
Title: Vice President
DANIEL INDUSTRIES, INC.
By /s/ James M. Tidwell
--------------------------------
Name: James M. Tidwell
Title: Executive Vice President
<PAGE>
EXHIBIT A
Conditions to the Offer
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange
Act (relating to Sub's obligation to pay for or return tendered Shares after
the termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer, and may terminate the Offer, unless (i) there shall
have been validly tendered and not withdrawn prior to the expiration date of
the Offer that number of Shares which would represent at least 66-2/3% of the
Fully Diluted Shares (the "Minimum Tender Condition"), (ii) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated (the "HSR Condition") and (iii) any
filings or approvals under applicable foreign antitrust laws and regulations
shall have been made and obtained and any related waiting periods shall have
expired. The term "Fully Diluted Shares" means all Shares, on a fully diluted
basis, after giving effect to the exercise or conversion of all options,
warrants, rights and securities exercisable or convertible into Shares, other
than potential issuances attributable to the Rights unless such Rights shall
be exercisable pursuant to the Company's Rights Agreement. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall not
be required to accept for payment or, subject as aforesaid, to pay for any
Shares not theretofore accepted for payment or paid for, and may terminate or
amend the Offer, with the consent of the Company (except as otherwise provided
in this Agreement) or if, at any time on or after the date of this Agreement
and before the acceptance of such Shares for payment or the payment therefor,
any of the following conditions exists:
(a) there shall be any action taken, or any statute, rule,
regulation, decree, order or injunction enacted, enforced, promulgated,
issued or deemed applicable to the Offer or the Merger, by any court,
government or governmental authority or agency, domestic or foreign,
other than the application of the waiting period provisions of the HSR
Act to the Offer or the Merger, that is likely to (i) make illegal,
delay materially or restrain or prohibit the making or consummation of
the Offer or the Merger or restrains or prohibits the performance of
this Agreement and the transactions contemplated hereby, (ii) in
connection with the transactions contemplated by this Agreement,
prohibit or limit the ownership or operation by Parent or Sub of all or
any material portion of the business or assets of the Company, Parent
or any of their respective subsidiaries, or compel Parent or any of its
subsidiaries to dispose of or to hold separate all or any material
portion of the business or assets of the Company, Parent or any of
their subsidiaries (taken as a whole for purposes of materiality), or
imposes any material limitation on the ability of the Company, Parent
or any of their respective subsidiaries to conduct such business or own
such assets, (iii) impose material limitations on the ability of Parent
or Sub (or any other affiliate of Parent or Sub) to acquire or hold or
to exercise full rights of ownership of the Shares, including, but not
limited to, the right to vote the Shares purchased by Sub on all
matters properly presented to the stockholders of the Company , or
(iv) require divestiture by Parent, Sub or any of Parent's other
subsidiaries or affiliates of any Shares;
(b) there shall be instituted or pending any action or any
investigation or other inquiry by any Governmental Entity that is
likely to result in any of the consequences referred to in clauses (i)
through (iv) of paragraph (a) above;
(c) it shall have been publicly disclosed or Parent shall have
otherwise learned that (i) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act) shall have acquired beneficial ownership
of more than 25% of any class or series of capital stock of the Company
(including the Shares), through the acquisition of stock, the formation
of a group or otherwise, or shall have been granted any option, right
or warrant, conditional or otherwise, to acquire beneficial ownership
of more than 25% of any class or series of capital stock of the Company
(including the Shares); or (ii) any person or group shall have entered
into a definitive agreement or an agreement in principle with the
Company regarding an acquisition of 25% or more of the Shares or a
merger, consolidation or other business combination;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Sub its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any takeover proposal, (ii) the
Company shall have recommended or entered into any agreement (other
than any confidentiality and standstill agreement entered into in
accordance with Section 8.2) with respect to any takeover proposal,
(iii) the Company shall have delivered to Parent a notice of superior
proposal, or (iv) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing;
(e) there shall have occurred a material adverse change in the
Company and its subsidiaries, taken as a whole, or a material adverse
effect on the Company and its subsidiaries, taken as a whole, it being
understood , however, that no such change or effect shall be deemed to
have occurred to the extent such change or effect arises from
conditions generally affecting the Company's industry or from the
United States or global economies.
(f) any of the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality shall
not be true and correct and any such representations and warranties
that are not so qualified shall not be true and correct in any material
respect, in each case (i) as of the date of this Agreement or any other
date as of which such representations and warranties expressly speak or
(ii) at any time prior to the consummation of the Offer as if made at
and as of such time, it being understood, however, that with respect to
clause (ii) no representation or warranty shall be deemed to be not
true and correct to the extent that the failure to be so arises from
conditions generally affecting the Company's industry or from the
United States or global economies and further that the consequence of
such failure to be true and correct (disregarding all references to
materiality or material adverse effect therein) is a material adverse
change or effect on the Company and its subsidiaries, taken as a whole;
(g) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with
by it under this Agreement which failure has not been cured; or
(h) this Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Sub and Parent
and, subject to the terms and conditions of this Agreement, may be waived by Sub
and Parent in whole or in part at any time and from time to time in their sole
discretion.
07480/151/EDGAR/costop.ed
Exhibit (C)(2)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of May 12, 1999 between Daniel
Industries, Inc., a Delaware corporation (the "Company"), and Emerson Electric
Co., a Missouri corporation (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company, EMERSUB LXXIV, Inc., a Delaware
corporation and a wholly owned subsidiary of the Purchaser ("Sub"), and the
Purchaser are simultaneously with the execution and delivery of this Agreement
entering into a Merger Agreement (the "Merger Agreement") pursuant to which
(i) the Purchaser has agreed, upon the terms and subject to the conditions
stated therein, to make a tender offer (the "Offer") for shares of the common
stock of the Company at a price per share in cash of $21.25 and (ii) the
Company will, upon the terms and subject to the conditions stated therein,
merge with Sub; and
WHEREAS, in order to induce the Purchaser and Sub to enter into
the Merger Agreement, the Company has agreed to grant to the Purchaser the
Company Stock Option (as hereinafter defined), upon the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and in the Merger Agreement, and for other good
and valuable consideration, the adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
1. Grant of Company Stock Option. The Company hereby grants to the
Purchaser an irrevocable option (the "Company Stock Option") to purchase for
$21.25 per share in cash (the "Option Price") up to 3,877,035 shares (the
shares purchased hereunder being referred to herein as the "Shares") of its
Common Stock, $1.25 par value per share (the "Common Stock"); provided,
however, that in no event shall the number of shares of Common Stock for which
this Company Stock Option is exercisable exceed 19.9% of the Company's issued
and outstanding shares of Common Stock without giving effect to any shares
subject to or issued pursuant to the Company Stock Option. The number of
shares of Common Stock that may be received upon the exercise of the Company
Stock Option and the Option Price are subject to adjustment as herein set
forth.
2. Exercise of Stock Option. (a) The Purchaser may exercise the
Company Stock Option, in whole or in part, at any time or from time to time,
following (but not prior to) the occurrence of one of the events set forth in
Section 3(c) hereof, and prior to the termination of the Company Stock Option
in accordance with the terms of this Agreement.
(b) In the event the Purchaser wishes to exercise the Company
Stock Option, the Purchaser shall send a written notice to the Company (the
"Stock Exercise Notice") specifying a date, which shall not be later than 10
business days and not earlier than three business days following the date such
notice is given, for the closing of such purchase. Such notice shall specify
the number of Shares to be purchased and a place for the closing of the
purchase.
(c) At any time the Company Stock Option is then exercisable
pursuant to the terms of Section 2(a) hereof, the Purchaser may elect, in lieu
of exercising the Company Stock Option to purchase Shares as provided in
Section 2(a) hereof, to send a written notice to the Company (the "Cash
Exercise Notice") specifying a date, not later than 10 business days and not
earlier than 3 business days following the date such notice is given, on which
date the Company shall pay to the Purchaser an amount in cash equal to the
Spread (as hereinafter defined) multiplied by all or such portion of the
Shares subject to the Company Stock Option as Purchaser shall specify. As
used herein "Spread" shall mean the excess, if any, over the Option Price of
the higher of (x) if applicable, the highest price per share of Common Stock
(including any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid or proposed to be paid by any person pursuant to any takeover
proposal (as defined in the Merger Agreement) (the "Alternative Purchase
Price") or (y) the closing price of the shares of Common Stock on the NYSE
Composite Tape on the last trading day immediately prior to the date of the
Cash Exercise Notice (the "Closing Price"). If the Alternative Purchase Price
includes any property other than cash, the Alternative Purchase Price shall be
the sum of (i) the fixed cash amount, if any, included in the Alternative
Purchase Price plus (ii) the fair market value of such other property. If
such other property consists of securities with an existing public trading
market, the average of the closing prices (or the average of the closing bid
and asked prices if closing prices are unavailable) for such securities in
their principal public trading market on the five trading days ending five days
prior to the date of the Cash Exercise Notice shall be deemed to equal the
fair market value of such property. If such other property consists of
something other than cash or securities with an existing public trading market
and, as of the payment date for the Spread, agreement on the value of such
other property has not been reached, the Alternative Purchase Price shall be
deemed to equal the Closing Price. Upon exercise of its right to receive cash
pursuant to this Section 2(c), the obligations of the Company to deliver
Shares pursuant to Section 3 shall be terminated with respect to such number
of Shares for which the Purchaser shall have elected to be paid the Spread.
(d) In the event of any change in the number of issued and
outstanding shares of Common Stock by reason of any stock dividend, stock
split, recapitalization, merger or other change in the corporate or capital
structure of the Company, the number of Shares subject to the Company Stock
Option and the Option Price shall be appropriately adjusted to restore the
Purchaser to its rights hereunder, including its right to purchase Shares
representing 19.9% of the capital stock of the Company entitled to vote
generally for the election of the directors of the Company which are issued
and outstanding immediately prior to the exercise of the Company Stock Option.
(e) If the Company shall merge or consolidate with or into any
other entity, thereafter upon the exercise of the Company Stock Option, for
each Share in respect of which the Company Stock Option is thereafter
exercised, the Purchaser shall be entitled to receive the kind and amount of
consideration per share it would have received in such merger or consolidation
had the Company Stock Option been exercised immediately prior to such merger
or consolidation.
3. Conditions to Delivery of Shares. The Company's obligation to
deliver Shares upon exercise of the Company Stock Option is subject only to
the conditions that:
(a) No preliminary or permanent injunction or other order,
decree or ruling issued by any federal or state court of competent
jurisdiction in the United States prohibiting the sale or delivery of the
Shares shall be in effect;
(b) Any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") shall have expired or been
terminated and any applicable filings or approvals under foreign antitrust
laws shall have been made or obtained and any related waiting periods shall
have expired; and
(c) (i) any person (other than Purchaser or any of its
subsidiaries) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the right
to acquire beneficial ownership of, shares of Common Stock aggregating 25
percent or more of the then outstanding Common Stock; (ii) in the event (A) at
any time during the pendency of the Offer, a takeover proposal (as defined in
the Merger Agreement) shall have been made to the Company or any of its
subsidiaries or any of its stockholders or any person shall have publicly
announced an intention to make a takeover proposal with respect to the Company
or any of its subsidiaries, (B) the Offer shall have terminated or expired
without the Minimum Tender Condition (as defined in the Merger Agreement)
being satisfied and (C) within one year after the Offer shall have terminated
or expired, either (x) the Company enters into an agreement (which is
subsequently consummated, whether before or after the expiration of such
one-year period) with any person, other than Purchaser or Sub, with respect to
a takeover proposal which provides for (1) transfer or issuance of securities
representing more than 50% of the equity or voting interests in the Company,
or (2) transfer of assets, securities or ownership interests representing more
than 50% of the consolidated assets or earning power of the Company, or (y)
any person acquires a majority of the Shares; (iii) the Purchaser or the
Company shall have terminated (or shall have the right to terminate) the
Merger Agreement pursuant to Section 7.1(c) or (d) or Section 8.2(f) or (g) of
the Merger Agreement; or (iv) the Company shall have delivered to Purchaser
the written notification pursuant to Section 8.2(e)(i) of the Merger Agreement
and Purchaser shall have notified the Company in writing that Purchaser does
not intend to match the superior proposal (as defined in the Merger Agreement)
referred to in such notification. As used in this Agreement, "person" shall
have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act.
4. Closing. (a) Any closing hereunder shall take place on the date and
at the place specified by the Purchaser in its Stock Exercise Notice or Cash
Exercise Notice, as the case may be, or if the conditions set forth in Section
3(a) or (b) have not then been satisfied, on the second business day following
the satisfaction of such conditions, or at such other time and place as the
parties hereto may agree (the "Closing Date"). On the Closing Date, (i) in
the event of a closing pursuant to Section 2(b) hereof, the Company shall
deliver to the Purchaser a certificate or certificates, representing the
Shares in the denominations designated by the Purchaser in its Stock Exercise
Notice and the Purchaser will purchase such Shares from the Company at the
price per Share equal to the Option Price or (ii) in the event of a closing
pursuant to Section 2(c) hereof, the Company will deliver to the Purchaser
cash in an amount determined pursuant to Section 2(c) hereof. Any payment
made by the Purchaser to the Company, or by the Company to the Purchaser,
pursuant to this Agreement shall be made by certified, cashier's or bank check
or, if mutually agreed, by wire transfer of funds to an account designated by
the party receiving such funds.
(b) The certificates representing the Shares shall bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
5. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby (i) are within the
Company's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of, or filing
with, any governmental body, agency or official, except for any filings
required to be made under the HSR Act and applicable foreign antitrust laws,
(iv) do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of the Company or of any judgment, injunction, order or decree binding upon the
Company or any of its subsidiaries and (v) will not require any consent,
approval or notice under and will not conflict with, or result in the breach
or termination of any provision of or constitute a default (with or without
the giving of notice or the lapse of time or both) under, or allow the
acceleration of the performance of, any material obligation of the Company or
any of its subsidiaries under, or result in the creation of a lien, charge or
encumbrance upon, any of the properties, assets or business of the Company or
any of its subsidiaries under any indenture, mortgage, deed of trust, lease,
licensing agreement, contract, instrument or other agreement to which the
Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or any of their respective assets or properties is subject
or bound. This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding agreement of the Company.
(b) Except for any filings required to be made under the HSR
Act, the Company has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and at all times from the
date hereof until such time as the obligation to deliver Shares upon the
exercise of the Company Stock Option terminates, will have reserved for
issuance, upon any exercise of the Company Stock Option, the number of Shares
subject to the Company Stock Option (less the number of Shares previously
issued upon any partial exercise of the Company Stock Option or as to which
the Company Stock Option may no longer be exercised). All of the Shares to be
issued pursuant to the Company Stock Option are duly authorized and, upon
issuance and delivery thereof pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, and free and clear
of all claims, liens, charges, encumbrances and security interests, and not
subject to any preemptive rights.
(c) The Company has taken all action so that the entering into
of this Agreement, the acquisition of shares of Common Stock hereunder and the
other transactions contemplated hereby do not and will not result in the grant
of any rights to any person under the Company Rights Agreement (as defined in
the Merger Agreement) or enable or require the Rights (as defined in the
Merger Agreement) to be exercised, distributed or triggered.
(d) The representations and warranties of the Company contained
in the Merger Agreement are true and correct.
6. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
(a) The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Missouri. The
execution, delivery and performance by the Purchaser of this Agreement are
within the Purchaser's corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official, except for any filings
required to be made under the HSR Act and applicable foreign antitrust laws,
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of the Purchaser or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser and constitutes a valid and binding
agreement of the Purchaser.
(b) The Purchaser will acquire the Shares for investment
purposes only and not with a view to any distribution thereof, and will not
sell any Shares purchased pursuant to the Company Stock Option except in
compliance with the Securities Act.
(c) The representations and warranties of the Purchaser
contained in the Merger Agreement are true and correct.
7. Further Assurances; Remedies. (a) The Company agrees to execute
and deliver such other documents and instruments and take such further actions
as may be necessary or appropriate or as the Purchaser may reasonably request
in order to ensure that the Purchaser receives the full benefits of this
Agreement. Prior to the termination of the Company Stock Option, the Company
will refrain from taking any action which would have the effect of preventing
or disabling the Company from delivering the Shares to the Purchaser upon any
exercise of the Company Stock Option or from otherwise performing its
obligations under this Agreement.
(b) The parties agree that the Purchaser would be irreparably damaged if
for any reason the Company failed to issue any of the Shares upon exercise of
the Company Stock Option or to perform any of its other obligations under this
Agreement, and that the Purchaser would not have an adequate remedy at law for
money damages in such event. Accordingly, the Purchaser shall be entitled to
specific performance and injunctive and other equitable relief to enforce the
performance of this Agreement by the Company. This provision is without
prejudice to any other rights that the Purchaser may have against the Company
for any failure to perform its obligations under this Agreement.
8. HSR Filing; Listing of Shares; Notification of Record Dates. (a)
Promptly after the date hereof, and from time to time thereafter if necessary,
the Purchaser and the Company shall each file with the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice all required pre-merger notification and report forms and other
documents and exhibits required to be filed under the HSR Act and applicable
foreign antitrust laws, to permit the purchase of the Shares pursuant hereto.
(b) Subject to the rules and regulations of the New York Stock Exchange,
Inc. (the "NYSE"), after the Company Stock Option becomes exercisable
hereunder, the Company will promptly file an application to list the Shares on
the NYSE and will use its reasonable best efforts to obtain approval of such
listing; provided, however, that if the Company is unable to effect such
listing on the NYSE by the Closing Date, the Company will nevertheless be
obligated to deliver the Shares upon the Closing Date.
(c) The Company shall give the Purchaser at least ten days' prior
written notice before setting the record date for determining the holders of
record of shares of Common Stock entitled to notice of, or to vote on, any
matter, to receive any dividend or distribution or to participate in any
rights offering or other matter, or to receive any other benefit or right,
with respect to shares of Common Stock. Further, if the Company Stock Option
is exercisable and during such notice period Purchaser elects to exercise the
Company Stock Option, in whole or in part, the Company shall defer setting
such record date until after the Closing Date in respect of such exercise.
9. Sales of Shares. (a) At any time prior to the first anniversary of
the Closing Date with respect to the first Stock Exercise Notice, the
Purchaser shall have the right to sell (the "Sale Right") to the Company all
or any, of the Shares acquired upon exercise of the Company Stock Option at
the greater of (i) the Option Price, or (ii) the average of the last sales
prices for shares of Common Stock on the five trading days ending five days
prior to the date the Purchaser gives written notice of its intention to
exercise the Sale Right. If the Purchaser does not exercise the Sale Right
prior to such first anniversary, the Sale Right terminates. In the event the
Purchaser wishes to exercise the Sale Right, the Purchaser shall send a
written notice to the Company specifying a date, not later than 10 business
days and not earlier than 3 business days following the date such notice is
given, for the closing of such sale.
(b) If at any time after the first anniversary of the Closing Date with
respect to the first Stock Exercise Notice, neither the Purchaser nor any
other person or group shall have acquired more than 50% of the shares
(excluding any Shares owned by Purchaser and its affiliate) of outstanding
Common Stock, then the Company shall have the right to purchase all, but not
less than all, Shares then owned by the Purchaser and its subsidiaries for a
total cash price such that following such purchase the Purchaser's Total
Profit (as defined below) is the Maximum Total Profit.
10. Registration of the Shares. (a) If the Purchaser requests the
Company in writing to register under the Securities Act, any of the Shares
purchased by the Purchaser hereunder, the Company will use its best efforts to
cause the offering of the Shares so specified in such request to be registered
as soon as practicable so as to permit the sale or other distribution by the
Purchaser of the Shares specified in its request (and to keep such
registration in effect for a period of at least 90 days), and in connection
therewith prepare and file as promptly as reasonably possible (but in no event
later than 60 days from receipt of the Purchaser's request) a registration
statement under the Securities Act to effect such registration on an
appropriate form, which would permit the sale of the Shares by the Purchaser
in the manner specified by the Purchaser in its request. The Company shall
not be obligated to make effective more than two registration statements
pursuant to the foregoing sentence.
(b) The Company shall notify the Purchaser in writing not less than ten
days prior to filing a registration statement under the Securities Act (other
than a filing on Form S-4 or S-8) with respect to any Common Stock of the
Company's intention so to file. If the Purchaser wishes to have any portion
of its Shares included in such registration statement, it shall advise the
Company in writing to that effect within five business days following receipt
of such notice, and the Company will thereupon include the number of Shares
indicated by the Purchaser under such Registration Statement.
(c) The Company shall pay all fees and expenses in connection with any
registration pursuant to this Section other than underwriting discounts and
commissions to brokers or dealers and shall indemnify the Purchaser, its
affiliates, its officers, directors, agents, other controlling persons and any
underwriters retained by the Purchaser in connection with such sale of such
Shares in the customary way, and agree to customary contribution provisions
with such persons, with respect to claims, damages, losses and liabilities
(and any expenses relating thereto) arising (or to which the Purchaser, its
affiliates, its officers, directors, agents, other controlling persons or
underwriters may be subject) in connection with any such offer or sale under
the federal securities laws or otherwise, except for information furnished in
writing by the Purchaser or its underwriters to the Company. The Purchaser
and its underwriters, respectively, shall indemnify the Company to the same
extent with respect to information furnished in writing to the Company by the
Purchaser and such underwriters.
11. Termination. The right to exercise the Company Stock Option granted
pursuant to this Agreement shall terminate at the earliest of (i) the
Effective Time of the Merger (as defined in the Merger Agreement), (ii) if the
Company Stock Option is not exercised within one year after termination of the
Merger Agreement in accordance with its terms; provided that, if at the time
the Merger Agreement is terminated the conditions in Section 3(c)(ii)(A) and
(B) have been satisfied, the Company Stock Option shall not terminate until
two years after the termination of the Merger Agreement (the date referred to
in clause (ii) being hereinafter referred to as the "Termination Date");
provided further that, if on the Termination Date the Company Stock Option
cannot be exercised or the Shares cannot be delivered to Purchaser upon such
exercise because the conditions set forth in Section 3(a) or (b) hereof have
not yet been satisfied, the date referred to in clause (ii) shall be extended
until thirty days after such impediment to exercise or delivery has been
removed.
12. Profit Limitation. Notwithstanding any other provision of this
Agreement or the Merger Agreement, in no event shall the Purchaser's Total
Profit (as hereinafter defined) exceed $20,000,000 (the "Maximum Total
Profit") and, if it otherwise would exceed such amount, the Purchaser shall
repay such excess amount to the Company in cash (or the purchase price for
purpose of Section 9, as applicable, shall be reduced) so that Purchaser's
Total Profit shall not exceed the Maximum Total Profit after taking into
account the foregoing actions.
As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following (i) (x) the amount of cash
received by Purchaser pursuant to Section 8.3(a) or (b) of the Merger
Agreement and Section 2(c) hereof, less (y) any repayment of such cash to the
Company, (ii)( x) the amount received by Purchaser pursuant to the Company's
repurchase of Shares pursuant to Section 9 hereof, less (y) the Purchaser's
purchase price for such Shares, and (iii) (x) the net cash amounts received by
Purchaser pursuant to the sale of Shares (or any other securities into or for
which such Shares are converted or exchanged) to any unaffiliated party on
arms-length terms, less (y) the Purchaser's purchase price for such Shares.
13. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise specifically
provided herein or in the Merger Agreement.
14. Entire Agreement. This Agreement, together with the
Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions.
15. Miscellaneous. (a) Amendments. This Agreement may not
be modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto.
(b) 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 received if so given) by delivery in person or by
cable, telegram or telex (with copies by registered or certified mail, postage
prepaid, return receipt requested), to the respective parties as follows:
To the Company:
Daniel Industries, Inc.
9753 Pine Lake Drive
Houston, Texas 77055
Telephone: (713) 467-6000
Facsimile: (713) 827-4805
Confirmation: (713) 827-4870
Attention: R. C. Lassiter
Chairman, President and Chief Executive Officer
with a copy to:
Daniel Industries, Inc.
9753 Pine Lake Drive
Houston, Texas 77055
Telephone: (713) 467-6000
Facsimile: (713) 827-4805
Confirmation: (713) 827-4870
Attention: Katie-Pat Bowman, Esq.
General Counsel
with a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Telephone: (713) 651-5151
Facsimile: (713) 651-5246
Confirmation: (713) 651-5496
Attention: Charles H. Still, Esq.
To the Purchaser:
Emerson Electric Co.
8000 West Florissant Avenue
St. Louis, Missouri 63136-8506
Telephone: (314) 553-2000
Facsimile: (314) 553-3527
Confirmation: (314) 553-2015
Attention: Robert M. Cox, Jr.
Senior Vice President - Acquisitions and Development
with a copy to:
Emerson Electric Co.
8000 West Florissant Avenue
St. Louis, Missouri 63136-8506
Telephone: (314) 553-2000
Facsimile: (314) 553-3527
Confirmation: (314) 553-2015
Attention: W. Wayne Withers
Senior Vice President, General Counsel and Secretary
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
Facsimile: (212) 450-4800
Confirmation: (212) 450-4618
Attention: Phillip R. Mills, Esq.
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
(c) Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of law rules of such state.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(f) Headings. The section headings herein are for convenience only and
shall not affect the construction hereof.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns; provided, however, that such successors in interest or
assigns shall agree to be bound by the provisions of this Agreement; provided
further that no such assignment shall relieve the assignor of its obligations
hereunder. Nothing in this Agreement, express or implied, is intended to
confer upon any person other than the Company or the Purchaser, or their
successors or assigns, any rights or remedies under or by reason of this
Agreement.
(h) Survival. All representations, warranties and covenants contained
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, except as otherwise
provided herein.
(i) Time of the Essence. The parties agree that time shall be of the
essence in the performance of obligations hereunder.
IN WITNESS WHEREOF, the Company and the Purchaser have caused this Agreement to
be duly executed as of the day and year first above written.
DANIEL INDUSTRIES, INC.
By: /s/ James M. Tidwell
------------------------
Name: James M. Tidwell
Title: Executive Vice President
EMERSON ELECTRIC CO.
By: /s/ Robert M. Cox, Jr.
--------------------------
Name: Robert M. Cox, Jr.
Title: Senior Vice President--
Acquisitions and Development
Exhibit (c)(3)
DANIEL
Daniel Industries, Inc.
9753 Pine Lake Drive (77055)
P.O. Box 19097
Houston, Texas 77224
Telephone: (713) 467-6000
Facsimile: (713) 827-4805
CONFIDENTIAL
April 1, 1999
Mr. James D. Switzer
Senior Vice President of Development
Emerson Electric Company
8000 W. Florissant
PO Box 4100
St. Louis, Missouri
Gentlemen:
You have requested information (which is either non-public,
confidential or proprietary in nature) from Daniel Industries, Inc. (the
"Company"), in connection with your consideration of a possible transaction
between the Company or its stockholders and you or your affiliated companies
(collectively, "you"). In consideration for, and as a condition to, your
being furnished such information, you agree to treat any information (whether
prepared by the Company, its advisors or otherwise, and whether oral or written
and regardless of the form in which such information may be initially or
subsequently reflected) that is furnished to you or your representatives
(which term shall include your parents, subsidiaries, other affiliates,
directors, officers, partners, employees, agents, advisors and others brought
into the matter by you) by or on behalf of the Company (herein collectively
referred to as the "Evaluation Material") in accordance with the provisions of
this letter and to take or abstain from taking certain other actions herein set
forth. The term "Evaluation Material" does not include information that (i)
is already in your possession, provided that such information is not known by
you to be subject to another confidentiality agreement with or other
obligation of secrecy, or fiduciary duty of confidentiality, to the Company or
another party, or (ii) becomes generally available to the public other than as
a result of a disclosure by you or your representatives, or (iii) becomes
available to you on a non-confidential basis from a source other than the
Company or its advisors, provided that such source is not known by you to be
bound by a confidentiality agreement with or other obligation of secrecy, or
fiduciary duty of confidentiality, to the Company or another party.
You hereby agree that the Evaluation Material will be used
solely for the purpose of evaluating a possible transaction between the
Company or its stockholders and you, will not be used in any way detrimental
or disadvantageous to the Company or its stockholders, including competing in
any way with activities carried on by the Company, and will not be disclosed
but will be kept confidential by you and your representatives; provided,
however, that (i) any of such information may be disclosed to your
representatives who need to know such information for the purpose of
evaluating any such possible transaction between the Company or its
stockholders and who shall be required by you to keep such information
confidential and to be bound by the confidentiality provisions of this
agreement to the same extent as if they were parties hereto and the names of
whom shall be recorded by you and identified to the Company upon its request
and (ii) any of such information may be disclosed if required by any United
States or foreign law, including the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), if and to the extent, in the written opinion of
your counsel, who shall be reasonably satisfactory to the Company ("Counsel"),
you are required to make such disclosure pursuant to any such law, provided
that prior to any such disclosure pursuant to this clause (ii), you shall
first give the Company a reasonable opportunity to review the proposed
disclosure and to comment thereon. You will be responsible for any breach of
this agreement by your representatives, but the Company shall be entitled to
directly enforce the agreements of your representatives who are bound hereby
and to cause you to enforce such agreements. You shall restrict the
photocopying or other reproduction of the Evaluation Material to that which is
necessary to provide copies to those persons authorized to have access to the
Evaluation Material pursuant hereto and for those purposes authorized herein.
You and your representatives shall use all reasonable and prudent efforts to
protect and safeguard the Evaluation Material from misuse, loss, theft,
publication or the like to at least the same extent as you protect and
safeguard your own similar proprietary information and to ensure that your
representatives who receive any of the Evaluation Material shall do likewise.
You hereby acknowledge that you are aware, and that you will
advise your representatives who are informed as to the matters which are the
subject of this letter, that the United States securities laws prohibit any
person who has received from an issuer material, non-public information
concerning matters which are of the nature of those covered by this letter
from, so long as such material information is non-public, (i) purchasing or
selling securities of such issuer or (ii) communicating such information to
any other person under circumstances in which it is reasonably foreseeable
that such person may purchase or sell such securities.
In the event that you or your representatives receive a request
to disclose all or any part of the information contained in the Evaluation
Material under the terms of a valid and effective subpoena or order issued by
a court of competent jurisdiction or by a governmental body or by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process, you agree to (i) promptly notify the Company of the
existence, terms and circumstances surrounding such a request, so that it may
seek an appropriate protective order and/or waive your compliance with the
provisions of this agreement (and, if the Company seeks such an order, to
provide such cooperation as the Company shall reasonably request) and (ii) if
disclosure of such information is required in the written opinion of Counsel,
exercise your best efforts to obtain an order or other reliable assurance that
confidential treatment will be accorded to such of the disclosed information
which the Company so designates.
In addition, without the prior written consent of the Company,
you will not, and will cause your representatives not to, disclose to any
person either the fact that the Evaluation Material has been made available or
the fact that discussions or negotiations are taking place concerning a
possible transaction between the Company or its stockholders and you or any of
the terms, conditions or other facts with respect to any such possible
transaction, including the status thereof, except that disclosure of such
information may be made if required by any United States or foreign law,
including the Exchange Act, if and to the extent, in the written opinion of
Counsel, you are required to make such disclosure pursuant to any such law,
provided that prior to any such disclosure pursuant to this paragraph, you
shall first give the Company a reasonable opportunity to review the proposed
disclosure and to comment thereon.
You hereby acknowledge that the Evaluation Material is being
furnished to you in consideration of your agreement that, until April 15,
2000, you and your affiliates (as defined in Rule 12b-2 under the Exchange
Act) will not (and you and they will not assist, provide or arrange financing
to or for others or encourage others to), directly or indirectly, acting alone
or in concert with others, unless specifically requested in writing in advance
by the Board of Directors of the Company,
(i) acquire, or agree to acquire, offer, seek or propose to
acquire (or request permission to do so or to make any proposal in such
regards), ownership (including, but not limited to, beneficial ownership as
defined in Rule 13d-3 under the Exchange Act) of the Company or any of the
assets or businesses of the Company (except in transactions in the ordinary
course of business) or any securities issued by the Company or any rights or
options to acquire such ownership (including from a third party), or make any
public announcement (or request permission to make any such announcement) with
respect to any of the foregoing, or
(ii) seek or propose to influence or control in any manner the
management or the policies of the Company or to obtain representation on the
Company's Board of Directors, or solicit, or encourage or in any way
participate in, directly or indirectly, the solicitation of, any proxies or
consents with respect to any securities of the Company, or make any proposal
or any public announcement with respect to any of the foregoing or request
permission to do any of the foregoing with or without conditions, or
(iii) seek or propose any recapitalization, restructuring or
other extraordinary transaction with respect to the Company or any of its
businesses, or
(iv) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing, or
(v) take any action which might force the Company to make a
public announcement regarding any of the foregoing.
You will be responsible for any breach of this agreement by your
representatives, but the Company shall be entitled to directly enforce the
agreements of your representatives, whom you agree you will cause to be bound
hereby to the same extent as if they were parties hereto, and to cause you to
enforce such agreements.
Although the Company has endeavored to include in the
Evaluation Material information which it believes to be relevant for the
purpose of your consideration, you understand that neither the Company nor any
of its representatives or advisors have made or make any representation or
warranty as to the accuracy or completeness of the Evaluation Material. You
agree that neither the Company nor its representatives or advisors shall have
any liability to you or any of your representatives resulting from the use or
contents of the Evaluation Material or from any action taken or any inaction
occurring in reliance on the Evaluation Material.
At the request of the Company or in the event that you do not
proceed with a transaction which is the subject of this letter, you and your
representatives shall promptly redeliver to the Company all written Evaluation
Material and, except for the materials referred to in the next succeeding
sentence of this paragraph, any other written material containing or
reflecting any information in the Evaluation Material (whether prepared by the
Company, its advisors, agents or otherwise) and will not retain any copies,
extracts or other reproductions (including any computer tapes or discs or oral
reproductions) in whole or in part of such written material. All documents,
memoranda, notes and other writings or materials whatsoever prepared by you or
your representatives based on information in the Evaluation Material shall be
destroyed, and such destruction shall be certified in writing to the Company
by an authorized officer supervising such destruction; provided that such
certification as to destruction of materials prepared by your representatives
(other than your affiliates, directors, officers or employees) may be based
on a certification to such effects from your representatives.
Without the prior written consent of the Company, you further
agree (i) that, prior to April 15, 2001, you and your representatives will
not, directly or indirectly, solicit for employment any Employee who is now,
and at the time of such solicitation is, employed by the Company or any
affiliate of the Company, and (ii) that you and your representatives will not,
directly or indirectly, solicit for employment any Employee who is now
employed by the Company or any affiliate of the Company while any discussions
or negotiations are pending between you and the Company with respect to a
possible transaction contemplated hereby; provided that this restriction shall
not prohibit any general solicitation of employment published in the newspaper
or other public media. For purposes of the foregoing, an "Employee" shall
mean any person with whom you had contact or who was otherwise identified
directly or indirectly in the course of your review of the Company.
It is further understood and agreed that no failure or delay by
the Company in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder.
You agree that unless and until a definitive agreement between
the Company and you with respect to any transaction referred to in the first
paragraph of this letter has been executed and delivered, neither the Company
nor you will be under any legal obligation of any kind whatsoever with respect
to such a transaction by virtue of this or any written or oral expression with
respect to such a transaction by any of the Company's or your directors,
officers, employees, agents, or any other representatives or advisors except
for the matters specifically agreed to in this letter. You further agree that
the Company shall have no obligation to authorize or pursue with you or any
other party any transaction referred to in the first paragraph of this letter
and you understand that the Company has not, as of the date hereof, authorized
any such transaction. The agreements set forth in this letter may be modified
or waived only by a separate writing by the Company and you expressly so
modifying or waiving such agreements.
The parties hereto acknowledge that money damages are an
inadequate remedy for breach of this letter agreement because of the
difficulty of ascertaining the amount of damage that will be suffered by the
Company in the event that this agreement is breached. Therefore, you agree
that the Company may, in addition to any other available remedy, obtain
specific performance of this agreement and injunctive relief against any breach
hereof. If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND THE PARTIES HERETO CONSENT
TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS FOR ANY
SUITS, ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATED TO THIS LETTER
AGREEMENT AND WAIVE ALL OBJECTIONS TO SUCH JURISDICTION.
Very truly yours,
DANIEL INDUSTRIES, INC.
By: /s/ R. C. Lassiter
------------------------------
R. C. Lassiter
Chairman of the Board and
Chief Executive Officer
Confirmed and Agreed to:
EMERSON ELECTRIC COMPANY
By: /s/James D. Switzer
--------------------------------
James D. Switzer
Senior Vice President of Development
